Re: Reserve funding levels
From: David Heimann (heimanntheworld.com)
Date: Mon, 22 May 2017 07:44:36 -0700 (PDT)

Hello,

During our final year of development we put together an estimated list of reserves needs, which went into the determination of our initial budget and condo fees, which in turn set the tone for subsequent budgets and fees. In the first year as a community we hired a reserves firm to take our initial list and develop a curated full list of reserves items. We now update this list every three years.

As to how much to put into the annual budget for reserves expenses, we have a spreadsheet going out over the next 30 years incorporating the reserves schedule. The spreadsheet has an assumed inflation rate, investment yield rate, and most importantly a reserves-expenses increase rate. The reserves-expenses increase rate is set so that the spreadsheet never shows a negative reserves balance over its 30-year horizon. In our annual budget, the amount we set aside to add to the reserves fund is the previous year's amount increased by the reserves-expenses increase rate. For example, if one year's reserve budget item is $50,000 and the reserves-expenses increase rate is 3%, the next year's reserve budget item will be $51,500. In that way, we feel as confident as one can be about the future that our reserves will be fully funded over the next 30 years.

Regards,
David Heimann
Jamaica Plain (Boston) Cohousing


Date: Fri, 19 May 2017 16:48:57 -0700
From: Terri Hupfer <terri [at] phch.org>
To: cohousing-l [at] cohousing.org
Subject: [C-L]_ Reserve funding levels
Message-ID: <0FDB3DAF-255A-4B79-ABE8-69CD08800835 [at] phch.org>
Content-Type: text/plain;       charset=us-ascii

Our community, Pleasant Hill

Cohousing, is located in the Bay Area of California. Ev n though state regulations in CA require a minimum of 10% fully funded for a reserve account we have always kept ours significantly higher. I would love to hear from other communities what their minimum reserve percentages are, particularly those located in CA or in urban areas such as D.C. Or Boston that might have similar costs for replacement.

Thanks,
Terri Hupfer
Pleasant Hill Cohousing


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