Cohousing-L Mailing List: Re: Large Increase in Capital Reserve requirements (Chris Hansen)

[Sharon Villines (sharon]

On Jul 9, 2024, at 7:25 AM, Alan O'Hashi via Cohousing-L <cohousing-l [at] 
cohousing.org> wrote:
> 
> A generally accepted number is 70 percent. Say the total assessment is $32000 
> per year, which is $1000 per household. Seventy percent is $700. The burden 
> per unit is $58/month. Some will be higher or lower depending on house size.

A foundational question is how much is included in your list of reserve items. 
One of our studies was done by an architect who included every bolt and pipe in 
the building in bulk numbers. Another study only included the large obvious 
items and left out many things that we would want rserves to pay for. 

Another consideration is how large your operating budget is. Most reserve 
studies include items costing more than a set amount. This avoids the number of 
withdrawals and allows the funds to be invested for longer terms at higher 
interest rates. The amount is determined by how much you feel you can spend 
from the operating budget should anything need to be replaced.

We began with items costing more than $500 but we also had a $10,000 emergency 
fund. It would have been difficult the first 5 years to suddenly come up with 
$500 extra. Over time our operating budget became much larger and the emergency 
fund disappeared. By then it was much easier to move things around to over a 
$500 unexpected expense. 

Now our annual budget is $300,000+ and we have raised the limit to $1,000. And 
after half a dozen studies we have reached an equilibrium on the items that are 
included. It's fairly comprehensive.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org