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Glazer and Sachs presents a forum for board members and owners to tell their side of the story. Hosted by Eric Glazer, a recognized authority in community association law, Condo Craze and HOAs offers valuable insights and lively discussions, attracting a diverse audience of homeowners and board members.
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by Steven J. Weil, PhD, EA, LCAM, Royale Management Services, Inc.
A “dummie,” in this case, is a first-time association member and/or someone with little or no association budgeting experience who wants to know more about how and why the budget is created before they vote on it.
Is it really necessary to go through all that work year after year?
The first answer is, yes, because it’s the law. Florida law (718.112 (2) (f) 2) requires that annual budgets be prepared and, further, that reserve calculations be made by using a formula that estimates useful life and replacement cost.
The real answer is that the budget is a tool used by the association’s board to determine how much owners will be required to pay in maintenance costs for the coming year in order to keep the association financially stable.
The budget is a financial plan, a guide; but the process is an art, not a science. That’s why it’s important to leave room for unplanned expenses. A shortfall may result in an assessment, which will not make anyone happy. The only thing owners hate more than a maintenance fee increase is a special assessment that is necessary because the budget does not adequately cover the ongoing operating and maintenance costs. The tricky part of the process is to balance what is required with the often competing interests of those who want the lowest possible increase with those who are willing to pay more for better services, better amenities or other improvements.
There are two parts to every budget: the operating budget and the reserve budget.
• The operating budget should include all the necessary regular and recurring expenses that are expected in the coming year, no matter how small, such as repairs, maintenance, payroll, utilities, supplies, insurance and administrative costs.
• The reserves are designed to accumulate funds for major ongoing repair and replacement.
Statutes make it mandatory that reserve budgets first include estimated expenditures for roof replacement, building painting and pavement resurfacing at a minimum.
Aside from what the law requires, a good reserve budget also covers other large capital items that will wear out and need to be replaced over the life of the association, such as: elevators, windows, common area air conditioners, docks, generators, et al.
Projected estimates take into consideration the cost to replace each item, prorated over the years of its estimated life. A common mistake in estimating this value is the failure to take into account the rise in replacement costs that occurs over time.
Reserve funds cannot be used for purposes other than those intended without a majority owner’s vote of approval in advance.
How do you build a budget that works? The big secret is to start months before your current budget year ends!
Step one is the information-gathering process, including a review of long-term contracts, upcoming expected maintenance and repairs, details of possible fee increases and a “wish list.” This time-consuming step includes getting quotes from vendors, examining recurring contracts for things like insurance policies, lawn and landscaping, trash removal, etc. Sometimes closely-scrutinized contracts can be renegotiated to save money. It’s also important to use caution when reducing maintenance and repairs numbers to delay an expense outlay. That could result in increased costs in the long run.
Step two is to compare and, using a spreadsheet or special budget software, enter into the appropriate columns the year-to-date income and expenses — projected through year end — with the budget for the current year, to review for increases, and show the percent of difference.
Step three: compare projected expenses for the coming year with “other” income (non-assessed) — such as laundry income, application fees, clubhouse rental, dock rental and any other items for which the Association collects fees other than maintenance fees.
Using those figures, it is then possible to calculate the maintenance fees needed to fund the budget for the coming year. These required maintenance fees are calculated by subtracting the total projected “other” (non-assessed) income from the total projected expenses. This number is then allocated by the formula shown in the association documents. (The number is often based on the number of units or on square footage.)
According to the Statutes, owners may petition the Board if it adopts a budget where assessments rise more than 15% over those for the prior year. The budget must be in keeping not only with the State Statutes but also with the association’s documents, which may be more stringent.
Final approval by the board where the proposed budget is adopted must be done at a properly noticed budget meeting. A notice of this meeting, along with a copy of the proposed budget, must be sent to all owners at least 14 days prior to the meeting. Only association members may vote to waive or reduce the budgeted reserves through full or partial funding.
