Page 10 - SFL Cooperator Fall 2020

10 THE SOUTH FLORIDA COOPERATOR
—FALL 2020
SOFLCOOPERATOR.COM
And remember: deferred projects don’t
represent savings. You’ll still need to do
those projects next year.
Reallocating Cash
If your reserve contributions are any-
where close to the 25% of total budget
that most associations find is necessary
to offset ongoing deterioration and avoid
special assessments, you might consider
scaling back for a few months. Dropping
your contributions by 10% down to 15%
immediately offsets a 10% increase in
delinquencies. The same effect could be
achieved by deferring reserve contribu-
tions entirely for a few months. You could
also consider a zero-interest loan from
reserves to operating.
Consult with legal counsel and your
reserve study provider regarding these
possible approaches to determine which
might be the best fit for your current
needs in light of your contribution size,
reserve fund size, and upcoming reserve
projects. Run some cases on your reserve
study software, or ask your study provid-
er to run some cases to document both
the borrowing and the repayment plan—
there should be no guessing! That repay-
ment might take the form of a single or
multiyear special assessment, or higher
future reserve contributions, all of which
might be minimized by higher-than-nor-
mal transfers to reserves next year, when
delinquent owners resolve the funds owed
to the association.
Saving Cash
Certain industry sectors are offering
association clients significant savings at
this time—particularly those projects
with a high labor component, like roof-
ing, painting, and asphalt work, to name
just a few. If the cash is available, now
might be a great time to check in and ne-
gotiate with your service providers. You
may be very encouraged to stimulate the
economy, keep their crews working, and
enjoy a 5% or even 10% discount on some
of your association’s larger projects. Just
be careful when updating your reserve
plan, as discounts available in 2020 will
likely not be repeatable in future years.
Final Thoughts
No matter what your association’s cur-
rent situation, the fact remains that ro-
bust, well managed reserves are a crucial
component to its long-term financial sol-
vency and physical integrity. So gather in-
formation. Confer with your legal coun-
sel. While documenting your process,
conserve reserve cash by prioritizing and
only spending where the projects have
true merit, reallocate cash going into the
reserves or already in them (remember to
create a repayment plan), or save cash by
negotiating with vendors to get some re-
serve projects done now. No matter what
route you take, make decisions that are
in good faith, in the best interests of the
association, and after investigating your
options. It may turn out that one of those
options may be a new and valuable use of
reserves.
n
Robert Nordlund is founder and CEO of
Association Reserves (www.ReserveStudy.
com), and a registered professional engi-
neer. He was involved in creating the 1998
National Reserve Study Standards and is a
past chairman of Community Associations
Institute’s (CAI’s) Reserve Professionals
Committee, past chairman of the Association
of Professional Reserve Analysts, and past
president of the CAI Greater Los Angeles
Chapter. He regularly writes on the topic of
reserve studies and is a frequent speaker in
industry-sponsored seminars and presenta-
tions throughout the United States.
TAPPING RESERVES...
continued from page 9
A
“In a condominium, the area
outside of the unit is gener-
ally a common element, un-
less specifically assigned to a unit owner as
a ‘limited common element,’” says attorney
Russell Robbins of the firm Basulto Robbins
& Associates in Miami Lakes. “There will
always be some group of unit owners—we
refer to them as NIMBYs (which stands for
'not in my backyard')—who are going to op-
pose any changes to the common elements
which may impact their unit. If the associa-
tion is replacing the pump and well with one
of similar size and near the location of the
original well, I doubt that such improvement
would be considered a material alteration (a
type of change that may require consent of
the membership). The board generally can
follow the ‘business judgment rule’ and make
the change (so long as the pump station is not
being relocated away from a board member’s
unit and closer to another unit).”
For the Record
Q
Is an association required to main-
tain a recording of a meeting as an
official record?
—Wondering
A
“Thank you for your question.
The answer is that a record-
ing of a meeting is an official
record until the recorded meeting minutes
are transcribed and then approved, at which
point the recording can be discarded,” says
Jonathan Goldstein, a senior associate attor-
ney with Haber Slade P.A. in Miami. “How-
ever, if the board elects to keep the recording,
the recording remains an official record that
must be accessible to the membership unless
it is privileged.
“The Florida Condominium Act, at Sec-
tion 718.111(12) (a), Florida Statutes, lists the
various categories of official records which
must be maintained by the association. An
association must provide an owner with ac-
cess to the records (a tenant is now entitled
to access to a very limited scope of records)
within ten (10) business days of receipt of a
Q&A
continued from page 5