Can the board install a new component (speed bumps) from reserves? If I
understand correctly, it can't come from reserves since it is a new
component which will alter the appearance of the complex, and it can't
come from the operating fund either.
Speed bumps are asphalt mounds constructed on streets for the purpose of slowing down traffic. Arguably, the installation of speed bumps would be a capital improvement
, i.e., the addition of a component that did not
previously exist. As such, an argument could be made that speed bumps cannot be funded from reserves since
reserve monies are set aside for existing common area components.
However, the streets themselves
are existing reserve items and adding
safety features to streets such as reflectors, additional striping, signage and the like are elements
of streets that legitimately fall within the discretion of the
of directors. If the cost is relatively minor, it could justifiably come from
street reserves. If the cost is significant, it would likely require a special assessment
to pay for the improvements.
If a safety concern can reasonably be
demonstrated and the cost to install is a small percentage of the street funds, I
suspect a judge would side with the board on using reserve funds for that purpose.
. Before installing speed bumps, associations should contact appropriate fire authorities. They have jurisdiction over their installation since it may affect their response time to a fire. They may require particular size, placement, signage and striping.
. See www.phoenix.gov/Streets/speedhmp.html
for information used by the City of Phoenix, Arizona. Also see www.ctre.iastate.edu/Research/roadhump
for a study on speed bumps prepared by the Center of Transportation Research and Education at Iowa State University.
Since this issue is open to debate, boards should discuss with legal
counsel how best to balance safety and cost concerns related to
: Associations needing legal assistance can contact us
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