• MaintenanceBudget

This page is intended to give a description of how our maintenance spending works, how much money we have, what budgets it's separated into, etc.

This system was approved in July 2021.

Basics

When we pay our rent to NASCO Properties, they hold on to a part of our rent and give it back to us later as our maintenance budget. This is in order to prevent CHEA from having a rough year and entering a maintenance 'death spiral' of cutting maintenance budgets to deal with financial shortfalls, leading to worse living conditions and more finance shortfalls. NP's policies are meant to make sure a co-op having a rough financial year can still access its full maintenance budget to prevent this problem.

Background

The maintenance money supplied by NASCO Properties (NP) is divided into two pots: minor maintenance and major maintenance. Major maintenance money is generally for larger, more planned projects, and rolls over to your next budget at the end of the year. Minor maintenance money does not roll over and is "lost" (fear not - it stays within the NASCO co-op system). So a good maintenance allocation proposal should attempt to use minor maintenance money first, then major maintenance since a failure to use all major maintenance money by the end of the year will not cause loss of that money to CHEA.

Fiscal Year

• NASCO Properties' fiscal year is from May 1st to April 30th.
• Minor maintenance budget money should be spent by April 30th, or it will be placed in the maintenance reserves.
• Major maintenance budget money rolls over into our budget for the next year.

(See: FinancialCalendar)

For our COVID era budgets, the NASCO board approved everything rolling over because bringing in contractors became more complicated, and it is expected that would likely be the case this spring as well (as of 02/2022)

Maintenance Reserve

There is another category of maintenance funding in the Maintenance Reserve - that reserve is available to all of the co-ops. These reserves kick in once a co-op has exhausted local maintenance budgets and has a project that's mandatory (legally required, a health and safety hazard, etc), which is to recognize that these reserves need to be there for every co-op's houses when things come up.

(For example, in 2005, NASCO Properties paid $15,000 to replace Sasona's roof).

What Counts as Maintenance Spending?

If you have a question about whether something will be reimbursed, contact NASCO Properties - our current contact person is Daniel Miller: daniel@nasco.coop.

3.2.1.3. Subsequent Major Maintenance: (3/03)

NASCO’s Properties’ Standing Rules section 3.2.1.3.1

• 3.2.1.3.1. In Jointly-Managed co-ops: Major maintenance includes all non-rehab maintenance expenditures over $1,000 for repair or replacement. Major maintenance is approved by the NASCO Properties board, in the form of a capital budget for each leasing co-op, each year. Emergency major maintenance may be approved by NASCO staff. Staff shall fully manage any major maintenance project (emergency or scheduled). This management includes: making expenditures, contractor hiring, and receiving and using member labor for the project. Staff time and expense would be billed according to the prevailing billing policies. Staff may, at its discretion, allow the co-op to manage parts of major maintenance projects.

3.2.1.4 Minor Maintenance (3/03)

NASCO’s Properties’ Standing Rules section 3.2.1.4

• 3.2.1.4.1. Minor Maintenance includes all repair and replacement expenditures under $1,000 and within the minor maintenance budget for the house. Tasks that may require skilled contractors shall be managed by the co-op unless the co-op requests the staff to do so. Master-Leased co-ops shall perform minor maintenance at their own discretion, and without management assistance from NASCO Properties.
• 3.2.1.4.2. If staff feels that a minor maintenance item is a particularly high priority, it may require that a co-op repair it. Staff may only do so if the minor maintenance item is required by law, threatens revenue, safety or may jeopardize lender relations.

3.2.2 Maintenance of Property and Reporting

NASCO’s Properties’ Standing Rules section 3.2.2

• 3.2.2 Maintenance of property and reporting (11/91, 3/03, 11/08). For reasons of economics and the image of group equity housing cooperatives, all NASCO Properties owned properties shall be kept in a sanitary, clean, and well-maintained condition.
• 3.2.2.1. Standard of upkeep. NASCO Properties projects shall keep their properties in a sanitary and clean condition.
• 3.2.2.2. Timely maintenance. Staff and NASCO Properties projects shall provide for the timely performance and completion of all maintenance with respect to NASCO Properties-owned properties.
• 3.2.2.2.1 Monthly reporting. (11/08) All NASCO Properties projects shall operate under management agreements which provide for the monthly reporting of maintenance needed and performed, and shall receive monthly requests for information from each location for the coordination of staff efforts and for reporting to the NP board.
• 3.2.2.2.2 No reimbursement without reports. NASCO Properties shall not reimburse projects for appropriate maintenance expenditures in the absence of such reports

3.2.3 Definition of Maintenance

NASCO’s Properties’ Standing Rules section 3.2.3

• 3.2.3. Definition of Maintenance (6/14) The use of NASCO Properties maintenance funds shall be limited to projects directly related to the upkeep of property. This includes any structural or mechanical systems related to the habitability of the property as well as any expenses required for the health and safety of residents. This also includes any projects required for code compliance, requirements set out by lenders to NP, or requirements to continue property or liability insurance coverage.
• 3.2.3.1 Maintenance funds may be used for materials and equipment related to maintenance, including tools that the coop may use for other projects in the future.
• 3.2.3.2 Maintenance funds may be used for labor or service fees paid to a third party. If labor or service fees are being paid to a member of the NP board, the cooperative, or the cooperative's board, this payment must comply with policy 1.3.1.5 (Conflicts of Interest), and be approved by the NP General Manager.
• 3.2.3.3 In the event of a planned Labor Holiday where coop members are contributing their time to a larger set of goals, it is reasonable that maintenance funds may be used to make modest food purchases. The goal of this policy is not to use maintenance funding for food, but to allow the coop to focus on maintenance projects, and thereby save maintenance funding over the amount that would have been paid to outside labor.

