The ACHOA Communications Committee (ACCC for short) has responded to an individually asked question concerning the ACHOA responsibilities under NRS concerning a Reserve Study of major components of “The Club At ArrowCreek” that may be included if the ACHOA members vote to acquire the club.

The question is restated with the response below. The NRS paragraphs cited are at the end.

“Below is the statute requiring funding of adequate reserves for common elements. The golf courses, clubhouse, parking lot and even furniture and personal property (golf carts) etc. will become “major components of the common elements” that will require adequate funding of reserves, since we don’t have funding for replacing these items. This could very well be a significant expense, but as highlighted in green below, the HOA’s Executive Board has the power to impose fees without approval of unit owners.”

An independent Reserve Study by Browning Reserve Group has been contracted for by the ACHOA Board of Directors and ArrowCreek Community Club Committee (ACCC). The preliminary report is currently being reviewed by the following Board Advisory Committees – ACCC, Reserve Study Committee and Budget and Finance Committee. The committees have been tasked to make sure the report is comprehensive and covers all assets of “The Club At ArrowCreek” if approved for purchase by the ACHOA members, as per the NRS 116 and Nevada Administrative Code 116.

In our preliminary discussions with Arnold Palmer Golf we have insisted that the reserve contribution associated with the Club assets be included as an expense of the proposed Joint Venture in order to cover the additional cost to homeowners. Arnold Palmer agreed to this in concept, pending the actual Reserve Study results. The preliminary Reserve Study was released to Arnold Palmer Golf for negotiation purposes. Results of negotiation are still pending and will be included in a Letter of Intent to be shared with the HOA membership.

This Reserve Study and resulting Arnold Palmer Golf (APG) negotiations will require future presentations by the Board to the entire ACHOA membership concerning Reserve Fund Assessments both current and with the golf purchase combined. The ACHOA Board has stated that it will not increase the monthly assessment to the ACHOA members without proper due diligence and communication with the membership concerning the Reserve Study Results. Any monthly reserve assessments for this potential purchase will not be automatic.

As additional information is developed through negotiations with APG by the ACCC, the Communications Committee will update the community. Please visit the ACHOA web-site and come to the Board/Town Hall meetings for updates.

ACHOA Communications Committee

NRS:
NRS 116.3115  Assessments for common expenses; funding of adequate reserves; collection of interest on past due assessments; calculation of assessments for particular types of common expenses; notice of meeting regarding assessments for capital improvements.

1.  Until the association makes an assessment for common expenses, the declarant shall pay all common expenses. After an assessment has been made by the association, assessments must be made at least annually, based on a budget adopted at least annually by the association in accordance with the requirements set forth in NRS 116.31151. Unless the declaration imposes more stringent standards, the budget must include a budget for the daily operation of the association and a budget for the reserves required by paragraph (b) of subsection 2.

2.  Except for assessments under subsections 4 to 7, inclusive, or as otherwise provided in this chapter:

(a) All common expenses, including the reserves, must be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsections 1 and 2 of NRS 116.2107.

(b) The association shall establish adequate reserves, funded on a reasonable basis, for the repair, replacement and restoration of the major components of the common elements and any other portion of the common-interest community that the association is obligated to maintain, repair, replace or restore. The reserves may be used only for those purposes, including, without limitation, repairing, replacing and restoring roofs, roads and sidewalks, and must not be used for daily maintenance. The association may comply with the provisions of this paragraph through a funding plan that is designed to allocate the costs for the repair, replacement and restoration of the major components of the common elements and any other portion of the common-interest community that the association is obligated to maintain, repair, replace or restore over a period of years if the funding plan is designed in an actuarially sound manner which will ensure that sufficient money is available when the repair, replacement and restoration of the major components of the common elements or any other portion of the common-interest community that the association is obligated to maintain, repair, replace or restore are necessary. Notwithstanding any provision of the governing documents to the contrary, to establish adequate reserves pursuant to this paragraph, including, without limitation, to establish or carry out a funding plan, the executive board may, without seeking or obtaining the approval of the units’ owners, impose any necessary and reasonable assessments against the units in the common-interest community. Any such assessments imposed by the executive board must be based on the study of the reserves of the association conducted pursuant to NRS 116.31152.

3.  Any assessment for common expenses or installment thereof that is 60 days or more past due bears interest at a rate equal to the prime rate at the largest bank in Nevada as ascertained by the Commissioner of Financial Institutions on January 1 or July 1, as the case may be, immediately preceding the date the assessment becomes past due, plus 2 percent. The rate must be adjusted accordingly on each January 1 and July 1 thereafter until the balance is satisfied.

4.  Except as otherwise provided in the governing documents:

(a) Any common expense associated with the maintenance, repair, restoration or replacement of a limited common element must be assessed against the units to which that limited common element is assigned, equally, or in any other proportion the declaration provides;

(b) Any common expense benefiting fewer than all of the units or their owners may be assessed exclusively against the units or units’ owners benefited; and

(c) The costs of insurance must be assessed in proportion to risk and the costs of utilities must be assessed in proportion to usage.

5.  Assessments to pay a judgment against the association may be made only against the units in the common-interest community at the time the judgment was entered, in proportion to their liabilities for common expenses.

6.  If damage to a unit or other part of the common-interest community, or if any other common expense is caused by the willful misconduct or gross negligence of any unit’s owner, tenant or invitee of a unit’s owner or tenant, the association may assess that expense exclusively against his or her unit, even if the association maintains insurance with respect to that damage or common expense, unless the damage or other common expense is caused by a vehicle and is committed by a person who is delivering goods to, or performing services for, the unit’s owner, tenant or invitee of the unit’s owner or tenant.

7.  The association of a common-interest community created before January 1, 1992, is not required to make an assessment against a vacant lot located within the community that is owned by the declarant.

8.  If liabilities for common expenses are reallocated, assessments for common expenses and any installment thereof not yet due must be recalculated in accordance with the reallocated liabilities.

9.  The association shall provide written notice to each unit’s owner of a meeting at which an assessment for a capital improvement is to be considered or action is to be taken on such an assessment at least 21 calendar days before the date of the meeting.

(Added to NRS by 1991, 567; A 1993, 2371; 1995, 2230; 1997, 3119, 3120; 1999, 3008; 2001, 2491; 2005, 2603; 2009, 1734, 2805, 2892; 2011, 2447)

NRS 116.0605  “Major component of the common elements” defined.  “Major component of the common elements” means any component of the common elements, including, without limitation, any amenity, improvement, furnishing, fixture, finish, system or equipment, that may, within 30 years after its original installation.