# SPECIAL MEETING OF THE MEMBERSHIP BONNET CREEK RESORT MARCH 4 2014 at 4:30 PM (ET)



## Vacationfuntips (Feb 21, 2014)

*NOTICE OF SPECIAL MEETING OF THE MEMBERSHIP *​ *BONNET CREEK RESORT VACATION CONDOMINIUM ASSOCIATION, INC.*​ *MARCH 4 2014 at 4:30 PM (ET)*​ February 21, 2014
Dear Owner:

Please  take notice that a Special Meeting of the Membership of the Bonnet  Creek Resort Vacation Condominium Association, Inc., (the "Association")  will be held at Wyndham Bonnet Creek Resort on *Tuesday, March 4, 2014* at *4:30 PM (ET)*,  for the purpose of holding a vote of the Members to waive funding of  Reserves for 2014 and 2015, and to ratify the 2014 budget.

In  an attempt to reduce costs to the Association and make it easier for  the Members to cast their votes, the Board has determined it to be in  the best interest of the Association to implement online voting for this Special Meeting.

*IF YOU HAVE NOT ALREADY CAST YOUR VOTE, PLEASE FOLLOW THE INSTRUCTIONS BELOW. *

To  access the online voting site, please enter the URL listed below into  the address bar of your internet browser of choice (Internet Explorer,  Firefox, Chrome, Safari). Once there, you will enter your USER ID and unique PASSWORD to  be taken to the electronic proxy form. Your USER ID and PASSWORD are as  follows:

*URL: **WWW.BONNETCREEK2014SPEC.COM*

*USER ID: 
*

*PASSWORD: 
*

Once you arrive at the online voting site, you may view the meeting information and proxy, and cast your vote. All proxies must be submitted no later than 5:00 PM (ET) on February 28, 2014 to be counted.

If  you have any questions regarding this Notice, or any other items that  were not addressed by this information, please feel free to contact Bob  Gaul, General Manager by phone at (407) 238-3500.

By Order of the Board of Directors of:
*Bonnet Creek Resort Vacation Condominium Association, Inc.*
By: James Laidlaw, President





9560 Via Encinas, Lake Buena Vista, FL 32830

Cynthia T.


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## CruiseGuy (Feb 21, 2014)

Okay, my Bonnet Creek contract is still in the process of being transferred.  (It has all 2014 points intact and the MFs were being paid monthly, so I'll be picking those up beginning around April.) 

But I'm curious why they would be voting to waive funding of reserves for 2014 and 2015?


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## pacodemountainside (Feb 21, 2014)

No first hand knowledge, but a couple  wild gusses.

Calculated   were over funded!

Operating expenses  way over budget  so  to keep total MF    fairly low  doing an offset.

Underfunding reserves is often called  deferred maintenance and generally  leads to SA!


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## CruiseGuy (Feb 21, 2014)

pacodemountainside said:


> No first hand knowledge, but a couple  wild gusses.
> 
> Calculated   were over funded!
> 
> ...



Those were the same two reasons that I managed to come up with.  I wonder if someone here has the inside scoop.


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## Vacationfuntips (Feb 21, 2014)

On the revocable proxy at the bottom of the page it says* "WAIVING THE RESERVES IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.*"

Below is a copy of the President's Message:

​*
*****PRESIDENT'S MESSAGE******

Dear BCRVCA Inc. Owners,

Your Bonnet Creek Board of Directors is always exploring ways to save money.  As mentioned last year, we identified an opportunity to pay off an existing debt of the Association which would produce a substantial savings over the upcoming years.  In order to accomplish this, the Board recommended that we pay off the CDD (Community Development District) bond for parcel A, which is an obligation of the Association.

As you are aware, the Bonnet Creek Resort is part of Bonnet Creek Resort Community Development District ("CDD"), which provides various municipal services to the area, including services relating to utilities and roadways.  As with any municipality, the CDD can issue bonds to help fund district improvements and the Association's annual obligation to the CDD under the parcel A bond is $1,762,933.65 per year through 2034.

