26 Nov It’s About More Than Assessments (Part 2)
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.
Voting on a Special Assessment
A special assessment usually requires a vote of the community and will be about a specific project. If the condo complex hasn’t saved enough to replace the roofs, and they have to be replaced, the board may request a special short-term assessment that will be used to pay for the difference between what is saved and what is needed.
If the budget shows a reserve assessment it means the board has designated an amount above and beyond the standard contribution to the association savings. It’s actually a good thing. A small reserve assessment now can help an association avoid a large special assessment later. A board that is this forward thinking most likely is keeping close track of upcoming repairs.
This is one of the steps will help you understand if the association budget is meeting the community expectations. Check back in for an additional recommendation to make budget and assessments a simple part of home ownership.