The HOA Board recently unveiled their plan to “balance the budget”—but their solution is reckless and deceptive. Instead of properly managing expenses, they have decided to drain our reserve funds—$400,000—and invest it in risky Schwab accounts. This locks the funds from use for unexpected expenses like a recall election.
What your Vice President / Treasurer isn’t telling you:
1. Reserve fund interest should be used to offset inflation – These funds exist to ensure the long-term financial health of our community, not to cover budget shortfalls.
2. Investment gains are being used to pay for legal fees and meetings – Instead of addressing budget issues responsibly, the Board is diverting investment returns to cover operating expenses.
3. Any gains (or losses) are still subject to steep taxes – The HOA is liable for 21% federal tax and 8.84% state tax on these earnings, cutting into any potential benefit.
While our HOA is a nonprofit, tax laws require that income unrelated to its primary purpose must be taxed. Based on advice from the management company, their attorney, and their accountant, it’s likely that the HOA’s reported financials don’t tell the full story—and may be misleading homeowners.
This is yet another example of why this Board and the management company they support must be held accountable and replaced. Homeowners deserve transparency, responsible financial management, and leadership that prioritizes our community’s long-term stability over short-term cover-ups.