Last year, the Board requested the membership approve waving the funding reserves of the 2013 budget in order to begin funding the early payoff of the CDD bond.  The ownership did so with a majority affirmative vote.  It was also reported at that time that it would be necessary to waive funding of reserves of the 2014 and a portion of the 2015 budget in order to complete the early payoff of the bond.  If, in lieu of funding reserves in 2013, 2014, and 2015, the Association prepays the CDD obligation, the Board estimates an aggregate savings in interest payments of over $8M, resulting in a net positive cash flow of $500,000 per year 2029.  The below chart illustrates the Board's analysis of the interest paid under CDD versus any projected interest on reserve contributions. 

Interest to be paid on CDD bond from 2013 through 2034  $16,336.943
(per original schedule)

Loss of potential interest earned on Reserves contributions
(due to waiving contributions 2013 through partial 2015)     $7,780,131

*Net Savings on Interest paid out by Association* *$8,556,812*


Repayment of waived Reserve funds
(per year through 2029)                                                                                            $1,000,000

Yearly CDD Bond Payment Savings (eliminated by payoff)       $1,500,000

*Net Gain in Operating Account (per year)                                                       $500,000 *

Accordingly, the upcoming Special Membership Meeting on March 4, 2014, you are being asked to vote to waive the statutory funding of reserves for the years 2014 and partial year 2015 to complete the CDD parcel A bond payoff, as well as to ratify the 2014 budget.  Thank you for your ownership and we look forward to serving you in the future!

James Laidlaw, President
Bonnet Creek Resort Vacation Condominium Association, Inc.

******PROPOSED AGENDA******

1. Call to Order/ Certification of Quorum
2. Proof of Notice
3. New Business
*.* Waiver of 2014 Reserves
*.* Ratify 2014 Budget
*.* Waiver of 2015 Reserves
4. Adjournment
     *Agenda is subject to change​
******AUDIT NOTICE******
In accordance with Florida Law, this Notice to advise you that a copy of the Association's year-end financial report is available to you at no charge.  If you would like to have a copy of the report mailed to you, please put your request in writing to the Association at P.O. Box 22819, Lake Buena Vista, FL 32830.  Please be certain to include your full name in your written request.  The report will be mailed to the address we have on record.  Alternatively, if you would like to receive a copy of the report via email, please provide your email address in your written request. ​
Cynthia T. 


​


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## CruiseGuy (Feb 21, 2014)

Vacationfuntips said:


> On the revocable proxy at the bottom of the page it says* "WAIVING THE RESERVES IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.*"
> 
> Below is a copy of the President's Message:
> 
> ...



See.  A third option!  Very helpful. Seems to make sense.  Thanks.


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## Ron2 (Feb 22, 2014)

Vacationfuntips said:


> On the revocable proxy at the bottom of the page it says* "WAIVING THE RESERVES IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.*"
> 
> 
> 
> ​



This is what concerns me the most about using reserve funds to pay the CDD Bond in advance. Apparently things worked out fine by waiving funding of reserves in 2013 since 2014 maintenance fees only increased slightly. I just hope we get through 2014 and 2015 without any disasters that would require the use of those reserve funds.


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## csxjohn (Feb 22, 2014)

Vacationfuntips said:


> On the revocable proxy at the bottom of the page it says* "WAIVING THE RESERVES IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.*"
> 
> Below is a copy of the President's Message:
> 
> ...



If the reserve funding is statutory, how in the world could a vote of the membership waive paying into the fund??


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## brownhaired_girl (Feb 22, 2014)

Ron2 said:


> This is what concerns me the most about using reserve funds to pay the CDD Bond in advance. Apparently things worked out fine by waiving funding of reserves in 2013 since 2014 maintenance fees only increased slightly. I just hope we get through 2014 and 2015 without any disasters that would require the use of those reserve funds.



It would have been nice to have been informed how much money is currently in the reserve fund.  From what I have been reading on the Disboards some of the units are coming to a point where they are needing updating.  I'm all for paying off debt early if they have planned adequately for other needs.  If this debt is paid off early how will it affect future maintenance fees?  Will my maintenance fees rise less later or will they just find another place to spend the available money?  Also what plans if any are in place for a disaster?  Hoping for some ideas from other tuggers before voting.


