An excuse has been defined as “the skin of a reason stuffed with a lie”. There are two Boardmember sentiments we hear most frequently expressed: “We can’t afford the Reserve Funding Plan” and “We’ll worry about that next year”. But no matter how many times a Boardmember may repeat these sentences, it doesn’t mean they’re true and it doesn’t mean they’re wise. After we look beneath the skin of these two reasons, it may surprise you how differently you feel about these excuses!
One of the primary business duties of community associations is maintaining and preserving property values of homes and the common property. To do this properly, associations must develop funding plans for future repair or replacement of major common area components, such as roofs, boilers, elevators, swimming pools, balconies, asphalt surfaces and decks.
An association has several funding options, including periodic assessments over the life of assets, special assessments at the time of replacement, borrowing funds when needed, a combination of the above or the most common method – and in many states the only lawful alternative: setting aside funds in a special category commonly called reserve funds.
As budget season approaches, many associations are focusing on their reserve stud-ies for two reasons only; one, it is required, either by state statutes or governing documents, and two, to make sure that the reserve assessment fits within the de-sired overall budget of the association.
In less than a year, the Venetia Country Club, an association in Largo, Fla., went from more than $350,000 in delinquencies–and near-collapse–to having reserves in the bank. In this week’s tip, we hear how board member Scott Simms helped turn it around with help from Tampa-based LM Funding.