CAI-NJ Feb. 2019

MANAGEMENT TRENDS

Money Matters… Assessments, Snow and Community Info By Elaine Warga-Murray, CMCA, AMS, PCAM, RMG Regency Management Group, Inc., AAMC

E very association has started this year with a new bud- get and has experienced the winter reality of snow. Snow and budgets are generally not compatible, since snow is an unpredictable cost and a disruptive con- dition that impacts every aspect of community association operations. While it may be unseemly to link snow and budgets at first glance, lets take a look at what snow has been responsible for in dollars and cents: special assessments, deficits and homeowner complaints are all costs that are rarely accurately prepared for or predicted when the board adopts a budget. Even if the board wants to (shutter) raise fees and increase the budget, there is always resistance. No one likes to have to pay more money and I have seen communities in turmoil when it is time to adopt a new budget increase. While it may seem like the path of least resistance is to special assess for the cost of snow for each year that there is a deficit, that is really not the best option. For one thing, mortgage providers don’t like to see special assessments and the best situation is to have a stable budget year-to- year with minimum increases. Here are a few budget options that can help avoid the crushing snow costs when a storm or combination of storms in a year costs much more than anticipated: 1. Place a Deferred Snow line item in the budget for approximately 20% of a big storm i.e. $20,000/year based on $100,000 snow cost and place in a sepa- rate account if not used. 2. Budget an extra $15,000-$20,000 a year for snow line item and then place any funds not used in a sepa- rate account at the end of the year. 3. Increase a contingency line item to an additional $20,000 with a note that the line item includes a snow contingency.

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“...lets take a look at what snow has been responsible for in dollars and cents...”

4. Budget the snow line item based on the most costly snow of the past four years and again place any unused funds in a separate snow account at the end of the year. The above are just a few considerations, however, review of the budget and assessments should be presented to homeowners mid-year. Often homeowners only worry about the budget at the end of the year when an increase is anticipated. The better way to provide information about the budget and the costs of operating the community is to evaluate the status mid-year, even if the budget is not going to be modified or adjusted. This should follow a review of current delinquent home- owner accounts. Delinquencies can often be cleared, or payment plans adopted when it is time to issue pool pass- es. This is a good time to review the collection policy to evaluate if the program is addressing delinquent accounts before they get too high. One change for consideration

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