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## SueDonJ (Feb 22, 2014)

Florida and South Carolina are two states that I know of (there may be others) which mandate "fully-funded reserves" unless the ownership votes to waive the requirement.  In cases where the issue is put to a vote, language similar to the "WAIVING THE RESERVES …" that's bolded above is required on the ballot and any notices.

From what I understand "fully-funded" in SC means that the reserve is required to be kept at a level at all times such that any _anticipated_ routine refurbs/repairs/etc could be done and completely paid for at any time.  Waiving the requirement instead allows the resort to collect partial reserves such that if the resort is, for example, on a 5-year anticipated re-furb plan, one-fifth of the total anticipated expenses can be collected in each of the five years leading up to the expense becoming due.

I'm not sure of the differences and similarities between the FL and SC mandates but there are several well-established Marriott resorts in both states for which the ownership have consistently waived the fully-funded mandate, and I don't know of any Special Assessments due to this mandate being waived.  As noted, if routine maintenance is planned and budgeted for correctly then the reserve fund will build year-over-year to cover routine expenses as they occur.

Also worth noting, though, is that Special Assessments can occur for other reasons such as a catastrophic loss due to a weather event, in which cases a large insurance deductible will probably be at play.  Fully-funded reserves are immaterial then because the requirement doesn't mandate coverage for a catastrophic event, meaning that a SA can still be assessed even if fully-funded reserves are in place.


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## Ron2 (Feb 22, 2014)

csxjohn said:


> If the reserve funding is statutory, how in the world could a vote of the membership waive paying into the fund??



Last year Bonnet Creek changed their accounting method to what is called “Pooled Accounting” which is allowed by Florida statutes. Under the pooling method, all reserve funds are pooled together and the annual requirement is not computed in the same manner as in a straight line method. Last year an account here on TUG (Joe33426) provided the following explanation:  To put the process in simple terms, the Association would prepare a spreadsheet listing all reserve items and the cost and years the items would be replaced. The required reserve funding is the amount required to keep no year's cash balance less than zero. So in other words, the funding makes sure that the Association always has sufficient balance in the reserve fund to make necessary repairs. Funds accumulated are in a "pooled" reserve and can be used on any component of common element included in the "pool".

Before voting on the waiver last year, I contacted BC to ask if they had enough reserves to cover the period of the waiver and they assured me that there was enough. Hopefully that is still the case. The Pooled Accounting makes it possible for BC to waive funding of reserves and use the funds to pay off the Bond.


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## nkldavy (Feb 22, 2014)

