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Subject: Advice to a New Treasurer?
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BillD16
(Texas)

Posts:37


09/29/2021 10:29 AM  
Hello, it's me again. I am a member of an HOA Board in Austin, Texas. I live in a nice upper-middle class (UMC) neighborhood of about 600 detached single-family homes.

Long story short: I've just been elected Treasurer. The former Treasurer resigned shortly after I was elected to the Board several months ago - no-one else has come forward to take the Treasurer role.

I'm not a Certified Public Accountant (CPA) or etc, although I like math a lot and I've taken college classes up to and including real and complex analysis. I'm good enough with money that I took early retirement and I'm slightly wealthy (apologies, that's crass but I mean it as a sign that I can be responsible with money). Our neighborhood engages a mgmt company who handles most financial stuff; they seem to use a modified cash basis system.

My question: any advice on how to get started? I already have monthly financial statements for the past couple of years plus budgets and many reports. Is there something I should ask of the mgmt company along the lines of "Hi, I'm the new Treasurer, please give me all of the X, Y, and Z documents I need?" And / or, is there anything about which I should specifically engage the mgmt company? I don't want to be a PITA - I just want to do a good job of it.

Thank you,

BillD
JohnT38
(South Carolina)

Posts:768


09/29/2021 10:34 AM  
In addition to the points you've raised I would strongly urge you to bone up on Reserve Studies and then take a close look at yours to see if it is adequate for your community. Hopefully, you have one.
HenryS6
(Arizona)

Posts:80


09/29/2021 10:37 AM  
Hi Bill,

Congrats on the role. I think that the Treasurer's role is a lot of fun. I'm good with numbers, generally, and enjoy looking at financial stuff. Like you, I'm not an accountant.

The biggest thing each year that will fall on your shoulders will be proposing the next year's annual budget and proposing dues, for the rest of the board to review and approve. Likely, you should get started on this now. Look at the last year's budget and actual expenditures and try to determine what would make sense for this year. As a starting point, you could propose to keep dues the same unless there is a specific reason to make them go up or down.

I think that having a good understanding of the reserve study, and being a champion for updating it on a regular basis, is an important function of the treasurer. The information in the reserve study will help guide you on how much to propose setting aside in reserves each year, and also give you a good idea of upcoming expenses. Over time, you can help guide the reserve study company into being more accurate with their reserve study.

I kept copies of all proposals and signed contracts as part of my function as treasurer. These are handy for future reference. Your PM company will have them as well, but having them handy on your computer makes good sense in my mind.

I reviewed the general ledger each month to compare how much we paid vendors versus what they proposed, to make sure that we paid the right amounts and the services were delivered. Some vendors charge time and materials, and it was interesting to see how their final numbers would compare to their estimates.

Finally, it'll be your responsibility to review the annual audit should your board choose to have one.

Hope that helps.
AugustinD


Posts:1695


09/29/2021 10:46 AM  
Posted By JohnT38 on 09/29/2021 10:34 AM
In addition to the points you've raised I would strongly urge you to bone up on Reserve Studies and then take a close look at yours to see if it is adequate for your community. Hopefully, you have one.
-- Ditto.

-- Also, does the study indicate that the current assessment is adequate to cover both reserve funding and annual [non-reserve] operating expenses?
MichaelS56
(Minnesota)

Posts:279


09/29/2021 10:49 AM  
If you have a management company, please take the time to review each transaction that they do. Make sure your association has an annual audit and follow the money trail. If you have a website place the monthly financial documents for all to have access, both operating and Replacement Reserve.
BobS38
(Oregon)

Posts:15


09/29/2021 10:51 AM  
Posted By JohnT38 on 09/29/2021 10:34 AM
In addition to the points you've raised I would strongly urge you to bone up on Reserve Studies and then take a close look at yours to see if it is adequate for your community. Hopefully, you have one.




what is a normal amount to be in the reserve account? I think ours has ~1 years worth of dues sitting there, separate from the annual operating expenses.
HenryS6
(Arizona)

Posts:80


09/29/2021 10:56 AM  
Posted By BobS38 on 09/29/2021 10:51 AM
Posted By JohnT38 on 09/29/2021 10:34 AM
In addition to the points you've raised I would strongly urge you to bone up on Reserve Studies and then take a close look at yours to see if it is adequate for your community. Hopefully, you have one.




what is a normal amount to be in the reserve account? I think ours has ~1 years worth of dues sitting there, separate from the annual operating expenses.




