Subject: RE: Island Towers Master Assn - Flood Insurance

Joe & Lisa,

I'm for anything that? minimizes the chance for mix ups, and that allows later boards to carry on with a minimal amount of confusion.

Drago

-----Original Message-----

Sent: Monday, August 06, 2012 12:42 PM

To: dkahnau; 'metelski joseph'

Cc: Liz Fox

Subject: RE: Island Towers Master Assn - Flood Insurance

Thanks Drago.? That answers all of my questions.? The invoices that were paid in July were all reclassified to "Prepaid Insurance" (Account 1320-00) and ultimately paid from Operating in accordance with the budget.?

I'm still hopeful that with the next budget year the Board will agree to let us open a segregated bank account for Insurance Savings that would be used to pay premiums.? It's much cleaner that way and everyone can easily see what surplus is available from year to year.? Something to consider:)

Thanks for your help.

Best regards,

Lisa Pezone

Staff Accountant

Condominium Associates

727-573-9300

________________________________________

From: dkahnau [dkahanu@tampabay.rr.com]

Sent: Monday, August 06, 2012 12:33 PM

To: 'metelski joseph'; Lisa Pezone

Cc: Liz Fox

Subject: RE: Island Towers Master Assn - Flood Insurance

Joe & Lisa,

We only started paying the insurance bill out from cash a few years ago up until then we use a loan. The first payment came out of the left over's from the building special assessment. Every year since it has been budgeted for and carried in the operational accounts (since we pay in advance, the budget represents two years ahead). IT WAS NEVER IN THE RESERVES. It was carried in the operational accounts because it's an annual operational expense. Also, I thought CA set up the accounting location based on standard accounting practices. I remember some subsequent discussion about putting the budgeted insurance funds into the reserves but we decided against it because (I

think) we wanted the insurance reserves to be for the specific functions of paying any deductibles' and all covering any unexpected insurance increases.

We didn't want to confuse the two types of moneys in one reserve: budgeted operational money to pay annual insurance v budgeted reserve money to pay contingencies for deductibles and unanticipated increase increases.

Unfortunately thinks results in the false impression that we have an operational surplus when in reality we we're just accumulating more to pay our insurance in the next year.

It would be nice to put the funds currently being collected for next year's insurance payment some place where it would NOT give a false impression of a fund surplus. Joe do you remember when Liz, at a meeting of the board, highlighted how much money we had in surplus? We subsequently had to explain that it was NOT surplus but rather money being held to pay bills not yet due.

I'm not sure how well our explanation was received.

Hope that perspective helps.

Drago

-----Original Message-----

Sent: Friday, August 03, 2012 5:41 PM

To: Lisa Pezone

Cc: metelski joseph; fox liz; kahanu drago

Subject: Re: Island Towers Master Assn - Flood Insurance

hi lisa, the easy answer is, i don't know.? insurance premiums have for the last few years always been paid out of operating funds, not reserves. why this was changed i do not know, liz is suppose to check with me if, for what ever reason, a change is contemplated. matter of fact the finance committee, last year, asked me if they should take into consideration the insurance reserves, i told them i like to have those reserves - in reserve - in case op cash turns up low in any given month. the june numbers did not indicate that the master op cash was low. did something happen in july?

please check with liz and drago on this. i really do not understand.

if you recall when we met last december i showed you, liz and nelli the spread sheet i keep to track insurance premiums coming out of op cash, and a

$6,000 + payment should be easy. would liz or drago let me know what the problem was on this payment. joe

On Aug 3, 2012, at 4:02 PM, Lisa Pezone wrote:

Hi Joe,

In July, the flood insurance premium was paid with reserve funds; however, the Assn has also budgeted for insurance as an operating expense. In past years, we've paid premiums from operating, so I'm confused as to why this year the reserves were used.

Although the insurance reserves are being funded, it's not nearly enough to pay annual premiums. Can you give me some background as to why the Association budgets insurance as both an operating expense and a reserve item?

Thanks so much for your help.

Lisa Pezone

Staff Accountant

Condominium Associates

727-573-9300

Source: http://islandtowersdunedin.blogspot.com/2012/08/subject-re-island-towers-master-assn.html

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