Corte Bella Reserve Funds

Corte Bella Reserve Funds 101

Joel Block, former Finance Committee Chair

Note: This article is reprinted from the January 2021 CB Times. It was authored by a former Corte Bella resident and Chairperson of the HOA Finance Committee.

Corte Bella has 3 Reserve Funds. They are: 1) “Repair and Replacement Fund (R&R Reserve Fund)” 2) “Street Reserve Fund” 3) “Capital Acquisition and Improvement Fund (Capital Reserve Fund)” Let’s look at each of these funds.

• “R&R Reserve Fund” - covers the repair, replacement, restoration or maintenance of existing or acquired assets.

Some examples are pool pump, air conditioner, computers, carpeting, fitness equipment, or a chair in the Anacapa. The underground irrigation system for our common areas are also covered by this fund. Every asset is given a “useful life in years”, and monies are collected annually to repair or replace each asset at the end of its useful life, if needed. For example, if an asset has a 10 - year life, then 1/10th of the estimated replacement cost would be collected each year, so it would be fully funded in the 10th year. Assets are not always replaced at the end of their useful life. Some assets could last many years past their “useful Life”. The projected quarterly assessment for the “R&R Reserve Fund” in 2021 was $65, but because the “R&R Reserve Fund” was overfunded due to better than expected returns in previous years, we reduced the “R&R Reserve Fund” assessment in 2021 to $36 per quarter. • “Street Reserve Fund” – covers the repair, replacement, restoration and maintenance of our streets.

In 2019 it was determined we were underfunding what was needed to fund the “Street Reserve Fund” per the street study that was ordered by the CBCCA Board. Like the 2020 “Street Reserve Fund” assessment, the 2021 assessment will also be larger than normal. The 2021 “Street Reserve Fund” quarterly assessment will be $83

per quarter.

• “Capital Reserve Fund” – is only used to purchase, construct or acquire additions to the common property, or other assets of the association that exceed $5,000 in total cost, and have a useful life of three years or more. For example, when we purchased the street lights from APS we used money from this fund. Over the last number of years, the Board and committees have put a lot of effort into looking at future projects in Corte Bella, whether that be expansion of current facilities or totally new ideas. Whatever it is, the “Capital Reserve Fund“ will furnish the funds. All new funds added to the “Capital Reserve Fund” come from fees assessed from sales of homes. Every time a home sells in Corte Bella a fee equal to 110% of the annual assessment is collected. Starting in 2021 that fee is $2,297 per home sale.* If Corte Bella would average 7 home sales per month, the fund would grow by $192,931 in 2021. Note that $0.00 dollars come from your homeowner’s assessment in 2021 for “Capital Reserve Funds”. So, the answer to the question “Will my homeowners assessment fees go up if we remodel or do an addition to the Corte Bella facilities?” is: No, they will not.

*Note: The current fee for home sales is 150% of the annual assessment or $3,252 effective January 1, 2022.