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JS1
(Nevada)

Posts:30

08/12/2008 8:42 AM
It's time for our association's annual budget review - Any suggestions on how your HOA is saving money. These are the things we are looking at right now. 1. Review of the governing documents to determine if we can eliminate a few meetings by combining them ( such as the budget ratification meeting and the election) 2. Adding a line item for bad debt. 3. Signing up as many people as possible for electronic notification 4. Aggressive debt collection 5. Renegotiating contracts What are you doing to stretch your HOA budget during the crunch time for the next 18 months? Best~! J

SusanW1
(Michigan)

Posts:2316

08/12/2008 9:21 AM
Congratulations and good question . . . a few thoughts: 1. Review of the governing documents to determine if we can eliminate a few meetings by combining them ( such as the budget ratification meeting and the election) Will this take a bylaw amendment? How does eliminating meetings save money. If anything, you may need more in times of crisis. 2. Adding a line item for bad debt. Interesting . . . how about several budget reviews during the year? If your revenues don't come in, then you can't spend as much as you planned for in the budget. Adjust the budget, first. I'd be interested in seeing how a "bad debt" line item is handled, in a bookkeeping sense. 3. Signing up as many people as possible for electronic notification Do your bylaws allow for "notice" to be done electronically? 4. Aggressive debt collection OK - did the Board pass a collection policy? 5. Renegotiating contracts Good luck in reducing anything - status quo is the best you will probably do here. Stay with vetted, reliable companies.

JohnK3
(Pennsylvania)

Posts:565

08/12/2008 9:28 AM
JS, A good and timely topic you've raised. We've (our Board) just started our 2009 budget "discussion" process. Our biggest, current single budget item is landscaping/care of our common areas, which is over 1/2 of our total dues. Some of our thoughts include: 1. Continue weekly mowing in April, May and June, then switch to every-other week for the rest of the season (as our grass grows more slowly then). 2. Skipping mulching our front entrance and retention area trees every year in favor of every-other year. 3. Only replacing "key" dead trees/shrubs. For instance: one on our main road into the subdivsion? Yes. A few others in the front enterance area that nobody would notice were simply gone? No. 4. Cutting back from 3 to 2 weed/fertilization treatments. All of the above would fall under your #5 as our contracts are limited to a single year, though this year we're going to shop for bids, our current firm, though doing a good job, has had the business for years. While your #s1-4 might be of concern at your HOA, they aren't at ours = We have no bad debts, few meetings, and everybody is on e-mail. We are currently running a surplus and our reserves are in good shape. But we're dreading September, when a pro is coming in to examine and propose a solution to the weed/algae issues in our 4 ponds. Hopefuly, the savings suggestions we're considering will cover some/all of that project. Insurance and pond fountain electricity cost are pretty much static. This year we had our fountain re-rigged so we can handle removal/replacement rather than paying $1K for that service. A good $200 investment, that. We are self-managed, but if you have a PM, consider less services in return for lower fees. Or, take a big leap and go self-managed yourselves if you have enough warm bodies to handle the work. That step saved us about 1/3 of our dues. Our ultimate goal is to avoid dues increases while continuing to add to reserves.

SheliaH
(Indiana)

Posts:92

08/12/2008 11:50 AM
We're also starting our budget preparation in September and at this time, I'm thinking we're going to have to put EVERYTHING on the table for cuts. I'm particularly intersted in reducing our administrative expenses, as they seem to take a hefty chunck out of our budget. Still, with the number of foreclosures and slow pay we've had, we may not have a choice but to put in an increase, although I'm hoping we can keep it at 3% (our bylaws limit increases to 5%). Some ideas of the top of my head and that will be brought to the board include: cutting the lawn every 10 days instead of every week (I read somewhere that may be good for the grass in the long run), cutting a day out of our Thursday - Sunday swimming pool schedule (it's already been reduced from every day between Memorial Day and Labor Day). We've also tried to encourage residents to accept the newsletter via email to save on printing and postage costs, but only got one homeowner (out of 156) to sign up. I'd also like for us to consider not using a coupon book - just print them on a sheet or two of preforated paper and let everyone clip out the appropriate month. We're definitely going to talk with our association insurance on ways we can reduce premiums without reducking risk.

GeraldT4

Posts:934

08/12/2008 12:12 PM
SheliaH - Your newsletter is most likely not a requirement, rather a luxury. I doubt you need homeowner approval to reduce any expense surrounding that.

