A component of the monthly assessment is also allocated to the reserve fund which covers the cost of future replacement of permanent assets owned by the HOA. The HOA engages an outside firm to periodically prepare an analysis of the assets to be funded, estimate their lives until required replacement, and determine the amount necessary at the end of each year to provide for the required funds when needed. A Five Year Projection is a forecasting tool used by the Finance Committee and Board to provide estimates of the operations and investment funds projected five years into the future based on current operating assumptions. The proforma is a living document and is revised annually based on changes that occur in the previous year and new operating assumptions based on input from committees and the Board. It provides an opportunity for the Board and Finance Committee to make financial decisions based on the projected future needs of the Association and to evaluate the financial impact of operational changes on the monthly assessment.
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