RobL (Maryland)
Posts: 2
Posts: 2
Posted:
I'm new to this discussion board but have been an ACC member of our HOA for the past 3 yrs and, while not a member of the BoD, have been keenly interested in our HOA/BoD's financial/budgetary health.
I'm trying to:
1) Benchmark similar communities and its respective HOA line item expenditure ratios for 2 items, Management Fees and Lawn Service/Lawn Maintance, as these 2 expenses drive our HOA budget.
Background:
Our community is small and in a somewhat unique situation given the following characteristics:
Located in the northern Montgomery County (Laytonsville), MD, area, there are 66 single-family homes, each lot in the 1-1.2 acre size; no amenities at all (no pool, no playground/tot lots, tennis/basketball courts, etc); approx 10-15 acres of common area, which include 5 storm-water management (SWM) ponds; and somewhat in its infancy as an HOA (the community is 7 1/2 yrs old but the developer turned over control to the HOA BoD only 4 yrs ago when the development was about 3/4 completed).
Operating budget for 2007 is $43,800 ($54/month).
Since there are no amenities and the county maintains our roads and provides snow removal, our primary HOA budget expenses are Management Fees (at 16.8%/$7,200 of all expenses) and Lawn Service/Maintenance (50.0%/$21,800).
Situation:
A Reserve Study was just completed and it's estimated that by 2015, our community will need to replace the wooden, split-rail fences that surround/protect each of the 5 SWM ponds at an estimated $115K. The 5 fences, at a combined 4,000 linear feet, is by far the largest, most costly asset to be replaced.
Problem and Concern:
Currently, there is $25K in reserve funds, so we'll need to build the Reserves by $80K in 8 yrs, or $10K/year. But our By-Laws limit the annual assessment to a 10% increase, roughly $4,000 year, which at 8 yrs, yields only $32K of the needed $80K.
Question/Issue:
To the extent possible, without having to resort to a Special Assessment when it's time to replace all the SWM pond fencing in 8 yrs, it seems to me that another way to approach this would be to reduce our current costs/expenses. Since we have 2 main budget drivers, our Lawn Service/Maint costs appear to be out-of-whack based upon a detailed analyses I did with 2 other local HOA's, where this expense ratio was in the 20% range. Granted, these were not necessarily apples-to-apples given the characteristics of the other communities but still somewhat of an indicator.
Lawn Service details: approx 32 cuttings of the common areas, which are most open, relatively flat stretches of grass, plus the areas near/around the 5 SWM ponds 6 times each. Basically, while there's a lot to be cut/serviced, it's not difficult and given the professional equipment of our contractors, doesn't require that much time.
I'm not trying to resolve the entire budget/Reserve issue, but would like to have more data/benchmark about your expenses ratio for Lawn Service/Maint, as well as Mgmt Fees, as reductions here would also help us meet our Reserve funds. Our current contract runs out at the end of 2007 so it's a great time to get a better handle on this cost prior to issuing an RFP and rewarding a future contract that will lock us in at an untenable cost structure.
Any and all responses and advice would be greatly appreciated, especially if you're community has a similar make-up/situation. Many thanks in advance.
RobL
I'm trying to:
1) Benchmark similar communities and its respective HOA line item expenditure ratios for 2 items, Management Fees and Lawn Service/Lawn Maintance, as these 2 expenses drive our HOA budget.
Background:
Our community is small and in a somewhat unique situation given the following characteristics:
Located in the northern Montgomery County (Laytonsville), MD, area, there are 66 single-family homes, each lot in the 1-1.2 acre size; no amenities at all (no pool, no playground/tot lots, tennis/basketball courts, etc); approx 10-15 acres of common area, which include 5 storm-water management (SWM) ponds; and somewhat in its infancy as an HOA (the community is 7 1/2 yrs old but the developer turned over control to the HOA BoD only 4 yrs ago when the development was about 3/4 completed).
Operating budget for 2007 is $43,800 ($54/month).
Since there are no amenities and the county maintains our roads and provides snow removal, our primary HOA budget expenses are Management Fees (at 16.8%/$7,200 of all expenses) and Lawn Service/Maintenance (50.0%/$21,800).
Situation:
A Reserve Study was just completed and it's estimated that by 2015, our community will need to replace the wooden, split-rail fences that surround/protect each of the 5 SWM ponds at an estimated $115K. The 5 fences, at a combined 4,000 linear feet, is by far the largest, most costly asset to be replaced.
Problem and Concern:
Currently, there is $25K in reserve funds, so we'll need to build the Reserves by $80K in 8 yrs, or $10K/year. But our By-Laws limit the annual assessment to a 10% increase, roughly $4,000 year, which at 8 yrs, yields only $32K of the needed $80K.
Question/Issue:
To the extent possible, without having to resort to a Special Assessment when it's time to replace all the SWM pond fencing in 8 yrs, it seems to me that another way to approach this would be to reduce our current costs/expenses. Since we have 2 main budget drivers, our Lawn Service/Maint costs appear to be out-of-whack based upon a detailed analyses I did with 2 other local HOA's, where this expense ratio was in the 20% range. Granted, these were not necessarily apples-to-apples given the characteristics of the other communities but still somewhat of an indicator.
Lawn Service details: approx 32 cuttings of the common areas, which are most open, relatively flat stretches of grass, plus the areas near/around the 5 SWM ponds 6 times each. Basically, while there's a lot to be cut/serviced, it's not difficult and given the professional equipment of our contractors, doesn't require that much time.
I'm not trying to resolve the entire budget/Reserve issue, but would like to have more data/benchmark about your expenses ratio for Lawn Service/Maint, as well as Mgmt Fees, as reductions here would also help us meet our Reserve funds. Our current contract runs out at the end of 2007 so it's a great time to get a better handle on this cost prior to issuing an RFP and rewarding a future contract that will lock us in at an untenable cost structure.
Any and all responses and advice would be greatly appreciated, especially if you're community has a similar make-up/situation. Many thanks in advance.
RobL