Failing to fund reserves at all puts everyone’s future at risk. If owners can’t afford the monthly cost how are they going to come up with the money when the roof, elevator or other capital component needs replacing? Often this is done by borrowing, making monthly maintenance payments higher because of what is required to pay back a loan, creating a double whammy of current debt repayment for past depreciation and creating an excuse not to meet current obligations. In some buildings this can create a death spiral.
Comments: Comments Off on SFPMA NEWS: Our Website will be down for a System Reboot Feb 29, 2024
On Feb 29, 2024 SFPMA Website will be down.
We have a total reboot of our system on our server, while adding many new members our IT dept had to add new code to advance our search. We will try to conduct this late night but it might fall over to the next day…due to caching.
In the last month we have found some of the articles, and the New listed Members were not being shared from our system Feed to our Website, there was a disconnect between our Server. Since we have our own dedicated Server and Files. We can reboot and move to a new section and pair this with our hosting provider.
Upgrades will not stop search results from showing but it will make them better. Our IT Dept has found some of the Inner workings through the WordPress CMS Plugins and our System were not linking up properly. ie: as of Feb 22, 2024 New Member Companies were added yet did not show on the website. It came to our attn. when one of our members were sent their log in details and once they did they could not view their Membership listing.
It took a week to make all the changes, to the System, Calendar, Company Listings, and Plugins So the end of the week the system is being upgraded to a faster dedicated server.
We recently published an article on how communities can speed up maintenance projects. In this article, we’ll look at how long some common maintenance jobs should take to complete.
HOAs have an obligation to maintain certain parts of the development. They must set aside a portion of the dues or fees collected from owners to pay for big and small maintenance projects. If the association fails to meet those obligations, it not only creates safety problems for members, but legal issues for the association as well.
If members feel that the board is not properly caring for the property, they can write official complaints, vote to remove board members, or even sue the HOA.
Maintenance must be taken seriously, but it is far easier to manage when you have a system or solution that enables you to organize components, schedule/assign work, and track tasks.
Defining maintenance obligations
The maintenance responsibilities of an association versus those assigned to individual owners depend primarily on whether the item or equipment is classified as part of a common area, exclusive use common area, or separate interest.
Common areas typically refer to shared spaces such as pools, sidewalks and roads. Exclusive use common areas are spaces or elements used by one or more, but fewer than all, of the owners. Separate interests are the separately owned lots belonging to members.
While some maintenance obligations are quite clear, others can be a little murky. This is especially true with exclusive common areas since they tend to be things like patios and windows. Roof maintenance may also be confusing; some HOAs cover roof repairs while others do not.
The association’s CC&Rs should detail maintenance obligations and define who is responsible for what. But if there is some uncertainty, boards are advised to refer to civil codes and/or consult with the HOA’s attorney.
Why timelines matter
There are several reasons why time matters when it comes to maintenance projects. The main one is so staff and management can plan for disruptions and costs. However, there are times when maintenance work will impact owners, and they will also need to know approximately how long the work will impact their day-to-day lives.
For example, if a parking lot is being repaved, owners will need to be informed of the work, they will need to move their vehicles before the work begins, and know how long they will have to find temporary parking.
Contractors can’t know for sure how long maintenance work will take to complete, but they should be able to provide an educated estimate. Tracking the time it takes for professionals to complete routine and unplanned maintenance is another good way to predict future repair timelines. Having this knowledge allows those responsible for setting up maintenance work to complete projects with more confidence (plus they’ll know if a vendor is taking too long to complete certain jobs).
How long should HOA repairs take?
There is no way to know for sure how long any maintenance project will take. Even a standard preventative maintenance job can become lengthy if a contractor discovers additional damage to an element. Other factors, including availability of materials, permit requirements, complexity of the project, size of the community, and weather will all impact the timeline of a project.
That being said, below are some estimates of how long common HOA maintenance work takes to complete.
To get a more accurate time estimate, speak with a contractor or repair expert. They will be able to look at the specific qualities of your community and provide you with a realistic timeline.
