Capital Improvement

Started by AlexG2 • 7 replies • 1570 views

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AlexG2 (California)
Posts: 18

Posted:

The board voted to replace a battery emergency lighting system with a gas generator system ($18K) and paint the entire exterior building ($73K) for a total of $91K. In the reserve fund is $136K which only leave $45K. The Condo was built in 2006, I have a feeling that a board member does not like the color of the existing paint. I asked the management company if the Capital expenditure would require the BOD’s to call for a vote with a quorum? His answer is “the HOA is not undertaking a Capital improvement as it relate to HOA’s and does not need a general membership vote in order to proceed”. I’m not sure what he means by “as it relate to HOA’s”.
Here is the HOA CC&R Article 8 8.01 (4) "Contracting for goods and service for the common areas, facilities, and interest of the Association subject to the limitations set for below".
Section (b) " The Board of the Association shall ordinary be prohibited from taking any of the following actions except with the assent, by vote at a meeting of the association or by written ballot without a meeting pursuant to Corporation Code section 7531, of a simple majority of the members, constituting a quorum consisting of more than 50% of the voting power of the Association residing". I sent this quote to the management company and I was told that the article does not relate to the projects on hand

Do the board need member approval?

RogerB (Colorado)
Posts: 5,067

Posted:

AlexG stated "shall ordinary be prohibited from taking any of the following actions except ...".
What the the actions the Board can not take?
What you listed appears to be actions which the Board ought to be authorized to take.

JohnB26 (South Carolina)
Posts: 1,001

Posted:

IMO:

The BOD may:

Paint

Replace/service the battery system

Renew and or repair any common element

w/o a vote

The BOD may NOT:

Make a major IMPROVEMENT unless a vote is taken.

All expenditures are capital expenditures.

All capital expenditures are NOT capital improvements.

eg.

An existing asphalt roof requires replacement at a cost of 10,000.

The BOD decides to replace with tiles at a cost of 18,000.

The resulting capital expenditure CONTAINS a 8,000 capital improvement.

AlexG2 (California)
Posts: 18

Posted:

Thank you. Understood

NpS (Pennsylvania)
Posts: 4,216

Posted:

Painting after 9 years sounds reasonable. (May be that color change is not the reason)

Sikubali jukumu. Read all posts at your own risk.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By AlexG2 on 04/04/2015 9:49 AM
The board voted to replace a battery emergency lighting system with a gas generator system ($18K) and paint the entire exterior building ($73K) for a total of $91K. In the reserve fund is $136K which only leave $45K. The Condo was built in 2006, I have a feeling that a board member does not like the color of the existing paint. I asked the management company if the Capital expenditure would require the BOD’s to call for a vote with a quorum? His answer is “the HOA is not undertaking a Capital improvement as it relate to HOA’s and does not need a general membership vote in order to proceed”. I’m not sure what he means by “as it relate to HOA’s”.
Here is the HOA CC&R Article 8 8.01 (4) "Contracting for goods and service for the common areas, facilities, and interest of the Association subject to the limitations set for below".
Section (b) " The Board of the Association shall ordinary be prohibited from taking any of the following actions except with the assent, by vote at a meeting of the association or by written ballot without a meeting pursuant to Corporation Code section 7531, of a simple majority of the members, constituting a quorum consisting of more than 50% of the voting power of the Association residing". I sent this quote to the management company and I was told that the article does not relate to the projects on hand

Do the board need member approval?

Yes, your cash standing will take a hit with the new investments and painting but that may not reflect negligence or overspending by your board of directors if those projects were reasonable (and the painting after 9 years sounds very very reasonable for scheduling).

In fact, an HOA can keep too much cash on hand by not maintaining the property in the name of financial strength. It's a delicate balance.

AlexG2 (California)
Posts: 18

Posted:

Thanks, yes, it's a delicate balance

KerryL1 (California)
Posts: 14,550

Posted:

I had a very crazy weekend, Alex, so I may not understand your question. Both updates were expensed from reserves. Your study lists both, right? Unless the gas generator was hugely more expensive than the battery one, the Board should need no authorizations to do the work.

Is it that the new gas powered generator for the lighting is considerably more $$ than the previous battery-powered system?

I also am fuzzy-minded about this part of your quotation: "CC&R Article 8 8.01 (4) Contracting for goods and service for the common areas, facilities, and interest of the Association subject to the limitations set for below."

but, Alex, you don't list these "limitations"??? I think Roger also was trying to understand that.

Please clarify: what exactly is your question?

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