Do you know about The Arbors Reserve Accounts?

Updated: May 8

There has been some discussion and confusion about the “Reserve Accounts” in our budgets and on our financial statements. In the hopes of providing clarity, here are explanations, definitions and a bit more information about these accounts.


Generally speaking, Reserve Accounts are monies that are separate from normal operating funds (regular recurring items in the HOA budget). Reserve accounts are funds that have been set aside specifically for capital improvements and major repairs that can’t be accounted for in a regular operating budget.

Per Florida law for HOAs, there are two types of reserve accounts:

1. Statutory: A statutory reserve account is regulated by Florida statutes and is mandatory.

2. Non Statutory: A Non-statutory Reserve Account is voluntary and controlled by the Board and its governing documents

What Type of Reserve Account(s) do we have and why?

The Arbors is not required to have, and does not have, a mandatory Reserve Account. However, like many other HOA’s, we have several strategic options we can implement for funding capital improvements and repairs. These are:

1) anticipate and plan for capital improvements, and fund voluntary reserve account(s) with quarterly assessments (dues);

2) keep quarterly assessments (dues) as low as possible and pay for capital improvements and repairs through special assessments;

3) not provide for reserve funding and attempt to obtain a loan when capital improvements are required; or

4) keep assessments (quarterly dues) as low as possible and don’t repair or replace major items in the community;

The Arbors, has chosen option 1 above, and has in place two (2) non-statutory, voluntary Reserve Accounts. By setting up these reserve funds and including funding for reserves in each annual budget, we are hopefully able to avoid large special assessments and/or loans, mitigate safety concerns, keep our community in the manner we all expect for our enjoyment, and maintain our property values.

Key Facts about The Arbors' Two Voluntary Reserve Accounts

  • Our two Voluntary Reserve Accounts are designated for

1. Roads/Paving

2. Capital Improvements

  • The budgeting to fund our Reserve Accounts is discretionary.

  • The expenditure of monies from these reserve funds is at the discretion of the board. However, as per our Declaration of Covenants and Restrictions (4/18/19), reserves funds must be utilized for their intended purpose, unless another purpose is approved by a vote of the homeowners.

Strategic planning and management of the Reserve Accounts funds is a high priority of the current board.

As is discussed at most BOD meetings, our infrastructure is aging as one would expect of a +20 year old community.

It’s a fine line to navigate to ensure that the association has sufficient funds to maintain and improve our aging community while keeping our dues as low as reasonably possible.

Where did we stand at the end of 2020?

Balances as of 12/31/2020 for our two Voluntary Reserve Accounts were:

The Roads/Paving Reserve Account: $277,918

The Capital Improvements Reserve Account: $9,730

The 2020 budget included reserve funding of $24,000 for Roads/Paving & $7,000 for Capital Improvements

2020 Reserves fund expenses were: $19,077 (Road/Paving $11,282 and Capital improvements $7,795).

At the end of 2020, we had accrued interest of $3,950. The Board determines how to allocate the earned interest across one or both Reserve Accounts. The Board has decided to allocate all $3,950 to the Road/Paving Reserve Account.

What about 2021 and beyond?

The 2021 budget includes reserve funding of $24,000 for Roads/Paving & $5,000 for Capital Improvements.

We foresee a need for future capital repairs and replacements, such as: irrigation system, sidewalk replacements, sewer system & drainage, tree root issues, gazebos, gate columns and other items. Some of these will need to take place this year and next; most will be done (and paid for) in phases.

Updated financial information will be posted monthly on the website and reports are made at monthly Board Meetings.

The actual budget for 2022 (operating and reserve projections) will be prepared in the fourth quarter.


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