Notices of Annual Budget and Reserves

The following are documents that were mailed out over the past month as notification of the annual budget and reserves meeting. Not all of these documents arrived to me at the same time, but I am posting them here all together for convenience. 

I have heard that some people have believed that they did not receive appropriate notice of the annual meeting. Most know that all Board of Director meetings that involve making financial decisions require a fourteen (14) day notice to the unit owners that will be directly affected by those decisions. I cannot speak for everyone, but I know that I got my notice appropriately early. I also know how serious the BOD takes their duty to provide adequate notice. I hope that any confusions and conflicts have been worked out. 

Annual Budget Meeting will be Tuesday Nov 13th

Letter From A Concerned Resident

The letter below was sent to the blog administrator after having been sent to the BOD. The author says that he has not received a response to his inquiry.

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With all due respect to the Board and finance committee who volunteered their time, why are we still having issues with the budget?

"Fully funded reserves" DOES NOT mean collecting all the funds in one year: it means determining the remaining useful life of the assets, how much is already in the bank, and how much is still left to collect. In 2009, the total amount to fully fund reserves was $25.33 per unit per month for the outstanding balance of $1.5 million, of which $103,000 was scheduled to be collected in 2009 to fully fund them that year. Based on the budget we received a few weeks back in the mail, the finance committee is using the same spreadsheets that were created several years ago and have in them the calculations for funding the association reserves.

I am unable to figure out how someone came up with $325 per unit per month, or $1.32 million, for 2011 ....we're not supposed to collect all of the funds in one year. And if an asset is already fully funded we don't have to fund it any further. State law I believe also requires the Board to re-evaluate the reserves every couple of years to correct the amounts and useful life - has this been done?

Your accountants - who may already be subject to disciplinary actions  for not transferring 2010 and prior common area and building reserve funds each month to a separate reserve account as required by law and which you were previously notified about  - should have corrected or advised you on this.

Please see the attached sheets from the proposed 2009 budget - specifically the Common Area Reserves worksheet that had the calculations from 2009.

I am not that smart, but I am smart enough to know that something is wrong when it took me less than 5 minute to review the old files, and your current spreadsheets you sent to us the other month, to see the mistakes. Our budget could have remained the same as last year and fully funded the reserves at about $23 per month per unit, or about $16 per month more than the  first budget notice and $302 per month less than the budget you just sent us.

Who will be addressing this at the meeting on Thursday night? Who will answer the questions about insurance deductibles and were they passed back to all the units in the Association or did just the units in the buildings affected pay the deductible on their insurance claims, such as Building 2 and 31 (by law each building is responsible for their own expenses, including insurance premiums and deductibles)? When will the reserve funds that the Associaton colllected  be transferred to the Reserve Accounts per Florida Statutes since Moody never transferred them (board votes don't override the law)?

Thank you.

718.111 (14) - note: we don't have investment funds, and Moody never transferred our reserve funds to our reserve accounts!COMMINGLING.—All funds collected by an association shall be maintained separately in the association’s name. For investment purposes only, reserve funds may be commingled with operating funds of the association. Commingled operating and reserve funds shall be accounted for separately, and a commingled account shall not, at any time, be less than the amount identified as reserve funds. This subsection does not prohibit a multicondominium association from commingling the operating funds of separate condominiums or the reserve funds of separate condominiums. Furthermore, for investment purposes only, a multicondominium association may commingle the operating funds of separate condominiums with the reserve funds of separate condominiums. A manager or business entity required to be licensed or registered under s. 468.432, or an agent, employee, officer, or director of an association, shall not commingle any association funds with his or her funds or with the funds of any other condominium association or the funds of a community association as defined in s. 468.431.

718.111(3)(f) - note: description of how to compute association reserve funds
Annual budget.—

2.In addition to annual operating expenses, 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, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. 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. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection. However, prior to turnover of control of an association by a developer to unit owners other than a developer pursuant to s. 718.301, the developer may vote to waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association’s operation, beginning with the fiscal year in which the initial declaration is recorded, after which time 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. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

Annual Budget Meeting: Attendance Low, Monthly Fees High

Of the several hundred unit owners that make up the TAJ community and will collectively share the cost of the $1,040,949.00 budget in 2010, four of us showed up for the Annual Bedget meeting on Monday, January 11th.

