Review/update responsibility

Revision

Reference

Florida Statute 720.303

MI reserve funding

1. Due to the nature of the MI Reserves planning process and funding, there is no minimum balance for the MI Reserves. However, no MI expenditure can take place without the proper funding authorization.  MI expenditures may be funded only if there is actual cash on hand designated for use for MI or if a MI funding source has been identified and authorized at the time the expenditure is authorized.
2. Major Improvements may be funded through MI Reserve annual assessments or from a Special Assessment consistent with the timing of the purchase or improvement of the asset.   MI Annual Assessments are levied at the beginning of the year. At the discretion of the Board, the MI assessments may be paid as a single payment or on the same basis as property owner annual assessments (paid quarterly).
   • For MI Projects greater than $5,000 and less than $100,000 the Board can levy assessments for specific budgeted/projected projects, or they can assess to fund the MI Reserves to a targeted balance for future unspecified projects. The funding required is determined based on the beginning balance of the MI reserve and the revenue projected from other sources (e.g., inter-fund allocations or interest income).
   • MI Projects greater than $100,000 require approval by a vote of property owners.
     • Projects over $100,000 will normally require funding of the reserve from a project specific MI Special Assessment. The timing, amount and source of the funds will be determined on a project by project basis. Where there is sufficient lead time, funding may be assessed in multiple installments over an extended time frame. Where possible, these multiple assessments will be level amounts or may include gradual increases.
     • There may be instances when the funding for a project specific MI project exceeds the actual cost of the project.
       • If funding exceeds expenditures (excess funds) for a project by greater than $100,000, the excess funds will be credited on a pro rata basis to the property owners who paid the Special Assessment unless the Board initiates and obtains Association member authorization of an alternative disposition of the excess funds.
       • If the excess funds are $100,000 or less the Board may determine their disposition (retention in the MI reserve or property owner assessment credits).
3. MI costs for certain Tier 2 and all Tier 3 Amenities (see QHRRP 7000-010 (Amenity Tier Classifications)) may be fully funded by user fees, such as the Marina MI Reserve which is funded through a portion of Marina slip rental fees. Amenity fees, which are established by the Board as part of the annual Budget preparation may include MI Reserves funding requirements as a factor in establishing the fees.
4. Investments of MI Reserve(s) cash will be made consistent with providing sufficient liquidity to meet MI Reserve cash requirements and within the limitations of the Investment Policy.  Interest will be credited to each MI Reserves based on its percentage of the total MI funds and the total interest realized for MI funds.
5. Should there be excess cash from operations at the end of a budget year, the Board may elect to reallocate some or all the excess operating cash to the MI Reserves. This decision must be consistent with regulatory requirements for Association membership approval to retain earnings and with the Authority to Commit Funds Policy.
6. MI funding can also come from a loan from the MRR Reserves, consistent with the limitations specified in the Authority to Commit Funds Policy.