Cohousing-L Mailing List: Re: Reserves funding levels/percentages?

[Kelly Bachman (happyvalleykelly]

Percent Funded. It’s an indicator of the risk of special assessments.

Reservestudy.com has lots of information, articles, free webinars, and a
book that can help you understand reserves. From their website, percent
funded is a ratio of reserves balance divided by the fully funded balance.
Fully funded balance is the computed value of the deterioration of the
association’s common assets. It is determined by multiplying the fractional
age of each component by its current estimated replacement cost, then
summing them together.

For example, if a furnace costs $10,000 and is expected to last 10 years,
the fully funded community will be setting aside $1,000 a year so that when
the furnace is ready to be replaced, they have the funds available to do
so. A community that sets aside only $300 a year for furnace replacement is
30% funded.

Kelly
Bellingham Cohousing

On Wed, May 7, 2025 at 7:48 AM Gary Hellenga <gary.hellenga [at] gmail.com>
wrote:

> In early April, there were a number of postings related to "Rate of
> Increase in HOA dues".  Several responses discussed their community's
> policy to achieve 70%, or 30%, of funding; 70 or 30 percent of what?  Where
> can I find more on this idea of hitting a specified percentage of funding?
> We had our initial Reserves Study completed a couple years ago and are
> funding our Reserves in accordance with their recommended contribution plan
> that keeps our balance above a given threshold value over the next 30
> years, but the report does not mention anything that seems to match this
> concept of being "X% funded".  Any references to point us to?
>
> Gary Hellenga
> Bozeman Cohousing
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