Dear Resident's

There seems to be some confusion and misunderstanding in the community
regarding reserves vs. retained earnings.  I would like to try to enlighten
those of you who are confused.

1.  Retained earnings - Are the money we have in the budget for emergency
or optional expenditures.  An example would be adding a security guard.  This
would come out of our retained earnings.  The community would have to pay for
the guard.  If we spent all of our retained earnings and did not have enough to
cover the added expense of a guard.  We (the board) would then have to go to the
community and either assess for the difference and or wait until the next budget
when we would then add the expense of a guard.

Also if we have an unexpected expense such as the fence by the RV lot being
damaged by excessive wind this would come out of our retained earnings.

2.. Reserves - This is the money that a board is required by law to set
aside amounts to cover certain items in a community such as Roofs, Roads,
Clubhouse, Pool, etc.  Right now our clubhouse interior needs to be repainted. 
That is money that we have been required to set aside to spend on reserve items,
one of which is painting. 

This money can not be spent on any other item or problem.  Reserve money
can only be spent on the line item it was reserved for.

The bottom line is this.  We will be painting the interior of the clubhouse
this summer.  It will come out of our reserves.  This is exactly why we have
reserves and this is exactly how reserves should be spent.

I hope this clears up any confusion between the two very different pools of
money. They are not interchangeable.