There isn't a "normal" amount to be in the reserve. The correct amount is a complex formula that is based on how much stuff you have in your HOA that is known to need to be replaced in the future and also based on how old the stuff is. As your stuff ages, the correct amount to have in reserves will go up. As you replace equipment, it'll go down.
AugustinD


Posts:1695


09/29/2021 11:00 AM  
Posted By BobS38 on 09/29/2021 10:51 AM
what is a normal amount to be in the reserve account? I think ours has ~1 years worth of dues sitting there, separate from the annual operating expenses.
I agree with HenryS6's response, except I do not feel the "formula" is all that complex.

BobS38, when was the last reserve study done? A reserve study will tell you how much should be in the reserve account as of the date of the reserve study. Conventional wisdom is to have a professional, full reserve study done every five years, with annual adjustments (which amount to far less than a full reserve study) as deemed prudent.
DouglasK1
(Florida)

Posts:1681


09/29/2021 11:31 AM  
Posted By AugustinD on 09/29/2021 11:00 AM
Posted By BobS38 on 09/29/2021 10:51 AM
what is a normal amount to be in the reserve account? I think ours has ~1 years worth of dues sitting there, separate from the annual operating expenses.
I agree with HenryS6's response, except I do not feel the "formula" is all that complex.

BobS38, when was the last reserve study done? A reserve study will tell you how much should be in the reserve account as of the date of the reserve study. Conventional wisdom is to have a professional, full reserve study done every five years, with annual adjustments (which amount to far less than a full reserve study) as deemed prudent.


Based on what Bob has said so far I'm going out on a limb and guessing that they do not have a reserve study, and may not even be familiar with what they are.

Escaped former treasurer and director of a self managed association.
BillD16
(Texas)

Posts:37


09/29/2021 11:39 AM  
Posted By HenryS6 on 09/29/2021 10:37 AM
Hi Bill,

Congrats on the role. I think that the Treasurer's role is a lot of fun. I'm good with numbers, generally, and enjoy looking at financial stuff. Like you, I'm not an accountant.

The biggest thing each year that will fall on your shoulders will be proposing the next year's annual budget and proposing dues, for the rest of the board to review and approve. Likely, you should get started on this now. Look at the last year's budget and actual expenditures and try to determine what would make sense for this year. As a starting point, you could propose to keep dues the same unless there is a specific reason to make them go up or down.

I think that having a good understanding of the reserve study, and being a champion for updating it on a regular basis, is an important function of the treasurer. The information in the reserve study will help guide you on how much to propose setting aside in reserves each year, and also give you a good idea of upcoming expenses. Over time, you can help guide the reserve study company into being more accurate with their reserve study.

I kept copies of all proposals and signed contracts as part of my function as treasurer. These are handy for future reference. Your PM company will have them as well, but having them handy on your computer makes good sense in my mind.

I reviewed the general ledger each month to compare how much we paid vendors versus what they proposed, to make sure that we paid the right amounts and the services were delivered. Some vendors charge time and materials, and it was interesting to see how their final numbers would compare to their estimates.
...
Hope that helps.




Thank you Henry and everyone else!

Reserve Study: check. We had a new one earlier in 2021. I think someone said a new Reserve Study should come about every 5 years? I'm all ears for advice here. FWIW, my neighborhood's physical assets are in pretty good shape.

Reserve Study Recommendations: check. I'll be happy to champion this stuff. It's do-able, and I'd be very happy to finish out my term on the Board with *no* special assessments or increases to resident fees.

Budget: check. I've been kinda thinking about it already; I'd like to generate some nice reports that show expenditures over the past few years[Ώ]]. So this is the motivation I need to actually do it.

Copies of Proposals and Signed Contracts: hmmm. I see the wisdom of it. I foresee the mgmt company being 'possessive' about these things (just because they're like that). I'll attempt to pursue it, though.

