QUESTION. If funds are taken from the reserve account for a new roof, does the reserve fund need to be replenished? If so, what is the timeline? One year? Two years? –Judith H.
ANSWER: Yes, it should be replenished and no the timeline is not one or two years. The short timeline applies when a board borrows the funds. The timeline for replenishing reserve items related to planned replacements is the projected life of the new component.
If your new roof has a projected life of 20 years, your reserve analyst will reset that line item in your reserve study to 20 years. The amount of money paid into reserves each year (adjusted for inflation) should be sufficient at the end of 20 years to pay for a new roof. The goal is to properly fund your reserves so that replacement of major components does not require a special assessment. To get into the weeds on how reserve studies work, your reserve analyst can give you a detailed explanation.
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