Reserve Fund Expenditures

Our complex is at the age major repairs have come due and the property is crumbling around us. We have a significant amount of money in the reserve fund. Our quarterly assessments are appropriate to more than cover our reoccurring expenditures. The problem is my fellow Board members refuse to spend any money from the reserve fund. They have been Board members for a long long time and I was recently elected. There has never been a reserve study completed. They believe a reserve study would be a waste of money seeing as they "know" how to manage a HOA budget.

Presently, capital improvement projects are funded out of the operational fund. Only a few projects are completed each year. Basically, none are completed until the fall seeing as we have not yet collected enough assessment money to move forward in the spring. We have steps, stairs and stair towers that are falling apart and pose a significant liability issue for the complex. Each year we roll over the remaining operational money into the reserve account. Recently the property management company moved forward with a necessary but not approved repair. In doing so, the Board was forced to take a small amount of money out of our reserve account. The Board was extremely upset and still brings it up during our meetings as such an egregious offense. Certainly I realize the up hill battle I have but any suggestions on how to change this mindset would be greatly appreciated .

WaltC,

-- I expect the likelihood is high that these directors would not understand either a reserve study or the purpose of putting money from the assessments into a reserve fund every year, in a systematic way per what the reserve study advises. (The purpose is to spread the costs of replacing major infrastructure/amenities over as many owners and years as possible, yielding maximum fairness and minimum risk that a large Special Assessment or loan to the HOA will be necessary.)

-- It appears to me that the Missouri Condo Act has nothing helpful in it on reserve funds.

-- Do your bylaws or covenants have anything to say about reserve funding? If so, please quote them exactly.

-- Your best options? (1) ask to do a presentation on reserve funding. Preparation of said presentation may require a lot of study. This forum can help, IMO. (2) campaign intensively to elect new directors at the next annual election. (3) Identify possibly violations of municipal code. E.g. might the fire department have something to say about crumbling stairwells? Call the fire department and the city and ask if there might possibly be violations of city code.

Unfortunately our bi laws and declarations are silent except for rolling over operational money into the reserve fund after closing the books. Unfortunately
code enforcement is also silent....

I recommend you take photos on the deterioration of your complex and have 8x10 color photos made a Walmart. The price is cheap. Then take them to your board meeting and ask when they believe the stuff is going to heal itself.

You might also point out if you have stuff like stairs and handrails in need of repair this is a liability and if you insurance company were to do on on sight inspection it would not go well.

I find it amazing how some homeowners believe boards waste money and all of them seem to have some spending paralysis.

Sorry, my "sorry" above should have been "worry." Glad Dean agrees &, yes, pics to the Board is a great idea. It's amazing that even in my compact HOA,some directors will not budge to inspect visible issues that are reported. Pics, nowadays, are always best and in Walt's case to scare, and I mean it, the Board into acting.

(My "lever" should hav ben "sellers.")

I was on a board with a couple of long term members. Our main reserve components were road repaving and storm drainage system. In past years the board had raised dues for a number of years and built admirable reserves. They never had a reserve study, I did an inhouse one when I was on the board and estimated that we were about 200% funded. They had developed what seemed like an emotional attachment to those reserves and didn't want to spend a dime. Our roads had an original estimated life of 18 years and when I left they were 25 years old and had never been repaved. They were in ok shape but spots were showing wear, but these members pushed hard that we could wait a few more years. I moved about 4 years ago and as far as I know they still haven't repaved.

Thank you for all of your feedback. My condo complex has 192 units, 92 garages, two pools and no elevators. We have 350k plus in the reserve account and our quarterly assessments bring in 1.3 mil. We are located on a lake and are much better off financially than most around us. Unfortunately, the articles of incorporation, declaration and bylaws are silent with the exception of rollover of funds at the end of the year. To date, all projects are funded out of the operational account. In the past, the Board only focused on the age of our roofs every time other repair projects were mentioned. We lost all roofing to a severe storm last year. We were able to cover the cost with insurance proceeds and no money from our reserve fund was used. Our largest capital improvement project was removed from the list of repairs. I thought once completed, the Board would turn their attention to repairs that pose a liability issue. Nope....

During my first meeting as a Board member I presented 28 pages of power point slides. The pics depicted all of the issues with property specifically highlighting the liability concerns. My actions were not well received. At first, the President did not want to discuss the topic. It was only when I stated it was geared towards getting our management company to do a better job, then I was allowed to proceed. The Board has allowed the management company to submit bids on projects. Ironically, 99% of the time they were awarded the contract out of several bids. The management company was recently purchased. Unfortunately, the new owners did not change the companies name. Local contractors reuse to bid projects at our complex believing it is a waste of their time. Fortunately, we have a unit owner who is also a general contractor . Out of frustration, he would perform repairs at the complex in between jobs.

I did meet with the President and asked if I could attempt to locate contractors willing to submit bids. He gave me permission and asked for me to prioritize the projects that were to be completed this year (out of operational funds.) In addition, I told the President I would solicit bids for additional projects throughout the complex. After countless refusals from jaded contractors, I located a legitimate company. At first, the Board was happy seeing as this company was several thousand dollars cheaper. It was only after I emailed the Board with unsolicited bids did the push back start. I was told to cease and desist seeing as the Board has no intention of moving forward with any of these projects this year. In doing so, I was wasting their time and the pricing would not be accurate next year or the year after. I looked at my actions as informative in nature. Having an idea of what these projects cost would be beneficial in many ways. Most important, the contractor provided professional bids with pictures and was eager to get our business. Looking around our property he realized we could keep his company busy for several years.

Yes, I believe there is an emotional attachment to the "amount" of money in the reserve fund. Even though I do not ask for their assistance, I am hurting a lot of feelings with the amount of work I have completed in such a short period of time. I am retired and have a contractor background . Its too cold to fish and I enjoy working with my hands. So...... with board approval, I have completed several projects that have greatly improved the overall appearance of the complex. Owners have taken notice, are vocal and very happy something is finally being done. The curmudgeons on the board only complain I am spending too much money even though we moved operational funds into the reserve again this year. They refuse to acknowledge there is no labor cost with everything I do. I made the mistake of agreeing to renovate three public bathrooms at our pools. I agreed to do it, providing the labor savings would be transferred into better quality materials. I submitted a cost specific estimate, 3K in materials per bath. They balked at the price and only agreed when I started to back off the project. Thanks for letting me vent. The Mrs now only allows one Board conversation between us per day. haha

W

2024 Full reserve and structural study by law must be completed by a structural engineering firm by December 31, 2024.
Not only the state will require, all insurance companies will also require.

This is for Florida, and possibly with more qualifications.

Missouri has no such law.