10 Ways Community Associations Can Lower their Assessments. A Primer for Condo Association Board Members.

10 Ways Community Associations Can Lower their Assessments. A Primer for Condo Association Board Members.

Community associations around the world are facing increasing costs. From rising utility expenses to increased insurance premiums, associations are constantly facing rising expenses. This typically results in the board of directors having to raise assessments. Some associations raise assessment annually by a very moderate amount and others raise the assessments by larger amounts because they have not kept up with the rising costs of their expenses. Some associations follow recommendations made by the reserve studies while others don’t have any reserve studies to follow. Some associations have fully funded reserves, while others have little to no reserves. Regardless of your current financial situation, is there a way to potentially lower the assessment levels of your association? Let’s discuss some potential ways to do so.

Review your budget and expenses. You may be able to find areas where you can reduce costs or increase efficiency, such as
renegotiating contracts, switching vendors, or implementing energy- saving measures. Do you really need janitorial services daily or
weekly? Can you cut back to every two weeks? Do you need zero tolerance snow removal services? Or can you cut back to snow
removal after a 2” snow fall?

Review your reserve fund and study. You may be able to lower your reserve contributions if your reserve fund is well-funded and your
reserve study is up to date. However, you should not compromise the long-term maintenance and replacement of your common elements, as this may lead to higher costs and assessments in the future. If you don’t have a reserve study, put together a capital plan and compare your upcoming capital needs with your reserve funding status. This might allow you to lower your assessments.

Explore alternative sources of income. You may be able to generate additional revenue for your association by renting out unused spaces, such as clubhouse, parking, or storage, or by offering services, such as laundry, vending, or cable, to your residents. Perhaps you can install a vending machine in your lobby or have a wireless provider install a cell tower in your roof? Or you might have an advertiser install a banner on the side of your building that can generate additional income. However, you should check your governing documents and local laws for any restrictions or requirements before doing so.

Communicate and consult with your homeowners. You should inform and involve your homeowners in the decision-making process
regarding your assessment levels. You should explain the benefits and drawbacks of lowering assessments and solicit their feedback
and suggestions. You should also educate them on the importance of paying their assessments on time and in full, as this will help your association maintain its financial stability

Ask homeowners to volunteer. Are there volunteers that can take on landscaping or gardening? Are there other duties that homeowner volunteers can take on that will help reduce association expenses? This is a strong possibility with the understanding that the association must take into consideration the insurance risks involved if the homeowner volunteer gets hurt while performing a task for the association.

Consider a Reduction in Amenities. Can the association reduce the amenities offered to the homeowners? For example, is the
association offering bulk cable to the homeowners and residents? Are there other amenities that can get cut back? This is yet another
way for associations to cut back on expenses and potentially reduce assessment levels.

Address Deferred Maintenance. In this scenario, you will need to spend money to save money. For example, if you have a very old
roof, you might be spending a lot of money resolving leaks which are damaging the ceilings of the homeowners living in the top floor of the community association. By installing a new roof, you will eliminate or significantly reduce the roof maintenance line item in your operating budget for many years to come. Another example would be to replace your inefficient water heating or heating systems for the building. This would end up slashing your gas expense and cut your overall operating expense budget over many years.

Rebid Contract Services. One of the best ways to cut expenses is to rebid contract services such as janitorial, snow removal and
landscaping. Consider stop paying an annual snow removal contract and only pay per push now that winters are milder. Perhaps cut back on the frequency of janitorial services or cut back on landscaping so that the service is every two weeks and not weekly.

Lower your Insurance Costs. Insurance premiums are one of the largest expenses for community associations. Shop around and see
if you can find a more cost effective insurance package.

Higher a more cost-effective Management Company. The difference between an effective and ineffective management company can be tremendous. An effective management company will constantly find ways to cut costs and investigate ways to increase income. There is a lot of effort required to properly vet a new management company, but the rewards are tremendous and more than likely will outweigh the effort involved.

Summary

As a board member of a community association, it is important to find ways to save the association money. There are in fact many ways to potentially reduce the assessment levels. Although this is unusual, it is possible with the understanding that there are several factors involved that need to be taken into consideration. Given the right amount of effort and determination, it is a strong possibility to reduce the assessments and the homeowner will applaud your efforts. For more information on ways to save money for your association, visit www.caionline.org

About Chicago Property Services

If you’re a board member of a community association in the Chicago area, you may want to consider reaching out to Chicago Property Services for assistance with your landscaping needs.

Chicago Property Services is Chicagoland’s leading provider of community management services for small to mid-sized condo, townhome, and homeowner associations, as well as cooperatives. They can help you hire a reserve study specialist and/or oversee your large-scale capital project.

To request a management quote or to request a copy of the 2024 board planning guide, you can email Salvatore at
ssciacca@chicagopropertyservices.com or call him at 312.455.0107 x102.

By working with a reputable and experienced community management company like Chicago Property Services, you can ensure that your community is well-maintained and enhances the homeowner community living experience.