Apportioning Regime Fees for Reserve

I was wondering how other HOA's seperate and deposit regime fees into special accounts. We have an operational account (61%), roofing (17%), and a reserve account(22%). I am under the impression that we should take the percentage of each based upon full regime fee collections and multiply the percentage as to what actually come in. Is this a correct process or is there another process that anyone has found better.

Thanks

WilliamS1 - If I understand your post correctly you multiply maintenance fees collected from each paymen by the percentages 61%, 17%, 22%, etc.? Correct? What did you base the overall amount you need transfer each year to cover all reserve replacement items. Many associations have a Transition engineering firm perform a Capital Reserve Replacement Analysis (CRRA) and arrive at an estimated replacement cost (ERC) of all the items the HOA/COA is responsible to replaced (common elements). Then at the Board's discretion or maybe state statute a threshold percentage amount of the ERC is transferred to the reserve account each pay period. Did you have a CRRA performed as a basis for your percentages?

I guess I was not to clear. Last year we had a complete reserve study done and they gave us an amount that we should be setting aside per month for the long term reserve. The problem s that some months if we allocate the entire amount of the reserve funds (roof and reserve), we are left with very little in the operational fund. It has been suggested that instead of setting a fixed amount into the reserve accounts, we proportion each account based on the amount of fees that we actually get in per month. Based upon that, the reserve deposits would be higher some months and lower other months. What do you think.

Thanks

Thanks everyone and especially RogerB.

Roger - I don't quite follow your post. Seems like you are saying that the reserve transfer is not a fixed monthly amount for the year.

They have quite correctly, identified a 39% Reserve, and a 61% Operating requirement, of the overall monthly Assessment, so that his statement that
"some months if we allocate the entire amount of the reserve funds (roof and reserve), we are left with very little in the operational fund" appears to point to an underlying collection problem.

DaneC - Typo correction to last sentence: My read of Roger's post is that as long as the overall transfer to reserves is what it should be at budget year's end, it doesn't matter that the monthly collections vary. My perspective on that kind of budgeting is that the reserve fund will not experience as much earned interest since the balance from month to month will not consistently accumulate.

1)The problem is that some months if we allocate the entire amount of the reserve funds (roof and reserve), we are left with very little in the operational fund.
2)It has been suggested that instead of setting a fixed amount into the reserve accounts, we proportion each account based on the amount of fees that we actually get in per month.

1)I think they are avoiduing the issue, which appears to be a collection problem, and he does say "the problem".

2)When does the reserve transfer get done, after the monthly bills get paid, and there is finally enough left for the reserves? In that type of setting, it usually means that there will be 2 reserve transfers in some months - a definite sign, that collections are not keeping up with due dates, also, he says - "actually get in per month."

Proportioning seems to be an attempt to work around collection delays. (And they are not optimizing their interest earning ability as you pointed out.)

JoeW1 do you know what it takes to increase "maintenance fees"? It takes a 2/3rds vote of the homeowner's to AGREE to even talk about the issue and approve the idea to have an increase in either dues or assessments. If the documents allow yearly increases, you have to wait until the beginning of the year for the newly organized board to vote in majority to approve raising the dues to that yearly percentage increase. Yearly increases are typically VERY low like 5% or less. Any more than the allowable yearly percentage increase takes a general membership vote to approve.

I don't know about anyone else on this forum, but I wouldn't appreciate a special assessment or increase in my dues without justification. I am not going to arbitrarily vote in a dues/special assessment even if you tell me that it's for increasing the reserves account. Any increase has to have a specific purpose and finite amount. You can't just say "increase the dues so we have some in reserves". It has to be "We need to put $10K in our reserves by the end of the year and that increase of dues/special assessment will be divided EQUALLY amongst ALL the homeowner's to achieve that".

Our HOA couldn't afford a regular contribution to our reserve fund. It was sporatic at best. However, if I were to setup a HOA budget, savings may be another "liability" I would put in the column. Then adjust the dues collection amounts from there to meet our monthly bills if needed. Quite often it is rob peter to pay paul in a HOA, so designating a savings amount is nearly impossible and keeping to it. Just do the best you can and hope at the end of the year, you have something there!

GlenL - I am totally with you on this. There is no HOA Commandment for all associations stating "Though Shall not Increase transfers to reserves or Assess without a 2/3rd's Vote of Owners".

MellissaP1 - You understand what GlenL and myself are saying here correct? You've read this reply? Please do not keep going on and on as if the rules in your former HOA apply to everyone?

As for your statement, "designating a savings amount is nearly impossible and keeping to it." It may be impossible for you and your former HOA, however it is not impossible for mine, especially when it comes to reserves. And if the best you can do is "hope" there is something in the savings account at the end of the year, than you my dear are not fit to be a fiduciary.

Your read of my post is correct Joe. However, let me try to change your perspective on "that kind of budgeting is that the reserve fund will not experience as much earned interest since the balance from month to month will not consistently accumulate."
When assessments are due at the beginning of a quarter or beginning of each year when you place the budgeted reserve funds into an investment account on a monthly basis rather than when received there will be less earned interest.