Reviewing the Ledger: check. I already do that anyway.

Here's a question where my not being an accountant is a problem: the mgmt company sends us various financial reports (2020 August Financial.pdf, 2021 January AP.pdf, etc). They look like they're generated from some kind of accounting software, which implies that there's a database back there somewhere. Any thoughts on Magic Words that might convince the mgmt company to share a copy of that DB? My guess is this is probably a flat *no* (not to mention the "generated" reports might all be hand-entered data in an Excel spreadsheet). But - thoughts?

Again, thanks! Please keep the advice flowing. I'm sure it sounds odd to most people - but not Henry and a few others - when I say that this stuff can actually be fun.

BillD

[Ώ]] I'm a computer graphics geek.
MaxB4


Posts:1394


09/29/2021 11:52 AM  
Bill

In regard to getting a hold of the database or software, the answer would be no. The reports generated from the software are not hand entered into an Excel spreadsheet. My HOA specific software has 350 different reports ready to go on the fly. They can also custom design specific reports tailored to customer needs.
HenryS6
(Arizona)

Posts:80


09/29/2021 11:55 AM  
I see no need to have a copy of the database that the management company uses for financial stuff. You are the treasurer, not the accountant. Your auditor will verify that the money is going where it needs to go from an accounting standpoint.

One other thing that I forgot to mention - you'll want to see how many homeowners are deliquent and be the one to suggest guidance on how to get them back up to speed on payments. You can (with board concurrence) offer payment plans, offer to waive late fees in exchange for paying in full, or send them to attorney's offices for collections. There are a variety of options if they are sent to collections. As the treasurer, the guidance on how to handle them should likely come from you, with concurrence from the board.
AugustinD


Posts:1695


09/29/2021 11:58 AM  
Posted By BillD16 on 09/29/2021 11:39 AM

Reserve Study Recommendations: check. I'll be happy to champion this stuff. It's do-able, and I'd be very happy to finish out my term on the Board with *no* special assessments
Hurrah for your understanding the hazard of having to impose a special assessment. Namely: Not all owners can afford all Special Assessments. If the HOA needs the money right away, then it may be stuck with taking out a loan. This is to be avoided.

Posted By BillD16 on 09/29/2021 11:39 AM
or increases to resident fees.
Hold on there. If your point is you want to be careful with what HOA money is spent on, great. But if the reserve study advises an increase in assessments, do it. Period.
CathyA3
(Ohio)

Posts:2475


09/29/2021 1:01 PM  
A few items since others have covered the important stuff:

The rule of thumb for reserve studies is every 5 years, but there can be reasons to do them more frequently. Anything that can make previous assumptions wrong should get your attention. These can include significant changes in the inflation rate or changes in interest rates (making estimated future replacement costs and estimated earnings on the reserve accounts less accurate) or extreme weather events that can accelerate the aging of physical structures (making estimates of remaining useful life less accurate).

We asked our reserve study company to provide their results in an Excel spreadsheet, and added some columns at the end in which we could track the amounts in our reserve accounts and estimated and actual spending. This also gave us an easy way to decide how much money we could tie up in CDs and for how long.

One other item about reserve accounts: these need to be invested in plain vanilla things like money market accounts (not funds!), CDs and Treasuries because your main goal is to preserve principle. I assume you know this already, but for others reading along, resist the temptation to buy things like brokered CDs and money market funds even if they offer a better rate of interest since these can lose principle. FDIC and NACUA insurance is important. If your reserve accounts exceed insurance limits, there is a program called CDARS offered by many banks that provide FDIC insurance for amounts exceeding $250,000 by holding your funds in multiple banks while allowing you to deal only with the bank that offers the program. Individual credit unions may also offer supplemental insurance to insure funds over the $250,000 NACUA limit.
JohnC46
(South Carolina)

Posts:11539


09/29/2021 1:45 PM  
Bill

A lot of good advice so for. I would have a sit down with your MC Financial Person and go over a set of financials so you are both on the same page. Make the Monthly Financial reports available to anyone asking for financials. Online or on a web site would be good. Be willing to show all to any owner. Let them figure it out.

