CAI-NJ February 2021

FINANCIAL TRACK... from page 40.

vital for boards to be realistic about their goals and costs to achieve those goals when determining the annual budgeted maintenance fees. Most sites will notice that their annual operating fund budget nets to zero. This is because the main- tenance fee is only intended to provide enough funds to cover the anticipated expenses included in the budget. The maintenance fee for the operating fund is essentially “backed into” by first deter-

mining the costs required to operating the property for the year as well as any other sources of income. What’s left to balance the budget? Maintenance fees. Ensuring that the budget is realistic and accurate is vital to the financial health of an association. The unfortunate truth of the matter is that most line items within the budget will increase on an annual basis. Whether it be insurance premiums or landscaping services, most costs will be subject to some level of increase from year to year. In the absence of other revenue sources, the only way that an association will be able to keep up with the expense increases is through an increase in maintenance fees. Whether it be done annually, every other year, etc. all depends on the anticipated expenses for the upcoming year. The key is to CONT I NU E S ON PAGE 44

community considering both short term and long term goals. At the end of the day, the mainte- nance fee is a calculation. Associations are not in the business of making money, but rather, have a goal of pro- viding for the unit owners and maintain- ing the common elements of the site. It is

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