Re: financing for special projects
From: Sharon Villines (sharonsharonvillines.com)
Date: Mon, 28 Mar 2016 11:12:48 -0700 (PDT)
> On Mar 28, 2016, at 12:14 PM, Lynn Nadeau / Maraiah <welcome [at] 
> olympus.net> wrote:
> 
> Ann Zabaldo refers to funding special projects from "reserves". Here at 
> RoseWind Cohousing in Port Townsend WA our Reserves are specifically for 
> repair and replacement: eventual expenses for things like roofing, major 
> appliances etc.

Capital Replacement Funds are reserved for replacing those items that "protect 
the capital investment of owners”  These replacements are expected to replace 
at the standard that is current at the time of replacement, which is usually 
much better than the original. Our standard in the Bylaws is “First Class.” If 
you didn’t do this, the capital investment would be diminished because it 
didn’t keep up with the market.

This means that when you replace part of a piece of equipment covered in your 
capital reserve study as a replacement or major repair, you can use those 
funds. So while we didn’t have solar before, we did have electrical wires, 
etc., that provided electrical service to our common lighting. We used the 
funds saved for those items to upgrade the system to “current first class” 
standards. And will replace those funds with the savings from using solar 
panels.

The total amount we save based on our reserve study is based on the amounts we 
are expected to need at various points in time. That amount is based on the 
cost of equipment and labor to replace each item, plus construction inflation, 
minus expected interest on funds in the accounts (currently zero!). But we 
don’t have a limit for replacing each item. We watch what is calculated for 
each item but expend funds as needed, not limited to the amount used to 
calculate the total. Then we recalculate the balance periodically to adjust 
deposits up or down.

I think Rosewind funds for each item so when one item is funded, it is no 
longer included in the total needed. This would restrict your planning, I 
think. (This is old information so you may have changed.)

Sharon
----
Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org





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