Ensuring a Successful Reserve for Your Community

Posted by Meigan Montoya on October 27, 2017

This week, Robert Nordlund, PE RS, CEO of Association Reserves, along with TOPS’ own Andrea Meyer, gave a very compelling webinar about guiding communities to help them build successful reserves by using a solid reserve plan. His webinar, “Reserve Funding Success,” explained everything from the ground up, giving viewers an in-depth run down of precisely what a reserve is composed of, and its purpose.

Starting with a basic understanding of reserves was a huge talking point for Nordlund—and I can see why. As someone who is mathematically challenged, accounting in any capacity frightens me! But his analysis of what a reserve is, and why that’s so important to it’s success, is inspiring. He talks about how a reserve’s greatest goal is to ensure community success. This is a pretty new way to think about reserves, I think.

Most times, reserves are talked of in regard to pinching pennies and disgruntled homeowners. Likely, it’s because of these four things Nordlund lists as Four Reserve Rules:

  1. Expenses always happen
  2. The board is responsible
  3. Delays usually get expensive
  4. Homeowners always get stuck paying the bills

He also stressed that just because expenses are irregular, they aren’t necessarily unpredictable. A strong reserve plan understands that, and accommodates for the irregularities that will predictably occur.

Another really important point he made was that many boards have the wrong approach to reserves (like I did!). Many boards, he says, focus on two things with their reserves:

  1. Minimized assessments
  2. Legal compliance

While these are both obviously important, like he says at the start, those are not the goals of the reserve. And focusing on these can lead to a series of what he refers to as “the D’s of Wrong Objectives”:

  • Deterioration
  • Decline
  • Danger (litigation)
  • Discouragement
  • Downward spiral
  • Distrust

Want to know everything else he has to say about reserves? Of course you do! Check out the recording here, or find it on our free downloads page along with a ton of other great downloadables and webinars. As a bonus, at the end of the webinar, Andrea Meyer covers how to implement your reserves in TOPS [ONE]!