*Florida Requirements*

Caution ... this may put you to sleep 


FLORIDA ADMINISTRATIVE CODE RESERVE REQUIREMENTS

Chapter 61B-22, Florida Administrative Code
61B-22.001 Definitions. For the purposes of this chapter, the following definitions shall apply:
(1) “Accounting records” include all of the books and records identified in Section 718.111(12)(a)11., Florida Statutes, and any other
records that identify, measure, record, or communicate financial information whether the records are maintained electronically or
otherwise, including, all payroll and personnel records of the association, all invoices for purchases made by the association, and all
invoices for services provided to the association.
(2) “Capital expenditure" means an expenditure of funds for:
(a) The purchase of an asset whose useful life is greater than one year in length;
(b) The replacement of an asset whose useful life is greater than one year in length;
(c) The addition to an asset which extends the useful life of the previously existing asset for a period greater than one year in
length.
(3) "Deferred maintenance" means any maintenance or repair that:
(a) Will be performed less frequently than yearly; and
(b) Will result in maintaining the useful life of an asset.
(4) “Funds” means money and negotiable instruments including, for example, cash, checks, notes, and securities.
(5) "Reserves" means any funds, other than operating funds, that are restricted for deferred maintenance and capital expenditures,
including the items required by section 718.112(2)(f)2., Florida Statutes, and any other funds restricted as to use by the
condominium documents or the condominium association. Funds that are not restricted as to use by Section 718.112(2)(f), Florida
Statutes, the condominium documents or by the association shall not be considered reserves within the meaning of this rule.
(6) “Turnover” means transfer of association control from developers to non-developer unit owners pursuant to Section 718.301, Florida
Statues.
61B-22.003 Budgets.
(1) Required elements for estimated operating budgets. The budget for each association shall:
(d) Include all estimated common expenses or expenditures of the association including the categories set forth in section
718.504(20)(c), Florida Statutes. Reserves for capital expenditures and deferred maintenance required by section
718.112(2(f), Florida Statutes, must be included in the proposed annual budget and shall not be waived or reduced prior to the
mailing to unit owners of a proposed annual budget. If the estimated common expense for any category set forth in the statute
is not applicable, the category shall be listed followed by an indication that the expense is not applicable;
(e) Unless the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the
association shall include a schedule stating each reserve account for capital expenditures and deferred maintenance as a
separate line item with the following minimum disclosures:
1. The total estimated useful life of the asset;
2. The estimated remaining useful life of the asset;
3. The estimated replacement cost or deferred maintenance expense of the asset;
4. The estimated fund balance as of the beginning of the period for which the budget will be in effect; and;
5. The developer's total funding obligation, when all units are sold, for each converter reserve account established pursuant
to section 718.618, Florida Statutes, if applicable.
(f) If the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association
shall include a separate schedule of any pooled reserves with the following minimum disclosures:
1. The total estimated useful life of each asset within the pooled analysis;
2. The estimated remaining useful life of each asset within the pooled analysis;
3. The estimated replacement cost or deferred maintenance expense of each asset within the pooled analysis; and
4. The estimated fund balance of the pooled reserve account as of the beginning of the period for which the budget will be in
effect.
(g) Include a separate schedule of any other reserve funds to be restricted by the association as a separate line item with the
following minimum disclosures:
1. The intended use of the restricted funds; and,
2. The estimated fund balance of the item as of the beginning of the period for which the budget will be in effect.
(5) Limited common elements. If an association maintains limited common elements at the expense of only those unit owners entitled
to use the limited common elements pursuant to Section 718.113(1), Florida Statutes, the budget shall include a separate
schedule, or schedules, conforming to the requirements for budgets as stated in this rule, of all estimated expenses specific to
each of the limited common elements, including any applicable reserves for deferred maintenance and capital expenditures. The
schedule or schedules may group the maintenance expense of any limited common elements for which the declaration provides
that the maintenance expense is to be shared by a group of unit owners.
61B-22.005 Reserves. Reserves required by statute.
(1) Reserves required by statute. Reserves required by section 718.112(2(f), Florida Statutes, for capital expenditures and deferred
maintenance including roofing, painting, paving, and any other item for which the deferred maintenance expense or replacement
cost exceeds $10,000 shall be included in the budget. For the purpose of determining whether the deferred maintenance expense
or replacement cost of an item exceeds $10,000, the association may consider each asset of the association separately.
Alternatively, the association may group similar or related assets together. For example, an association responsible for the
maintenance of two swimming pools, each of which will separately require $6,000 of total deferred maintenance, may establish a
pool reserve, but is not required to do so.
(2) Commingling operating and reserve funds. Associations that collect operating and reserve assessments as a single payment shall
not be considered to have commingled the funds provided the reserve portion of the payment is transferred to a separate reserve
account, or accounts, within 30 calendar days from the date such funds were deposited.
(3) Calculating reserves required by statute. Reserves for deferred maintenance and capital expenditures required by section