If willing to take the time, breakdown the Year End Report into Pie and or Bar charts so it is easily understood by all. No need to list each expenditure alone if it is part of a bigger charge. Example Landscaping might include mulching, fertilization/weed control, sprinkler repairs, etc. all as one expense.
MaxB4


Posts:1394


09/29/2021 1:53 PM  
This is something I put together for my associations. It may or may not be of help to some people.

Attachment: 1929534498471.pdf

BobS38
(Oregon)

Posts:15


09/29/2021 2:07 PM  
Regarding my situation, Yes, they just completed a Reserve Study over the summer but the Board has refused to share any financials (for 3+ years) or details of the reserve study and no one even knew the board had commissioned the study.

I was able to convince the manager to send me a current statement, but there's no mention of the study expense. Any idea how much a reserve study costs in general?
JohnC46
(South Carolina)

Posts:11539


09/29/2021 2:11 PM  
Posted By MaxB4 on 09/29/2021 1:53 PM
This is something I put together for my associations. It may or may not be of help to some people.



Awesome piece of work Max.
Thanks
AugustinD


Posts:1695


09/29/2021 2:13 PM  
Posted By BobS38 on 09/29/2021 2:07 PM
Regarding my situation, Yes, they just completed a Reserve Study over the summer but the Board has refused to share any financials (for 3+ years) or details of the reserve study and no one even knew the board had commissioned the study.

I was able to convince the manager to send me a current statement, but there's no mention of the study expense. Any idea how much a reserve study costs in general?
-- The lack of transparency is unacceptable. Texas law requires records like reserve studies to be available to owners upon proper request.

-- What sort of common elements does the HOA maintain? Front yards and irrigation system? Clubhouse? Swimming pool?

-- Condo reserve studies run on the order of $5000. I would expect your single family home HOA's to be less.

-- Maybe BillH10 can give some examples of recent costs of reserve studies he has helped arrange in Texas. Watch for his posts.
KerryL1
(California)

Posts:8620


09/29/2021 5:33 PM  
Say, BobS, OR: it'd be best if you'd start your own thread so that we aren't distracted from Bill's good questions & remarks. You definitely have issues with your HOA, bob.

Btw, our current reserve study for 2022 is a "Full" study of our 200+ unit condo high rise including a site visit and review of our CC&Rs for $2,500 with a national firm of certified reserve specialists. Perhaps their first ever study with us was more e expensive, but they had studies by previous firms to review. We have this full study every three years. CA requires a review that often. On the other two years, we have off-site studies when the specialist interviews are PM, building engineer, etc. to update the study.

It's good you have a recent reserve study, Bill. In CA, we should do a complete study every 3 years, which makes sense to me. I think they are interesting and fun. Your reserves analyst or specialist, and I assume s/he is certified, probably would be happy to talk with you about your new study and clarify why certain components are on it and not others that you think should be on it.

To this latter point, an HOA item must meet 4 criterion to be on your study: 1. It has a limited life (generally under 3o-40 years). 2. Its remaining useful life must be predictable. 3. It must be a common area maintenance responsibility (which is why the analyst reviews your CC&Rs); 4. it must be worth between .5% & 1 % of the HOA's total budget.

These analysts or specialists always recommend that your reserves be a least 70% funded and that you shoot for 100% funding. BUT if, say, you're only 50% funded, it's often too hard on some owners to raise dues all in one year to achieve 70% funded! Your analyst, like ours, should be ready to show you a few scenarios displaying how much you need to raise dues to get on a good path to become over 70% funded in, say 3-5 years. If you feel your Board is not very knowledgeable about reserves, have your analyst meet with the entire board or even in an open meeting with owners invited too.

I like the suggestion that executed contracts be posted on your web site. Owners in TX may have the legal right to review executed contracts. Bids & proposals generally are not required to be shared with owners, but I don't know about TX.
BillD16
(Texas)

Posts:37


09/29/2021 6:19 PM  
Posted By MaxB4 on 09/29/2021 1:53 PM
This is something I put together for my associations. It may or may not be of help to some people.




In the words of my uncle Barry, who was once in the music biz: "Gold, baby! Pure gold!"

