Approved by the Board of Directors on May 1, 1986
Approved by the General Membership on May 20, 1986
Objective
The objective of the Reserve Policy is to provide guidelines in creating/establishing, funding, managing and expending funds to ensure the continued stability and long-term management of the co-op according to members' decisions.
Article 1: Definitions and Intent
1.1 Capital Replacement Reserve
Definition: As in the Operating Agreement with CMHC (56.1).
Intent: The intent of the Capital Replacement Reserve is to maintain the building at an acceptable standard and fulfill our requirements under the operating agreement with CMHC. As such, this reserve will be used to fund major capital items needed to keep the building at an acceptable standard.
1.2 Housing Stabilization Reserve
Definition: The Housing Charge Stabilization Reserve is a pool of funds set aside to minimize increases in housing charges.
Intent: The intent of the Housing charge Stabilization reserve is to reserve funds necessary to reduce the impact of housing charge increases as the Mortgage Interest Reduction Grant diminishes, recognizing that this assistance will be more necessary after the third year of operation.
1.3 Building Maintenance Reserve
Definition: The Building Maintenance reserve is a pool of funds set aside to finance capital expenditures used to keep the building maintained at an acceptable level
Intent: The intent of the Building Maintenance Reserve is to have a pool of funds set aside to maintain the building at an acceptable standard, which can be administered by the co-op independently of CMHC.
1.4 Special Housing Charge Assistance Reserve
Definition: The Special Housing Charge Assistance reserve is an additional pool of funds set aside as a back-up to the regular subsidy reserve.
Intent: The intent of the Special Assistance reserve is to provide housing charge funding assistance to members that did not qualify for subsidy reserve assistance or for whom subsidy reserve assistance was not immediately forthcoming. At present, this reserve is designated for housing charge assistance only.
1.5 Emergency Assistance Reserve
Definition: The Emergency Assistance reserve is a pool of funds to be made available to any and all members of Windmill Line Co-operative who may approach the Board for a loan, grant or purchase for use in times of emergency when all other social and community resources have been exhausted.
1.6 Building Improvements Reserve
Definition: The Building Improvements Reserve is a pool of funds set aside to assist the co-op to make improvements to the building by way of extraordinary capital expenditures.
Intent: The intent of the Building Improvements Reserve is to provide an additional source of funds (additional to the future capital replacement reserve) which would be used to make "first time" capital outlays, i.e. new "capital" additional for the building. An example, i.e. new "capital" additions for the building. An example of a building improvement would be adding air-conditioning to each of the common area hallways.
1.7 Recreational Amenities Reserve
Definition: The Recreational Amenities Reserve is a pool of funds set aside to pay for recreational improvements to the co-op.
Intent: The intent of the Recreational Amenities Reserve is to provide funds for the co-op to make recreational improvements to the co-op. An example of a recreational improvement would be the purchase of patio furniture for the rooftop deck, the purchase of an "overhead" projector.
1.8 Subsidy/Surplus Reserve
Definition: The Subsidy/Surplus Reserve is a pool created by funds not expended from the monthly subsidy grant from CMHC.
Intent: The intent of the Subsidy/Surplus Reserve is to cover fluctuating subsidy needs. Allocations from the monthly subsidy grant and the Subsidy/Surplus Reserve are made to members by the Subsidy Committee based on the need and eligibility of the member for housing charge assistance.
1.9 Paint Reserve
Definition: The Paint Reserve provides funds for the painting of unit interiors and common areas every three years.
Intent: As above
1.10 Administrative Replacement Reserve
Definition: The Administrative Replacement Reserve is a pool of funds set aside to provide for the replacement of office equipment as it wears out.
Intent: As above.
Article 2: Reserves’ Operating Procedures
2.1 Reserves Other Than Capital Replacement and Subsidy/Surplus
(a) Establishing the Reserves: The creation of a new reserve must be approved by a simple majority of the general membership at a members' meeting. The creation of a reserve must include establishing the definition and intent of the reserve, allocation of income generated by the reserve and procedures for funding the reserve, the approval of a process for disbursement of monies from the reserve.
(b) Dissolution of Existing Reserves: The dissolution of a reserve for any reason other than the disbursement of all its funds must be approved by a two-thirds majority of the members at a general members' meeting.
(c) Funding: All reserves must be funded by an allocation from the operating budget or capital budget, or an allocation from a year-end surplus or an allocation by way of an unscheduled funding contribution. Ail funding must be approved by the general membership by way of a simple majority at a general members' meeting.
(d) Interest Income Allocation: All interest income generated by a reserve is to be accumulated in that reserve (i.e. for the account of that reserve) unless otherwise specified by either the operating budget or capital budget, approved by a simple majority vote at a general members' meeting.
(e) Disbursements: Any disbursements (withdrawals) of funds from a reserve must be approved by a simple majority of the general membership at a members' meeting, as either part of the budget process or as an unscheduled approval of a request for a disbursement, or as unbudgeted or over budget expenditure disbursements, procedures for which are outlined in the co-op spending policy.
2.2 Capital Replacement Reserve
(a) Funding: The funding of the Capital Replacement Reserve is governed by the Operating Agreement (56.1) with CMHC. At the time of writing this policy the operating agreement necessitates that a minimum of $30,000 must be allocated annually from the operating budget until $300,000 has been accumulated. The operating budget is prepared annually, prior to the beginning of each fiscal year. The co-op has applied to CMHC for approval to increase the $30,000 minimum annual contribution to $60,000, until a minimum of $600,000 has been accumulated. In addition to the Operating Agreement funding requirement, the Capital Replacement reserve can be funded by allocations from a year-end surplus should one occur. Such an unscheduled funding contribution must be approved by the general members by Way of a majority vote at a general members' meeting.
(b) Interest Allocation: The operating agreement with CMHC necessitates that any interest earned on funds maintained in the capital replacement reserve must be for the account of (i.e. included in) the capital replacement reserve.
(c) Disbursements: Any disbursements (withdrawals) of funds from the capital replacement reserve must be approved by the general membership and the utilization of the funds must be consistent with the intent of the capital replacement reserve. In addition, all disbursements from this reserve must receive the prior written approval of CMHC.
2.3 Subsidy/Surplus Reserve
(a) Funding: The funding of the Subsidy/Surplus reserve is governed by the Operating Agreement (56.1) with CMHC. This reserve is to be funded by way of any unused portion of the monthly CMHC subsidy grant.
(b) Interest Allocation: The Operating Agreement with CMHC necessitates that any interest earned on funds maintained in the Subsidy/Surplus Reserve must be for the account of (i.e. included in) the reserve.
(c) Disbursements: Any disbursements (withdrawals) of funds from the Subsidy/Surplus Reserve must be administered by the Subsidy Committee working within the guidelines of the subsidy policy.