20 Nov It’s About More Than Assessments (Part 1)
Assessments fund everything from entry gate maintenance to the clubhouse roof. For the majority of associations, 2020 budget discussions have already begun. Managers are pulling 2018 actuals and 2019 trends, checking the reserve study and talking to board members as they create the next budget.
Most homeowners receive the year-end mailing and immediately look for one thing, what is the assessment going to be in 2020? And while that is important for your personal budget, it’s just as important to read through your budget document because that is going to tell you what is being done, what needs to be done and if the association board is doing enough to plan for the future of the community.
With a few simple steps, you can usually tell if the association is moving forward.
- What projects will the association be completing in the next 18 months?
- Look to the reserve study for that information.
- Has an unexpected expense caused a budget shortfall?
- This usually appears in the form of a special assessment.
- Are standard monthly expenses showing increase above normal inflation?
- It could be accurate or be showing the signs of a bigger problem.
Projects and the Reserve Study
The reserve study lists the life expectancy and cost of repair/replacement of all common elements. If you live in a condo complex and the roofs have 5 more years before they’ll need replacement, the budget should include a specific dollar amount being saved for the project.
Or, the board may have chosen to begin the project early and have a plan in place to replace 3 roofs each year instead of all 18 at once.
You’re looking for big ticket items and project plans. A large project without adequate savings or pre-planning can become an association hazard.
This is one of the steps will help you understand if the association budget is meeting the community expectations. Check back in for additional recommendations to make budget and assessments a simple part of home ownership.