Thank you, Max!
BillD16
(Texas)

Posts:37


09/29/2021 6:24 PM  
Posted By HenryS6 on 09/29/2021 11:55 AM
I see no need to have a copy of the database that the management company uses for financial stuff...




Most people wouldn't have much use for it, I realize. But I'm a very good programmer. But it doesn't sound like I'll get my hands on it, so ... oh well.

BillD
BillD16
(Texas)

Posts:37


09/29/2021 6:37 PM  
Posted By KerryL1 on 09/29/2021 5:33 PM
Say, BobS, OR: it'd be best if you'd start your own thread so that we aren't distracted from Bill's good questions & remarks. You definitely have issues with your HOA, bob.

Btw, our current reserve study for 2022 is a "Full" study of our 200+ unit condo high rise including a site visit and review of our CC&Rs for $2,500 with a national firm of certified reserve specialists. Perhaps their first ever study with us was more e expensive, but they had studies by previous firms to review. We have this full study every three years. CA requires a review that often. On the other two years, we have off-site studies when the specialist interviews are PM, building engineer, etc. to update the study.

It's good you have a recent reserve study, Bill. In CA, we should do a complete study every 3 years, which makes sense to me. I think they are interesting and fun. Your reserves analyst or specialist, and I assume s/he is certified, probably would be happy to talk with you about your new study and clarify why certain components are on it and not others that you think should be on it.

To this latter point, an HOA item must meet 4 criterion to be on your study: 1. It has a limited life (generally under 3o-40 years). 2. Its remaining useful life must be predictable. 3. It must be a common area maintenance responsibility (which is why the analyst reviews your CC&Rs); 4. it must be worth between .5% & 1 % of the HOA's total budget.

These analysts or specialists always recommend that your reserves be a least 70% funded and that you shoot for 100% funding. BUT if, say, you're only 50% funded, it's often too hard on some owners to raise dues all in one year to achieve 70% funded! Your analyst, like ours, should be ready to show you a few scenarios displaying how much you need to raise dues to get on a good path to become over 70% funded in, say 3-5 years. If you feel your Board is not very knowledgeable about reserves, have your analyst meet with the entire board or even in an open meeting with owners invited too.

I like the suggestion that executed contracts be posted on your web site. Owners in TX may have the legal right to review executed contracts. Bids & proposals generally are not required to be shared with owners, but I don't know about TX.




Thank you, Kerry!

FWIW, I looked up the invoice details on our current Reserve Study from earlier this year: it cost ~$3100, it's about 50 pages long (with about 14 pages of 'filler' like resumes and credentials) and tries to project out to 2051. Which I thought was umm 'optimistic". Major expenditures predicted for April of 2029, when 99942 Apophis is expected to hit. (I'm joking). Without going into boring details, we're doing alright. I suspect it's common for these documents to advise adding more to reserves, and this one does that - but it's a goal that would seem easily within reach.

BillD

BillD16
(Texas)

Posts:37


09/29/2021 6:47 PM  
Posted By AugustinD on 09/29/2021 11:58 AM
... Hold on there. If your point is you want to be careful with what HOA money is spent on, great. But if the reserve study advises an increase in assessments, do it. Period.




Point taken. My big concern is that many residents don't feel they're getting a lot of value for their dues money. Especially these past couple of years, when COVID has reduced access to the pool and trashed all social events. I personally would not want to announce a dues increase unless my family and I had a secure, secret place to sleep. The Good News is that a dues increase is unlikely.

Although I'm reminded of Woody Allen's famous line: "If you want to make God laugh, tell Him your plans."

BillD
AugustinD


Posts:1695


09/29/2021 6:49 PM  
Posted By BillD16 on 09/29/2021 6:37 PM
FWIW, I looked up the invoice details on our current Reserve Study from earlier this year: it cost ~$3100, it's about 50 pages long (with about 14 pages of 'filler' like resumes and credentials) and tries to project out to 2051. Which I thought was umm 'optimistic".
From my experience, projecting out 30 years is standard practice for reserve studies.

