Florida Regulations 61B-40.006: Reserves
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(1) Reserves required by statute. The proposed annual budget shall include the reserves required by Section 721.07(5)(t)3., F.S., for capital expenditures and deferred maintenance, including roofing, painting, paving, unit furnishings, and any other building components having a useful life that is less than that of the overall structure.
(2) Calculating reserves required by statute. Reserves for deferred maintenance and capital expenditures required by Section 721.07(5)(t)3., F.S., shall be calculated using a formula that will provide funds equal to the total estimated deferred maintenance expense or total estimated replacement cost for an asset, over the remaining useful life of the asset. The amount of the current year funding for each reserve category shall be the sum of the following two calculations:
(a) If the fund balance of the reserve category is less than zero, the total estimated amount necessary to bring such negative reserve category balance to zero; and
(b) The total estimated deferred maintenance expense or total estimated replacement cost of the asset less the estimated balance of the reserve category as of the beginning of the period for which the budget will be in effect, the remainder of which shall be divided by the estimated remaining useful life of the asset. The formula may consider factors such as inflation and earnings on invested funds and may be adjusted each year for changes in estimates and deferred maintenance performed during the year.
(3) Estimating reserves when the developer is funding converter reserves. For the purpose of estimating non-converter reserves for condominium timeshare plans, the estimated fund balance of the non-converter reserve account related to any asset for which the developer has established a converter reserve, pursuant to Section 721.03(3)(e), F.S., shall be the sum of:
(a) The developer’s total funding obligation for the converter reserve account, calculated as if all timeshare periods are sold; and
(b) The estimated fund balance of the non-converter reserve account, excluding the developer’s converter reserve obligation, as of the beginning of the period for which the budget will be in effect.
Rulemaking Authority 718.501(1)(f), 721.03(2), 721.26(6) FS. Law Implemented 721.03(3)(e), 721.07(5)(u) FS. History-New 2-5-96, Amended 12-18-01.
Terms Used In Florida Regulations 61B-40.006
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Statute: A law passed by a legislature.
(a) If the fund balance of the reserve category is less than zero, the total estimated amount necessary to bring such negative reserve category balance to zero; and
(b) The total estimated deferred maintenance expense or total estimated replacement cost of the asset less the estimated balance of the reserve category as of the beginning of the period for which the budget will be in effect, the remainder of which shall be divided by the estimated remaining useful life of the asset. The formula may consider factors such as inflation and earnings on invested funds and may be adjusted each year for changes in estimates and deferred maintenance performed during the year.
(3) Estimating reserves when the developer is funding converter reserves. For the purpose of estimating non-converter reserves for condominium timeshare plans, the estimated fund balance of the non-converter reserve account related to any asset for which the developer has established a converter reserve, pursuant to Section 721.03(3)(e), F.S., shall be the sum of:
(a) The developer’s total funding obligation for the converter reserve account, calculated as if all timeshare periods are sold; and
(b) The estimated fund balance of the non-converter reserve account, excluding the developer’s converter reserve obligation, as of the beginning of the period for which the budget will be in effect.
Rulemaking Authority 718.501(1)(f), 721.03(2), 721.26(6) FS. Law Implemented 721.03(3)(e), 721.07(5)(u) FS. History-New 2-5-96, Amended 12-18-01.