Florida Senate - 2021                        COMMITTEE AMENDMENT
       Bill No. SB 1490
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  03/24/2021           .                                

       The Committee on Community Affairs (Pizzo) recommended the
    1         Senate Amendment (with directory and title amendments)
    3         Delete lines 119 - 275
    4  and insert:
    5  pursuant to sub-subparagraph (16)(b)2.
    6         18.All other written records of the association not
    7  specifically included in the foregoing which are related to the
    8  operation of the association.
    9         (13) FINANCIAL REPORTING.—Within 90 days after the end of
   10  the fiscal year, or annually on a date provided in the bylaws,
   11  the association shall prepare and complete, or contract for the
   12  preparation and completion of, a financial report for the
   13  preceding fiscal year. Within 21 days after the final financial
   14  report is completed by the association or received from the
   15  third party, but not later than 120 days after the end of the
   16  fiscal year or other date as provided in the bylaws, the
   17  association shall mail to each unit owner at the address last
   18  furnished to the association by the unit owner, or hand deliver
   19  to each unit owner, a copy of the most recent financial report
   20  or a notice that a copy of the most recent financial report will
   21  be mailed or hand delivered to the unit owner, without charge,
   22  within 5 business days after receipt of a written request from
   23  the unit owner. The division shall adopt rules setting forth
   24  uniform accounting principles and standards to be used by all
   25  associations and addressing the financial reporting requirements
   26  for multicondominium associations. The rules must include, but
   27  not be limited to, standards for presenting a summary of
   28  association reserves, including a good faith estimate disclosing
   29  the annual amount of reserve funds that would be necessary for
   30  the association to fully fund reserves for each reserve item
   31  based on the straight-line accounting method. This disclosure is
   32  not applicable to reserves funded via the pooling method. In
   33  adopting such rules, the division shall consider the number of
   34  members and annual revenues of an association. Financial reports
   35  shall be prepared as follows:
   36         (a) An association that meets the criteria of this
   37  paragraph shall prepare a complete set of financial statements
   38  in accordance with generally accepted accounting principles. The
   39  financial statements must be based upon the association’s total
   40  annual revenues, as follows:
   41         1. An association with total annual revenues of $150,000 or
   42  more, but less than $300,000, shall prepare compiled financial
   43  statements.
   44         2. An association with total annual revenues of at least
   45  $300,000, but less than $500,000, shall prepare reviewed
   46  financial statements.
   47         3. An association with total annual revenues of $500,000 or
   48  more shall prepare audited financial statements.
   49         (b)1. An association with total annual revenues of less
   50  than $150,000 shall prepare a report of cash receipts and
   51  expenditures.
   52         2. A report of cash receipts and disbursements must
   53  disclose the amount of receipts by accounts and receipt
   54  classifications and the amount of expenses by accounts and
   55  expense classifications, including, but not limited to, the
   56  following, as applicable: costs for security, professional and
   57  management fees and expenses, taxes, costs for recreation
   58  facilities, expenses for refuse collection and utility services,
   59  expenses for lawn care, costs for building maintenance and
   60  repair, insurance costs, administration and salary expenses, and
   61  reserves accumulated and expended for capital expenditures,
   62  deferred maintenance, and any other category for which the
   63  association maintains reserves.
   64         (c) An association may prepare, without a meeting of or
   65  approval by the unit owners:
   66         1. Compiled, reviewed, or audited financial statements, if
   67  the association is required to prepare a report of cash receipts
   68  and expenditures;
   69         2. Reviewed or audited financial statements, if the
   70  association is required to prepare compiled financial
   71  statements; or
   72         3. Audited financial statements if the association is
   73  required to prepare reviewed financial statements.
   74         (d) Unless an association invests funds pursuant to
   75  paragraph (16)(b), and only if approved by a majority of the
   76  voting interests present at a properly called meeting of the
   77  association, an association may prepare:
   78         1. A report of cash receipts and expenditures in lieu of a
   79  compiled, reviewed, or audited financial statement;
   80         2. A report of cash receipts and expenditures or a compiled
   81  financial statement in lieu of a reviewed or audited financial
   82  statement; or
   83         3. A report of cash receipts and expenditures, a compiled
   84  financial statement, or a reviewed financial statement in lieu
   85  of an audited financial statement.
   87  Such meeting and approval must occur before the end of the
   88  fiscal year and is effective only for the fiscal year in which
   89  the vote is taken, except that the approval may also be
   90  effective for the following fiscal year. If the developer has
   91  not turned over control of the association, all unit owners,
   92  including the developer, may vote on issues related to the
   93  preparation of the association’s financial reports, from the
   94  date of incorporation of the association through the end of the
   95  second fiscal year after the fiscal year in which the
   96  certificate of a surveyor and mapper is recorded pursuant to s.
   97  718.104(4)(e) or an instrument that transfers title to a unit in
   98  the condominium which is not accompanied by a recorded
   99  assignment of developer rights in favor of the grantee of such
  100  unit is recorded, whichever occurs first. Thereafter, all unit
  101  owners except the developer may vote on such issues until
  102  control is turned over to the association by the developer. Any
  103  audit or review prepared under this section shall be paid for by
  104  the developer if done before turnover of control of the
  105  association.
