Finance Policies

Summary of Policy
To accomplish the objective of replenishing operating cash used for the unbudgeted 
purchase, replacement or significant repair and maintenance of long-lived assets, the 
amount spent will be capitalized in Ocean Village’s general ledger and depreciated. 
Subsequent years’ depreciation expense is to be included as an operating expense in the 
annual operating expense budget. 

Operating cash spent on long-lived assets whose purchase was unbudgeted as an 
operating expense and which cash does not need to be replenished will be charged directly 
to Owners’ Equity, subject to board approval. When such operating cash needs to be 
replenished, the purchase will be capitalized and depreciated.

Operating cash spent on long-lived assets whose purchase was budgeted for as an 
operating expense will be expensed

Summary of Policy
As set forth in amendments to Article IV of the “Declaration of Covenants and Restrictions 
for Ocean Village of Hutchison Island” beginning June 25, 2021, capital contributions of a 
prescribed amount are due and payable from buyers of property within Ocean Village. 
 

Once collected at closing, and at the Board of Director’s sole discretion, such funds may 
be used to offset operating expenses, or otherwise as the Board shall determine from time 
to time and need not be restricted or set aside for reserves or capital expenditures. 
 

Notwithstanding the latitude provided the Board above, it is the intention of the Board that 
capital contribution cash be segregated from both operating and reserves cash and that it 
be used for the anticipated deferred maintenance, replacement or addition to Ocean 
Village’s buildings, equipment and amenities, including non-building infrastructure, not 
otherwise anticipated in General Reserves or the annual operating expense budget, subject 
to Board approval. It is also the intent of the Board that such funds be accounted for as an 
element of member’s equity, with appropriate financial reporting.

Summary of the Dune Reserves Policy
Funds will be annually set aside in reserve so that cash is immediately available to help 
pay for the eventual repair, reconstruction, or replacement of Ocean Village’s dune 
structure due to damage from weather events or coastal erosion. The amount set aside is 
determined by a Dune Reserves Study prepared at least every three years.

Dune Reserve funds are considered restricted-use funds. Spending is therefore restricted 
to weather event-related repair and reconstruction work. Recurring dune maintenance 
and management costs are provided for in OV’s annual operating budget.

Dune Reserve funds are not intended to fully cover all restoration efforts following weather 
and coastal erosion events and having such a reserve does not preclude the POA’s need 
for a special assessment.

Summary of Policy
To accomplish the objective of having sufficient funds on hand to pay for the anticipated 
deferred maintenance and/or replacement of Ocean Village’s buildings, equipment and 
amenities, including non-building infrastructure, such future spending will be pre-funded 
through the item’s inclusion in a reserve study and funded as prescribed in its multi-year 
funding plan. Generally, all long-lived assets are to be included in the reserve study. 

Ocean Village’s reserves will be fully funded to the baseline funding level, at a minimum. 

Reserve funds are considered restricted-use funds. Spending such funds is restricted to 
only those components / line items specifically included in the latest reserves study. 

Major structures or amenities in their entirety are not to be included in the reserves study 
and will generally have their replacement funded in the future using special assessments, 
although the deferred maintenance and/or replacement of major components of such 
structures or amenities is to be included in the reserves study.

Objective of this Dune Reserves Study Procedure – To set forth key objectives of the 
Dune Reserves Study, its minimum content and requirements, its frequency, authorship 
responsibilities, and process for review and acceptance by the OV Board.

Dune Reserves Study Description
The Dune Reserves Study is a financial analysis that sets forth a long-term dunes reserve 
funding plan and annual funding recommendation sufficient to achieve a restoration level 
consistent with OV’s Dune Reserves Policy. It is highly dependent on the current and 
anticipated future state of readiness of the dunes as a weather event and coastal erosion 
risk mitigation structure.