Many of you are in the process of completing your 2017 operating budgets for your boards/committees/commissions (constituencies). Most operating budgets consist of anywhere between 80-100 individual line items that will guide the association with its operations for the next year. Of these 80-100 line items your constituencies will debate heavily on 5-10 items since the […]
Budget Chess: Formulating a Strategic Plan for your Association
Once we have completed our annual budgets, held all our meetings, approved the plans and sent out the annual assessment coupons /statements, we can breathe that sigh of relief and look forward to the new year. Hopefully in preparing your budgets you reviewed your association’s reserve study and all contracts in place. Before we enter […]
Is Your HOA Reserve Fund Being Managed Properly?
How you handle your HOA reserve funds really makes a difference in the successful running of your association. The quality of the strategic planning of your homeowners association can actually make or break your community. It’s also really important to the longevity and future investments of your association. Read the article…………….
Should Your HOA Invest Its Reserves?
Your homeowners association (HOA) has diligently been adding to its reserves account and now would like to invest that money to possibly grow it even more. As a nonprofit, your HOA has the ability to generate income on your reserves. But should you? The answer depends on several factors. (If you need to build your […]
How an HOA Board Should Use the Reserve Fund vs. Operating Fund
Funding community operations is one of the most important, if not the most important, functions of an HOA board. Properly overseeing day-to-day actions and long-term projects insures the homeowners association will have a continuous supply of funds to keep the community running effectively. Read the article…………..
Capital Improvements: Getting Financing and Board Approvals
Even if your condominium or homeowner’s association (HOA) is a fortified castle atop a hill and surrounded by a moat, one day, someone will hit it with a really big rock, and thus it’s inevitable: work will be done, repairs will be made, the sun will set. But some projects are of greater consequence than […]
Why Reserve Funds Are Necessary
No one likes to spend their hard-earned money on community association dues. Just like taxes, everyone complains about having to pay them and resents it when they go up. Sometimes an HOA will try to please their residents by avoiding fee increases and dipping into their reserve funds to cover a rise in costs. […]
Is Your Condo Following the Proper Reserve Protocol?
The start of a new year represents a slew of new beginnings for most community associations. From holding annual elections to the preparation of annual budgets, the first quarter of the year marks a pivotal time for many associations. With that comes a great deal of confusion, particularly with regard to the proper way to […]
Loan or Assessment? Your Condo Board Might Want to Consider “Split Funding”
Assessments have been the traditional vehicle for condominiums to raise money for repairs and capital improvements. However, assessments have a couple of drawbacks. First, they usually take a fair amount of time to collect since most unit-owners don’t have a lot of idle cash available. Read the article…………
Four HOA Reserve Fund Investment Hurdles
HOA boards are faced with a challenge. They have limited time and resources, yet must meet the financial obligations of the reserve study by following a funding plan that provides adequate member contributions and additional revenue from prudent investment of reserve funds that reduce those member contributions. Here are four hurdles the board must jump […]
Don’t Raid the Cookie Jar: Capital Budgeting is Essential
Sometimes the future seems like it’s an awfully long way away. If a roof is going to last 30 years, why should we worry about it today? Same with that shiny new boiler or that flat, crack-free pavement just poured two summers ago. Eventually, though, everything new grows old. Wear and tear sets in and […]
An overview on Condominium and HOA Reserve Funds
For community associations, preserving the property and its common areas is one of the foremost duties of the association directors. Beyond the day-to-day maintenance responsibilities, association directors and managers are responsible to develop funding plans for the upkeep and replacement of common facilities such as elevators, roofs, heating/cooling systems, swimming pools, decks and balconies. Read […]
Can Reserve Funds be used for Drought-Friendly Landscape Renovations?
