condo board still hasn't produced budget for 2022

The board of our condominium is required to at least once a year produce a budget for the projected operations of the association . This budget is how a board is supposed to determine whether to raise or lower or keep the same the monthly owner assessments.

Our board has still not produced a 2022 budget. They voted to raise the assessments based on "inflation".

2022 is now in the second quarter, and there still is no budget for our association. When reviewing the end of the month financials. the actual costs are presented, but the budgeted column has straight 00's.

I know a budget is a planning tool;. But its also a useful tool to monitor the ongoing operations of an association.

When the board discussed the need to submit the budget to the accounting company, there was disagreement amongst the board. One faction wanted to submit the same budget as last year , one faction wanted to properly include the planned improvements that the board was going to undertake this year. The result, no budget at all.

I have sent a request for the board to provide a budget for the association. Noone answers.

The requirement to produce a budget is in our bylaws.

I have done a year by year comparison of the budgeted vs actual maintenance and expenses for the association with data pulled from the end of the year financials going back to 2011. The last two years, the actual money spent on maintenance is grossly under the budgeted maintenance for the year.

Operating without a budget is just another example of the mismanagement of our association that has occurred over the last 3 years. is there anything that owners can do do insist a budget be produced.

Our Association budget is presented at the October Annual meeting for all to see and ask questions. I wish you success in your pursuit of finding answers to your valid questions. The Board appears to have determined a path of how they want to handle budget information regardless of what the governing documents may require.

Didn't the new board just get elected like LAST month? Have they even had an official meeting yet? What if you get a copy then what? A tree falls causing damage. Are you going to scream "They didn't have that in the budget"?

Yup, I thought of this. I do not care. Fact: Among other things, Texas statutes require a resale certificate be provided to buyers. The statutes require this resale certificate to include a "current operating budget." The Board needs to come up with a current operating budget post haste.

Send the letter I recommend. If you want to add a sentence about how each resale certificate requires the budget, feel free.

As you know, this starts a clock. Let's see what the COA says.

Stay polite.

Lack of a budget is a big deal, as you apparently know. Let's see where your next formal request goes. Hopefully it is an education.

Thank you for ignoring MelissaP1's nonsense here and being a fine example.

Laska

Please ensure you mail your request via Certified Mail as is required in Section 82.1141(d) even though you told me a few weeks ago you do not believe your association has complied with the filing requirements.

obviously, the board didn't base the decision to increase the maintenance fees to owners on any actual budget or previous excess costs over previous budgets( see previous attachment showing the gross underspending by the current property manager for common area proper maintenance and upkeep.)

augustine, I like the response you suggested.. "then get it"

The problem is, as we all know. the board is well aware that there aren't really any consequences for their lack of transparency or proper management of the affairs of the association.

but for sure, i will compose a certified letter and include the requirement for a budget including the reasons you listed regarding resale information.

Is there any recourse owners have to the unnecessary increase in maintenance fees. I mean, they literally didn't base it on anything other than it's time.. and inflation.. noone bothered to look at our spending and lack thereof.

Augustine,,

did you look at the chart i created and posted above. For the past two years, the actual expenditures were grossly below the ammount budgeted. this is because we don't have a qualified experienced property manager ,and the acting property manager is a board member and noone else on the board is willing to hold him accountable.

Also, how can the board raise assessments without creating a budget. don't the bylaws require the board to determine the assessments based on a properly prepared budget?

i'm reattaching the chart showing the magnitude of budgeted vs actual maintenance and operations that has occurred
.

LaskaS, your charts speak of "operations spending." Is the contribution to the reserve account included in "operations spending"?

Reserve account contributions are normally counted as an expense. Because of the latter, I would say the first chart that you linked above (as 1417291787571.pdf) has no value.

Your latest chart has labels saying otherwise.

Whether the "reserve account" is accumulating funds depends on what "reserve account" means.From what source are you getting these numbers?

I think it's entirely possible that a portion of the $775,000 is counted (correctly) as "reserves" by the COA bookkeeper, as listed in a separate "ledger account" which represents the real "reserve account," et cetera.

LaskaS, in one of your attachments, you say COA money was "pilfered." Respectfully, I suggest you ask the hoatalk moderator to delete either (1) this thread; or (2) at least the posts with the attachments. Then start a new thread.

augustine, the funds of the association were absolutely pilfered by unscrupulous contractors post harvey. the charged the association for work that was not done. Then some board members approved the invoices without verifying the work had been done.

Totally agree. If the HOA pays the contractor $50,000 to do repairs and he or she decides to use the money on a vacation it's none of LaskaS business. Once a homeowner pays their dues they should butt out.

augustine, i have no problem no using the word pilfering.

as for what mellissa and someone else said about a contractor can do whatever they want .

