Snow removal retainer

DavidF, The contracts we prepare for the HOAs we manage have no retainer. They have an hourly rate for each piece of equipment used; state either plow after 2" or 3" of snow; and have a term of 1, 2, or 3 years which includes a 30 termination clause.

Snow and ice conditions in PA are probably similar to NY.

Under our current contract, we pay a flat rate each month for five months under a 3 year contract. Snow plowed and shoveled over 2". Salt and chemicals applied for icy conditions without considering how many inches.

Tough winter - he eats some costs. Easy winter - we overpay. Over 3 years, it averages out. Never have to deal with special assessments under a flat rate system.

One of the contractors we turned down wanted to cap the number of inches covered under the flat rate or to cap the number of events per season that were covered under the flat rate. Sounds like this is a somewhat similar arrangement to the one you have. We would have paid less, but we wanted the certainty of locking down our expense.

Smartest thing we did was to get competitive bids and run the numbers assuming a light winter and a heavy winter. Also helped that the first year of the flat rate was a severe winter.

We were once in a situation where our snow contractor went out of business. Had to scramble to find a replacement. Wasn't easy. Problem had more to do with equipment than personnel. They didn't have the extra equipment to leave on site, and it would have been too expensive for them to rent it from someone else (because we were on a pay per event contract back then).

With this being a tough winter for snow removal companies, its expected that a lot of new contracts will be a "per push" beginning next year. I can understand the idea of a retainer and have thought about exercising this myself as the owner of a lawn/snow company.

A contract, wrote with a full bid, payable over a certain amount of months definitely works well for the vendor and the hoa. However, the way that is being discussed is a "retainer" of 25% of the contract up front, which helps the vendor have equipment and staff at the ready. The remaining 75% is split up (divided by 26) which is how many snow events a good vendor plans for when making a bid. This amount is then billed at the end of every month, based on the amount of events that occur. Once the totality of the contract is met or exceeded, its agreed that no more charges will take place. A good vendor will be able to properly manage their finances involved with this type of contract and no issues should arise.

What are your thoughts on operating it this way?

We have a 3-year flat rate plan. We make 5 equal payments each month for 5 months (Nov 1 thru Mar 1). Same rate for first two years. Slight increase in third year.

Potential vendors had access to snow/ice reporting services which track local history - so bidders knew the historical data before bidding.

Some bidders offered plans where we absorb additional cost above a certain level - Their flat rate was lower, but not enough for us to take the additional risk of a surcharge. I'm going to guess that your divide by 26 plan is similar to one of the plans we rejected.

One of the most significant benefits we were looking for - and one that IMO doesn't get enough discussion - is the issue of event approval. When we were under a per-event contract previously, we got a call asking for approval on every event that was in the range of 2 inches or less. This doesn't happen anymore. They come no matter what.

This is important to us because winter temperatures here hover at around 30 degrees. Stuff can freeze, thaw, and re-freeze in a matter of a few hours. When we deal with ice, number of inches doesn't matter. We get treated as needed without concern about approving individual events.

So, you would rather not have to approve every time on a per push contract? Do you also negotiate a different price for salting only? I am looking at this from a contractors viewpoint, I want to better understand what my customers needs are. I want us all to be happy.

David

A fixed price is typical with extras outlined. Some years one is ahead. other years the other is ahead.

Attached.

NpS

Having lived on Boston and Chicago, 2in seems like a small amount to need removal. I would think more like 4 or more.

We have never had a multi-year snow removal contract here in Pennsylvania, although the HOA development right beside us does. We use the two inch rule, and we never have to call the contractor to have his crew come when necessary; and they never call us for plowing approval either. They're on autopilot, and they have neither ever abused the privilege, nor have they ever not shown up when they should have. It works for us. But then we are a small development with only two parking lots of about 70 parking spaces total, and sidewalks in front of our 32 condominium units.

Thanks for all the advice. Some of you may appreciate these additional tidbits I've learned since the original posting.

We have a rider that prohibits us from using National Weather Service measurements and relies on a board member to verify snowfall amounts with the contractor. During the January blizzard, the contractor failed to check with the board and so the snowfall amount on the invoice was pulled from thin air. We fought this and got it reduced to the tune of almost $3200. The contractor said he's never worked with a board that's so "detail-oriented." Uh-huh.

We pay $350 per additional inch over 10" and also pay $250 per hour for "Bobcat" service, primarily to clear driveways. So you can imagine the bill during the January blizzard. We may have the only HOA snow contract where we can have a very, very mild winter, except for one severe storm, and still have to report to homeowners that we have exceeded our annual snowfall budget by several thousand dollars. (As I may have mentioned above, we barely get any money back in a mild winter.)

If I am on the board when the contract is up, we will certainly be doing our homeowner before we sign anything like this again.