In the middle of a major drought, many of our California clients are asking this question as they try to be both “good citizens” and financially responsible. The answer is yes, but… Landscape renovations can be classified as a Reserve Project if they meet the National Reserve Study Standard four-part test: […]
Read Your Reserve Study, Then Look Down
At a recent conference/expo I asked all of the reserve study companies if they had begun to include the things that are not obvious, in their studies. Most said ‘no’, but they would try to help an association if they were asked. By “not obvious”, I mean those items that are underground, or inside of […]
Why Your HOA Should Contribute to Reserves
HOA boards and committees have to think about not only its community’s residents, but also its finances, taking care of day-to-day management and having to think ahead in case of unforeseen circumstances. With that being said, each year the committee sets up the community’s operating budget that deals with things like insurance premiums, utility bills, […]
3 Things an HOA Board Can Do Now to Combat Costly Maintenance
There is always work to be done, especially in a homeowners association. It’s crucial that an HOA Board plan for general, ongoing maintenance and upkeep. This is important in order to keep the Association a safe place to live and keep it an appealing place to live. Members don’t want to live in a run-down […]
Operating, reserve funds must be kept in separate accounts
Community associations need two pots of money, an operating account and a reserve account. The first is for paying day-to-day bills, and the second is for occasional big-ticket items like roofs and boilers. Read more……….
HOA Boards need to keep reserve budgets fully funded
Q. Our condominium association last raised our assessments in 2010, which left us with a small surplus above our annual expenses to fund our reserve account. With no assessment increases since then, but increasing expenses, we are no longer able to meet our operating expenses, much less contribute to reserves. Read more………
6 Questions HOA Board Members Ask About Operating & Reserve Budgets
An area where a lot of HOA board members get into trouble relate to properly understanding the operating fund and the reserve fund in a homeowners association. If the two funds aren’t properly maintained a Board can be setting up the Association for failure and don’t even know it. It’s crucial that Boards understand how […]
Reserves: An Overview for Community Associations (FL)
The topic of “reserves” in community associations is one which can be confusing. Chapters 718 (governing condominiums), 719 (governing cooperatives) and 720 (governing homeowners associations) of Florida Statutes each contain provisions regarding reserves. However, while similar in some respects, the statute for homeowners associations, in particular have significant differences. Read more……..
Understanding reserve and operating accounts
Well-run community associations keep two pots of money. One is the operating account, used for the day-to-day costs of running the association and maintaining the property. The other is the reserve account, which is earmarked for the repair and replacement of big-ticket common elements. Read more………
Failing to Reserve and Deferred Maintenance is a Recipe for Disaster
If you have ever served on the board of directors of an HOA, you know that some members are never happy to see their annual assessments increased. In fact, some folks can be downright hostile when faced with an increase. This can even be true when an assessment increase is absolutely necessary to adequately fund […]
Older condos plagued by high maintenance costs
To be more precise, a condo unit will remain a viable real-estate ownership alternative for as long as its monthly maintenance fees and realty taxes remain below the monthly rental of a comparable unit in another condo complex or apartment building. Once the condo’s maintenance fees and realty taxes exceed the cost of comparative rentals, […]
Assess for Capital Improvements? Borrow? Do Both with “Split Funding”
A reader writers: Since becoming a condominium, our building has needed a seemingly endless series of repairs, most of which have been funded with special assessments. Now we desperately need a new roof and major work on our elevator. The board is divided between another assessment and a loan. I recently read an article about […]
Who needs reserves?
If there is one thing people hate almost as much as an assessment increase, it is properly funding reserves. Some owners look at those lonely accounts, chock full of unused cash just sitting there, and think, “Hey, let’s use that money now! That way, we don’t have to raise assessments this year!” Other owners look […]
Saving for That Rainy Day: Reserve Funding for Your Condo Projects
These days, just about everyone is cutting back on spending, either to make ends meet, saving for something special or a rainy day, paying off debt or funding their retirement. Consumers are cutting coupons, looking for deals and keeping a close eye on their dollars. Whenever costs or fees go up and consumers have to […]
Worst-Case Scenarios: When the Reserves Won’t Cover It
New Jersey has had its share of hurricanes and weather disasters over the years, and while sometimes there’s ample warning before something calamitous happens, that’s not always the case. A bad situation can be made immeasurably worse when a building or association isn’t economically solvent enough to weather an emergency, or when insurance coverage doesn’t […]
Preserve Your Reserves
Seventy percent of homeowner associations are underfunded, and homeowners will feel the pinch. Anyone who lives in a townhouse or a condominium relies upon a homeowner association (HOA) to manage and maintain the building and common areas. Unfortunately for homeowners, a new study shows that most HOAs are drastically underfunded. Read more…….
