Cohousing-L Mailing List: Re: Capital improvements

[R.P. Aditya (aditya]

Hi,

On Wed, Sep 04, 2013 at 09:41:30AM -0400, David Entin wrote:
> We are wondering how cohousing communities finance capital improvements
> beyond those covered by replacement reserves.   Examples might be to build a
> new play structure for children (swings, slides, etc.), or a shed for
> bicycles, or major landscaping, or improvements to the Common House.
> Examples and responses would be appreciated.

That's an excellent question and one that has been on my (and our
community's) mind as well recently as we approach budget season!

The current, imperfect, way we approach this at GO is:

- if it is a "nice to have" item, for example a Common House kitchen
  remodel, we save up for it over multiple years through a lineitem in
  our operating budget -- what is important is to cap the amount and set
  a timeline, which we haven't done consistently!

- if it is an income generating item or expense saving item, then we
  borrow money from our replacement reserve fund as a loan and pay it
  back with interest out of our operating budget, for example a new
  water-only (no sewer) meter and sprinkler system for our community
  vegetable garden, or our soon to be installed Solar PV system for our
  Common House. Of course, if you borrow money from the reserves you
  have to be careful about cash-flow and paying taxes on the interest
  income...

- donations! we had a lineitem in our replacement reserves for "Common
  House exercise equipment" which had $1500 in it, but the elliptical
  trainer we wanted was $2000, so households that really wanted an
  elliptical contributed the $500 remainder.

I'm eager to hear other ideas!

-- 
Adi
Great Oak Cohousing
Ann Arbor, MI, USA
http://www.gocoho.org