How to handle unused special assessment funds?

We are in the process of collecting a special assessment for replacement of our water lines and streets. At a meeting last night members wanted to know what would happen to any surplus money we had collected if by some miracle the best bid came in lower than we expected and planned for. Do we have to refund it or can we add it to the general fund? I'm in Arizona.

We are not ready to start getting bids. We got ESTIMATES so that we would have a baseline because we couldn't even start work with our measly bank account. This way we can spread the monthly assessments out over a 2 year period, making it easier on the homeowners. When we get enough to proceed to bid, the bids will not be good for very long, so we're waiting until we need to do that.

Christine,

Since there is no state law addressing this and I doubt it's addressed in your gov docs, IMO, the board can pretty much do as they pleas. If you had an adequate reserve fund you wouldn't have needed a special assessment, so it's apparent your reserves are underfunded. Therefore, I would suggest depositing any surplus into your reserve fund.

Christine, There is no problem if you collect more special assessment funds than the total cost of the project. In fact it would be wise to do so in case of cost overruns. Any excess can be placed in a reserve fund.

The real question to ask yourselves is what happens if you don't collect enough money?

Roger, do you know if the old law(rule) about keeping general operating expenses separate from reserve funds still exists?

RobertG,
We follow the IRS guideline of keeping reserve funds in a separate account from operating funds.

Yes, give it back...