Borrowing
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Authorization to Borrow from MRR Reserve…
- Funds may be borrowed from the MRR Reserve to cover a shortfall in the Operating fund, EE&P Reserve, MI Reserve or between components of the MRR Reserve fund itself.
- A loan from the MRR Reserve shall only be made if the loan does not compromise the ability of the Association to fund MRR requirements during the period in which the principle and interest are being repaid. All loans must be analyzed and reviewed annually.
- A two-thirds (2/3) affirmative vote of the Board of Directors is required to authorize the amount, duration and applicable interest rates for all loans from MRR Reserves funds, consistent with the following restrictions…
- A loan from the MRR Reserve to the Operating fund must be reimbursed, including interest, from operating funds or special assessments within the following two (2) budget years.
- A loan from the MRR Reserve to provide additional funding for the EE&P Reserve or MI Reserve must be reimbursed, including interest, within five (5) years.
- A loan from one MRR Reserve sub-fund to another MMR Reserve sub-fund must be reimbursed, including interest, within five (5) years. In extraordinary circumstances (e.g., an extensive unplanned repair or replacement expenditure for which the reserve funds are not adequate, and the identified repayment source is insufficient to repay the loan within five (5) years), the Board may authorize repayment of the loan beyond the five (5) year period up to the length of the projected useful life of the asset. A formal, documented review and reaffirmation to continue all intra-fund loans, including interest, fees and principal repayment schedule, must be made by the Board annually in conjunction with the MRR budget/Reserve funding approval.
- At the time the loan is authorized, the Board must specify the source of funds which will allow the MRR Reserve funds to be repaid in the time frame specified. All loans must be documented in sufficient detail to validate that all terms are being fulfilled.
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