Management:  Reserves
Although the Association’s governing documents and applicable state laws do not require the Association to accumulate funds for future major repairs and replacements, the Association has a policy for accumulating funds for future repairs, replacements, and contingencies.  The Association maintains two separate reserve funds.
  • Replacement Fund - This fund is a capital reserve fund used to accumulate monies designated for future major
    repairs and replacements of common elements.
  • Maintenance Fund - This fund is a non-capital reserve fund used to accumulate monies for contingences, such as damage resulting from storms, and for components requiring periodic maintenance that does not occur annually.
Reserve Study
The Association has a policy of conducting a Reserve Study every 5 years to estimate the remaining useful lives and the replacement/maintenance costs of community components.  The study also includes a reserve funding analysis based on anticipated expenses over a study period of 30 years.   The Association uses the Cash Flow Method of collecting reserve funds which combines all capital reserve funds and distributes these funds to individual components as their replacement comes due or is necessary. Thus, the collected reserve amounts have not been allocated to the respective components of common property.  The Reserve Study funding analysis has a strategy of maintaining a positive cash balance in the reserves. This ensures that adequate funds are available for the entire study period.  Notwithstanding, actual expenditures and investment income may vary from the estimated amounts, and the variations may be material. Therefore, amounts accumulated may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Association has the right to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available.
Because our Reserve Study is meant for our Association members, it is password protected.  If you are an Overlook homeowner and do not have the password, please contact our Board of Directors using the link on our website homepage.
Reserve Contributions
The Association budgets contributions to the reserves based on the Reserve Study which seeks to maintain a positive fund balance and as well as maintaining a Fully Funded Balance goal of between 70% to 100% which provides additional measure of conservatism.  The Fully Funded Balance is the value of the deterioration of the Association’s common area assets, and is a computed quantity. The fractional age of each component is multiplied by its current estimated repair/replacement cost; then, the costs summed together to arrive at the 100% funding level. The percent funded figure is the ratio of the current reserve balance to the fully funded balance. The percent funded figure provides a gauge for assessing the relative size and risk associated with a particular reserve balance. In general, funding percentages under 30% represent a higher risk for special assessments and/or deferred maintenance. Funding percentages of 70% or more represent a lower risk. Funding percentages of 100% or more represent the lowest risk, but also may be viewed as overly conservative because the fund balance may remain significantly higher than the cash flow requirement. The annual percent funded status will change from year to year as information about the reserve balance and estimates for reserve component useful life, remaininguseful life, and replacement cost are updated.
Our Annual Financial Statement has detailed reserve information as part of the included Supplementary Information.  A list of components, remaining useful lives and estimated replacement costs are included for each fund.  The reserve balance in each fund is reported along with contributions, expenses and the calculated funding percentage.  Click on the link below to visit our financials webpage.
OPOA Financials Link