As PGI Section 22 approaches fall, the Board is immersed in one of its most important functions, which is setting the 2026 Budget. The budget drives the expected spending for next year. It also establishes what assessment is needed to fund the operation of our community.
Section 22’s budget process is dictated by Chapter 720 of the Florida Statute for homeowners’ associations (HOAs) and the PGI Section 22 By-Laws. What that means is that Florida law and an HOAs’ documents dictate what must in a budget, how it is presented to the owners, and when it must be adopted.
Section 720.303 of the Florida Statutes is controlling law, and articulates what every Florida HOA budget must contain. Section 720.303(c)(6) specifically deals with budgets.
This statute says that an HOA must adopt an annual budget that sets out the annual operating expenses. It requires that the budget must reflect the estimated revenues and expenses for the coming year, and the estimated surplus at the end of 2025. The budget must include reserve accounts for capital expenditures and deferred maintenance for which the HOA is responsible.
Florida law also mandates that the HOA provide all owners with a copy of the proposed annual budget, or a notice that a copy of the budget is available upon request. Copies must be provided at least two weeks before the meeting to adopt the budget. All owners must be notified of when and where the meeting to adopt the budget will be held. The meeting to adopt the budget must be an open meeting, and all owners should be given an opportunity to discuss the budget before a vote of the Board is taken.
The Section 22 Board’s budgeting process is controlled by not only Florida Statute but also by our Revised By-Laws. Section 6.2 of the By-Laws deal specifically with budgets. That section mandates that the Board, at a November meeting, shall adopt a budget of general expenses for the next fiscal year. It states the budget must reflect estimated revenues and expenses for the next fiscal year, and the estimated surplus or deficit as of the end of the current year. Our By-Laws also require that the budget be detailed and shall state the amounts budgeted by accounts and expense classifications.
Section 6.3 of the By-Laws deals with reserves. Technically, our By-Laws make reserves discretionary. Florida law has taken away that discretion, and now mandates a “reserve study” and a procedure to fund those reserves. Our By-Laws require the funding of reserves must be laid out in the budget. It also restricts the use of the reserves “for the purposes for which they were reserved, unless another use is approved by unanimous consent of the entire Board.”
Finally, in the Florida statute, there is the 115% rule. If a Florida HOA Board approves an assessment that is 115% over last year’s assessment, there must be a special meeting of the owners to approve the assessment. In a change to Florida law effective in 2025, if the Board presents a budget with assessments over the 115% limit, the Board must also provide a “substitute budget” for the owners’ consideration that excludes discretionary expenses for voter approval. The Florida legislature is the gift that keeps on giving.
A lot of work has already been done on PGI Section 22’s budget for next year. There have been Board workshops held where the budget was reviewed line by line. Reserves are always a tough topic. Section 22 is in the middle of a three-year $1.5M road paving project. We are also in the middle of drilling two new wells vitally needed for our irrigation system. Our reserves are dwindling quickly. The Board has engaged a company to assist us doing a reserve study in 2026. This should give us specific guidance to follow on year reserve funding.
By the time you add the income of our assessments and income from our amenities, the Section 22 Board is a $6M to $7M a year enterprise. The Board is keenly aware of the almost unimaginable housing expansion going on along Burnt Store Road, and the need to keep Burnt Store Marina well positioned in the marketplace.
The Board is on track to adopt the Section 22 budget in November, and have the assessment bills out by the beginning of December. At a minimum, the proposed budget will be sent out two weeks before our budget Board meeting. Please take the time to review the budget, and attend the meeting. Assessments will be due January 1st.
As a final thought, talking budgets is never fun. Taxing our neighbors through an assessment is never fun. With that said, it is a necessary process if we are to protect our investment here in BSM. Every owner has a right to expect the money is spent prudently. Our community is run by volunteers. It is the volunteers that make BSM such a special place. If you know somebody on the ARC committee, the irrigation committee, the CERT Team, the fitness club, the dog park, golf course volunteers, or any of the other committees, please take the time to thank them. I deeply appreciate their dedication and time!