Augustine, those numbers you are seeing are from 1974.

Update. at the board meeting this Wednesday, suddenly the one of the first topics on the agenda was to complete the budget. So my emails are working. The board members never respond to me. But, as long as the association's business and board legal obligations are being met. I'm fine with that.

The owner managing agent(not property manager) also insisted the board adopt the record keeping and charges policy that went into law last year. He was clearly miffed that an owner(me) was able to request records and they couldn't charge me back.

So now the record retention policy will be filed. The charges that texas allows are actually pretty fair.

Augustine, regarding the operating account vs reserves. I am not saying that the money is being stolen or anything. I Just think it's another indication that we don't have a professional. licensed property manager.

Augustine, I don't think the failure to properly transfer money into the reserves means a crime is going on. I just think it's another bad practice and evidence of lack of good internal controls.

Regarding the number of floorplans and assessments. That information is available. I have floorplan e. I see in the declaration assessments were originally called set at 157. I actually pay 525. So yes, those are very old numbers.

Anyway, I am actually pleased that almost every item I sent the board notice about was addressed at the meeting. I don't waste my time complaining about small crap. But I'm not going to sit by and let the property manager ignore the boards decisions and or the association fail to uphold their legal obligations.

augustine, one last thing, this landscaping decision and approval is so huge.

remember last year. the property manager literally claimed I damaged the common grounds and the absentee board agreed to assess my account 750$ . Even though I did no damage, I actually spent my own money and time and improved a large area that the property manager thought was acceptable. Luckily, the letter you helped me write, and the references to TUCA and the requirements before any fines etc. resulted in the $750 charge being removed from my account.

Finally, the grounds of the property are going to be restored and it will be a huge improvement !.

The board also finally took action and all of the property is being painted. The way they chose the colors wasn't ideal. But luckily, the color choices and pattern were also changed once I sent pictures to certain board members.

So , the board still will not acknowledge anything I say, but their actions acknowledge it. That's all i wanted.

LaskaS, thank you for elaborating.

I was interested in how much income the regular assessment for all the units yields. This of course should just about equal the sum of the budgeted common expenses and the budgeted reserve contributions. (Sometimes there are a few other income sources the COA may consider. Like interest. Like transfer fee income. And so on.)

From what you posted and the Declaration, I estimate the annual income is around 254 units * [Augustin estimate of] about $500 average per unit per month * 12 m~ $1.5 million of regular assessment income each year, give or take.

I understand best practices is for the operating account to hold at least a few months of expenses in it. This acts as a "cushion" so there's always enough money in the COA's bank account (for operating expenses) to cover these expenses. Right now, your COA's operating account is holding about $720,000, or I gather around half a year's expenses. I am not convinced this is necessarily not appropriate. The appropriateness to me depends on what the COA is up to this year; a back-of-the-envelope guess at the likelihood of unanticipated expenses; past experiences taking into account, say, unexpected weather events.

To me, a cushion in the operating account for somewhat extraordinary (or worse) unbudgeted expenses (as KerryL1 once put it) is good practice. Sometimes this is a line item that is labeled "contingency fund" or "operating reserve" (to be distinguished from the reserve account for repair of capital assets having a life of one year or more).

Regarding what the Declaration says about the "interest" of each unit:

Percentage of the total is what I have seen before. The Declaration having a table giving the percent interest for each and every unit is also what I have seen before.

As for some inaccuracies re square feet, it is what it is.

It appears the monthly assessment is also rounded to the nearest dollar. Which I have also seen before. I personally think this is dumb and not consistent with the governing documents.

Else --

Good job getting them to approve a budget. I hope this budget is truly prepared line item by line item, based on previous years' expenses.

Maybe the role for you is to write the occasional letter when you think the Board is not complying with the governing documents and the non-compliance is more than a matter of not dotting an i, say? It is to their credit that the Board that they are trying to get things done right. Even if it is the COA attorney educating them, this is progress. I know you should not have to ask. But believe me, many people ask for xyz from a COA that is completely consistent with statutes, and the Board just ignores the person. Unlike these people, and at least lately, you are not having to threaten suit or lawyer up.

Disclaimer: I am not an expert on COA budgets. AFAIC, I am good with numbers and applied financial math. Others here may have more to day.

augustine, your back of the napkin calculations were super close! this year assessments to owners is 1.468 million dollars.

Regarding the security cameras. All owners are members of the association. The security cameras are being installed and the layout and contract and specs are part of the records of the association.

An association is not a police state. The associations right to install cameras to monitor common areas has to be balanced against a residents right to privacy inside their homes.

Cameras are not allowed to be installed in locations that allow direct viewing into a persons home.

Then you know how to advise people to make a records request.