Bear in mind that best practices are to have a full reserve study done every five years. The numbers from the prior reserve study are adjusted. If a HOA Board isn't occasionally thinking about where things will be thirty years from now, then it's probably not doing its job. The reserve study reminds directors of the longer view. Imagine if Champlain Towers South (the condo building that collapsed a few months ago, killing 90+ people)... everyone knows the rest. The building turned 30 years old in 2011.
AugustinD


Posts:1695


09/29/2021 6:53 PM  
Posted By BillD16 on 09/29/2021 6:47 PM
My big concern is that many residents don't feel they're getting a lot of value for their dues money.
This is a common complaint from owners who do not understand why 10% to 40% of their dues is going to reserve funding.

The clever treasurer, supported by a clever board, will pound time and again on why savings must be set aside for infrastructure that has a long lifetime. It is a huge battle, first, because it requires a fair amount of math savvy, and the math skills of adults in this country is appalling. Second, when directors speak of raising the assessment, they risk being voted off the board.

You're a graphics guy, right? Do the pie chart like someone suggested.
BillD16
(Texas)

Posts:37


09/29/2021 7:07 PM  
Posted By AugustinD on 09/29/2021 6:53 PM

The clever treasurer, supported by a clever board, will pound time and again on why savings must be set aside for infrastructure that has a long lifetime. It is a huge battle, first, because it requires a fair amount of math savvy, and the math skills of adults in this country is appalling. Second, when directors speak of raising the assessment, they risk being voted off the board.

You're a graphics guy, right? Do the pie chart like someone suggested.




You made me laugh several times. Yeah, I'm sure I'll do a pie chart or two. I'd love to get down and dirty with some of the things out of Tufte. But as you noted: "the math skills of adults in this country is appalling". And so are the other Board members, sadly.

Right now I'm working on automating data extraction from stacks of Excel docs and consolidation into useful CSVs that can be recombined for various time-related reports.

BillD
MaxB4


Posts:1394


09/29/2021 7:35 PM  
Bill

Best practices on when reserve studies should be done, first should be based on what your state requires.

I happen to prepare Reserve Studies as part of my business. While I don't hold Reserve Specialist designation from CAI, I meet the qualifications for one. I will not do any for high rises, as those are a different beast, and will only handle HOA's that have had one done previously. If I happen to take on an associaton that has never had one done (there are some), I will refer them to friends who will climb up on the roofs. We have to have an onsite one done every three years and updates in between.

You're right, there are a lot of mumbo jumbo filler in there. To do updates, we use vendor proposals, vendor invoices on work completed, books on area construction costs and area construction databases. The software I currently use is constatntly being updated and tweaked and it is state specific.

What I do once the report is done is prepare a spreadsheet with all the items with a 5 year projection of when items come up for replacement or repair. This gets sent out to homeowners and the board which I include as part of the annual disclsoures sent out annually by state statues. It is also a financial tool that can be used for investing when the association has a large dollar reserve, so that CD's and money market accounts can be properly managed. Most management companies won't do this and most associations couldn't read a reserve study. I mainly do it for the one person in an association that might take an interest in this sort of thing.







MaxB4


Posts:1394


09/29/2021 8:15 PM  
Posted By AugustinD on 09/29/2021 2:13 PM
Posted By BobS38 on 09/29/2021 2:07 PM
Regarding my situation, Yes, they just completed a Reserve Study over the summer but the Board has refused to share any financials (for 3+ years) or details of the reserve study and no one even knew the board had commissioned the study.

I was able to convince the manager to send me a current statement, but there's no mention of the study expense. Any idea how much a reserve study costs in general?
-- The lack of transparency is unacceptable. Texas law requires records like reserve studies to be available to owners upon proper request.

-- What sort of common elements does the HOA maintain? Front yards and irrigation system? Clubhouse? Swimming pool?

-- Condo reserve studies run on the order of $5000. I would expect your single family home HOA's to be less.

-- Maybe BillH10 can give some examples of recent costs of reserve studies he has helped arrange in Texas. Watch for his posts.



Bob is in Oregon, so I don't think Texas law would apply, BUT, maybe I am wrong.
KerryL1
(California)

Posts:8620


09/29/2021 8:53 PM  
With Max, Bill, you just had a study done, but TX may have requirements for frequented annual reviews and studies.

