Cohousing-L Mailing List: Re: Association Reserves questions

[Mac Thomson (mac]

On May 17, 2006, Pat Little wrote:

>  - How do we prepare the members for the big increase?

Don't know.  We've never had to do that -- so far anyway.  :-)  Thank  
goodness.


> It would help us to be able to show what percentage of the
> annual budget other Cohousing communities pay for reserves. If you're
> willing to provide this information, please also include number of  
> units,
> age of project, whether urban or rural, and if you too are catching  
> up with
> previously under-funded reserves.

We automatically put $6K plus our HOA 'profits' (average about $5K  
per year) into our reserve budget every year.  Our total HOA budget  
is about $33K per year (not including common meals).  We are rural,  
24 homes, moved in in 2000, and are not catching up with previously  
under-funded reserves.


>  - We have a long list of potential reserves components, around 60.  
> Should
> we itemize the smaller things in our reserves study, which requires  
> effort
> to estimate life and replacement costs for each of them, or should we
> instead lump them in a 'general' reserves category to cover the
> (unspecified) small stuff (and gradually increase the funding over  
> time to
> match inflation)? Or should we just handle this via 'general  
> maintenance' in
> our annual operating budget?

Our reserves only cover items that cost over $500.  Anything smaller  
gets paid for from the teams' annual operating budgets or from our  
annual contingency budget controlled by our Steering team.  We did  
estimate useful life and replacement cost for all items specifically  
covered by reserves in order to figure out what our annual  
contribution needs to be.  An important part of that calculation was  
accounting for future earnings on our reserves balance.  That  
significantly reduces annual reserves contribution amount.  Have you  
taken future earnings into consideration?



> And a more technical bookkeeping question - we are wondering how to  
> track
> the reserves funds in our bookkeeping system. Most of the accumulated
> reserves will be in a separate savings account, requiring 2  
> signatures for
> withdrawals, but collections from the current year will be in the  
> checking
> account for some time before they get transferred to savings. We'd  
> like to
> have a way to show, in the books, the total accumulated reserves  
> regardless
> of which account they are in. We use QuickBooks. Does anyone have  
> experience
> with this, and could tell us what you did?

We separately account for lots of different kinds of reserves and  
funds, but we invest all our money in a commingled fashion.  I think  
you'll be missing out on a lot of income earning potential if you  
invest your reserve funds in a savings account.  I do all the  
reserves tracking on an Excel spreadsheet and then feed the info to  
our bookkeeping folks who use QuickBooks.  (I was a CPA in previous  
life.)

I'd be to share any of our reserves spreadsheets or other material  
with you.

Cheers,
Mac


--
Mac Thomson

Heartwood Cohousing
Southwest Colorado
http://www.heartwoodcohousing.com


"I don't know the key to success, but the key to failure is trying to  
please everybody."
     - Bill Cosby
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