Reserves

The HOA reserve fund is money set aside in a seperate account to pay for future major repairs and replacements of common area components, such as pavement, fencing, lighting, and other long-lived assets. 

• The Riverwood Reserve account balance has been essentially unchanged since 2023.

• Reserve funds are intended for these infrequent, high-cost expenses rather than day-to-day operating costs.

• California Civil Code prohibits the use of Reserve funds for community enhancements. 

The Fully Funded Balance (FFB) represents the target amount of money an association should have set aside for a specific asset at any point in its lifespan, based on its age and wear.

For example, when Riverwood’s front entrance signage reached the end of its useful life in 2026, its target balance (FFB) was approximately $26,000. When the association replaced the signage for roughly that amount, two things occurred simultaneously: reserve cash was spent, and the required FFB for that asset dropped by that same $26,000. In short, the reserve fund performed exactly as planned—funding the replacement without depleting the community’s overall funded ratio.

The reserve study notes that:

• 70%–100% funded: Generally considered a strong financial position with a low risk of special assessments.

• 30%–70% funded: Generally considered a fair financial position with a moderate risk of special assessments.

• 0%–30% funded: Generally considered a weak financial position, indicating a higher risk of special assessments or deferred maintenance.

Spending more than the reserved amount to repair or replace a reserve component reduces the funded percentage.