Announcements

At the September 9 Open Session Board meeting, residents raised thoughtful questions about how LARMAC handles fiduciary duty, budgeting, reserves and investments. Here is the short version, followed by the details for anyone who wants them.

LARMAC operates on a balanced budget and came within 1.4% of it last year. Reserves are funded on a schedule tied to when assets actually need replacing, not a lump sum for everything the Association owns. Investments are managed conservatively by design, because reserve funds are homeowner money held in trust. And the monthly assessment has grown more slowly than inflation for 25 years, while covering internet service that most communities bill separately.

All figures below are approximate and rounded.

Who is responsible for LARMAC's money?

Ultimate responsibility rests with the Board of Directors, whose governing documents require directors to act in good faith, in the Association's best interests, and with the care an ordinarily prudent person would exercise.

Is the budget balanced?

Yes, and last year's results came within 1.4% of plan. LARMAC generated approximately $22.7M in revenue in FY 2025–26, contributed $3.45M to reserves, and had $19.2M available for operations against actual operating expenses of $19.5M, a variance of about $271K. A balanced budget is the adopted plan; actual results rarely match it exactly, and this year they came close.

Should LARMAC hold $100 million in reserves?

No, because reserve funding is not based on a target cash balance. The reserve study identifies approximately $30M in current replacement value across all reserve components, but the amount needed today is based on when individual assets require repair or replacement, not the total future value of everything the Association owns. LARMAC currently holds about $9M in master reserves and is 62% to 64% funded against that schedule.

Why isn't LARMAC earning 10% on reserve investments?

Because reserve funds are managed for preservation, not yield. These are homeowner funds held in trust, invested conservatively in CDs and U.S. Treasury securities rather than higher-risk vehicles. As of May 2026, reserve investments were earning approximately 3.0% to 3.9%. A 10% target would require a materially different, and inappropriate, level of investment risk.

Is LARMAC adequately funding reserves?

Yes. LARMAC contributed approximately $3.45M to reserves in FY 2025–26 and earned about $415K in reserve interest. Actual repair and replacement costs have also consistently come in below the amounts budgeted for them.

Are assessments rising faster than costs?

No, assessment growth has trailed inflation. The monthly master assessment rose from $136.50 in FY 2001–02 to $241 in FY 2026–27, an increase of about 77% over 25 years, while California consumer prices rose approximately 94% over the same period.

How does $241 compare to other large Orange County HOAs?

It is in line with comparable communities, and it includes a benefit most do not. LARMAC's assessment is generally within the range of associations such as Talega and Great Park Neighborhoods, and unlike most, it includes bulk 2-gig high-speed internet, valued at roughly $120 per month at retail.

How are LARMAC's finances monitored?

Through ongoing board oversight, not just an annual review. Two directors serve on an Executive Budget/Finance Committee that meets monthly with LARMAC's investment agent to review cash flow and upcoming needs, and a Treasurer's Report is presented at every Open Session and posted publicly on LaderaLife.

The bottom line: LARMAC's fiduciary responsibility is not measured by holding the largest possible cash balance or earning the highest possible return. It is measured by whether the Board protects homeowner funds, maintains appropriate reserves, invests prudently, and manages assessments responsibly. On each of these measures, the record above reflects that it does.

Additional Resources

Homeowners interested in learning more about LARMAC’s financial responsibilities and reserve practices may review:

• LARMAC Master Declaration §1.61 – Reserve requirements
• LARMAC Master Declaration §3.8.1 – Board standard of care
• LARMAC Master Declaration §§8.2–8.3 – Reserve funds and permitted uses
• LARMAC Bylaws §2.9.5 – Reserve funds held in trust for Members
• LARMAC Bylaws §§2.10.5–2.10.6 – Financial review and reserve-study requirements
• California Civil Code §5380 – Handling and protection of Association funds
• California Civil Code §§5510 and 5515 – Reserve-fund use and prudent fiscal management
• California Civil Code §5550 – Reserve-study requirements
• California Civil Code §§5560 and 5565 – Reserve funding plans and disclosures
• Davis-Stirling.com – HOA reserve and financial-management resources

Learn more about LARMAC Financial Stweardship, Reserves and Investments