Cohousing-L Mailing List: Re: Investing reserves

[David L. Mandel (75407.2361]

This query is addressed to other veteran cohousing groups, plus any individuals
who might have some expertise and are willing to share it.

Now nearly 2.5 years up and running, our homeowners association is accumulating
significant sums that are meant to replace roofs in 20 years, to cite the most
extreme example, plus lots of other slightly less long-term stuff. So far it's
been in a regular money market account that yields fairly low return yet starts
causing a more and more hefty tax bill, since regular interest is non-exempt
income for an HOA and is taxed at a flat 30 percent rate by the IRS.

Therefore we're thinking about two things:
        1. Some more lucrative investments that are still safe enough so we can
be fulfilling our fiduciary duty to each other.
        2. Tax-exempt investments that will put us ahead at such a 30 percent
rate.

Ideas have included a tax-exempt money market account for liquid needs;
tax-exempt municipal bonds; mutual funds that invest in tax-exempt bonds of
various terms; unit investment trusts of such bonds. We've received information
on bond and money market funds in the Calvert and Citizens Trust families, in
which some of us already have investments.

We might even be willing to consider a more risky, potentially higher-yield
investment with a small portion of our funds if it 1) is tax-exempt; 2) uses the
money for purposes with very high social value, like maybe cohousing.

Please send any comments on these thoughts; and I'd especially like to hear from
other established communities that have come to some decisions on this topic.

You can reply to me directly or to the whole list if you think your
comment/experience is of general interest. Use your judgment.

Thanks.

David Mandel, Southside Park