Pool repairs
There are many different types of pool repairs. Some can be completed in a couple of hours while others will take several days.
A simple structural leak generally takes a day or two of work. Half a day is needed to complete the first step of a crack injection repair, and another half day is required to “staple” the cracks together and plaster the damaged area.
If your pool has a heater and the warming system breaks, the entire pool may be shut down for a week. The heater can be replaced in a day, but it could take longer. After the new pool heater is installed, it might be another three days before the pool is warm enough to use again.
Most plumbing leaks can be resolved in two days, but the time it takes to fix a pool leak from plumbing can vary according to the extent of the damage.
Pool resurfacing involves the removal and replacement of the top layer of the pool surface. This may be done to give the pool a clean fresh look, or to address several small cracks. In general, this renovation process takes one to three weeks.
Water/electricity lines
A water line is an underground pipe that transports water from a water source to a home’s or building’s service pipe. These pipes typically run beneath sidewalks and streets.
A water line pipe might crack, allowing water to spill out. This can cause many issues, including unsanitary water, higher water bills, low water pressure, and floods.
Due to the severity of this problem, a water main break needs immediate attention. Plumbing technicians will need to turn the water off while they repair the break. Once the pipe is in working order, they will flush it before reconnecting it to the plumbing system.
The good news is this type of repair only takes between four and eight hours.
If an electricity line goes out due to weather, it can generally be restored in a couple of hours. However, if an entire pole comes down, the outage could easily last a full day.
Roofs
In many cases, HOAs have delegated the responsibility of maintaining roofs to the individual owners. But if the association covers the costs of repairs, expect each home to take up 1-3 days of the contractors’ time. More complex designs and materials will add time to that estimate.
Gutters and downspouts
Routine maintenance of gutters and downspouts prevents more serious water damage from occurring. Like roofs, many HOAs have stated that owners are responsible for maintaining these items.
Minor gutter repairs can be completed in as little as one to two hours. Partial replacements can take two to four hours, and full replacements can take two to three days of work.
The timing is similar for downspout repairs and replacements.
Parking lots
Most HOAs can complete routine parking lot maintenance in two to three weeks, but timing will vary depending on the size of the lot and weather conditions.
Paving can take less than a week, but keep in mind that proper curing (letting the asphalt cool and settle) is an important part of the process as well. Depending on the size of the parking lot, thorough curing can take anywhere from one to two weeks.
General landscaping
While not a traditional repair, landscaping is a maintenance job that can be hard to plan for, at least the first couple of times. The size of the property, availability of materials, and weather conditions can greatly impact the time it takes to finish the job. Once you have found a landscaper that you like, you will become more familiar with the time it takes to do certain jobs.
From start to finish, most projects fall into the two- to three-week range, but cutting grass or trimming plans can take half a day.
Conclusion
HOAs have an obligation to maintain certain areas of the development. By scheduling routine maintenance, associations help prolong the useful life of elements and components, and keep the community safe and attractive too.
It’s important for staff, board members and management to have repair timelines so that they can budget for costs and time accordingly. While projects don’t always go according to plan, just having a guideline allows them to manage expectations more effectively.
Comments: Comments Off on Join Becker’s Jennifer Biletnikoff and David Muller on Wednesday, February 21 at 12PM EST for a webinar to learn the ins and outs,Are you ready to serve on your HOA or Condo Board?
Are you ready to serve on your HOA or Condo Board? If so, you must comply with Florida’s certification requirements.
Join Becker’s Jennifer Biletnikoff and David Muller on Wednesday, February 21 at 12PM EST for a webinar to learn the ins and outs, Are you ready to serve on your HOA or Condo Board?
and how to avoid potential liability associated with your new role. By attending this online class, you’ll earn CEU credits to satisfy the statutory requirement, so you are eligible to serve.
If you are planning to serve on your homeowner association board, you probably know that you will need to comply with Florida’s certification requirements within 90 days of being elected. Our HOA/Condo Board Certification class is designed to satisfy the statutory requirement so that you are eligible to serve. More importantly, it will provide the tools and information you need to perform your job well and to avoid any potential liability associated with your new role.
