HOA Nut House

Steven Shuey PCAM, CCAM, Special to The Desert Sun

Homeowner associations are seeing higher costs than anticipated this year. Good and effective budgeting could prevent a disaster from something like this, but when the budget is set before the increases could have been anticipated, what is a board to do?

Budgeting for a homeowners association can truly be a difficult task. Everyone who lives in the community wants the best possible maintenance and service, but few want to pay any more than necessary to obtain it. With that in mind, the Board of Directors makes every effort to keep the budget tight and on the mark to the expenses they anticipate.

Sadly, some folks on the budget committee actually think that expenses will not go up from one year to the next. Has anyone ever seen that happen? I don't think so, not unless service is reduced.

Service in a community gets better with an experienced crew. Changing companies is not always the best option. Changing companies can be a very good option if the service received is below the standard requested, but then the reason for change is not a lower price, it is a better service.

Still, because the homeowners want the best bang for their buck and none want to overpay, the budget will be tight. Although prudent boards include a contingency for the unexpected, few make the contingency large enough when utility bills skyrocket or a situation comes along causing unanticipated expenses.

When expenses suddenly go higher than expected, cash in the bank disappears! When there is no money in the bank to pay the association's bills, there is only one thing left to do - special assess the owners.

Thinking the owners do not like increases to the regular maintenance fee is correct, but they dislike unanticipated special assessments even more. The key word there is "unanticipated" - which really means, due to lack of proper and prudent planning.

Boards have a fiduciary duty to pay the association's bills and budget correctly to accomplish that. Proper budgeting does not mean keeping the budget as low as possible, but rather it means anticipating expenses and budgeting accordingly.

Continuous communication with the homeowners who pay the assessment is critically important when it comes to their satisfaction level. Keeping owners in the dark when it comes to what is happening to the association, especially when it comes to their direct cost, only breeds discontent. Inform homeowners on a regular basis and they will understand the changes when they come.

Steven Shuey is a Certified Community Association Manager (CCAM, PCAM), General Manager of the Desert Island Condominium Community and past president of the Coachella Valley Chapter of the CAI. If you have questions for this column e-mail CAIDesertSun@aol.com.

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