Financial

Jupiter Bay is a multicondominium association comprised of eight individual associations:

All eight associations share a common Community area containing a lake, waterfall, two swimming pools, two tennis courts, sidewalks, parking lots, roadways, bocce ball court and landscaped grounds.

Separate accounting records, both operating and reserves, are maintained for each of the eight associations.

Multicondominium Association accounting requires all income and expense to be posted to the correct association.  This is true for both Operating and Reserve accounts.

• Operating Accounts are used for day-to-day operation of the association, whereas
• Master and individual condominium Reserve Accounts are required for capital expenditures and deferred maintenance.

Condominiums use Accrual Accounting, rather than Cash Basis, for tracking and recording income and expenses.  This means that income exists when owner invoices are generated, and expenses exist when vendor bills are entered into the accounting software.

At the end of each year an Annual Financial Statement Audit is conducted as required by Florida statutes.  The Annual Audit reviews the accounting records and calculates cash balances for the Operating Account(s).  Jupiter Bay maintains its own Reserve Account balances on a Reserve Schedule that is maintained monthly and presented to owners each year as a part of the Annual Budget.

Common Expenses (15 Accounts) *

*Each Unit Pays 1/359

Individual Building Expenses

Here's  detail on the 10 expenses that are split, in differing amounts, to the 8 individual associations:

1. License/Fire Inspection Fees – These fees are charged directly to the applicable association/building. They vary because of the different fire protection systems described above.

2. Utilities – With the exception of elevator phones, all utility (water, sewerage, electricity, cable TV/Internet, and pool/office phones) expenses are allocated evenly (1/359th) to each unit. Elevator phones are charged to those associations/buildings with elevators.

3. Property Insurance – Property insurance premiums are split based on the insured value of the building(s). For the 2/2021 to 2/2022 insurance period, 42.23% of the building property insurance budget was allocated to the East, with 6.80% to the Villas, and 8.15% to each of the 6 West associations/buildings.  The remaining 2.07%, which was for common structures insurance, was split evenly among each individual condo unit.

4. Wind Insurance – The 4 East buildings are less prone to wind damage and therefore have lower per unit wind insurance costs ($43.37 per month versus $74.37 per month for the Villas and $89.16 per month for the West). Wind insurance premiums are charged to the individual 8 associations based on the premium amount. For the 2/2021 to 2/2022 insurance period, 21.84% of the building wind insurance budget was allocated to the East, with 8.88% to the Villas, and 10.64% to each of the 6 West associations/buildings. The remaining 5.41%, which was for common structures insurance, was split evenly among each individual condo unit.

5. Fire Protection – The three 5-story East buildings have fire sprinklers in each unit, the West buildings have fire sprinklers only in the attics, and the Villas have no fire sprinklers. Half of the West pump house equipment is used to deliver high-pressure sprinkler water to the West Buildings and restaurant; whereas, the East has its own fire sprinkler pump house adjacent to the East B building. All buildings have fire extinguishers. Fire protection expenses vary based on equipment testing, maintenance, and replacement costs. Due to its extensive fire protection systems, the East usually pays more for fire protection (25% to 45% of the total fire protection expense).

6. Elevator Repair & Maintenance – The monthly elevator service contract charge is split evening among the 10 elevator locations (4 for the East and one for each West building). Charges not covered by the contract are charged to the building requiring the repair.

7. East Generator Repair & Maintenance – Only the East has an emergency electric generator and receives all related charges.

8. Pest Control – The East and West/Villas have separate rodent control contracts with Hewlett that are directly charged.  Costs for the general pest control contract with Global are divided 1/359.

9. Trash Removal/Recycle – Expenses are allocated evenly (1/359th) to each unit.

10. Building Repair & Maintenance – All building repair and maintenance expenses are charged to the association/building incurring the expense.

Florida statutes require expenses to be properly allocated to the associations incurring the costs.

