- September 12, 2022
- Posted by: CCM
- Category: Uncategorized
This past summer, the Bureau of Labor Statistics announced that inflation had reached 9.1% – a 41 year high. This has significantly affected HOA budgets, impacting costs for labor, landscaping, maintenance, renovation, security, materials, sanitation, gas, electricity, and nearly every other cost imaginable. An HOA board of directors needs to make thoughtful and strategic decisions to navigate this tricky situation.
The options for remaining financially stable are to either cut costs, raise fees, or both. From the cost-cutting perspective, make a list of all current projects and planned ones for the next five years. Which are essential and which are “nice-to-have”? Structural improvement projects, such as roof or window replacement, should be at the top of the list of projects to keep. However, less necessary projects, like new furniture for the common areas, may need to wait. Similarly, it’s important not to skimp on ongoing maintenance since doing so will increase your HOA’s costs in the long run as well as lower your members’ home values.
When identifying which projects to cut and which to keep, it’s important that your board is working with accurate pricing information. If it has been several years since your last reserve study was conducted, the cost estimates are likely out of date. Consider commissioning a new study so you are working with current data. Similarly, once you review the data from the new study, you also may find that your reserve fund is too low and needs to be adjusted.
Another option for lowering costs is obtaining competitive bids for vendor contracts when contracts for those services come due. Perhaps there are new providers that can offer your HOA a discount compared to your current pricing or can provide additional services for the same price.
If cutting costs alone will keep your budget in check, then you are in luck. Most HOAs also need to raise their fees to keep up with inflation. If you need to raise fees, make sure to check with your HOA by-laws and attorney to make sure that any increases follow the governing rules of the HOA and the state. It’s also important to make a plan for communicating the increase to HOA members, who will likely not be pleased since they are being squeezed financially in other areas as well. Provide several months warning of the increase to allow members to plan ahead and provide a detailed rationale why the fees are increasing and how money will be used.
Leading an HOA through this steep inflation is a difficult process. If you want expert advice to help your HOA remain financially secure, contact CCM today. Our experienced property managers can help identify areas to cut costs, recommend professionals to conduct reserve studies, and develop and execute communication plans to deliver the news to homeowners.
Consolidated Community Management (CCM) is a full-service property management company specializing in condominium and homeowner association management in Broward and southern Palm Beach Counties. We are committed to working together with community Boards of Directors to develop management plans tailored to the unique requirements of each community and their residents.
CCM provides a quality of service that is unique to our industry and consistently delivers a distinct competitive advantage. Our concentrated, extensive local presence and knowledge of community associations results in lasting partnerships and superior service. We have built our industry reputation on employing the best in the business and assigning only a limited number of properties to each Property Manager Team.
Our team at Consolidated Community Management provides expert property management services at competitive prices. Contact us today by calling (954) 718-9903 or clicking on ccmfla.com.
 Bureau of Labor Statistics. Consumer Price Index Summary – 2022 M06 Results (bls.gov). Accessed July 24, 2022.