As Treasurer of our condominium
association, given the 4-5 month expected turnaround for getting any
flood losses reimbursed from NFIP insurance, I had the misfortune of
researching financing options for repairing and rebuilding any damage
from Hurricane Sandy. It is important to note that there are rules
stated in the by-laws that require a certain majority for either an
assessment or a loan, with the latter being more stringent.
Besides this, there are the three
choices of financing post hurricane construction.
Special Assessment to supplement
General Reserve funds
Most condominium associations have a
general reserve fund that can take on small repairs or unexpected
costs. Of course, Hurricane Sandy's losses exceeded most reserves. A
special assessment generally requires a majority vote, as explained
in each condominium association's by-laws. A special assessment is
the path of the lowest resistance, although it is most onerous to
owners.
A bridge loan for construction from a
bank
For Hoboken residents, a bridge loan can be a viable alternative since banks in town can help. Other than Hudson City Savings bank,
which declined to provide a business loan for reconstruction, many
local banks do provide loans to condominium associations, with
monthly or quarterly maintenance as collateral. Loans are given for a
period of six months to 5 years, plenty of time to recoup losses from
flood insurance. A friend has had success with
First RepublicNational Bank.
BCB Community Bank's Bayonne office also underwrites
these types of loans. Rates are a few basis points over prime, and
collateral requirements vary, so contact the banks directly.
A SBA Disaster Loan for HOAs
If all else fails, you can contact the
Small Business Administration for a disaster loan. Rates are much
higher if you do qualify for other loans, so understand that this
federally backed agency is the lender of last resort. You need all
estimates for repairs, as well as some sort of documentation from
your adjuster. You can read more here:
http://www.sba.gov/content/fact-sheet-associations
According to their website:
Before SBA will disburse any loan funds, we must have
confirmation that all the money necessary to complete the repairs is
available. Therefore, we must have documentation supporting the total
project cost of the repairs and the amount of anticipated insurance
recoveries. The damages to the common areas must be clearly separated
from the damage to the individual units to establish eligibility.
For additional tips please read: "
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