Written to help board members learn basic financial principles that will protect and preserve owners' investments and eliminate the need for special assessments.
Aimed at promoting financial soundness within community associations, this book focuses primarily on the importance of reserves-both reserve studies and reserve funding. The message is supported with information that goes beyond a discussion of reserves. It also touches on the areas that underlie and affect reserve funding: budget development, preventive maintenance, cost projections and estimates, collections, effective board functioning and the value of good management.
Contains multiple charts and diagrams illustrating various reserve systems for condominiums, homeowner associations, high-rise buildings and conversions.
Loaded with examples, checklists and sample documents.
PART ONE: Problems and Ideas for Solutions
Key Financial Questions for You and Your Neighbors
Four Key Ideas in this Book
What is a Community Association?
What is a Reserve Study?
Why some Community Associations ARE NOT Financially Strong
Annual budget underfunding: How does it happen?
The even nature of Operating Expenses spending
The UNEVEN nature of Reserve Expenses spending
How owners are hurt by Association financial weakness
Why some Associations are better at financial "catch up"
Thoughts on association financial survival during this prolonged economic crisis.
What is the expected useful life of your building?
Why some Community Associations ARE Financially Strong
It comes down to this:
An Ideal Board of Directors:
- Plan of Action
- Action Steps
Prudent - Action-Oriented - Sometimes CourageousFrom "Random Neighbors" to a Unified Board of Directors
Who makes a good Board Member?
A few common behavior problems in some board membersWhy a well-planned monthly board meeting is so vital
A few common behavior problems in some owners
A few common problems with property management firms
Who do you call or e-mail when there are day-to-day problems to solve?
Be wise. Keep good association employees for the long haul
Reviewing the basics: reserves, collections
Ideas to Improve the Financial Soundness of Community Associations
The BENEFITS to society:
- Reserve Studies required by law in every state
- Laws which give the board of directors the ability to have cash to make needed repairs
- An innovative private sector business which investigates association financial strength for new buyers, lenders
- Better pay for off-site, part-time property managers (home owners, please note, often you get what you pay for)
- Boards following the 'Business Judgment Rule'
- Experimental idea: The condo ownership/infrastructure rental hybrid
- Experimental idea: An outside, paid board of directors
- Annual, data-driven, local recognition of well-managed, financially sound community associations
- Discussion of better legal methods for termination of aging, failing Associations
PART TWO: Samples and Appendices
In-Depth Maintenance & Financial Planning Documentation
FIVE unique property examples
- Two or Three Story Stacked Flats
- Townhomes/Patio Homes
- Home Owner Associations of Detached Single-Family Homes
Sample financial and maintenance planning data for the five property examples
- Property Overview
- Annual Budget
- Monthly Income Statement
- Monthly Balance Sheet
- Monthly Accounts Receivable Report
- Reserve Study (condensed version)
- Preventive Maintenance Check List
- List of Major Structural Renovation Expenses for a "Same Neighborhood" Single-Family Home
- Who Does What? (Thumbnail List of Job Titles)
Major Repair and Renovation Project Summaries
Cost estimate ranges and photos
- Roofing System Replacements
- Wood Rot of Siding, Stairwells, etc
- Plumbing System Replacements
- Electrical System Replacements
- Boiler/Chiller Replacements
- Concrete Balcony Restorations
- Lobby and Hallway Renovation
Why the growth of Community Associations is probably here to stay
Frequently Asked Questions
- What percentage of the budget do we set aside for reserves to be safe?
- I'll be dead by then anyway. Why should I help pay for a new roof?
- If we raise the monthly fees, how can I ever sell my unit?
Hired Property Management Considerations
- Credentialing and Certifications
- Fees for Property Management Services
- Common Tasks for a Community Manager
- Should Owners/Volunteers Be Paid?
Frequently Asked Questions when buying in an association
- Assessing Association Management and Administrative Strength
- Assessing Association Financial Strength
A business-like Request for Proposal (RFP) for an association can be detailed and often technically complex.
- Sample RFP for Lawn Care and Snow Management Services
Local Resources to Help You