Re: Saving up for a capital expense
From: Ann Zabaldo (zabaldoearthlink.net)
Date: Thu, 5 Nov 2020 13:55:09 -0800 (PST)
Jerry is right in what he wrote.  Your reserve funds should cover capital 
expenditures.  Homeowners pay into the reserve funds every month through their 
HoA dues.

BUT … I perceive something else in your email:

> Our treasurer, who is experienced with budgets in business, says we can't 
> carry funds over from one year to the next (except for the reserve fund).

So, at TVC and probably a zillion other condos (we are organized as a Condo but 
this also applies to HoAs, coops and other multi-family developments) leftover 
funds are swept into a Members Equity fund.  This is specified in our by-laws.  
If a lawyer familiar w/ Multi family housing drew up your by laws they would 
have very likely included this in your documents.  Unused funds are not lost 
funds.     

The Members Equity fund is a little bit like a savings account.  When we have 
overspent our budget which has been RARE we can cover expenses via this fund.  
After 20 years we now have $80,000 in the fund so we are at the point of 
deciding what goes into Reserves, how much do we keep in the “savings account” 
and what other ways are there to distribute the funds e.g. back to members?  
The point is … you CAN carry over money from year to year in a fund like this.  
And … according to the companies who have done our reserve study every 5 years 
we have to have some cash in a fund to cover unexpected expenses that do not 
fall under reserves.

If your bookkeeper says you cannot carry over funds what does she suggests 
happens to the leftover funds?

Personally, I would like half the TVC Members Equity fund to build an 
underground swimming pool …  Maybe it would take all of it …  :-)

Best --

Ann Zabaldo
Takoma Village Cohousing
Washington, DC
Member, Board of Directors
Mid Atlantic Cohousing
Principal, Cohousing Collaborative, LLC
Falls Church, VA
202.546.4654

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and when we no longer know which way to go,
we have begun our real journey.
The mind that is not baffled is not employed.
The impeded stream is the one that sings.

–Wendell Berry, “Our Real Work”

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> On Nov 4, 2020, at 4:49 PM, Linda Hobbet <coho [at] lindahobbet.com> wrote:
> 
> Hi,
> 
> We are working on our first annual HOA budget. Our treasurer, who is 
> experienced with budgets in business, says we can't carry funds over from one 
> year to the next (except for the reserve fund). So how can we save up for a 
> capital improvement that is more expensive than we can collect in one year? 
> Is there a way other communities handle this?
> 
> Thank you,
> Linda
> 
> -- 
> VillageHearthCohousing.com
> 706-202-7278
> coho [at] lindahobbet.com
> 
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