Cohousing-L Mailing List: replacement reserves

[Don Arkin (shardon5]

Hi,  We have done our own reserves study at Sonora Cohousing in Tucson. 
Since our community is less than 4 years old it has yet to be tested.  We
based our calculations on standard practices in the HOA industry.  We
gleaned these practices from reviewing several professional reserve
studies done for HOA's where friends of ours lived.  
        Our assumptions were that our reserve accounts would grow at a
rate to match the inflation rate of repairs and replacements.  We did not
budget for items that would last at least 30 years from the date of the
study.  One assumption made by the professionals was that replacement of
buildings, typically more than 50 years away, were beyond the "useful
life of the project" and could thus be ignored entirely.  
        We then made a list of common buildings and facilities and
equipment, and estimated when they would need replacement or repair and
how much that would cost.  We divided the cost by the number of years
until the need, and added up all those results to get a yearly reserves
budget.
        Don
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