QUESTION: In light of the drought emergency, can reserve funds be used for drought-friendly landscape renovations?
ANSWER: Many associations already have landscape-related projects in their
reserve study, the most common being tree trimming. Many others have
periodic landscape renovation projects to freshen up the appearance and
health of their greenscape. If an association has a landscape renovation
reserve component, those funds could be used for replanting and
redesigning with
drought-tolerant plants.
Borrowing. If they don't have funds already set aside, another strategy is to borrow
from reserves with these
borrowed funds expected to be recouped by savings from lower water
usage. While borrowed reserve funds must be repaid
within twelve months, the following allows for the delay
of repayment:
...the board may,
after giving the same notice required for considering a transfer, and,
upon making a finding supported by documentation that a temporary delay
would be in the best interests of the common interest development,
temporarily delay the restoration. (Civ. Code 5515(d).)
Savings.
If you find that a $50,000 landscape renovation project would result
in a projected $50,000 water savings
over three years, and if your reserve balance can support the expense
without
delaying necessary reserve projects,
an updated reserve study can
provide the necessary documentation.
The result is a zero-interest loan
from reserves to implement the
project.
Additional Points. Make sure the project meets your architectural requirements. You
don’t want to replace grass in your greenbelts with
artificial turf if
you’ve been denying homeowner requests for similar projects in their
front yards. If you are installing artificial turf (or something else that will
need renovation or replacement), remember to add it to your reserve component list.
ASSISTANCE: Associations needing legal assistance can
contact us.
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