It's annual budget time!

Five Sources to backfill for an HOA Shortfall (all from homeowners) 

Best case sources of funds

•  1.   Prior operating surpluses / fund balance Accumulated excess assessments from earlier years can temporarily cover a shortfall. 
• Status:  Unfortunately, it appears that no supluses are expected in Medley's annual budget.
• 2.  Statutory reserves may be used only for their designated capital/deferred-maintenance purposes (e.g. housepainting.)  Using them for ordinary operating shortfalls without a member vote violates the statute.  
• Status:  Medley's reserves established by the developer are better than many HOAs, but didn't cover the clubhouse/amenities. 




What Fund Sources are left? 

• 3.   Higher regular assessments in future budgets - The 2027 budget must cover any carried-forward deficit plus ongoing expenses. The shortfall is spread across future dues.  Florida statute expressly requires the budget to show the estimated prior surplus or deficit so members can see this.⁠  
• Status:  Combined HOA+clubhouse Fees have increased each year in 2025 and 2026, excluding the additional $108 monthly clubhouse payment.   😕
• 4.  Special assessments  - An additional one-time charge levied to close a specific gap.  (It's used for unexpected repairs, insurance shortfalls, operating deficits, etc. and defined by the Declaration and bylaws requiring proper notice to members.) This is the most visible and often most painful way the shortfall is recovered.   
• Status:  Medley had two Special Assessments in 2025 - January for $170,000  and November $11,000,000.  😖
• 5.  Loans or lines of credit  - Last resort option for large shortfalls, but the interest increases the total cost paid by owners, and such borrowing requires membership approval.  
• Status:  This is what Medley did when borrowing $11M and including $1.5M for unspecifed 'reserves' and $450k for 'short term operating funds.'  (financed over 15 years and about 6% interest. )  😩
•  Non-statutory or voluntary deferred-expenditure accounts  generally give the board more flexibility  (i.e. less oversight),  but still shifts future capital costs onto owners via later special assessments or higher dues.  




So next time you hear the board or treasurer say something is "within budget", remember that they approved an $11 M loan (substantially over the clubhouse purchase price & closing costs) to establish a $1.5M (and more) fund for unspecified 'reserves'    We are basically are living on a cash advance!    

• Yes it is true that there were not established reserves for the clubhouse and related amenities, but we inherited reserves for everything else (house painting, road repairs etc.)   Homeowners still have not received a precise accounting for how the extra funds from the $11M was planned to be used.

 BUDGET TIMELINE posted by Castle last year -- We should expect something similar this year.   

August=planning;  September=Board review;  early October = posting/mailing to members

NOVEMBER 10 - MEMBERSHIP VOTE ON BUDGET - save the date!

How you can help now -- REQUEST THE FOLLOWING: 

1. Budget townhalls with homeowners for questions before the November vote.  

2. Itemized planned and actual use of non-statutory Reserves  
(i.e. the $1.5M cash advance and other funds from $11M loan)
Let's request the plan for 'reserve' expenditures, how much has been spent to date, how long the $1.5M will last, and ensure it's not appropriated to discretionary expenditures which should come from the the general budget.   
Ditto for the extra $450k for 'Short Term Operating reserves, $100k for 'Contingency' we borrowed.

3. Bottom up general HOA budget (Landscaping, CAM services, Cafe, Events, etc) 
Now that many one-time  "in budget" expenditures in (non-reserve) general budget have been expended, 2027's budget must be carefully reviewed from the bottom up.   All transition or one-time amounts that has been spent made should be removed from the draft budget for next year.   That provides cost savings to offset other costs which will increase. 

That  is responsible budgeting. 

Let's be sure next year's budget removes prior one-time expenses (zero-based budgeting)

Ask Castle, Treasurer, or Finance commitee members before the budget is drafted.   Here's a start to inquire about - 

• $170,000 special assessment ('SPA'), which increased our base HOA budget by nearly 40% (Jan 2024 to Jan 2025).  That SPA was exclusively for expenses related from the Turnover from the developer (mostly legal fees).  So we should be able to reduce the budget by $170k in subsequent years.  If not, exactly which accounts increased by that amount and why?
• $ 5,000 golf cart (we won't need to buy that again next year)
• $ 40,000 extra landscaping budget for one-time improvements near gates and clubhouse entry (completed)
• $ tens of thousands in legal expenses from the clubhouse purchase (See November 2025 Special Assessment)
• $ Any possible contract termination costs for replacing TrueClub.
• $ The one-time 'set up' costs for hiring Access for Club management.
• That's potentially at least $215,000+ in savings/offset so far (or $251 per home next year!)

Remember - Castle Group is a licensed CAM firm hired to assist the board and membership with the budget.  

It is their responsibility to provide monthly financial statements, help draft the budget and ensure that all statutory deadlines are met.  As a homeowner, you can walk in and ask them for this information, or request they obtain it for you from their accountant/bookkeeper per 720.303 (4).  

Thanks for reading -- informed homeowners help the entire community.