[KMA1313]

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Can anybody give me suggestions how to handle an HOA Board that is spending like a child with their first credit and an unlimited spending limit?

We are a community of 192 homes, community swimming pool, walkover to the beach, that’s it. HOAs around us are in the $170-$200 range (where we were before September 2023).

At the September 2023 board meeting our Board of Directors voted for a 14.99% increase (maximum our bylaws allow without membership approval). The next month, our Board voted for a budget increase of 13.87% (they didn’t need membership approval because it’s under 15%) and this increase will take effect January 1, 2024. This equates to our dues going up approximately $700 in 3 months.

If our dues needed to go up it would be one thing, but when I look at the 2024 proposed budget see:
storm cleanup – from $1,500 to $9,000 (we didn’t even use the $1,500 in 2023)
general maintenance – from $5,000 to $38,800 (that’s not a typo)
electric – from $19,000 to $30,000 (treasurer said this was a typo but they didn’t change the amount)
decoration committee – from $0 to $2,000 (can BOD make us pay for that?)
alley maintenance – from $4,000 to $12,000

On top of that, one of the 2024 projects in the budget for $13,500, will actually cost $4,000 and pool maintenance will be cut in 1/2 saving another $9,000.

When I asked the treasurer what happens to the “extra” money, I was told it would go into our “general” reserves. When I pushed further and asked if the “general” reserves were different from “reserves”, I couldn’t believe the answer. “General” reserves equate to a slush fund the BOD can spend however they want.

Our HOA President actually said to my face, that we no longer live in a quaint beach side community, we live in a community of million-dollar homes and our dues need to reflect that. That statement is so stupid I can hardly think straight and the only reason we have 3 homes in that range is because they face the ocean and were just built, and we all know that houses have gone up to ridiculous levels lately.

So, I go back to my first question, can anybody give me an answer/suggestion/Florida statute, anything that can stop our BOD from over budging, so they have a huge slush fund to play with?

Thank you

[kelly@wesselaccounting.com]

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Dear KMA1313,

I am a forensic accountant and consultant in SC and have done many forensic audits of HOAs and their managers. The first thing I usually tell my clients is to read your Covenants and By-laws carefully to see what the Board is actually allowed to do. They shouldn’t be able to amend these documents without a vote by membership, if at all. Once you have a good handle on what is and isn’t allowed you will probably have a good idea of what to do. If the Board is breaking the rules, that will need to be brought to their attention, if they don’t stop, you need a new Board and probably an audit of documentation (accounting records, bank statements, etc). I hope you can accomplish this without hiring an attorney and paying for an audit. Also, hiring a property management company should be an item on the agenda for your next HOA meeting. Good luck!

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