Policy Example: Replacement Reserves

    1. Replacement Reserves is a fixed amount included in every year’s budget. Replacement Reserves are set aside, usually in a separate account, and build up year by year. Replacement reserves are spent whenever some big ticket item (like the roof) needs to replaced. This is how you figure out how much to put into replacement reserves: You make a list of all the items you want to include. Figure out their life expectancy (5, 10, 15 years?). Then how much it would cost to replace that item. If you divide the cost by the life expectancy then you know how much to set aside for that item each year so when it is due for replacement you have the money saved for it. (Unofficial description)
    2. Replacement Reserves Spending Policy: (date?)
      1. Responsible committee submits proposal to Finance Committee to replace item and notifies the community.
      2. Finance Committee approves or refers to General Meeting. The Finance Committee will approve if:
        1. Item is on Replacement Reserve budget
        2. the expected expense is judged to be reasonable
        3. the community has adequate replacement reserves
        4. there seem to be no issues that warrant community discussion/decision