We did our first reserve study at the end of 2014. At the time, we had only funded 25% of our reserve, so we began adjusting the dues to reduce the possibility of having to levy a special assessment.

In 2020, we completed our second reserve study, and we’ve made good progress. Our capital reserve is now funded at nearly 50%. This is the result of running a mostly balanced budget, increasing our contributions to the capital reserve, and having a few large capital projects come in under budget.

We still have more work to do to hit our target of funding about 70% of our reserve, but we’ll get there if we keep following the plan we established several years ago. We’ll plan on running a new reserve study in about 5 years to check our progress.

Here is a list of questions that have been asked over the years, along with the best answers we could find.

What are capital reserves?

Capital reserves are the funds we set aside to pay to replace or repair the major assets of the association, like roofs, siding, fences and driveways.

How do we know how much we need to save?

The state of Washington requires associations like Danielson Grove to conduct formal reserve studies every few years in order to ensure that we are collecting enough money in order to pay for the cost to replace and maintain the assets of the commons. In 2014, and again in 2020, we hired Association Reserves to perform this study for us. Their report provides guidelines for how much we should be collecting and setting aside for this.

What if I sell my house in a few years? Why do I need to contribute if I’m not going to be here when we have to pay for big repairs?

Every year that passes, the buildings, roofs, driveways and other assets deteriorate. It’s only fair for each resident to pay for the cost of that deterioration while they are living here. Also, when a potential buyer is considering the purchase of a home in Danielson Grove, they will want to know whether the association has collected enough reserves over the years. If it hasn’t, then the new buyer might have to pay a special assessment in order to pay for a major repair in the first few years that should have been paid for in part by the seller of the house they bought. If the buyer things the reserves are not sufficient, they will decrease the price they are willing to pay for your home.

Will the increases to the dues be only temporary, or will they continue to rise over time?

The increase in the dues are determined based on the cost of deterioration each year. Since the assets will continue to deteriorate each year, we’ll have to continue collecting these dues each year also. Furthermore, the cost of replacing or maintaining assets is likely to continue to rise with inflation, and so we’ll have to match those increasing costs by raising dues to keep pace.

How much of an increase should I expect?

When we commissioned our first study in 2014, we were pretty far behind, so we made some significant adjustments at the time. Recently, we have been raising the amount we contribute to the reserve by about 5% per year. We plan to continue these increases until we reach our targets of funding roughly 70% of our reserve, and then adjust each year by whatever is required to maintain this balance.

Are there any other changes in dues that I should think about?

The changes discussed here are related only to the portion of the dues allocated to the capital reserve. The rest of the dues cover the annual cost of operations, such as gas, electric, trash, recycling, landscaping, etc. If those costs change, that might also result in a change to the dues.