New Investment and Financing Options Provide Significant Boons for Florida Condo Associations

Many Florida condominium associations have now started taking advantage of the investment and financial options created under last year’s new state laws. The changes were designed to give condo associations more flexibility in managing the strict reserve funding and structural inspection requirements implemented following the tragic Surfside collapse. The new laws that were implemented last year under HB 913/SB 1742 enhance condo financial flexibility by allowing association boards to invest reserve funds and fund Structural Integrity Reserve Studies via loans or lines of credit.

For condominium association boards of directors considering investment options for their reserves, it is best to start by developing a written investment policy under the guidance of a financial advisor who has experience with community association budgets and finances. The investments they should consider include savings bonds and treasury bills, which represent safe options that are backed by the U.S. government, as well as money market and certificates of deposit accounts. Insured cash sweeps are also a wise option for many communities.  Because they are connected to checking accounts, ICS are ideal for communities that need to maintain easy access to their funds.

Accessing their funds as needed is almost always among the most important investment considerations for community association directors. That is why many advisors recommend investment portfolios that retain the ability to pay for repairs and maintenance when needed while balancing the concern that association funds belong to the members and therefore should not be invested in a form that may result in a loss.

For underfunded associations with immediate needs for maintenance and structural repairs, long-term loans typically present an opportunity for deferring costs to unit owners over time at the lowest possible interest rates.  However, before taking out new loans from financial institutions, associations would be well advised to discuss their options with qualified legal counsel, reserve specialists, and financial professionals. They should also make plans to effectively communicate their investment strategies and financial decisions with the unit owners.

The new options for investments and financing provided to Florida condominium associations under last year’s legislative changes can help many communities contend with financial challenges.  By turning to the guidance of qualified professionals and implementing sound strategies aimed at addressing their short-term needs without overly sacrificing their potential long-term gains, directors can demonstrate their commitment to leaving no stone unturned in their efforts to improve their association’s financial outlook.