Re: Reserve Studies
From: Sharon Villines (
Date: Thu, 29 Dec 2011 10:10:07 -0800 (PST)
On 29 Dec 2011, at 12:19 PM, Holly McNutt wrote:

> But I wonder if  there is a general rule of thumb that most communities 
> follow in terms of how much they should have tucked away.  Like how healthy 
> is healthy? 

The financial figures in your reserve study should tell you how much you will 
need each year and include a spreadsheet and graph showing what amount is 
projected to be needed each year. The reason to do a yearly recalculation is to 
adjust contributions if there have been unexpected replacements or large 
replacements have not been needed.

I can't imagine that any community has an overfunded reserve, but according to 
the Reserve Study industry, a strong community will be 70%-100% funded. 
Association Reserves (see next message) recommends 100% because then you are 
prepared for the unexpected. If you want an affordable community, you want to 
be as fully funded as possible. While many on the edge households only look at 
the cash flow this month, their boat would be sunk if they had a special 

The older your community is, the more likely it is to have unexpected, high 
replacement costs, and the higher the costs, them more difficult it will be to 
come up with them. It's like not saving for college until your child is 16.

This is the link to the Association Reserves entries on percent funded:

When communities are 40-50% funded, the chances of having a special assessment 
are 10%. At 10-20% funded, 40%. I think these numbers would change if they were 
controlled for the age of the community.

In addition to the problem of special assessments there is the issue of 
deferring maintenance. If the funds are not available for necessary replacement 
of the roof shingles or siding, for example, the internal structure can be 
damaged by water and pest infiltration. Association Reserves has found that 
this begins to happen at 40% funded — in other words 60% underfunded.

Cohousers have often come out of the mind-set that we are different. This 
attitude has helped many communities to overcome huge obstacles, but buildings 
are not attitudes.

Sharon Villines
Takoma Village Cohousing, Washington DC

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