Budgets

Well, it's budget planning time. We have a new board, threw the old one out. Ten months into the new board, we raised fees last April; the budget failed in December at the same time the old board was removed.

We have just started year one of fifteen a special assessment for siding that was just completed. We are a twenty four year old association that had an assessment for roofs in 1996 and the assessment now for siding. We have money going into reserves now but will still have a $400,000 shortfall in 6 years to fund the paving that will needs to be done. The money going in now will cover the roofs in ten years along with some other items.

I feel that we should again raise fees as the budget is on course and the addition would go into reserves as shown on the reserve specialist' planning chart. Even with the amount he has us putting in we end up with the $400 K shortfall.

One board member wants to lower fees. UGH! And the others are kind of wishy washy saying we should keep them the same. They say that it's not a good time to raise the fees what with the economy and all. I say that the eoncomy will only be worse next year because I feel that taxes will go up no matter what campaign promises are made today. I've been hearing my whole life here that it's never a good time to raise fees. "How will the retired owners afford it? Guess what kids, the can afford a small bump every year than to get hit with a special assessment of $10,000 that is then financed for 15 years and at the end of that time these same retired owners have paid $7,000 in interest. How does that make sense?!

Any of you others going thru the same problem?

And don't tell me to cut out the frills. LOL They're no frills in my budget.

Good thing I get paid so much. :-)

Dana

Dana,

With a projected shortfall in the reserve fund, it would be very unwise to lower the assessments. Although it may not be a good time to raise the assessments, it might be the most prudent thing to do. I don't know how big your assn is, but even a small increase of only $1 would be better than nothing toward cutting down that deficit. As you so correctly point out, a little raise in assessments is much easier to swallow than a special assessment costing each member thousands of dollars. It might be a good idea to get a cost estimate on the repaving just to reinforce the need to increase the monthly reserve contribution. If the board sees, in black and white, what the cost will be, how much you'll be short and how much of a special assessment will be levied on each member it might cause them to wake up to reality. It might be a good idea to have a meeting of the members to discuss the situation. Give them this info -- let "them" see it in black and white.

Dana - you don't say how much flexibility you have in this fund, but you may have to readjust it constantly - or stretch the replacement years out - to get all that you want to do.

You can drive over bad roads for a while or do patching, but you must have a good roof over your head.

If both of these major replacments come at the same time and can't wait, consider a loan.

I would look for any means possible to stretch the needed repairs. For instance, if your streets are of asphalt, can you seal them? Is there a top coat that can be put on to make them last even a couple extra years?

You are certainly in a crunch, but to assume that raising dues is the only way out is a mistake. The thing is to get anyone who is willing to become involved to become so. Look for anything that could save some money along the way. If you have a pool, then perhaps you can reduce the period it operates. Also see where you may be able to reduce your electric and water costs.