One of the most common questions we receive when discussing a proposal for a reserve study is about the various levels available. Some clients prefer a complete re-evaluation every time. While others question the necessity of an on-site visit for every study.

At MillerDodson Associates, we adhere to the Community Association Institute (CAI) National Reserve Study Standards. These standards, developed by industry experts, ensure that boards and committees are well-equipped to protect, maintain, and enhance their association’s assets.

Let’s explore the different levels of reserve studies:

Level 1: Full Reserve Study

A Level 1 Full Reserve Study is the initial study performed for a community or facility. This study is redone when new components are added or at the board’s discretion if they believe there are discrepancies. It always includes an on-site inspection and encompasses five key tasks, drawing on our on-site evaluation, client-provided information, and input from other subject matter experts:

• Component Inventory: This establishes the comprehensive quantities and measurements of all components within the community or facility.
• Condition Assessment: We evaluate the current physical state of these components.
• Life and Valuation Estimates: We determine the estimated useful life and replacement cost for each component.
• Fund Status: We assess the current balance of your reserve fund.
• Funding Plan: We develop a strategic plan for your association’s reserve contributions to cover future expenses.

Level 2: Update with On-Site Inspection

A Level 2 Update with an on-site inspection is recommended approximately every three years, following a previous Level 1 or Level 2 study. While state laws may dictate different intervals, an on-site inspection is still a crucial part of this study. It also consists of the same five tasks as a Level 1 study:

• Component Inventory: While re-establishing all quantities isn’t required, we perform a thorough review to ensure the updated study aligns with the observed as-built conditions. We also add any new components anticipated within the next 30 years and recognize long-life components as defined in our documentation.
• Condition Assessment: We reassess the condition of components.
• Life and Valuation Estimates: We update these estimates based on current observations.
• Fund Status: We review and update your reserve fund’s status.
• Funding Plan: We will refine the funding strategy as needed.

Level 3: Update Without On-Site Inspection

A Level 3 Update without an on-site inspection is typically performed within one year of an on-site inspection. This update is conducted remotely through correspondence such as emails, shared documentation, and telephone conversations. It’s important to understand that this study is not a substitute for a Level 2 Update. It focuses on three key tasks:

• Life and Valuation Estimates: We update these estimates remotely.
• Fund Status: We reassess your reserve fund’s current status.
• Funding Plan: We refine your funding strategy based on updated information.

Level 4: Preliminary from Plans

A Level 4 Preliminary Reserve Study from plans is designed for communities or facilities before construction is complete. Utilizing blueprints and other conceptual documents. This type of study becomes invalid once construction is finalized and must be replaced by a Level 1 Full study at that point. It includes three tasks:

• Component Inventory: Based on detailed plans.
• Life and Valuation Estimates: Derived from the planned components.
• Funding Plan: A preliminary strategy for future reserve contributions.

We hope this clears up the various levels of reserve studies and helps you determine the most suitable option for your community or facility. If you’re ready to take the next step, feel free to submit your proposal request.