For most Floridians, fall is just a label that is placed on another set of months because we don’t really experience the dramatic temperature shifts the way other states do. However, the beginning of fall is significant when it comes to HOA’s because of one thing in particular – budget season. Your board of directors should be getting ready to have several budget meetings which will serve as an opportunity to reflect on the past, discuss current needs, and plan for a secure future. It is always true that those who are prepared really have very little issues.
Here are some things to consider to ensure a successful budget season.
Checklist for Condo and HOA Budget Season
Prepare your Documents
The first thing that you must do is to ensure that all of the association’s financial documents are in one place. This means getting every document that you can possibly find from the last two years and having it on hand. This will help you make the most informed decisions as you prepare your new budget.
It may be a pain to go line by line, but it’s necessary. Find the shortcomings and address them; look for areas where opportunities were missed to better use the money and address them. Scrutinize every line. For example, if your association only budgeted about $15,000 for shared pool maintenance, but it actually costs $24,000, that is something that you need to make note of moving forward. Check to see the overall state of your budget from last year and if it was successful or if there were significant moments of financial shortcomings. These things are teaching moments that can help the association set a better budget.
Find a solution
It can be difficult when it looks as though there are more things to fix than there is money; however, putting band-aids on the problem is only going to cost your association more in the long run. Patchwork can only suffice for a little while before the problem becomes very prominent to everyone. From old roofs to leaky plumbing, whatever the problem is, sit down as an association and figure out ways that you can work towards fixing the problem instead of a temporary go to.
This does go without saying; however, it is so important that budget meetings are more than times to discuss money. Budget season is a great opportunity to set goals for your association whether it be preventative maintenance goals for your reserves, or new community projects. Take the time to throw everything on the table as far as wants and needs. What can your association do to improve the quality of life for your community all while keeping property values high and the community looking amazing?
Have you had a recent bank foreclosure in your community? During this time, it is difficult for people and the economy has felt that. So, it is not a surprise if there has been a foreclosure or serious delinquency within your community. Like it or not, this is an expense that you need to budget for. Consider discussing the lost money due to the foreclosure (if that was the case) and how the delinquency will be addressed. If there was a lawyer on file, but the bank came in and foreclosed anyway, this is an expense that you need to recover as well. Consider bringing in a collection agency to help you manage the delinquencies.
Put it all Together
After you and your association has gone through every step in the process, model out everything you’ve discussed on a budget sheet. This will give you a clearer understanding of what everything looks like going forward. While there are still outliers such as increased maintenance fees (which tend to happen yearly), you should be able to see a budget that works for the most part and make small allowances for the unexpected. In addition, consider the special needs of your community, review the most recent financial reports, and listen to those within the neighborhood. Consider what you’ve heard at HOA meetings and see how it factors into the plans that your association has made. Does it reflect everyone or just a few?
Lastly, remember to keep everyone in the loop. This is the best way to ensure that the entire association is on the same page and that there aren’t any hiccups as you’re planning or implementing.
As always, we are here to answer any questions that come up along the way.