CAI-NJ Jan. 2019 (w)

association’s reserve account. In such a case, the Board may decide to “borrow” the additional monies needed from other line items in the reserve fund and adjust the associ- ation’s contributions in the following years to make up for the created shortfall. It may also decide to cre- ate a repayment schedule to replace the monies borrowed from the other reserve line items to restore proper funding of the association reserves within a reasonably short period of time. Boards should consult with their Reserve Specialist, association attorney and accountant to make sure they are following proper pro- cedures and guidelines to fund the project through the reserve account. - Assessment: Associations who decide that they will need to assess their members for the total cost of the cladding project, or part thereof, must determine if they have any lan- guage contained in their governing documents that limit the amount the board can spend without a vote of approval by the membership. Although it is common to see such limitations when a project is to add an improvement that didn’t originally exist, it is rare to see such a limitation when a project is to replace an existing capital item like cladding. Boards should be aware that in cases where a vote is required for a capital improvement project, there could be an argument that what the board thought was a replacement project is actually an improvement project when the board decides to replace the cladding with a differ- ent material or design. However, there is some debate on this issue

and boards should always carefully consider these changes and discuss them with the association’s attorney before contracting and performing such work. - Borrowing: Boards have a few options to explore if their existing

funds are not sufficient or available for the cladding replacement proj- ect. They can consider traditional loans from financial institutions or borrowing from other association accounts that may not have been set up to originally fund the replace-

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