|
MINUTES
ROC Forum Meeting
Report – Jan. 13, 2012 – Americana Cove
President Favata opened
the meeting at 10:00am. She advised that the
February meeting, usually held on the second
Friday of the month, will be held instead on
Friday, February 17th at Golden Gate
in Pinellas Park to enable ROC Forum members to
attend the annual CA day in Tampa on February 9th.
(Information on CA Day will be attached to this
report).
Director Lestage spoke
briefly on the importance of joining both ROC
Forum and FLAROC, for education purposes and
getting things done at Tallahassee on behalf of
ROC’s.
Director and ROC Forum’s
Board Member Seminar Moderator Ed Mosakowski,
introduced guest speaker Jan Shekitka of the
Florida Department of Business & Professional
Regulation Education Team (DBPR), and a
panelist at our 2011 Board Member Seminar. Mr.
Shekitka’s presentation on “ROC Finances – It’s
all about Education”lasting 35 minutes, followed
by a 45 minute Q&A period.
The following is a
summary of his presentation and Q&A:
-
Shareholders should first try to
communicate with their board to try to resolve
issues before forwarding their complaint to the
DBPR, who will investigate and be the
intermediary.
-
Knowledge and being informed is powerful.
Shareholders as well as Board Members should
educate themselves on their documents and state
statutes which govern their community.
-
Co-operatives and condominiums have
similarities but are different. Changes to FS719
(the
Co-operative Act) do not come as quickly as
condominiums. There are over 900 co-ops in
Florida and 26,000 condominiums.
-
Common areas of investigation by DBPR
are:
1.
Failure to maintain accurate and complete
accounting records
2.
Improper assessment of shareholders
3.
Insufficient budgeting
4.
Board member compensation
5.
Using Association Funds for other than
common expenses
6.
Special Assessments – Must be used for
the project(s) specified
7.
Proposed budget – Must be provided to
shareholder 14 days in advance of the budget
meeting, and include fully funded reserves, even
if the shareholders subsequently vote to waive
them or partially fund them. Statutes require
they include, roofing, painting, paving and all
items over $10,000. Community documents may
require other straight line reserves costing
less than $10,000. Pooling of reserves have the
advantage of putting several items in one pot,
and the flexibility of using funds for any item
in that pool without shareholder approval. The
moving of any reserve line item into a pooled
reserve must first be approved by the
shareholders. Line item reserve funds cannot
be used for any other purpose than the item
specified.
-
Reserve Calculations - The reserve
schedule must show (a)each item in the reserves
(b) the replacement value of each item (c) The
useful life of each item (d) how many years of
useful life left for each item (e) how much
money is in the reserves for each item, to
calculate the amount required that year to fully
fund the reserves. Calculations are based on
good faith estimates.
Interest earned in reserve fund accounts must
stay in reserves but may be allocated to any
item(s) in the reserves. The waiving of reserves
must be done at a duly called meeting
attended by a majority (including proxies)of
shareholders, and passed by a majority of those
present and is valid for one fiscal year.
8.
Financial Reporting– The other side of
the fiscal year from the budget. It’s essential
that the shareholders reads both the budget and
the financial report of what actually happened
that fiscal year. There are four levels of the
report which is provided to each shareholder.
(a)Cash receipts or disbursement report
(b) the compilation (c)review or audit (d)reserve
report.
Typically, the financial report is provided
within 90 days of the end of the fiscal year
(unless otherwise stated in the documents). The
reserve report must show the actual status of
the five items in the reserve schedule.
-
The difference between
manufactured/mobile home community
condominiums, co-operatives, and HOA’a or
sub-divisions
Condominiums – Each home is on a deeded lot and
the common area expenses are shared and managed
by a board of directors elected by the home
owners . Governed by FS718
Co-operatives – A co-operative Corporation owns
and manages the land (common property) and
leases lots to the homeowner. The lease is a de
facto deed. Each shareholder is issued a share
in the corporation, elects a board of directors
and shares in the expenses of the common areas.
Governed by FS719.
HOA’s are similar to a condominium but organized
under FS720
Question and Answer period
Q. When pooling reserves, do you provide the
same information in the pool as if it was a line
item?
A. Yes. The key is you can spend all the money
on one item if it becomes necessary
Q. Is a reserve fund item required to replace an
actual building (ie: clubhouse)?
A. No
Q. Can you use reserve funds to repair rather
than replace an item in the reserves.
A. Yes.
Q. Can we move the existing funds from reserve
line items to a new pool which includes those
items?
A. Yes, with shareholder approval. If
shareholder approval is not obtained, then the
line item funds must be used up before spending
funds from the pool.
Q. Can contingency funds be put in the reserves?
A. No. However, you can have a line item in
reserves called “Deferred Maintenance”.
Q. Must all items listed in a Reserve Fund study
done by professionals be included in the
Reserves?
A. No. It is a board decision whether to include
items other than roofing, painting, paving, and
items costing more than $10,000, as
specified in the statutes.
Q. Does the 115% budget rule apply to the total
expenditures in a fiscal year?
A. It is based on the total assessments for the
year derived by the budget.
Q. What Is co-operative income tax based on?
A. It is based on income such as rentals,
laundry uses, any other source of income, and
interest.
Any income over $400,000 requires an audit.
Q. A follow up on the 115% budget rule. Must a
one-time expense be included?
A. A one-time unanticipated expense, betterments
(i.e a fountain), and reserves will be deducted
from the total budget assessment.
Q. If we have two openings on the board and
there are only two applications for those
positions, must we have a quorum at our general
meeting to confirm the appointments?
A. Yes. 20% or whatever number is stated in
your documents.
Q. If we have waved an audit for three years
running, must we have one on the fourth year?
A. Yes, if you are in the $400,000 or over
income category.
Q. Can we use a pooled reserve to pay for an
item not in that reserve if we identify it?
A. No.
Q. Our auditor insists that we have a reserve
fund item for a leased asset (street lights). Is
he correct?
A. This is an interesting situation never
encountered before. Will check and advise.
Q. Must we have a reserve fund to purchase a new
truck?
A. No. Such items can be a capital expense.
Q. Can we have a reserve fund item called
infrastructure to cover such things as sewers
and water?
A. Those items should be broken down into
components to enable shareholders to understand
what those items are all about. The DBPR will
have a “Budget Reserve” booklet available which
will cover reserves in detail.
Q. Can we have a line item fund for “General
Reserves”?
A. No. You can’t have a general item to
camouflage other purchases.
Q. A past board has changed the use of a common
area without shareholder consent. Can the
current board change it back to the former use?
A. You should check your documents and consult
your attorney.
Q. When is a decision made to assign interest
earned on reserve funds?
A. Generally at the annual budget meeting.
Q. If a line reserve fund for a swimming pool
has $25,000 in it and repairs made cost $26,000,
Can the remaining $1,000 be taken out of another
reserve item?
A.
No. The simplest way is to take the
$1,000 out of the Operating budget.
A few questions and answers are not covered here
as they were either repetitious or inaudible.
Mr. Shekitka will again participate in the ROC
Forum Board Member Orientation Seminar, to be
held this year on March 19, 2012.
The meeting closed at 1130am.
Reminder: 2012 ROC
Forum memberships are due.
Norman Banning – Secretary
rocforum@hotmail.com
727-734-5706
|