3.2.4 Amenities

NASCO’s Properties’ Standing Rules section 3.2.4

• 3.2.4 Amenities (6/14) NASCO Properties maintenance funds (including capital improvements, minor maintenance, or maintenance reserve funds) shall not be used for amenities which cannot otherwise be shown to be covered under policy 3.2.3. NP Leasing coops are encouraged to create their own amenities budgets for social events, recreational expenses, or aesthetic improvements. Amenities include (but are not limited to):
• 3.2.4.1 Kitchen appliances or equipment beyond ovens, cooking surfaces, prep surfaces, plumbing, and refrigeration
• 3.2.4.2 Any gardening or landscaping not directly required to soil drainage, building foundations, or health/safety/code issues
• 3.2.4.3 Recreational equipment, including audio/video equipment, and sports or game equipment
• 3.2.4.4 Computer or networking equipment
• 3.2.4.5 Furniture and decorations

Budget Split

• 39.5% for Sasona
• 60.5% for La Reunion

Current Maintenance Split

• 70% of the money is simply divided on the basis of resident member population
• 30% of the money is reserved for emergencies or planned projects, split in half

How to Calculate the Maintenance Budget

You will need the following pieces of information:

• NASCO Properties’ variance statements

• Minor/Major maintenance budget for the year - can be found on the “Activity” tab of the most recent variance statement (line #6481 - Sasona Capital Improve and line # 6482 - La Reunion Cap Imp)

• Remaining Major money from the previous year (if any) - can be found on the “Variance” tab of the most recent variance statement (under “NASCO Properties Maintenance and Reserve Funds”, or search for “CHEA”)

• Previous reimbursement requests from that year (if any) - can be determined from contacting NASCO Properties, the Treasurer, or the Maintenance Coordinator

• How much money has been spent that has not been sent in for reimbursement (Minor/Major) - can be determined from contacting the Treasurer or the Maintenance Coordinator or by looking at Mint.com

• How much money is there in receipts for reimbursement (paid for by members) - can be determined from contacting the Treasurer or the Maintenance Coordinator

Here is a PDF explaining how to log in to Mint.com and how to use it to extract spreadsheets: Mint.com login - Exporting spreadsheets

You can extract spreadsheets of all the spending from the Maintenance account or by searching for Maintenance expenses in the Primary account. That way Mint does all the data entry for you.

2021-2022 Fiscal Year Budget for Sasona

NASCO Properties Financial Reports

Dropbox link

All variance statements can be found here.

NASCO Properties Lease

ARTICLE 1 Demise, Description, Use, Term and Rent (2013)

In subsequent years, beginning on the first day of every May, the rent shall be calculated as the sum of three amounts: (1) operating costs related to the property, which shall be defined as the sum of debt, property and liability insurance, property taxes, all of which shall be the responsibility of the lessor; “(2) an amount for minor and major maintenance and maintenance reserves, the total of which shall be set by the NASCO Properties Board of Directors, but which must be at least seventeen percent (17%) of the above amounts in item 1 and less than 25% of those items, unless a higher amount is arrived at by mutual consent;’’’ and (3) an amount for overhead and reserves, which shall be set by the NASCO Properties Board of Directors, but which may be no more than 15% of the gross lease charges. Other amounts may be added by mutual agreement.

This is how the lease is split, generally, this is the number used when dividing things between the houses. It is based on population. The lease from NP is one lease, it is paid accordingly.

More Information

NP approves maintenance funding levels for all the co-ops in each year's budget, and does look at a few things in that process: known projects brought up either by staff or local members that need funding, the percentage of the lease payments going to maintenance, and whether previous years' budgets were enough to cover the co-op's needs.

That money allocated in the budget gets earmarked for use by each co-op, and the amount remaining in the year's allocation gets tracked in the monthly financial statements that NP sends out, and NP counts those earmarked maintenance amounts against our bank balances - so if there's $500k in the bank and $200k in unspent maintenance budgets, NP is going to assume that the other $200k is going to be spent so that it's available when it's needed. And that these projects can be fronted by the co-op and reimbursed by NP, or NP can pay directly when that makes the most sense (like with very large invoices that would cause CHEA a cashflow issue).

For CHEA we do have much more detailed Property Condition Assessments that include estimates of when the major systems at the houses will need to be replaced and some guesses about the likely cost of these projects when they come due. We also have internal depreciation schedules that track when the major systems were replaced, which can be helpful in estimating whether a minor issue is a small repair or the first sign that a major system is failing.

Maintenance Coordinator Job Description

Communicate with treasurer and bookkeeper when larger projects requiring significant funds are being planned. Keep track of how much money is left in the maintenance fund, and budget accordingly. Spend money frugally so that there will be some Minor Maintenance money left near the end of the fiscal year. Be aware of and follow NASCO Properties' policies on spending Major Maintenance money; communicate with NASCO Properties before spending Major Maintenance money. JobDescriptions#MC

Receipts

When we spend money on maintenance, the Maintenance Coordinator gives the receipts to the Treasurer, the Treasurer sends the receipt to NP, and NP mails us a reimbursement check. The best practice is to coordinate with the Treasurer and to send out reimbursements requests along with rent/lease payments. This will expedite the refund and allow the Treasurer and Bookkeeper to keep a balanced budget.

(Update as of 07/18/2022) The process listed above is the way we have done it in the past, but now we use an electronic folder in the Google Drive for the receipts and a Google Sheet for the total reimbursement request. The Maintenance Coordinator submits the reimbursement request regularly to NASCO for approval and CCs the Sasona Treasurer, the CHEA Treasurer, and the Operations Manager. Best practice is to send the reimbursement request monthly.

Maintenance Reimbursement Spreadsheet