Get 6 months of free community web site hosting from Community123.com!
Saturday, February 04, 2012
HOA Websites by Community123.com (National Community Website Provider)
We built HOATalk and we'll build your community website for free!  Click here for information on a free trial website.
Community Associations Network (National HOA Reference Library)
News, articles and blogs about condos/HOA's
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Forums > Homeowner Association > HOA Discussions
Subject: TAX EXEMPT BONDS
Prev Next
You are not authorized to post a reply.
Author Messages
SusanK5
(Utah)

Posts:29
03/11/2010 8:34 AM  
Hello everyone...
Our Treasurer wants to invest our reserve funds in a tax exempt bond. Everything that I can find on this says that you have to commit the money for a long period of time and that there may be risk with the funds. Does anyone have information about that? What do you all do with your reserve funds?
Thanks
TimB4
(Virginia)

Posts:3229
03/11/2010 5:57 PM  
Susan,

The most we have done is laddered certificate of deposits.

Tim
DavidW5
(Virginia)

Posts:297
03/11/2010 6:26 PM  
Our HOA's written investment policy places safety of principal as the highest priority for our reserve funds. Unless a bond is held to maturity, there is always a risk to principal (e.g. if the general level of interest rates rises the price of the bond will fall). If you need to sell the bond when the price is down to pay for replacement of common property the association will lose money.

Beyond that consideration why would you be considering tax exempt bonds? The association only pays taxes on investment earnings so the tax burden is likely quite low. In that case the after tax yield on a tax free bond is going to be lower than on a comparable maturity taxable bond.

We invest reserves only in FDIC insured bank money market accounts, FDIC insured CD's or US Treasury Notes held to maturity.
RobertR1
(South Carolina)

Posts:5164
03/12/2010 12:41 AM  
Susan,
I don't know the answer personally, but I do know that Virginia's Hoa legislation seems pretty comprehensive matched up against any other that has surfaced here. Just an opinion of course and I don't know that the wording of the Virginia documents copy the SC condo requirements and Hoa practices else where, but it appears the Virginia route is the safest and the best choice. Our association tends to follow the CD route, but I am sure the Treasury Notes are a good choice also. Aside from the requirements in the documents, this issue could fall under the Board having obligation to follow good business practices demands.
You are not authorized to post a reply.
Forums > Homeowner Association > HOA Discussions > TAX EXEMPT BONDS


General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement