SB100 Reserves Study

1. You may need to adjust some of the time tables for repair/replacement.

2. Perhaps some of the replacement items will never need replacement and small repairs (such as sidewalks) can be paid for out of operating funds.

3. See what items in the reserve list can be transferred to the operating fund list.

4. Raise the dollar level of an item before requiring it to be paid out of reserves. Example: Anything under $3000 will be paid out of operating funds.

All that assumes that your operating funds is sufficient to budget the items.

I'm going to assume that your study was done by a firm that would qualify as "knowing what they were doing". If you juggle their report to get to the number you want, you've basically defeated the purpose of the report, and in my opinion, put the board at some risk. Picture this in your mind---you're sitting in a witness chair in court and an attorney representing an owner, who is challenging the special assessment the board just passes to make up the shortfall, asks you: "Let me get this straight, you took a report that you commissioned, that was completed by a licensed and qualified architect/engineer, and a group of non-expert volunteers tinkered with the numbers to reach an assessment level you thought would be more acceptable to the owners----that has now led to the shortfall which triggered this special assessment? Have you heard of the term 'breach of fiduciary responsiblity'? My client, who just moved in gets smacked with this large assessment because you failed to properly fund the reserves following the report you had done."

You get the point. Sorry, but now and then I remind people how things would sound on a witness stand.

What you have in front of you is a public relations problem. You need to raise the assessments by 9.?% this year. How will this benefit the existing owners?
1) You're in compliance with state law
2) You've chosen small, incremental increases instead of large assessments, which could really put a financial strain on owners especailly since they won't know when they are coming.
3) Reduces potential liability
4) Ensures the common areas are maintained properly, when they need it, so that no matter when a person moves in or out, the place will look good and operate well.
5) No one likes an increased assessment, but people really hate $3,000 special assessment to repair/replace (pick an item)
6) This is the cost of "wear and tear" on the property. By handling it this way, everyone, no matter when they move in or out, pays their fair share of maintaining the common areas. There isn't a fairer way to do it.
7) Associations don't have credit cards, you have to do what good Americans are supposed to be doing, putting aside a little money so that you can pay as you go.
8) Associations in Florida are facing 100-800% increases in their assessments because they had no reserves to cover insurance shortfalls following last year's hurricanes - now that's financial hardship.
9) The association has a "duty to maintain" the common areas. This is not a choice. This is the cost of carrying out that duty.

I'm sure others can help with some more ideas, but you need to come up with ways to convince the owners that a well-funded reserve program is a GOOD THING!

Joe

JoeW is absolutely correct.

The line, "You can pay me now or you can pay me later" is fitting here.

Why do boardmembers feel owners will always be unwilling to pay a small increase every year as opposed to not doing it and then getting hit with a special assessment in 5 or 10 years AND paying $500,000 IN INTEREST ALONE to get the work done.

I hear so many board members say they want to keep fees low so that people on fixed incomes can afford it; and in the end the exact opposite happens.

This is constantly happening in associations everywhere.

I've seen too many boards spend too much time on dog poop and other petty items and spend far too little time managing the budget. "SHOW ME THE MONEY!"

Dana