Re: Reserves funding levels/percentages? | <– Date –> <– Thread –> |
From: Sharon Villines (sharon![]() |
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Date: Wed, 7 May 2025 10:35:00 -0700 (PDT) |
> On May 7, 2025, at 10:43 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? It might be one very small mention in the beginning of the report before the schedule of payments. That schedule is based on an assumption — how well funded will you be if you follow that schedule. In addition to the explanation from Kelly Bachman, from reading the ReserveStudy.com <http://reservestudy.com/> website and other sources for many years. The advice for determining the appropriate percentage interest for a particular community is based on a variety of things. Factors that communities — not just cohousing — have used: 1. The available wealth of members of the community. Communities of people with high levels of personal wealth may fund their Reserves at a lower level than communitiies of people who do not have personal reserves, who live paycheck to paycheck. The more fully funded your reserves are, the greater your ability to be sustainable with a wider range of income levels. People with personal wealth can more easily cover any emergencies if the Reserves are too low when a hurricane destroys the new roof. Most cohousing communities, particularly for the first 10 years, have significant numbers of people who are already stretched thin and can’t produce thousands of dollars when the Reserves are inadequate. Wealthy and older financially stronger community members may prefer to maintain low reserves and risk special assessments becuase they can earn more interest than the conservative sources Reserves are invested in. 2. Is the operating budget large enough to cover some unexpected expenses? A large community, for example, is more likely to have cushions built in that can be used for emergencies. Items that are optional and easily delayed or other reserves that can be used. A 10-20% contingency fund, for example, that can be used for more things than the Capital Reserve fund. 3. The level of funding that has been shown to be adequate without endangering capital values by delaying maintenance or replacement. ReserveStudy.com <http://reservestudy.com/> does studies for so many communities that it maiintains data based on real life experiences that are predictive of sustainabilty when funded at a lower rate than 100%. The number I remember is that at 40% funded communities are in trouble. They are most likely to be delaying maintenance and replacement that is necessary for long terms sustainabilty. 4. From entirely different economic situations, having adequate reserves, “cash on hand”, is what allows investors not only to protect themselves from emergencies but to take advantage of opportunities that might arise unexpectedly. For example, when it became optimal to install solar panels we were able to do it by borrowing partly from our almost 20-year-old Reserves. 5. Local dangers and opportunities. In hurricane, tornado, flood, sink hole, or termite danger or not. Using elbow grease to replace sidewalks with pervious pavers over time. Sharon ---- Sharon Villines Takoma Village Cohousing, Washington DC http://www.takomavillage.org
- Re: Reserves funding levels/percentages?, (continued)
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Re: Reserves funding levels/percentages? Kelly Bachman, May 7 2025
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Re: Reserves funding levels/percentages? Brian Bartholomew, May 10 2025
- Re: Reserves funding levels/percentages? Kelly Bachman, May 10 2025
- Re: Reserves funding levels/percentages? Brian Bartholomew, May 10 2025
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Re: Reserves funding levels/percentages? Brian Bartholomew, May 10 2025
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Re: Reserves funding levels/percentages? Kelly Bachman, May 7 2025
- Re: Reserves funding levels/percentages? Sharon Villines, May 7 2025
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