1. VHMR Capital Reserve Study Update
T. Colle
J. Weaver
D. Weidner
January 23, 2014

2. Capital Reserve Study
Committee (T. Colle, J. Weaver, D. Weidner) formed to prepare Capital Reserve Study
Study methodology:
30 potential assets identified (9 later dropped - below “de minimus” cost)
Expected life and 2013 replacement cost estimated based on info from original suppliers or businesses with expertise
Assume inflation rate to predict future repair or replacement costs in projected replacement year
Project replacement costs and annual expenditures out to 2060 (all assets replaced at least once)
Option A – Linear Accrual
Calculate annual $ needed to reserve for replacement (linear accrual)
Aggregate individual assets to determine annual contribution required for the Capital Budget
Large annual capital reserve requirements inflation, inflation) and initial 2014 contribution of $25,000
Rejected Option A due to large reserve requirements
Option B – Cash Flow
Calculate projected expenditures in each year to keep reserve balance above $0
Initial 2014 contribution of $18,000 sufficient with initial Capital Reserve of $75,000
Recommend adoption of Cash Flow method as basis for funding Capital Reserve Account

3. Details of Capital Reserve Study
Assumed inflation rate:
3.0%
2014 $ added (cash flow method):
$17,981
Raise by inflation every year
2013 Replacement Value All Items
$296,109
Capital Reserve Funding Method:
Ind. Linear Accrual
Cash Flow
Year
Cash Reserve Needed
Cash Reserve Spent
Annual $ Need
Fund Balance
Annual Contr.
2006
$1,240 $0
2007
$5,618
$4,378
2008
$28,274
$22,656
2009
$50,930
2010
$76,057
$25,128
2011
$101,185
2012
$126,313
2013
$151,441
$75,000
2014
$176,568
$92,981
2015
$195,897
$6,365
$25,694
$105,136
$18,520
2016
$210,139
$12,020
$26,262
$112,192
$19,076
2017
$221,561
$15,194
$26,616
$116,646
$19,648
2018
$248,176
$136,884
$20,238
2019
$272,471
$2,388
$26,682
$155,341
$20,845
2020
$292,009
$7,379
$26,917
$169,432
$21,470
2021
$318,926
$191,546
$22,114
2022
$271,113
$78,298
$30,485
$136,026
$22,778
2023
$301,598
$159,487
$23,461
2024
$283,881
$49,832
$32,115
$133,819
$24,165
2025
$308,170
$8,555
$32,844
$150,155
$24,890
2026
$341,014
$175,791
$25,637
2027
$313,966
$62,167
$35,119
$140,030
$26,406
2028
$349,085
$167,227
$27,198
2029
$384,203
$195,241
$28,014
2030
$390,823
$29,751
$36,371
$194,344
$28,854
2031
$423,910
$3,405
$36,492
$220,659
$29,720
2032
$339,267
$125,918
$41,274
$125,353
$30,611
2033
$380,541
$156,883
$31,530
2034
$421,815
$189,359
$32,476
2035
$463,089
$222,809
$33,450
2036
$470,488
$35,525
$42,923
$221,737
$34,453
2037
$342,633
$177,056
$49,201
$80,168
$35,487
2038
$391,834
$116,720
$36,552
2039
$389,126
$53,915
$51,207
$100,453
$37,648
2040
$416,713
$24,434
$52,021
$114,797
$38,778
2041
$468,735
$154,738
$39,941
2042
$400,255
$125,626
$57,147
$70,251
$41,139
2043
$452,720
$4,855
$57,319
$107,770
$42,373
2044
$510,039
$151,414
$43,645
2045
$567,358
$196,368
$44,954
2046
$603,393
$22,545
$58,580
$220,126
$46,303
2047
$538,129
$128,673
$63,409
$139,145
$47,692
2048
$571,618
$30,952
$64,441
$157,315
$49,122
2049
$636,059
$207,911
$50,596
2050
$700,500
$260,025
$52,114
2051
$764,942
$313,702
$53,677
2052
$625,924
$209,052
$70,035
$159,938
$55,288
2053
$695,959
$216,884
$56,946
2054
$685,120
$83,997
$73,159
$191,541
$58,655
2055
$692,037
$69,214
$76,130
$182,741
$60,414
2056
$730,264
$39,210
$77,438
$205,759
$62,227
2057
$551,351
$269,852
$90,939
$64,094
2058
$642,290
$66,017
$66,016
2059
$733,229
$134,014
$67,997
2060
$824,168
$204,050
$70,037

4. Details of Capital Reserve Study