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FOUR SEASONS BREEZE | OCTOBER 2021 5 By Kathy Craven, Board Vice President As I mentioned in last month's article, I wanted to provide you with information regarding our Capital Reserves. We have so many knowledgeable people on our Finance Committee, with more expertise than I, so I would like to share information provided by Finance Committee member, Boyd Bartlett from the March 2019 Breeze. WHAT IS THE CAPITAL RESERVE? The monthly HOA fee is used to maintain and operate the common properties owned by the Association. This is accomplished by allocating our fees to a Capital Reserve Fund and the yearly operational budget. The $227 HOA fee that we pay each month distributes $36 to the Capital Reserve and $191 to the operational budget. Last month's article focused on the operational budget. This article will take a closer look at 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 furnishings. 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 100 percent of the full funding study. Some have asked why we increased the HOA dues when the reserve funding is 110 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, the HOA goes through the process of doing a thorough review to determine the proper reserve. Happening this year, the 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 will be sent to all homeowners in 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 would maintain your personal home and possessions. The Board meets the second Thursday of every month in the Ballroom at 1 pm and we welcome all residents to join us. For a more informal meeting, we have "Meet the Board" meetings the third Wednesday of every month at 1 pm in the Ballroom. If you have questions, this is the meeting to join. If you want to email the Board about an issue, please send to theboard@fourseasonsbeaumont.org or call me directly at (714) 722-1301. Take care and be kind to one another. Message From The Board

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