Roof reserves and insurance

We've got several hundred thousand in our roof reserve and were on target to re-roof our 100 residences in another 7 years. Assuming this approaching hurricane does substantial damage and some or all of the roofs need to be replaced or repaired, we take some comfort in the fact that we carry insurance for that.

I'm told that we have a contractor who we've long had dealings with, a roofer, who will arrange to tarp homes with damaged roofs while waiting for the insurance claim process to run its course, which can take months. Then there's the potential to re-roof some of the homes on an ASAP basis, with the knowledge that finding a roofer ready, willing and able to do the work may take months with the anticipated devestation the coastal areas of Florida will be faced with. It might be 6 months before the repair and/or replacement work to commence.

The roofer will obviously want to be paid for the tarp work. Our operational budget is tapped for the rest of the year. While we're insured, it may be months before any insurance settlement check is sent to us. So what are our options to pay for this work?

We could take out a loan and pay it off from the insurance settlement.
We could borrow from the roof reserves and pay the internal loan off from the insurance settlement.
We could just use the roof reserve money to pay for the work (both tarps and later repairs).

Random acts of nature are not something you reserve for. They're not predictable and don't have an "estimated useful life".

"What are the roof reserves for if not to be used in case of an emergency?"

I'm hearing that a lot this past week from homeowners and a couple of board members. If the insurance settlement is substantial - and it was 13 years ago in similar circumstances - the pressure will be on to treat our several hundred thousand dollar roof reserve as a big ol' piggy bank once the insurance money arrives. I've also heard it said that that "free money" could be used for re-painting the homes, which is scheduled in 4 years. The painting reserve is currently $200,000 less than where it needs to be.

None of this makes me feel comfortable with the exception of borrowing from the roof reserve to cover immediate roof tarps and emergency repairs with the understanding and approval of the board to pay back the money to the roof reserve. Then, we can sort out a new reserve shedule for the NEXT re-roofing project 15 years down the road and decide how to treat the "found money" in the roof reserve. Just cracking it open like some piggy bank to use for every project under the sun seems like a really, really bad idea to me. Anyone have any similar experience or maybe some insights to offer? I'm most concerned about convincing some of the board that just spending the existing roof reserve would be irresponsible. While it is the homeowners' money, at the end of the day there's the state HOA statute to consider.

All replies appreciated. I'm probably going to be offline for a couple of weeks after Sunday.

And finally, the statute gives us an out, from FS 720:

"Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a meeting at which a quorum is present."

Most of my problems go away if there's a homeowner vote to raid the rood reserves for other uses, which the law allows. I'm pretty sure the homeowners would vote overwhelmingly to do that.

So forget my earlier questions LOL. Hurricane Irma has me frazzled with a lot of balls in the air at once right now. Stay safe, everyone in Florida.

I was going to suggest the same as Tim. If any excess does allow lowering assessments for a while that would be money in the owner's pockets to also help them get back on their feet after this very ugly hurricane. Hopefully your buildings will stand up well and maybe Irma will hopefully die down some. Take all precautions and be safe!!!

I have been talking with individuals in Turks & Caicos, but have not heard anything since about 11:00 pm. At that time had no power yet the wifi was still working. I found and posted to them a couple of websites and this one gives great info with very frequent updates. It might be one you can keep an eye on for information:

https://www.theguardian.com/world/live/2017/sep/07/hurricane-irma-live-latest-updates-caribbean

It noted at 1:41 am there was a magnitude 8.4 earthquake off the southern coast of Mexico, so there also might be possible upcoming tsunami warnings.

This was the last video I saw when Irma was going through Turks & Caicos tonight: https://m.youtube.com/watch?v=e3jCdBpjg5w

This is is appropriate strategy. No need to incur debt or special assessment when your organization has the cash on hand for a legitimate emergency purpose. Congrats to your community for its financial strength.

Just to add, that was a good article anyway, CarolF, thanks for the link. I had not seen it.