Re: HOA Dues Increase & Reserves
From: R Philip Dowds (
Date: Sat, 6 Jul 2019 02:29:52 -0700 (PDT)
Sorry. but I’m not sure I’m persuaded that the typical homebuyer is especially 
interested in, or capable of analyzing, reserve funding.  Nor do I have reason 
to suspect that the average buyer of a cohousing unit is more sophisticated 
than the average buyer of an ordinary condo, or a single family home.  I do 
believe that if a property looks “shabby” (e.g., an obviously superannuated 
roof, or peeling paint job), it will command less resale value than if it looks 
spiffy and “well maintained”.  Purchasers of “shabby" properties will probably 
exercise greater financial scrutiny or caution than they would for a property 
that “looks good”.

None of this, however, is directly related to saving ahead for major capital 
replacement projects.  Consider the ever-popular single family home and its 
owner.  A minority of American households has the financial flexibility AND the 
financial management skills to save ahead for the new roof and the next paint 
job.  But to pay for these big hits, many others must rely on either (a) 
re-financing the first mortgage, or (b) supplemental borrowing (e.g., the home 
equity loan, which is the modern euphemism for the previously much-stigmatized 
“second mortgage”).  Absent these versions of the “special assessment”, 
households often learn to live with the disappointments of deferred 
maintenance.  Foreclosures and forced sales sometimes fall upon households that 
simply never factored in the correct costs of operations and maintenance over 
time.  (Good lenders will set limits that help keep novice borrowers from 
getting in over their heads …)

So what’s different for cohousing?  Organized as condos or HOAs, the avenues of 
special assessment and bank borrowing are often blockaded by internal politics 
and/or reluctant  lenders,  But saving ahead can be unpopular because it 
implies, to some, that the occupants of today are subsidizing the occupants of 
tomorrow.  In general, despite its incredible technical aptitudes, the human 
species is not so hot at making, and adhering to, plans for fifty years ahead.  
(Which is why our civil infrastructure crumbles away.)

None of which is to say, Don’t bother with a “reserve plan”.  Just recognize 
that the classical “fully funded” reserve plan — one that anticipates total 
replacement of a physically and functionally obsolete structure after five 
decades plus or minus — is stunningly costly.  Partial plans focussing on the 
next ten or twenty years, and offering a funding strategy that covers just the 
“major” or critical systems, can look and feel more realistic. even to the 
solvent and future-oriented.

Philip Dowds
Cornerstone Village Cohousing
Cambridge, MA

mobile: 617.460.4549
email:   rpdowds [at]

> On Jul 5, 2019, at 4:05 PM, Sharon Villines via Cohousing-L <cohousing-l [at] 
>> wrote:
> This is a link to the California Reserve Study Guide which is very well 
> written and explains the what and why of reserve studies.
> I have not a clue why they don’t recommend a minimum funding. I suspect 
> because they think then everyone would do the minimum and no more. But if you 
> have a study, at least you know how far behind you are. 
> The Association Reserves website that does studies in many states has a 
> variety of publications plus a DYI reserve study program. They also have a 
> sample study online.
> They assess the risk of having a special assessment at 51% there is no 
> reserve fund. If 40% funded, 10% risk, and 80% funded, -1% risk. 70-100% 
> funded is strong. 
> The study establishes a base for the projected costs of replacing everything 
> you own for the next 30-50 years, so this means 70-100% of the total 
> projected cost. If you are not adequately funded, that will affect property 
> values as well. People moving in will have to make up the deficit so the 
> condo is worth less.
> Association Reserves also notes that when funds go below 40%, regular 
> maintenance tends to be seriously deferred, costing more later.
> Sharon
> ----
> Sharon Villines
> Takoma Village Cohousing, Washington DC
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