Unspecified Reserve Funds

Our HOA has never had an operating budget. We are a small 68 single-family home neighborhood with the only common area being the front entrance landscaping easement. Our operating expenses for maintaining this area along with insurance, electric bills for street lights, etc. is about $7800 per year but our HOA dues are set to collect about $14,000 per year. Later this year, we will have almost $40,000 in the bank with no specfied reserve fund plans! Are there any guidelines for the amount of reserve funds a not-for-profit can accumulate?

Jennifer,
I commend your association for estalishing a Reserve account. I suggest you don't have to call it a Reserve account if you have no use for a Reserve account which is dedicated to the preservation of the Real Property. If it is a fact that there is NO real property other than the entrance and you hold a deed to that, I think the owners deserve to have a Fabulous Entrance with waterfalls, etc, etc, etc. Then when the Reserve account reaches high enough that the interest generated each month covers all your common expenses, you can do away with your annual dues and actually charge a new owner to buy into your fund and when someone leaves you can give them their interest in the Fund. It would take a little Lawyer work, but in the long run should work. The "shares" of the Fund woulod not have to be 1/68 for each unit but could be anything to insure the Fund remains solvent and never goes below a certain amopunt