The BOD members out-numbered the unit owners 2 to 1. Our thanks goes out to the BOD and especially the Finance committee for their work in the creation of the annual budget. It is not an easy task and we appreciate that they donate their time to do this for all of us.

Yearly Budget Meeting; Something Missing?

It is time, once again, for the yearly budget to be approved for the following year. This includes determining the yearly maintenance fee that is assessed to all unit owners (and then divided into equal monthly payments). As part of the process, the BOD is required to determine what the buildings' reserve amounts should be. Each building is then allowed the opportunity to vote to reject the proposed reserves for their building. All this is part of the law in Florida, as shown in an earlier post.

The BOD sent out the flyers shown above. However, in past years the BOD also sent out proxy ballots so that unit owners could submit their votes to reject the proposal without having actually to attend the budget meeting. It seems that the proxy ballots did not get sent out this time. Does that mean that in order to reject the proposed monthly payment of $410 in favor of the lessor payment of $260 each building has to have a majority of their owners show up at the meeting?


Florida Statutes Chapter 718.112(1)(f)2:
2. In addition to annual operating expenses, 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, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. 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. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection. However, prior to turnover of control of an association by a developer to unit owners other than a developer pursuant to s. 718.301, the developer may vote to waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association's operation, beginning with the fiscal year in which the initial declaration is recorded, after which time 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. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

~12 Jan 2010~ At the BOD meeting to ratify the annual budget, held on 1/11/2010, the BOD indicated that the proxy ballots were soon to be mailed out to owners and that there was to be a subsequent meeting to determine each buildings' vote on reserve funding.

A Letter From A Concerned Unit Owner

Thanks to Dan Capobianco for reporting on the Feb 5th BOD meeting and for sharing his thoughts and feelings.  I wish more people would submit entries for the blog.  Demands on my time have taken away from my ability to attend meetings lately.  Steve Frahm

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HELLO UNIT OWNERS;

I WAS THINKING OUT LOUD!! THOUGHT I WOULD LET YOU IN ON IT. I ATTENDED THE ,"BOD, NEW YEAR BUDGET MEETING."[thurs 02/09]I WAS AMAZED THAT ONLY ABOUT A DOZEN PEOPLE WERE THERE. IS THEIR ANYTHING MORE IMPORTANT THAN THIS ??? I DON`T THINK SO!WELL IN GENERAL WHAT I HEARD WAS ENCOURAGING.FIRST,I WAS VERY IMPRESSED WITH THE TWO LADIES ON THE FINANCE COMMITTEE WHO DID THE BULK /ALL THE WORK.[bod,i imagine cooperated and assisted]IN BRIEF TERMS, "SPREAD THE LIABILITIES AND HARDSHIP OVER THE 370[aprox] UNIT OWNERS.WE ARE ALL IN THIS TOGETHER EITHER WE ALL PITCH IN OR WE ALL CONTRIBUTE TO A MUCH DARKER FATE.THE NEW[tentative maintenance fee]$259.00 per mth.SAME FOR EVERY UNIT OWNER ALIKE.THOSE OF US WHO HAVE BEEN PAYING FOR THOSE UNFORTUNATE HARDSHIPS WILL GET RESPECTIVE CREDITS.I ALSO SUGGESTED[more of a plead]PLEASE DO NOT BUY ANYMORE UNITS.I WANTED TO ASK,MOST IMPORTANT QUESTION ?? WHEN WILL WE HAVE A PROPERTY MANAGER,HOWEVER THE BOD GOT NASTY WITH EACH OTHER OVER????? I LEFT[better i watch tv] I DO THIS BLOG FOR THE BENEFIT OF ALL WHO DID NOT ATTEND/OR DO NOT GO TO BOD MEETINGS. I WILL CONTINUE TO REMIND YOU,IT IS CERTAINLY IN YOU VERY BEST INTERESTS TO MAKE THE EFFORT.
I WOULD ALSO SUGGEST YOU USE THIS BLOG,IT IS THE ONLY WAY TO SPREAD ANY INFO.THIS BLOG USED TO BE VERY ACTIVE ?? IT SEEMS TO HAVE STOPPED. MAKE IT ACTIVE AGAIN AND GO TO BOD MEETINGS.
REGARDS ALL
DAN CAPOBIANCO #12blg