This website's developer, Paul St.Clair, wrote Jupiter Bay's original Financial Policy in 2009. In 2014, Paul was asked by the then current president to update the policy to conform to current statutes, code and procedures.  This task was initially completed in February, 2014; and afterwards eight policy drafts were developed, sent to Board members, and reviewed with Jupiter Bay's Treasurer and bookkeeping staff. The updated version, which extensively references the Association's Condominium Documents and Florida statutes, was approved by the Board of Directors at the May 20th 2014 Board Meeting.

The following additional updates to the 2014 version of the Association’s Financial Policy were approved by the Board at a 10/21/15 Board Meeting:

• Clarification of multi-condominium Association and commingling of funds (Paragraphs 3 & 4).
• Changing Peachtree Sage 50 accounting software to QuickBooks (Paragraph 5).
• Adding “bonds” to the reserve investment options (Paragraph 7).
• Adding “unit’s exterior door” to the list of limited common elements (Paragraph 8, Section 2).
• Listing of all of the individual reserve items included within the common and building reserve schedule categories (Paragraph 9).
• Deleting “adjusting journal entries” from the monthly financial report contents (Paragraph 10).

Following is the latest version reflecting these changes.

Reserve Expense Rules

• Condominiums must have reserve accounts for Roof Replacement, Building Painting & Pavement Resurfacing.
• Reserve accounts are required for any item for which deferred maintenance expense or replacement cost exceeds $10,000.
• Reserve accounts must be fully funded at same frequency as assessment collections (i.e., quarterly).
• Use of Reserve funds for other than originally intended use requires owner approval.
• Membership has the right to annually vote to not fund reserves or to pool reserves. Pooled reserves do not require 100% funding of components.
• General or contingency reserves are not classified as reserves and must be in the operating budget.

Jupiter Bay Reserve Accounts

In condominium association financial accounting, there is oftentimes confusion between the terms Cash Balance and Fund Balance. As a not-for-profit corporation, the Association uses Fund Accounting, which emphasizes how money is spent rather than profitability, and it requires that operating and replacement funds (reserves) be classified separately. Also, Accrual Accounting is used, rather than Cash Basis, for tracking and recording income and expenses.  This means that income exists when owner invoices are generated, and expenses exist when vendor bills are entered into the Association’s accounting software.

Cash Balance is a point-in-time value based primarily on:

• Cash-on hand (e.g., petty cash)
• + Receivables (money invoiced and not yet received)
• -  Payables (bills received but not yet paid)

Because of separate accounting for operating funds and reserves, a “due to/due from” account is included showing money owed to the Operating Account from the Reserve Account.

Cash Balance is a lot like an individual’s checking account, where the daily balance fluctuates day-by-day as income is posted and checks are written. For example, the Association’s financial reports showed a $-94,337 cash balance in December 2018 and a $229,064 cash balance in January 2019. Consequently, Cash Balance, as posted on a monthly financial report, is a rather meaningless figure for determining the financial strength of an organization. This number is more suspect for two reasons:

• Although we generally wait until the 15th of the following month to produce the financial report for the prior month end, new transactions frequently trickle in past the cutoff date, and
• The December monthly financial report does not reflect the auditor’s yearend adjusting journal entries.

On the other hand, Fund Balance is a very precise audited number. It can be calculated for the current year’s Operating Fund as Revenues minus Expenses. According to the Auditor’s Report, this figure for the year ending December 31, 2018 is $-1,110. Counting all prior years, the Association’s fund balance was $-74,855, the number that I report. From a balance sheet perspective, this same number results from the calculation of total Assets minus total Liabilities.

Accountants caution that Cash Balance is different than Fund Balance. They say that “Cash is a current liquid asset while Fund is a liability which may be current or non-current and doesn’t have to be liquid.” However, the association’s accurate financial position comes from the Fund Balance line of the Auditor’s Annual Report and not from any point-in-time available cash figure from an imprecise monthly financial report. Fund Balance reflects the Association’s true net financial position, which provides an accurate Cash Balance. Fund Balance tells how much money is being borrowed from future assessments.