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12/6/2009 - Editorial - On Waiving the 2010 Condominium Reserves

A Special Membership meeting will be held at 4:00 PM on Thursday, December the 17th in the Recreation Room for the purpose of voting to waive the statutory reserves in the budget for 2010. Condominium homeowners can vote either in person at the meeting or with the Limited Proxy and the stamped envelope that has been mailed to all homeowners.

What are reserves?

Reserves are a "savings account" to fund future maintenance of significant common assets e.g. exterior painting, roofing, plumbing, and electrical repairs/replacement, without having to come back to the homeowners for a special assessment.

Table 1 below shows the 2010 condominium reserve schedule for the items covered by the reserves and the estimated calendar year and special assessment amount required if no reserves are put aside to cover these items.

For example, if no reserves are put aside, the first special assessment of $787.50 per unit will be required in 2014 to pay for the exterior painting of the condominium buildings.

Table 1
2010 Green Cay Village Condominium Reserve Schedule

If No
Exterior Painting $126,000 7 4 2014 $787.50
Furnishings/Finishes $155,400 10 7 2017 $971.25
Roofing $426,720 20 17 2027 $2,667.00
Electrical/Mechanical $360,720 15-30 23 2033 $2,254.50

How much will reserves cost me?

Table 2 below shows the 2010 Condominium Association fees required to establish sufficient reserves to avoid the need for special assessments for the reserve schedule items.

For Example, a homeowner living in a 3 bedroom unit will pay a monthly association fee in 2010 of $301.00 without reserves or $342.00 with reserves.

Table 2
2010 Monthly Condominium Association Fees

Unit Type Configuration Base
B 2 Bedroom $247.00 $33.00 $280.00
B2 2 Bedroom $244.00 $33.00 $277.00
C 3 Bedroom $301.00 $41.00 $342.00

*  The Base Monthly Fee includes the 2010 Master Association fee plus $4.00 for B and B2 Units and $6.00 for C Units for the 2010 Master Association reserve fee.

Reasons for voting for reserves.

1. It's the responsible thing to do. Saving for a rainy day makes good sense. And having the money on hand when the work needs to be done can avoid arguments about whether or not the work needs doing when in fact the reason for the argument is that some people don't have the money for a special assessment or don't want to pay their fair share.

2. It's not a lot of money - In terms of a typical $1,100 per month for mortgage and tax payments and $244 to $301 in association fees, another $33.00 to $41.00 doesn't represent a big increase in household expenses.

Reasons for voting against reserves.

1. It's a lot of money - if you don't have it. 12 of the 93 condominium homeowners are currently someplace in the foreclosure process. For these folks and probably others in the community, these are truly hard times.

2. Association not turned over yet. The Developer currently owns 67 of the 160 condominium units and will be eligible to vote for or against reserves after turnover, which is scheduled to occur on or before July 2010.

What this means is that, while the homeowners may vote for reserves for the 2010 budget, there is no guarantee that the homeowners will prevail in voting for reserves for the 2011 budget, particularly if the developer votes against funding reserves for the 2011 budget.

Note: For the 2007 and 2008 budgets the Developer voted against funding reserves. For the 2009 budget the Developer was not eligible to vote, but homeowners voted 24 to 6 against funding reserves. So to date, no condominium reserves have been put aside.

While I claim no insight into how the Developer will vote for funding reserves for the 2011 budget, a failure to achieve a majority vote for reserves would mean that the money paid into reserves in 2010 would just sit in the bank, perhaps waiting to be used until 2014.

Note: The Developer currently pays the same association fees as the homeowners. And if the vote is for reserves in the 2010 budget, the Developer will pay reserves as well, even though the Developer can not vote for or against reserves for the 2010 budget.

My Point of View

This is your decision. But what I think it comes down to is the following. Those of you who are down on your luck should vote against funding reserves. Those of you who have the money may decide to vote for funding the reserves. But if you do, you should do so knowing you are probably going to add to the financial hurt of some of your neighbors.

Alternatively, perhaps we should all vote against reserves for the 2010 budget and wait until the 2011 budget when the Developer will also be voting and hopefully times are better.

The choice is yours. But either way you need to vote to be heard. You can vote in person at the meeting or with the Limited Proxy and the stamped envelope that has been mailed to you.

Last minute voters - Drop your filled in ballot off at the Property Manger's Office or leave it in the white mailbox in front of the clubhouse, or fax it to 561-638-2738 before 4pm Thursday 12/17.

Click here for a sample ballot. Click here for a clean ballot if you can't find the one mailed to you.

Peter Schulz - Editor - Email CM

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