Special Assessment - Snow Removal

We have had a winter with substantially higher than normal snow removal costs which look like they will come in approximately 20-25K over our snow removal budget without factoring in any snow removal for November/December of this calendar year.

I understand that as a general rule special assessments show a lack of financial planning from the association and could be viewed as a red flag to potential buyers. We planned for snow removal but didn't anticipate the second highest snowfall total on record. I am curious as to people's opinions on how a snow removal assessment (approx $150/unit) would reflect upon the association or what reaction has been if you have had to do something similar in the past.

Chris,

You have most of the calendar year remaining. There must be some discretionary items in your budget that can be reduced or eliminated to offset some or all of the excess snow removal costs.

Your association should consider doing what we do - budgeting an operating contingency of 10 to 20% for the unexpected expenses that occur from time to time. If, at the end of a given year this goes unused, part or all of it can be transferred to reserves.

In my opinion, if an association cannot find room in its budget for such a contingency fund, then it is living beyond its means and is sure to need a special assessment at some point.

Last year (2010) our HOA snow removal costs exceeded the snow removal budget by $68,000. We still managed to end the year with a surplus in the operating account. The operating contingency saved us from needing a special assessment.

David I wish we had an option like that in our budget. We passed an excessively lean budget this year that would have been pushed to the near breaking point anyway by the end of the year. We have cut what few discretionary items we had in the budget and are still likely to face a significant gap after snow removal. Our treasurer and management company keep pushing to not have us fund the reserve account to make up for it which is what I would like to avoid, especially since we aren't fully funding it according to our reserve study (most board members didn't want to increase dues).