Proposal to fund reserve by rate that increases over the years

Would appreciate some feedback on a proposal by a committee of my HOA. We are 94 "villas", which means every two homes share a common wall. These were built from 1989 to 1996. The developer set up reserve funds, one of which was for re-roofing the homes every ... I think it was originally 15 years. Not sure about that. Anyway, two years ago, after everyone had had their roof replaced once, the homeowners voted to discontinue that fund. For some reason it still showed up on the budget, but a much reduced amount "for roof cleaning." Most of our residents are old and will not be alive to need a new roof, which is why they voted to discontinue it. Some newer residents now want to reinstate it. They forsee problems such as when one "roofmate" wants a new roof and the other doesn't. They worry that roofs will be allowed to deteriorate. They understand that the current owners will not likely allow the reinstatement, so they have proposed a sort of amortized (is that the right word?) schedule. For the first few years the assessment is very little. It increases every few years until it is quite substantial.

I see two problems at least. First, there is no guarantee that the fund won't be discontinued again, once the assessment to fund it gets large. Second, I have never heard of this, and I wonder if its legal. We're in Florida. Statute 720.303(6)(g)would seem to apply, but I'm not exactly sure.

Funding formulas for reserves authorized by this section must be based on a separate analysis of each of the required assets or a pooled analysis of two or more of the required assets.
1. If the association maintains separate reserve accounts for each of the required assets, the amount of the contribution to each reserve account is the sum of the following two calculations:
a. The total amount necessary, if any, to bring a negative component balance to zero.
b. The total estimated deferred maintenance expense or estimated replacement cost of the reserve component less the estimated balance of the reserve component as of the beginning of the period the budget will be in effect. The remainder, if greater than zero, shall be divided by the estimated remaining useful life of the component.
The formula may be adjusted each year for changes in estimates and deferred maintenance performed during the year and may include factors such as inflation and earnings on invested funds.
2. If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget may not be less than that required to ensure that the balance on hand at the beginning of the period the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful life of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal and accounts receivable minus the allowance for doubtful accounts. The reserve funding formula may not include any type of balloon payments.

IS this a type of balloon payment? I'd really appreciate your comments on this situation. Thanks in advance.

> They forsee problems such as when one "roofmate" wants a new roof and the other doesn't. They worry that roofs will be allowed to deteriorate.

This is a red herring. The association has to maintain the roofs, and (unless you have some very unusual provisions) that expense is shared among all owners.

The approach you describe is somewhat better than at present.

If you do nothing, when roof replacement time comes there will be a substantial assessment. Each owner would need to pony up or arrange financing.

> Intentionally short the reserve fund now in order to screw those people who move in later.

Well, not exactly, it's more pay later instead of pay now. (The American way). It is true that a clearly underfunded reserve would be a negative for prospective purchasers.

Seems kinda silly for the hoa to be responsible for all exterior maintenance, painting, etc "except" the roofs. Having each duplex responsible for their own building is totally reasonable, but not this exception. I dont know what to tell you.

Interesting. The cost to everyone might very well be less if the roofs are all done at the same time (roofers will probably give a better price on a big job). At present you are avoiding a perception of unfairness at the price of a higher cost for everyone.

Becky

Your units are what I would call a duplex. It can get very tricky and tacky looking to do only one side. If it is one contiguous roof, it can get tricky. I can see it now. Side A sues Side B as Side B replaced their roof which is causing water leaks in Side A.

I say if one contiguous roof on the Villa then this might heave to be addressed.

What is the downside to the current system? Each owner pays for their own roof replacement as required. The HOA, I assume, can dictate the style & color to be used, so while neighboring roofs may be of a different age and not quite match, they're not actually touching. Doesn't sound that bad to me.

It seems that there are two arguments for reinstating the fund:
1.) If an owner doesn't make necessary roof repairs, the integrity of the roofmate's home is threatened.
2.) Repair and replacement done by owners instead of the Association might not meet the village's standards of appearance.

And two arguments against:
1.) It is a needless expense for me to fund a reserve I will probably never be around to benefit from.
2.) I prefer to take care of my own maintenance rather than turn that over to the Association.

Well that explains it. Now I agree with having the roofs separate. Now that the units are not identical, and owners are going to expand their homes, and costs, they should pay for the additional costs of maintaining it.

Other owners should not have to pay more because you decide you want to expand your house. It's not fair. I think the board did the right thing.

Please, could anyone who knows FL statute weigh in on whether such a scheme would be legal?

I am glad we do not have your problems with that, not to say we do not have our own problems.

But we have quad 2 stories and quad ramblers so they have vastly different roof sizes but we all get along just fine with the roof replacement funding and schedule and when the attics we just re-insulated.