Topics Covered:
• Defining your fiduciary duty
• Analyzing association operations
• How to properly maintain the association’s books and records
• The pros and cons of alternative dispute resolution
• Avoiding common election pitfalls
• Preparing budgets and funding reserves
• Understanding financial reporting requirements
• Assessing insurance needs for common areas
• Defusing conflict within the community
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PLEASE NOTE: Instructions to receive certificate of completion or CEU credit will be emailed a few business days after the class has concluded.
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This online class will be presented on Zoom! Full live viewing instructions will be sent to all registrants.
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Comments: Comments Off on RSVP for free to attend a Lunch & Learn at the Weston Community Center on Feb. 21st at 11:30am. Topic: “Managing Conflict Management in HOAs and Condos”.
RSVP for free to attend a Lunch & Learn at the Weston Community Center on Feb. 21st at 11:30am. Topic: “Managing Conflict Management in HOAs and Condos”.
This also gets CAMS a credit in HR!
Guest panelists include Weston Commissioner Mary Molina Macfie and Kaye Bender Rembaum’s Michael S. Bender, offering their perspectives.
The instructor is Marcy Kravit, PCAM (Hotwire Communications). Lunch provided by Blue Tiger Wellness and is complimentary to those who register.
Comments: Comments Off on CEU course “Navigating the FFHA: Assistance Animal or Pet?” next week on Feb. 20th. Alan Schwartzseid of KBR Legal.com
We are presenting the CEU course “Navigating the FFHA: Assistance Animal or Pet?” next week on Feb. 20th. Alan Schwartzseid from KBR Legal.com will be the instructor.
Presented by Alan Schwartzseid, Esq., of Kaye Bender Rembaum Learn about the HUD regulations and Florida Legislation pertaining to assistance animals, as well as common issues concerning assistance animals and addressing requests by residents for reasonable accommodations. Provider #: 0005092 | Course #: 9631847 | 1 CE credit in OPP or Elective
A lake is a living, and ever evolving thing. Many people think a lake is static and unchanging like a swimming pool.
Often, we hear “I’ve lived on this lake for years and it’s never been like this before. What’s going on?”
The simple answer is: You’re lake is getting older and as it matures it’s going to go through changes. This is
especially true in South Florida since most of our lakes are man made, shallow and quite new in comparison to the natural lakes that occur in other parts of the country.
To add to the situation, our lakes are connected directly to storm water drains and canals, increasing sources of input. Community lakes may provide nice scenery but their primary purpose is to catch and hold rainwater from storms so our neighborhoods don’t flood. That water carries with it anything it picks up as is flows across our properties, down the streets, and through our developments. Items such as dirt, fertilizer, grass clippings, pet waste, leaves, and petroleum products are carried into our lakes via storm flow and accompanying winds where they begin to accumulate.
Everything from lake depth to water chemistry is changed (ever so slightly) every rainy season. Year after year the subtle changes build until finally, the cumulative result becomes visually obvious. Another source for change that often goes unnoticed is the constant barrage of new weeds and plants introduced to our lakes by wildlife. Waterways provide an oasis and convenient habitat for migrating water birds. Every season they travel great distances, hopping from lake to lake; carrying new weeds and transferring them to each water body as they go.
Therefore, if the observation is “Our lake wasn’t like this 5 years ago.” The response is “That’s because it’s not the same lake it was 5 years ago.” The long standing relationship Allstate has had with many of its customers has given us tremendous experience in handling the changes that naturally occur with community lakes over time. Feel free to contact us and let our staff work with your specific waterway needs.
Author: Stephen Montgomery, Allstate Resource Management
SFPMA works throughout the State of Florida, we are a multi-member organization for the Condo, HOA and Property Management industry. Through knowledge based Articles, Events and our Members Directory, Clients find the right information to make an informed decisions for their Florida properties.
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Is it really necessary to go through all that work year after year?
