Lessons from Baltimore
No matter how long an association has been established or how many reserve studies they’ve completed, even the most experienced properties face challenges that only periodic reserve study updates can help mitigate. One such example is a long-tenured client of Reserve Advisors: a 15-story high-rise condominium in Baltimore, Maryland, listed on the National Register of Historic Places.
Beginning their reserve study journey in 1992 and completing an initial update in 1997, this community then waited another 14 years before commissioning its next update with Reserve Advisors. Their evolving approach to reserve study updates offers critical lessons in managing building infrastructure and financial planning – both of which grow increasingly complex as buildings age.
Waiting Can Be Costly
After conducting the 1997 update, the association delayed its next update with Reserve Advisors until 2011, in part because there were very few major capital projects on the horizon. By 2011, much had changed. Key building systems were nearing the end of their useful lives, and the plaza deck membrane had started to fail. With reserve funds falling 25% short of target levels, the board turned to Reserve Advisors for guidance on prioritizing critical projects and identifying a financial strategy to fund them.
The 2011 inspection revealed the extent of deterioration in the plaza deck membrane, which had worsened over time, leading to a looming $2M replacement project. Additionally, the building’s aging condition necessitated nearly $2.2M in additional near-term exterior and building services work.
Periodic Updates Support Strategic Decisions
With $4.2M in critical capital projects, the board was at a critical juncture. With the guidance of our team, they opted to complete limited repairs to the plaza deck, rather than fund a full replacement. While this added $200,000 in capital repairs, it meant that the association could defer the full replacement for 7 to 8 years. Additionally, it allowed the board to redirect reserve funds toward other critical infrastructure needs.
Ongoing Updates Deliver Long-Term Benefits
Following the 2011 update, the board committed to more frequent updates, commissioning updates in 2018 and again in 2023. As the board began to plan for the complete replacement of the plaza deck membrane, they engaged with a building envelope specialist to help monitor deterioration and to establish a scope of work, timeline, and cost. As the details were finalized and funding was secured, an update was commissioned in 2018.
Working directly with management and the board, Reserve Advisors’ 2018 update took into account the exterior and building services work that had occurred since the prior study. The condition of the remaining building services elements, primarily air handling units and chillers, was re-assessed, and replacements were prioritized around the upcoming plaza deck membrane replacement. This update was critical to establishing a new baseline for future reserve funding. It reflected the future needs of the community and gave the board confidence that the reserve plan would meet its actual needs after the remaining near-term critical projects.
By the time the 2023 update was completed, the association had completed the plaza deck membrane replacement. They had also established adequate reserve funds, which were sufficient to cover future capital projects without the risk of deferred maintenance, special assessments, or bank loans.
The Bottom Line
This community’s story illustrates the value of treating reserve study updates as a foundational part of long-term planning, rather than a formality. When studies are approached as a one-time task or “check-the-box” item, associations risk being caught off guard with costly surprises and losing time to respond effectively to changing needs.
By recommitting to timely updates, the board has regained control over the community’s financial future, is making more informed project decisions, and is entering the next decade with a solid roadmap to steer future capital planning decisions.