Boards – Take Notice – 3 big reasons properly funded reserves are essential
Only a few years ago the Virginia General Assembly recognized that many association boards just would not face up to the need for reserves in an effort to keep “dues” at a lower and more competitive level. Many are paying a price for those decisions now. It became such a problem that several years ago […]
Live Long and Prosper – Life Spans of Building Systems
Nothing lasts forever, and though you can’t predict the moment a piece of building equipment will break down, you can prepare for it. Even the toughest boiler, HVAC unit, or elevator will eventually tucker out and need major repairs, or just give up the ghost and have to be replaced. And with New England’s penchant […]
Where’s the Money? Alternative Funding for Capital Improvements
As readers of this publication surely know, well-run condo buildings and HOAs need to have adequate amounts of money in both their operating funds and their reserve funds. Read more…….
Should Co-op / Condo Boards Create a Five-Year Capital-Improvement Plan?
If you prepare for the worst, you’re better off in the long run. Except when you’re not. A few years ago, the American Institute of Certified Public Accountants (AICPA) suggested that every co-op and condo’s financial statement contain information about the remaining useful life of — and the replacement cost for — all the building’s […]
How an HOA Board Should Use the Reserve Fund vs. Operating Fund
Funding community operations by an HOA Board is one of the most important, if not the most important, functions of the group. Properly overseeing day-to-day actions and long-term projects insures the neighborhood will have a continuous supply of funds to keep the community running effectively. Read more….
Property Managers and Financial Education
I recently interviewed with a local HOA seeking to replace their present property management. One of the questions I was asked was “Why does it matter that a property manager have a background in finance and/or economics?” My response was to take their financials which I had received copies of and use it as an […]
Capital Reserves and the Future of Your Community
I went to see a fortune teller recently. She took me into her reading room and asked me to gaze into her crystal ball. She then predicted my future. “I see wear and tear on your buildings. I see a new roof will be needed. I see aging windows that need replacing. I see… a […]
Transition Study, Reserve Study. What’s the Difference?
Most board members understand what a reserve study is and the beneficial role it plays in managing the financial future of the community association. Another study that comes up for recently constructed associations and is equally as important is the transition study. Read More……
We need to scare the hell out of boards and owners – Raven’s Cove didn’t do it!
Once again in the news today, an association that failed to reserve for major repairs and the low-income owners are now looking at a $5,400 additional assessment due in a couple weeks. The particulars or location of this association isn’t important. What is, is that this is happening too often, in too many locations, to […]
Court Grapples with Distinction Between Repairs and Capital Improvements
The Washington Court of Appeals issued an unpublished opinion earlier this month concerning a condominium association’s authority to fund a major construction project without a prior vote of its owners. The project involved the installation of a $2 million “rain screen” building envelope system Read More……
Budgeting and Reserves for Condominiums
Most covenants for condominiums require that the association include as part of the annual budget, an allocation for reserves. Reserves should be set aside for roof replacement, pavement resurfacing, building painting, and any other item of association responsibility with a replacement cost or deferred maintenance expense of $10,000.00 or more. Read More……
What’s in Your Wallet? The Importance of Healthy Reserves
Just as families are encouraged to set aside a portion of the household budget into a savings account, so are community associations advised to maintain a reserve fund for capital improvements—repairs and replacements of major common-owned features, infrastructure and facilities. And just as American families are notoriously lax about saving money, so are condo boards […]
When Was the Last Time You Looked Down
The next time you’re out walking around the property, take a look down. What is actually below ground, and more importantly, do you know who is responsible for it and what condition it’s in? Today I posted four news stories about community associations around the country that found themselves stuck with major underground problems that […]
Associations can learn something from government infrastructure failures
It’s in the news media every day – towns, cities, counties, states and the federal governments struggling to keep up with crumbling infrastructures with the problems magnified by revenue shortfalls that prohibit even temporary fixes. Roads, bridges, dams, levees, lakes, water systems, power grids, utility lines, and more, are all continuing to be put on […]
There’s a reason for long-term planning –
….because not thinking about it usually leads to problems, or even a disaster. Utility costs are going to continue to go up, so why not plan for converting the high cost items to energy and cost savings items. Now is not a bad time as there are grants floating around to help. One association in […]