  106         (e)If an association invests funds pursuant to paragraph
  107  (16)(b), the association must prepare financial statements
  108  pursuant to paragraphs (a) and (b) of this subsection.
  110         (a)Unless otherwise prohibited in the declaration, and in
  111  accordance with s. 718.112(2)(f), an association, including a
  112  multicondominium association, may invest any funds in one or any
  113  combination of investment products described in this subsection.
  114         (b)If an association invests funds in any type of
  115  investment product other than a depository account described in
  116  s. 215.47(1)(h), the association must meet all of the following
  117  requirements:
  118         1.The board must obtain prior approval by a majority vote
  119  of the unit owners or all nondeveloper voting interests at a
  120  duly called meeting of the association before investing funds in
  121  investment products other than a depository account described in
  122  s. 215.47(1)(h).
  123         2.The board must develop a written investment policy
  124  statement and such statement must be annually approved during a
  125  budget meeting. An investment policy statement must, at minimum,
  126  address:
  127         a.Liquidity;
  128         b.Safety;
  129         c.Yield;
  130         d.Short-term and long-term goals;
  131         e.Authorized investments;
  132         f.The mix of investments allowed; and
  133         g.The limits of authority relative to investment
  134  transactions.
  135         3.The board must select an investment adviser who is
  136  registered under s. 517.12 and who is not related by affinity or
  137  consanguinity to any board member or unit owner. Any investment
  138  fees and commissions may be paid from the invested reserve funds
  139  or operating funds. The investment adviser selected by the board
  140  shall invest any funds not deposited into a depository account
  141  described in s. 215.47(1)(h) by the board and shall comply with
  142  the prudent investor rule in s. 518.11. The investment adviser
  143  shall act as a fiduciary to the association in compliance with
  144  the standards set forth in the Employee Retirement Income
  145  Security Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A)-(C). In case
  146  of conflict with other provisions of law authorizing
  147  investments, the investment and fiduciary standards set forth in
  148  this subparagraph shall prevail.
  149         4.At least once each calendar year, the association shall
  150  provide the investment adviser with the association’s investment
  151  policy statement, the most recent reserve study report or a good
  152  faith estimate disclosing the annual amount of reserve funds
  153  which would be necessary for the association to fully fund
  154  reserves for each reserve item, and the financial reports
  155  prepared pursuant to subsection (13). The investment adviser
  156  shall annually review these documents and provide the
  157  association with a portfolio allocation model that is suitably
  158  structured to match projected reserve fund and liability
  159  liquidity requirements. There must be at least 36 months of
  160  projected reserves in cash or cash equivalents available to the
  161  association at all times.
  162         (c)Portfolios managed by the investment adviser may
  163  contain any type of investment necessary to meet the objectives
  164  in the investment policy statement; however, portfolios may not
  165  contain stocks, securities, or other obligations that the State
  166  Board of Administration is prohibited from investing in under
  167  ss. 215.471, 215.4725, and 215.473 or that state agencies are
  168  prohibited from investing in under s. 215.472, as determined by
  169  the investment adviser.
  170         (d)The investment adviser shall:
  171         1.Annually provide the association with a written
  172  certification of compliance with this section; and
  173         2.Submit monthly, quarterly, and annual reports to the
  174  association which are prepared in accordance with investment
  175  industry standards.
  176         (e)Any principal, earnings, or interest managed under this
  177  subsection must be available at no cost or charge to the
  178  association within 15 business days after delivery of the
  179  association’s written or electronic request.
  181  ====== D I R E C T O R Y  C L A U S E  A M E N D M E N T ======
  182  And the directory clause is amended as follows:
  183         Delete line 43
  184  and insert:
  185  718.111, Florida Statutes, is amended, and paragraph (e) is
  186  added to subsection (13) of that section and subsection (16) is
  188  ================= T I T L E  A M E N D M E N T ================
  189  And the title is amended as follows:
  190         Delete lines 6 - 35
  191  and insert:
  192         requiring associations that make certain investments
  193         to prepare financial statements in a specified manner;
  194         authorizing associations to invest funds in specified
  195         investment products; requiring certain association
  196         boards to obtain prior approval before investing funds
  197         in certain investment products, annually develop an
  198         investment policy statement, and select an investment
  199         adviser who meets specified requirements; authorizing
  200         investment fees and commissions to be paid from
  201         invested reserve funds or operating funds; requiring
  202         investment advisers to invest certain operating or
  203         reserve funds in compliance with a specified rule;
  204         requiring investment advisers to act as association
  205         fiduciaries; providing construction; requiring that
  206         certain funds be held in specified accounts; requiring
  207         associations to provide their investment adviser with
  208         certain documents at least annually; requiring
  209         investment advisers to annually review such documents
  210         and provide the association with a portfolio
  211         allocation model that meets specified requirements;
  212         providing that portfolios may not contain certain
  213         investments; requiring investment advisers to annually
  214         provide to the association a certain certification and
  215         to periodically submit certain reports; requiring that
  216         certain funds be made available to associations within
  217         a certain timeframe after they submit a written or
  218         electronic request; amending s. 718.3026, F.S.;