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MagdaS
(Florida)
Posts:21
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| 05/31/2008 9:34 AM |
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Our deloper controlled HOA has no reserve funds nor, to my knowledge, a contingency fund. We are told the developer instead funds any shortfalls in the budget. According to what we saw in the 2007 Financials there is a surplus.
The developer will release the HOA when 90% of homes are sold.
The HOA owns most of the streets and rainwater retention ponds. Ponds are monitored according to financial statements.
My first question is : who owns the water/sewer pipes in our private community, the HOA or the Utility Company?
Some of these items will be 14 years old when we take over, some 12 years, some less. All depending on the progress of the build-out.
Second question is more imprtant: Can individual members of the HOA request a reserve study?
We do have a Residents Group of valuntary members that does have the money to pay for such a study. Is it legal for us to do so? We know it will tick-off the HOA but we are worried that in 4 years we will be left holding the bag.
MagdaS |
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SusanW1
(Michigan)
Posts:2176
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| 05/31/2008 4:57 PM |
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Who do you pay water and sewer to? THAT's who owns the pipes (at least to the curb; the conncetion to the house is another thing.)
Anyone can do a Reserve Fund study.(It just won't be "official")
Just all community-owned "assets" and their components, determine the initial cost, its current state of repair; get a "life expectancy" for it, and determine a replacement or repair cost for it. Then figure out what you need to save each year in order to replace it after its "life" is done.
There are samples on the web.(Google Reserve Fund example) The big challenge is to make sure that all the components are listed and logged in the report. It takes a lot of study and research to find out initial cost, life expentacny, and then replacement cost for each item. I have really over-simplified the process.
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GeraldT4
Posts:932
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| 06/01/2008 5:54 AM |
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| MagdaS - Anybody can do pretty much anything within reason. However, a trained licensed contractor or more ideally an engineering firm with expertise in performing Capital Reserve Replacement Analysis and Deficiency Studies is best. The cost of hire and developing the Scope of Work of study to be performed is usually that of the owner controlled Board. If the Developer is willing to kick in a buck or two for the study, fine but be wary of bias. The studies are intended to show flaws or potential flaws in construction in variance to building code, and prevent to long term risk to the Association as a whole. I strongly recommend you look into Reserve Fund Essentials Second Edition Fourth Printing by Graham D. Oliver (HOATalk Member, retired Board President, Reserve Fund Aficionado), and Jonathan H. Juffs Reserve Fund Specialist. It is for Board members, reserve fund specialists, property manager, unit-owners, accountants, lawyers, and builders. Read and learn what you're supposed to know and act first and than begin to act. |
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CarolC5
(Colorado)
Posts:3
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| 06/30/2008 4:17 PM |
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| Be careful in your wording on reserve fund. I am on a board that has a board member questioning the use of funds from our reserve account. We did a reserve study about 10 years ago, needs to be updated. We have funds in this account to cover replacements. But when that big ticket item breaks before it can be replaced, is it general fund or reserve fund? Majority of board says 'reserve'. |
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DonnaS
(Tennessee)
Posts:2833
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| 06/30/2008 7:33 PM |
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Magda,
Your association owns the water and sewer pipes within your community. along with your retention ponds, that is part of your infrastructure and is your financial responsibility. It is sad that it is taking this long for the buildout which has just aged all of the things that you will end up repairing and replacing.
YES, you can request a Reserve Study but I would get as many signatures as possible from the members before you present it to your Board. Absolutely DO NOT have any individual members pay for the study. That is not your job to do that. That is what you pay dues for. But get it(the study) done asap. Below, I posteed from Statute 720:303-(6) c. under BUDGETS.
(c) If the budget of the association does not provide for reserve accounts governed by this subsection and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided, each financial report for the preceding fiscal year required by subsection (7) shall contain the following statement in conspicuous type: THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO THE PROVISIONS OF SECTION 720.303(6), FLORIDA STATUTES, UPON THE APPROVAL OF NOT LESS THAN A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION.
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MagdaS
(Florida)
Posts:21
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| 07/01/2008 8:16 AM |
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Thank you all for your input. Sorry about the delay in answering but I was out of town.
We pay water and sewer charges to our county utility. Is that who is responsible for the maintenance amd upkeep?
As for the reserve funds we are ALL worried that there are none. Since the HOA is still controlled by the developer we have no idea how to go about getting that entity to set up a reserve.
They collect $500.00 from every home sale, new or resale, capital contribution. The account doesn't show much.
We are totally at sea here. Thanks again. |
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MagdaS
(Florida)
Posts:21
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| 07/01/2008 8:41 AM |
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Hello again. Thank you Donna, I missed your writ the first time around.
Since the developer still has the majority and will have for a long time
(400 x 3.6 versus our 1 for about 550) I guess we will just have to grin and bear it.
Yes, our financials do state about the reserve fund and that worries us all a
great deal.
Thanks again. Magda |
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