To survive temporary disruptions to cash flow, planned communities may want to consider their Reserve Fund as a resource.
WESTLAKE VILLAGE, Calif., Oct. 14, 2020 /PRNewswire/ — As the Coronavirus pandemic drives unemployment to a record high, Association-governed communities are bracing for higher than normal delinquency rates among their homeowners. Volunteer Boards across the country are all asking the same question: “Can we use our Reserve Account to cover an Operating Fund shortfall?” This includes Boards of Condominiums (Condos), Common Interest Developments (CIDs), Cooperatives (Co-ops), Community Associations (CAs), Homeowner Associations (HOAs), Property Owner Associations (POAs), Planned Unit Developments (PUDs), Townhome Associations (Townhouses), and Vacation Ownership Resorts (VORs). Robert Nordlund, PE, RS, and Founder/CEO of Association Reserves, Inc. advises that relying on Reserves to help manage a temporary cash flow disruption must be done with great care. His eBook & online tool help Boards facing operating fund shortfalls make wise decisions about Reserves.
Boards across the U.S. are all asking the same question: “Can we use our Reserve Account to cover an Operating Fund shortfall?”
Reserves to the Rescue? eBook
Nordlund outlines four steps to take before an association-governed community even considers tapping into Reserves to fund operations:
Assemble Financial Information (i.e., Bank Balances, Delinquencies)
Review/Adjust the Operating Budget
Maximize Communications & Collections
Confer with legal counsel regarding Governing Document or state-level restrictions
If the Board elects to tap Reserves, that decision will come under intense scrutiny. It will be vitally important that a proper process of decision-making be both followed and documented.
uPlanIt- online Reserve Funding tool
uPlanIt gives Boards a way to forecast various “what-if” scenarios related to their most recent Reserve Study, such as:
What if we re-prioritized our Reserve expenses?
What if we temporarily reduced Reserve contributions?
What if we borrowed money from Reserves?