JS1
(Nevada)

Posts:30

08/12/2008 4:51 PM
Susan - Thanks for the comments- 1. Review of governing documents - in the case of our association, this was in the works and already suggested by legal counsel, due to other issues. I agree, we need more communications but we don't need to spend the money on ballots and proxies, we need newsletters,and pro-active resources for homeowners. 2. Line item for bad debt - Had an interesting discussion about this from legal stand point as NV has very specific laws, such as an accrual based account mandate, and adoption of AICPA guide - If in question as to how that would work please ask your CPA to consult "the guide". 3. Electronic notification - state law allows for electronic notification 4. Aggressive debt collection - what board in their right mind doesn't have a collection policy? - Beyond that the CC&Rs have the collection policy too. Which mirrors the collection policy. Policy just provides more information as to which collection agency will have the account. 5. Renegotiating contracts - We are shopping all contract, rescheduling maintenance (deferred maintenance is more costly, but we are sealing asphalt cracks in the fall/winter and then doing the street sealing in the spring/summer) CC&Rs mandate professional management, but we need to negotiate some services they do/don't provide. We looked at coupons for assessments, but found out that one source will provide up to 4 pages to be sent with the statements~! Yippee easy communications without additional postage. 6. Looking into possible budget stretchers - public grants, selling ad space in the newsletter, electronic notices, etc. Don't want to go here - 7. special assessments 8. closing of clubhouse, swimming pool 9. When the property is foreclosed upon by the financial institution, and the bank doesn't pay the assessment, foreclose upon the bank for the property and rent the property out.

JosephW
(Michigan)

Posts:787

08/12/2008 6:41 PM
Here are some of the things I'm seeing associations carefully review: Increase in insurance deductibles to lower premiums (rolling the dice, but????) Doing an extra round of preventive maintenance instead of a scheduled replacement (i.e. patch and seal coating for asphalt roads and pushing back scheduled resurfacing) Don't just skip everything, only those that waiting a year or two won't do any harm or look bad. Accepting donations - one association wanted to change to flourescent lighting (condo, outsides of buildings), but the initial outlay for the more expensive bulbs wasn't something they could handle - so they simply asked those owners who could afford it to to donate a bulb or two. The bulbs are trickling in, but every one helps. If you still have gas lights, many local utilities are providing help in replacing those. Other donations might include annuals or replacement plants/shrubs. If you have any common watering system for the grounds, then a water management system often pays for itself the first year. Using a sand/salt mix on roads during winter instead of just salt (northern issue in urban areas) If you pay for water, emphasize drips, leaks, not removing the reducers in faucets - you might also see if someone can help those who can change a faucet washer. Often you are paying double for the same water, the water and sewage charges, so the less used, the faster the bill goes down. Joe

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KirkW1
(Texas)

Posts:1190

08/12/2008 7:00 PM
As for the line item for bad debt, I would mention that our last audit specifically looked for that in our budget. This could fall into generally accepted accounting principal (GAAP). I will go opposite of the advise to not look at your contracts to see if you can renegotiate.

JS1
(Nevada)

Posts:30

08/12/2008 7:08 PM
Joe- Thanks for the eco-friendly suggestions. Our power utility gives away the new energy efficient light bulbs, and also has a grant program for weatherization, which is available to non-profits. Water department has rebates for retro-fitting lawns to conserve more water. Regarding salt and sand mixture - and it has been a long time since I lived in the frozen north of Kalamazoo.... but - doesn't fertilizer provide a similar benefit on ice/snow, but without the salt burn? (but for this discussion, probably not as cost effective.) Kirk - I am with you regarding the renegotiation line - If you don't ask you definately will not get it. What is the worst that can happen - I will be told no.

BradP
(Kansas)

Posts:1742

08/13/2008 6:31 AM
Here are things I would look at: 1. delay unnecessary projects and use that money for operating budgets 2. Cut back on fertilizer applications, be careful not to cut back too much as you don't want to hurt the grass long term. 3. Water grass less, won't be a huge savings but take advantage of rains. 4. Try to go electronic on as much as you can, newsletters, meeting notices, etc...I wouldn't skip newsletters, I think they are valuable tools. 5. Try hand delivering newsletters and meeting notices to save on postage, would depend on size of the community and volunteer base. 6. I am not a huge fan of shutting down amenities such as pools or clubhouses, however, consider reduced hours to save on electricity. On the flip side look for alternative sources of revenue, maybe ads in newsletters, interest on accounts, etc...but realizing these incomes may be taxable.

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