Re: Association Reserves questions
From: Mac Thomson (
Date: Thu, 18 May 2006 08:07:14 -0700 (PDT)
On May 17, 2006, Pat Little wrote:

 - How do we prepare the members for the big increase?

Don't know. We've never had to do that -- so far anyway. :-) Thank goodness.

It would help us to be able to show what percentage of the
annual budget other Cohousing communities pay for reserves. If you're
willing to provide this information, please also include number of units, age of project, whether urban or rural, and if you too are catching up with
previously under-funded reserves.

We automatically put $6K plus our HOA 'profits' (average about $5K per year) into our reserve budget every year. Our total HOA budget is about $33K per year (not including common meals). We are rural, 24 homes, moved in in 2000, and are not catching up with previously under-funded reserves.

- We have a long list of potential reserves components, around 60. Should we itemize the smaller things in our reserves study, which requires effort
to estimate life and replacement costs for each of them, or should we
instead lump them in a 'general' reserves category to cover the
(unspecified) small stuff (and gradually increase the funding over time to match inflation)? Or should we just handle this via 'general maintenance' in
our annual operating budget?

Our reserves only cover items that cost over $500. Anything smaller gets paid for from the teams' annual operating budgets or from our annual contingency budget controlled by our Steering team. We did estimate useful life and replacement cost for all items specifically covered by reserves in order to figure out what our annual contribution needs to be. An important part of that calculation was accounting for future earnings on our reserves balance. That significantly reduces annual reserves contribution amount. Have you taken future earnings into consideration?

And a more technical bookkeeping question - we are wondering how to track
the reserves funds in our bookkeeping system. Most of the accumulated
reserves will be in a separate savings account, requiring 2 signatures for withdrawals, but collections from the current year will be in the checking account for some time before they get transferred to savings. We'd like to have a way to show, in the books, the total accumulated reserves regardless of which account they are in. We use QuickBooks. Does anyone have experience
with this, and could tell us what you did?

We separately account for lots of different kinds of reserves and funds, but we invest all our money in a commingled fashion. I think you'll be missing out on a lot of income earning potential if you invest your reserve funds in a savings account. I do all the reserves tracking on an Excel spreadsheet and then feed the info to our bookkeeping folks who use QuickBooks. (I was a CPA in previous life.)

I'd be to share any of our reserves spreadsheets or other material with you.


Mac Thomson

Heartwood Cohousing
Southwest Colorado

"I don't know the key to success, but the key to failure is trying to please everybody."
     - Bill Cosby

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