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24 FOUR SEASONS BREEZE | MARCH 2019 WHAT IS THE CAPTIAL RESERVE? The monthly HOA fee is used to maintain and operate the common properties owned by the Association. This is accomplished by allocating our Fee to a Capital Reserve Fund and the yearly operational budget. The $219 HOA fee that we pay each month distributes $37 to the Capital Reserve and $182 to the operational budget. Last month's article focused on the operational budget. This article will take a closer look at the Capital Reserve. What is the Capital Reserve? The HOA's assets (the three clubhouses and common area) exceed $18,000,000. Examples of items that require replacement over time include flooring/carpeting, chairs, road resurfacing, repainting facilities, pool pumps, etc. We have a great many of these when you consider the number of buildings, pools, roadways/sidewalks and sports courts and the associated furnishing. The Capital Reserve is a specifically designated fund for replacement of these elements as they become old, worn and beyond serviceable life. A Capital Reserve Fund is established following a well-defined process of identifying all the common items, determining life expectancy, and estimating replacement costs. Funds are set aside to be available when replacement is needed in the future. This process alleviates the need to assess homeowners every time funding is required to replace common elements. It should be noted that these funds cannot be used for normal maintenance and repairs or to purchase new items that do not exist on our current property inventory. The Four Seasons Capital Reserve is sufficiently funded to meet our needs at over 115 percent of the full funding study. Some have asked why we increased the HOA dues when the reserve funding is 115 percent. Consider this example. You are told your AC system will last 10 years and cost $5,000 to replace. So you save $500 per year. But 10 years later due to inflation and equipment changes you need $6,000. You will wish you had saved more. That is why it is prudent to have a reserve fund in excess of 100 percent. Every three years, which will happen this year, the HOA goes through the process of doing a thorough review to determine the proper reserve. This process will update the inventory of our assets, review the estimated replacement costs, and the remaining life of each item. This new analysis will be used to ensure the HOA is maintaining a proper Capital Reserve. The state requires that the HOA report to its members the status of the Capital Reserve and project the needs for 30 years. These reports were sent to all homeowners the beginning of December. These reports project the reserve needs based upon inflation and estimated expenditures to replace HOA assets. Remember that all the common areas are part of your home here in Four Seasons and you have a responsibility to maintain it just as you will maintain your personal home and possessions. ~ Boyd Barlett, blbarlett@gmail.com Finance Committee

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