Review/update responsibility

Revision

Reference

Florida Statute 720.303

Florida Statute 720.31

Operations excess cash

• Excess cash from operations is defined as the audited fiscal year end net operating cash balance (total operating cash less prepaid assessments, refundable deposits, and current payables) less the budgeted operating cash flow shortfall (if any) for the year following the audited year less the target operating cash balance minimum (currently set at 1/12 of annual budgeted expenses for operations excluding depreciation).
• Should audited Financial Statements reflect excess cash from operations at the end of a fiscal year, the Board may elect to reallocate some or all of the excess cash to Reserve funds with a two-thirds (2/3) affirmative vote. This decision must be made consistent with regulatory requirements under IRS Revenue Ruling 70-604 and Florida Statute 720 regarding Association membership approval to retain earnings.
• Excess cash from operations will be reallocated in the following order of priority:
  • To the EE&P Reserve to replace any shortfall resulting from actual or planned EE&P expenditures authorized. Reallocation of excess cash from Operations to the EE&P Reserve is limited to the amount of the EE&P expenditure that caused the Reserve shortfall.
  • To the MRR Reserve to replace any MRR revenue shortfall occurring in the fiscal year in which the excess operating cash was generated. Reallocation of excess cash from operations to the MRR Reserve is unlimited.
  • To either the MRR Reserve or the MI Reserve, or a combination of both. Reallocation of excess cash from operations to the MI Reserve is limited to an annual maximum of $100,000.

Reallocate surplus MRR reserve funds

• If the MRR Reserve is over-funded and a surplus is projected over the ten (10) year planning period, MRR Reserve funds may be reallocated to operations or the MI Reserve, without repayment, by a vote of Class A members.

Deposit of excess cash

• In the unusual circumstance when the funding for a specific MI project exceeds the actual cost of the project, disposition of excess funds will be authorized as stated below.
  • If an MI project was funded through a Special Assessment that required authorization by a vote of Class A members and funding exceeds expenditures for this project by greater than $100,000, the excess funds will be credited on a pro rata basis to the accounts of those lots of Class A members who paid the Special Assessment unless the Board of Directors initiates and obtains Class A member authorization of an alternative disposition of the excess funds.
  • If the excess funds are $100,000 or less the Board may authorize their disposition with a two-thirds (2/3) affirmative vote.