CAI-NJ May 2022 Community Trends

MANAGEMENT TRENDS

Mid-Year Check Up — Keeping Your HOA in Check By Vincent Rapolla, CMCA, AMS, Corner Property Management, LLC, AAMC

S everal industry professionals recently attended CAI’s High-Rise Manager Workshop in Philadelphia. It was a great event with colleagues discussing real life events, experiences, and macro-conditions along with the resulting impacts to our day-to-day management activities. Even though the session was geared towards a specific building type, everyone left with a list of items that are worthy of checking for all community types they manage and can ultimately help to improve both the community’s financial and operational health. So, with mid-year coming up fast, we have outlined several significant items to focus on for your communities to provide for financial and operational resilience. Financial Health The current economic environment is unpredictable at best. There are many macro-economic variables that are outside of our control which have a direct impact on our community’s financial health. Given that backdrop, it is a good time to revisit our communities’ financial components centered on creating as much financial resilience as possi ble in an uncertain financial environment. Budgets As described above, the financial environment is changing very quickly. In particular, the increase in the cost of labor and materials. It is important to reproject and reprioritize this year’s budgets to account and adjust for the increases from when the budget was approved several months ago. Here are a Few Macro Items that are Impacting Budgets: • Inflation in general is impacting our communities’ buying power due to the rising costs of labor, building materials, and consumables for maintenance, repairs and operat ing supplies. • Supply chain problems creating delays in projects due to either equipment delivery extensions or the lack of skilled professionals to complete the project.

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“...it is a good time to revisit our communities’ financial components centered on creating as much financial resilience as possible in an uncertain financial environment.”

The objective would be to categorize projects and spend as to not affect annual dues. Since we are a few months into the new year, we should see the cost increase trend and calculate the inflation amount. From there, the manag er can then apply the inflation amount to the remainder of the year and calculate the total increase over the approved budget. The final step would then be to reprioritize all spending and projects to make up for the calculated increase considering the safety of the community. Reserve Funding Along with the more tactical budget, the financial envi ronment will affect reserves and as a result, we need to assess the impact on reserve funding and the projects that our Engineering partners have laid out for our communities. We should think through the following considerations: 1. Reserve funding goals may need to increase to reflect persistent inflation rates and will ultimately impact the cost of future projects.

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