Florida Community Association Manager Practice Exam

In HOA financial reports, which of the following is a category for which the association maintains reserves?

1. Costs for recreation facilities

2. Parking fees

3. Utility savings

4. Landscaping contracts

The correct answer is: Costs for recreation facilities

In HOA financial reports, maintaining reserves is essential for ensuring that the community can meet future expenses without needing to levy unexpected assessments on homeowners. One primary category for which the association maintains reserves is the costs for recreation facilities. These facilities often require significant funds for maintenance, repair, and eventual replacement. By reserving money specifically for these expenses, the association ensures that it can provide proper upkeep and continue to offer recreational amenities to residents. Other items mentioned, such as parking fees, utility savings, and landscaping contracts, do not typically fall under reserve categories in the same way. Parking fees are generally operational expenses or income but do not require reserve funds for future costs. Utility savings are not a cost category but rather indicate reduced expenses. Landscaping contracts may involve regular operational expenses, but they are typically not set aside in a reserve fund since they usually represent ongoing services rather than long-term asset replacement needs.