The Lake Monticello Owners Association (LMOA) is considering an emergency fund withdrawal to address a $681,000 federal loan repayment demand. Board members voted to add the proposal to the upcoming ballot. Residents will decide whether to use the Emergency Reserve Account (ERA) to help pay the debt.
Emergency Fund Withdrawal Linked to PPP Loan Repayment
LMOA plans to ask residents for permission to use funds from the Emergency Reserve Account (ERA). The goal is to help settle a federal Paycheck Protection Program (PPP) loan.
The association applied for a $646,843 PPP loan in April 2020. The loan was meant to cover payroll costs during the pandemic. At the time, leaders feared falling dues and possible staff layoffs.
The board believed it was their fiduciary duty to apply for assistance, so they relied on the Small Business Administration to review the application properly.
Although the loan was forgiven in May 2021, that changed in December 2024. The Department of Justice (DOJ) sent a letter demanding repayment, plus interest.
According to the DOJ, LMOA did not qualify for forgiveness because it is a 501(c)(4) homeowners association. The total repayment now stands at $681,000. If LMOA refuses to repay, it could face action under the False Claims Act.
The association’s legal team reviewed similar cases. Most settlements ranged from 1.2 to 1.5 times the original loan amount.
Member Vote Will Decide Emergency Fund Withdrawal
The ERA was created when LMOA sold its water treatment plant in the 1990s. Residents approved the fund’s formation to cover future community needs.
In 2014, residents voted to loan $2 million from the ERA to build new clubhouses. That loan is being repaid through annual dues, with full repayment expected by 2030.
Residents will vote in the coming weeks on whether the ERA can be tapped to repay the PPP debt. The results will be announced at the annual meeting in late June.
