Assessment increases are never pleasant, but keep in mind, if you take them a little at a time, they are much easier for homeowners to deal with than a giant rate hike all at once.
Board members, here are some tips to point you on your way to a pain-free budget season:
- Review the reserve study to determine how much money the association should have set aside for replacement costs and other contingencies. Determine the percentage funded in reserve. Make sure you have planned for adequate cash flow for upcoming expenditures. Compare recommended funding in the reserve fund to the current level of actual funding to also determine if an assessment increase is needed. Analyze expenditures for the current year and pinpoint assets that may need to be replaced or upgraded in the coming year
- Examine each line item to account for increased costs. Divide the total among homeowners to determine whether an assessment increase will be necessary to cover costs
- Review legal documents for specific requirements
- Include a narrative explanation of how each income and expense item was determined
- Prepare the proposed budget and submit it to the board for review. Take board members’ input into consideration and prepare final budget.
If you have questions about the budget process or financial statement review, please give us a call at 602-957-9191. We are happy to assist!