Encino Creek Homeowner's Association

The Reserve Fund aka Saving for Street Replacement

The Reserve Fund as of November 2006

The main objective is to have sufficient amounts available in the Replacement Fund to fulfill the Encino Creek Homeowners Association's responsibility to maintain common areas and assets.

The Reserve Analysis Study, prepared by Armstrong, Vaughan & Assoc., contains asset listings, tentative replacement dates and costs, and recommended funding levels.

As of November 2006, based upon the updated Reserve Analysis Study dated July 3, 2003, the ECHOA is at a 40% Ideally Funded Level. Ideally Funded Level is a percentage measuring current ECHOA Replacement Fund levels as compared to the levels recommended by the study.

The study is prepared using numerous assumptions (such as the dates and costs of future expenditures), and the ECHOA has the ability to determine it's own level of reliance upon the report, including such determinations as whether a 100% Ideally Funded Level is desired, or whether a level below 100% would be acceptable.

The largest expenditure identified in the study is $115,204 in the year 2015. This expenditure is for an asphalt overlay of the private streets. This is an example of an assumption contained in the study. It is possible that the streets may not require an asphalt overlay in the year 2015; it is also possible the cost of street repairs could differ from the $115,204 amount - either of which could have a significant effect on the actual Replacement Fund levels as compared to the study's recommend funding levels.

If the main objective of maintaining sufficient amounts in the Reserve Fund to fulfill the Encino Creek Homeowners Association's responsibility to maintain common areas and assets is not met, a Special Assessment may have to be collected from the ECHOA members to cover any funding shortfalls.

Following are illustrations of funding shortfalls and their effect on each ECHOA unit (there are a total of 80 units in the ECHOA): a $1,000 shortfall would require a one-time special assessment of $12.50 per unit; a $50,000 shortfall would require a one-time special assessment of $625 per unit; a $100,000 shortfall would require a one-time special assessment of $1,250 per unit.

Financial Highlights

2006 recommended contribution $10,727; actual contribution $10,000. Resulting projected fund balance at the end of 2006 $30,350, 40% Ideally Funded (2006 year-end balance recommended by the July 3, 2003 Reserve Analysis Study $75,565)
2002 Year-end Fund Balance $15,125, 32% Ideally Funded (as recommended by the July 3, 2003 Reserve Analysis Study)

2002 recommended net contribution $9,199; actual net contribution $5,076

2003 Year-end Fund Balance $12,325 (reduction from 2002 year-end balance of $15,125 due to gate replacement expenditures), 22% Ideally Funded (as recommended by the July 3, 2003 Reserve Analysis Study)

2003 recommended net contribution $9,595; actual net contribution negative $2,800

November 30, 2004 Fund Balance $12,375, resulting in a 20% Ideally Funded level (as recommended by the July 3, 2003 Reserve Analysis Study).

2004 recommended net contribution $10,006; budgeted net contribution $9,243, actual change in fund balance projected to be $2,650, (based upon November 30, 2004 operating account balance; substantial increases in this amount during the month of December can increase this number).

2005 recommended contribution $10,294; budgeted contribution $9,376. Resulting projected fund balance at the end of 2005 $24,401, 36% Ideally Funded (2005 year-end balance recommended by the July 3, 2003 Reserve Analysis Study is $66,588)