Cohousing-L Mailing List: Re: Annual budget increases & capital improvements

[R Philip Dowds (rpdowds]

Peter —

Phil Dowds from Cornerstone in Cambrige, MA.  (Perhaps we met during the Green 
Haven Sociocracy symposium.)

Your community expenses will divide, more or less, into three categories ...
NECESSARY / INESCAPABLE.  You have to pay for property insurance, property 
taxes, public utilities, etc.  Maybe you can bargain for better terms ...but 
very few cohos would go without some kind of insurance, and ducking your 
municipal taxes and fees is not an an option.
TRADITIONAL:  The history and values of your community establish traditional 
budget components.  For instance, do you usually rely on a management company 
and outside auditor for keeping your books squared aware?  You are not 
OBLIGATED to do this, but you may have a history of CHOOSING to do this.  In 
general, your budget traditions need not be re-debated every year.
SPECIFIC, INTENTIONAL.  We live in intentional community; what do we intend?  
Do we want to add a sauna or a movie room to our Common House?  Is it time to 
buy new dining room furniture?  Should we pay more for a day care room and 
child care support, such that our parenting households are liberated for more 
participation?  Should we purchase a second tractor?  I sure don't have the 
answers, but I will note these kinds of questions are important to the annual 
budgeting process.

For the necessary and traditional, we (our Managing Board) investigates each 
line item one by one; we do not rely on a hypothetical inflation factor.

My advice would be:  During your budget cycle, try to push onto the sidelines 
the necessary and traditional, and save your energy for good debates about the 
intentional.

At Cornerstone, we've pushed our repair / replacement budgeting into a five 
year cycle, such that our annual assessments are pre-consensed for five years.  
Accordingly, in most years, we do not re-discuss and re-consense repair / 
replacement assessments.  So far, this has worked well.  The second five year 
cycle will need consensus in 2013,

Cornerstone is more or less acclimated to the idea that we must pay money to 
maintain that which have.  But, is it ever appropriate to buy anything new and 
different?  Thus far, we've not committed to any kind of CI (Capital 
Improvement account or assessment) — and all purchases of something new and 
different are regarded with great wariness.

Thanks for raising topics of broad significance for coho.

R Philip Dowds AIA
Cornerstone Cohousing
175 Harvey Street, Unit 5
Cambridge, MA 02140
617.354.6094

On Feb 17, 2012, at 4:46 PM, Peter Orbeton wrote:

> 
> Nubanusit Neighborhood & Farm is a relatively young cohousing community,
> and is looking to tweak the budget process. We've heard first-hand from
> residents of other coho communities who have passed through about less
> meeting-intensive processes than we have now, pre-determined annual budget
> increases (tied to the CPI), and capital improvement funding not
> necessarily earmarked to a project. The number of meetings (and time) spent
> with our current process is probably, we've learned, directly related to
> our newness. And because we still have development projects, we've
> experienced annual budget increases that are not sustainable.
> 
> As the Treasurer, I've volunteered to gather information on other
> communities, and have plumbed the C-L archives. While suggestions on how to
> achieve a short and painless budget process are certainly welcome, I'd like
> to hear how annual budget increases are determined so we can model ours for
> more predictability. Do you base it on the Consumer Price Index, establish
> a fixed dollar figure ceiling annually, or by some other means?
> 
> We have operating reserves and a reserve fund (replacement/replenishment),
> and would like to also establish a capital improvement (CI) 'account.' Our
> budgets to date have been line-item specific, and up until 2012, were for
> the most part not funding multi-year projects. We've heard of other
> communities with CI accounts that are tapped when a team/committee brings a
> proposal forward, and are funded annually based on a pre-determined amount.
> So, my questions on this topic are do you have a CI account, how is that
> account funded, what is the process for withdrawing from it.
> 
> I'll take responses directly if you would prefer. Based on the responses, I
> may post a summary as well.
> 
> Thanks in advance.
> 
> Regards,
> Peter Orbeton
> Treasurer, Nubanusit Neighborhood & Farm
> http://www.peterboroughcohousing.org
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