This year (2007) the current Board of Directors has not sent to unit owners the voting forms to waive building reserves. Is that because they are trying to avoid having buildings waive their reserves? No. I was informed by a member of the Board of Directors that the waiver was to have been included in the packet that was sent out to unit owners. It was not sent out to unit owners, yet. Perhaps there is another packet to be sent out, or supplemental mailing to be done that will include the waiver. Whatever the case, the law allows any building to waive reserves for the following year at any time.
The article below was written by Steve Frahm in the November 2006 issue of the TAJ newsletter. It is being included here to lend clarity to the current situation. [Prior to the December 2006 budget meeting, voting forms were sent out to unit owners so that they could vote on whether to accept or reject the building reserve budget that is proposed by the Board of Directors.]
The November 2006 article:
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Florida Statutes Chapter 718.112(1)(f)2. reads as follows:
“...the budget shall include reserve accounts for capital expenditures and deferred maintenance. These accounts shall include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost…
“The amount to be reserved shall be computed by means of a formula which is based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance.
“...reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves, and no such result is achieved or a quorum is not attained, the reserves as included in the budget shall go into effect.”
On December 12th (2006) the BOD will have a meeting at which unit owners’ votes will be counted regarding the reserves for their buildings. By law, failing to vote is the same as voting yes to significantly higher monthly maintenance payments in 2007. More information is included in the voting packet.
Steve Frahm
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As you can see from the 2006 article above, the budget meeting for the 2007 year was held in December, before the changes to monthly maintenance payments (including building reserves) were due for the following year. This year the Board seems to be running behind schedule a little bit by holding the the budget meeting (and apparently the building reserve vote) on January 7th, after the first payment for the year is actually due (the notice in the mailing said the first payment was due January 1st). However, the coupon for the first monthly payment in 2008 calls for payment of only the existing 2007 amount for the monthly maintenance fee. They have not required unit owners to pay for the new 2008 monthly maintenance amount with the building reserves added. They have properly chosen to wait until after the budget meeting to include the new 2008 amounts.
Anyone who has participated on the Board of Directors understands how difficult it is to get things done in a timely manner. The Board deserves our patience and support as long as they are working on our behalf to do things properly. I (for one) believe that this BOD is doing that very thing.
THE WISDOM OF BUILDING RESERVES
Finally, all unit owners should consider making some sort of contribution to their own building's reserves on a monthly basis. The Property Manager is going to place an emphasis on building maintenance in the coming year, I am told, which will be charged to each particular building's reserve funds. Rather than face a special assessment to pay for those maintenance expenses, it might be more painless to make monthly payments ahead of time.
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