08 Aug Appreciation for the Annual Budget
Each year, boards, managers and vendor partners spend a great deal of time evaluating association expenses. They review reserve studies to identify future projects. They look at current expenses and factor in inflation and contract increases. They develop 5 year plans for re-roofing or street replacement. When all is said and done, this document is mailed to the homeowners. And most of those homeowners will only look at one thing – how much did the assessment go up?
As HOA industry specialists, the team at IHS appreciates the efforts of the association to research and develop the annual budget. It’s an incredible tool in understanding the needs of the community. The annual budget can even help us figure out whether the community will continue to draw tenant interest while creating income for our clients.
A 20-year-old condo complex with money in the reserves for a 5-year reroofing plan is paying attention to the aging components of the community. They are probably focused on curb appeal and making sure the pool and clubhouse are ready for use.
A 2-year-old condo complex with zero reserve funding for roof replacements is not planning for the future. This may lead to a large one-time special assessment that would spike costs related to the property. It can also indicate a lack of appreciation for non-essential routine maintenance. Communities that aren’t planning for long term infrastructure care are more likely to be make questionable decisions about day to day requirements for the neighborhood.
The annual budget is simply the footprint for where the association is going. Take the time to look beyond the change in assessment. If you do, you’ll be acknowledging the efforts of your volunteer board and learn a lot about what’s needed to help the association to thrive.