Loan to Pay for the Paving
We had made a request from Citizens Bank for a loan to pay for the paving of our streets and they were going to keep our invested reserves as collateral for the loan for the duration of the five-year pay off schedule. This meant we would not have any reserves available except those we set aside after the signing of the loan.
In addition, the “boiler-plate” language of the loan document was not to the liking of the board of directors, causing the board to decide to pay for the paving from our reserves and repay this action by increasing our reserve contribution by the estimated monthly cost of the load. In essence we are lending the money to ourselves at no interest and the repayment period will be less than the bank had requested.
The cost of the paving was $25,426. By adding $500 per month to our scheduled reserve saving schedule, we will be back to the current level of reserves in approximately 14 months. However, the board intends to mimic the loan repayment schedule of five years, thus accumulating $30,000 additional in the reserve account. The board appreciates the fact that more than 75% of the co-owners signed the authorization to borrow the money, thus signifying your faith in the board and their decisions and, of course, your desire to have your streets paved. We are now the envy of the entire Water Edge community!
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