718.112(2)(f), Florida Statutes, 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 or group of assets over the remaining useful life of the asset
or group of assets. Funding formulas for reserves required by Section 718.112(2)(f), Florida Statutes, shall be based on either a
separate analysis of each of the required assets or a pooled analysis of two or more of the required assets.
(a) If the association maintains separate reserve accounts for each of the required assets, the amount of the current year
contribution to each reserve account shall be the sum of the following two calculations:
1. The total amount necessary, if any, to bring a negative account balance to zero; and,
2. The total estimated deferred maintenance expense or estimated replacement cost of the reserve asset less the
estimated balance of the reserve account as of the beginning of the period for which the budget will be in effect. The
remainder, if greater than zero, shall be divided by the estimated remaining useful life of the asset. The formula may be
adjusted each year for changes in estimates and deterred maintenance performed during the year and may consider
factors such as inflation and earnings on invested funds.
(b) If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to
the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance
on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the
remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected
annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the
current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The
reserve funding formula shall not include any type of balloon payments.
(4) Estimating reserves which are not required by statute. Reserves which are not required by section 718.112(2)(f), Florida Statutes,
are not required to be based on any specific formula.
(5) Estimating non-converter reserves when the developer is funding converter reserves. For the purpose of estimating non-converter
reserves, the estimated fund balance of the non-converter reserve account established pursuant to section 718.618, Florida
Statutes, shall be the sum of:
(a) The developer's total funding obligation, when all units are sold, for the converter reserve account pursuant to section 718.618,
Florida Statutes; and,
(b) The estimated fund balance of the non-converter reserve account, excluding the developer's converter obligation, as of the
beginning of the period for which the budget will be in effect.
(6) Timely funding. Reserves included in the adopted budget are common expenses and must be fully funded unless properly waived or
reduced. Reserves shall be funded in at least the same frequency that assessments are due from the unit owners (e.g., monthly or
quarterly).
(7) Restrictions on use. In a multicondominium association, no vote to allow an association to use reserve funds for purposes other
than that for which the funds were originally reserved shall be effective as to a particular condominium unless conducted at a
meeting at which the same percentage of voting interest in that condominium that would otherwise be required for a quorum of the
association is present in person or by proxy, and a majority those present in person or by limited proxy, vote to use reserve funds for
another purpose.. Expenditure of unallocated interest income earned on reserve funds is restricted to any of the capital
expenditures, deferred maintenance or other items for which reserve accounts have been established.
(8) Annual vote required to waive reserves. Any vote to waive or reduce reserves for capital expenditures and deferred maintenance
required by section 718.112(2)(f)2, Florida Statutes, shall be effective for only one annual budget. Additionally, in a
multicondominium association, no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at
which the same percentage of voting interests in that condominium that would otherwise be required for a quorum of the association
is present, in person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves. For
multicondominium associations in which the developer is precluded from casting its votes to waive or reduce the funding of reserves,
no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at which the same percentage of
non-developer voting interest in that condominium that would otherwise be required for a quorum of the association is present, in
person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves.
61B-22.006 Financial Reporting Requirements.
…(3) Disclosure requirements. The financial statements required by sections 718.111(13) and 718.301(4), Florida Statutes, shall contain
the following disclosures within the financial statements, notes, or supplementary information:
(a) The following reserve disclosures shall be made regardless of whether reserves have been waived for the fiscal period covered
by the financial statements:
1. The beginning balance in each reserve account as of the beginning of the fiscal period covered by the financial statements;
2. The amount of assessments and other additions to each reserve account including authorized transfers from other reserve
accounts;
3. The amount expended or removed from each reserve account, including authorized transfers to other reserve accounts;
4. The ending balance in each reserve account as of the end of the fiscal period covered by the financial statements;
5. The amount of annual funding required to fully fund each reserve account, or pool of accounts, over the remain useful life of
the applicable asset or group of assets;
6. The manner by which reserve items were estimated, the date the estimates were last made, the association's policies for
allocating reserve fund interest, and whether reserves have been waived during the period covered by the financial
statements; and,
7. If the developer has established converter reserves pursuant to section 718.618(1), Florida Statutes, each converter reserve
account shall be identified and include the disclosures required by this rule.


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## uscav8r (Feb 22, 2014)

Well I guess the bond payoff partially explains why the mf have stayed about steady with slight increases even though funding of reserves was waived in recent years. 

I figured this topic would come up in TUG eventually!


Sent from my iPhone using Tapatalk


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