Now that Fall is upon us, you can bet your bottom dollar on 2 things. Old man winter is right around the corner and it is time to prepare and approve next year’s budget. And in order to run an association in a fiscally sound fashion, the board of directors must take the time to review the financial history of the association and to properly plan for the future. This is only accomplished by following common sense accounting guidelines. And what are those guidelines you might ask? Well I am pleased to share with you the absolute most important best practice guidelines to ensure your budget is blown before you know it in 2016. So sit back, relax, take a few sips of neat Kentucky bourbon and enjoy the ride J
10. Slash your snow removal budget. Better yet, buy hand shovels for all the homeowners so that the association can cut back on the ridiculous snow removal expenses that have grown exponentially – especially after the Polar Vortex winter of 2013. Besides, the association has workers compensation and everyone at the last annual meeting (3 years ago) said that they wanted to pitch in. Well here is a great way for everyone to help out in ways that they never imagined.
9. Install a green roof and allocate the expense under roof repairs. Green roofs are environmentally friendly and help cut down on CO within the environment. This is also a great way for homeowners who live on the top floor to save on their heating and cooling bills. Besides, the current roof which is about 25 years old needed some work anyway.
8. Upgrade the swimming pool to a salt water pool (without the consultation and approval of the homeowners). Think of the therapeutic benefits of this.
Everyone is talking more and more about ways to live a healthier lifestyle and this will ensure your association will be the talk of the town. So what if you have to buy all new pool maintenance equipment? The current equipment was on its way to the graveyard anyway.
7. Decrease the management fees by 50% and hire a startup management company. This is an ideal way to save money and can help the board cut assessments. So what if the new management company drains away your savings. Besides, all the homeowners are sick and tired of “overpaying” for services and this is a perfect way to cut back on the budget expenses. And make sure that the board hires that startup company without any due diligence, because hiring an attorney to review the contract will COST $$$.
6. Weed wack the landscaping budget. The landscaping budget has mushroomed over the years and has really gotten out of control. It’s time to take back control of the gardening budget and bring the services in house. This is a great way for all the homeowners to pitch in and help save the association save money. Don’t worry about the fact that the association spent $50,000 installing the new garden. Now that the new sprinklers are installed, it should easily maintain itself.
5. Go retro with the lighting and install vacuum tube lamps. Isn’t that the new look? Retro vacuum tube light bulbs. LED lighting is too sterile. Think of all the benefits such as warmer common areas and something for the building engineer to do.
4. Freeze all capital expenditures for 5 years (and don’t raise the assessments). This way, the association will have time to build up the reserves. Besides, the hot water tanks are in the basement and there are a few floor drains just in case. Not only that but the hallways were painted about 5 years ago and all the board of directors realized that their condo investments are all underwater. So they have no intention of selling for at least the next 5 years.
3. Cut back on all legal collections activity. These legal fees are sky high and are really draining our savings. Besides, if someone can afford to pay, then we need to be sensitive to their situation. We as a community should then pick up the slack for those that don’t pay.
2. Pass rules and regulations requiring all homeowners to install their own individual heating system (even though there is a common area boiler) This is a sure way to heat up the board meetings and drive up attendance. Besides, the board has been looking for ways to get the homeowners more engaged and this is the perfect way for homeowners to come to the meetings and blow off some steam.
1. Don’t pass a 2016 budget. Last year’s budget was blown by July and the last thing the board wants to do is create another fiscal mistake. Remember the saying: if it ain’t broke, don’t fix it. Besides, the association has $500,000 in reserves so the fact that the 2015 budget was blown by $50,000 still leaves the association with another 9 years of budget blowing opportunities.
So in summary, it is very important for the board to take the time to carefully review the past financial performance as an association and craft a 2016 that will take into account the current reality of the association in terms of physical infrastructure, collections and operating expenses. Then add some pixie dust and pray that your board doesn’t follow any of these guidelines.
About the Author
Salvatore J. Sciacca aka “Condoboss” is one of the nation’s leading experts in the community property management industry and is also recognized for his stress relieving blogs and insight on personal and organizational transformation. He is also the President and Founder of Chicago Property Services, Chicago’s #1 community property management company specializing in management and operations of condos/townhomes/HOA’s of 100 units and under. Salvatore is also the founder of managmycommunity.com (MMC), which is a state-of-the-art online support portal for community associations.
With over 20 years of industry experience, Salvatore is recognized for his extensive knowledge of capital planning, preventative maintenance, cost-saving measures and community building techniques. He holds industry stature as a Certified Manager of Community Associations (CMCA), the designation of Association Management Specialist (AMS) and is fully licensed as a manager (License #: 261.001386) through the State of IL.
Salvatore has also traveled extensively around the world and has meditated with Buddhist monks in Nepal and met the world’s happiest man, Matthieu Ricard. He’s passions include cooking, traveling, meditating and hiking. He is also the founder and executive director of the Chicagoland Italian American Professionals organization.
Salvatore can be reached at: 312.455.0107 x102 or at firstname.lastname@example.org.