Unlike max's clients, all of our directors have read our 3 reserve studies for years some more thoroughly than others. Our draft studies for '22 is an inch thick partly because it IS an onsite study so has photos of all 100+ components in our twin towers high rise. Our board met with our reserves specialist a few weeks ago and he gvave a good explanation to our two newest directors, both of whom seem interested (based on the questions they asked) and grasp the essences of them.
MaxB4


Posts:1394


09/29/2021 8:58 PM  
Posted By KerryL1 on 09/29/2021 8:53 PM
With Max, Bill, you just had a study done, but TX may have requirements for frequented annual reviews and studies.

Unlike max's clients, all of our directors have read our 3 reserve studies for years some more thoroughly than others. Our draft studies for '22 is an inch thick partly because it IS an onsite study so has photos of all 100+ components in our twin towers high rise. Our board met with our reserves specialist a few weeks ago and he gvave a good explanation to our two newest directors, both of whom seem interested (based on the questions they asked) and grasp the essences of them.



You can lead them to water, but you can't make them drink.
BillH10
(Texas)

Posts:774


09/30/2021 3:07 AM  
Sorry everyone, I have no experience with HOA reserve study costs for an association the size of that of the OP. The sub-association in which we reside has 105 homes and $30,000 worth of association common elements at full replacement cost if we had to write a check today. The master association is comprised of 9,000+ homes with association owned pools, a beach club, tennis courts, buildings, tens of thousands of feet of fencing, entrance monuments, hundreds of irrigation system controllers, lighting systems, etc. The master owns all the amenities.

The last Reserve Study we obtained for a client was for a small condominium association and cost $1,200.

Texas does not have statutory requirements regarding reserve studies, frequency, funding levels, or funds management processes other states seem to have.

I will say I think the OP is getting way out into the weeds as a brand new treasurer. I don't think a focus on the Reserve Study should be a priority just now, nor should be pie charts or graphics culled from the financial accounting data.

BillD16, I recommend you read the Bylaws of your association which describe the duties of the Treasurer and ensure you are dotting those i's and crossing those t's. You may wish to have a private meeting with the President of the Board regarding his or her view of your duties and responsibilities. Perhaps similar conversations with the other members of the Board would be useful as well.

I suggest you review the documents you have beginning with the current year budget and most recent financial report. Ensure you understand every line item on both, including the Balance Sheet and not just the math, but also the accounting rationale behind the numbers. You should also be thinking about the information being presented by the management company. Is it relevant, does it make sense, is it timely, does it provide the information needed to perform financial analyses and reach decisions?

Tomorrow is October 1st. If your association is on a calendar year basis, your MC probably wants the 2022 budget locked down for loading into the accounting system by the end of October. Is the new budget in the works? Have you reviewed it? Does it make sense when tested against the 2021 YTD and 2020 EOY numbers?

I've not followed the mandates affecting Section 209 HOAs enacted by the Legislature in the session which adjourned in May. There were many, how many affected the financial operations side of your association processes? Have they been reviewed, understood, and implemented. Are there new financial tracking and/or reporting requirements? Are those set up and ready to go? Are there projected financial impacts which must be included in the 2022 budget?

Next, as someone previously suggested, look at the Receivables/Collections process. Presumably your association has delinquent accounts, is your Past Due Account management process being followed? Do you have a documented Collections Process? Is it being followed? Do you have homeowners on payment plans? Are they current? Who in the MC is watching delinquent accounts and are they doing their job? Is the entire collections process compliant with Texas law and could the association attorney file a lien or foreclose based on the process as it exists or are there holes in it which would require starting over from scratch.

Do you understand the processes used by the MC to obtain approval to pay bills and then to actually pay them. Do those make sense? Are the books of the association audited? How frequently? Texas does not require annual audits of Section 209 HOA associations, should an audit be scheduled? Do you understand what would be audited and what the outcomes would be?

Are special assessments pending or in the wind? If so, you should understand why and be prepared to discuss the rationale.

I could go on and on. My point is, while the entire Board has a fiduciary responsibility to the Association and the Owners, you as Treasurer should be the financial watchdog. Does your association have a financial committee? Would having one make sense? You have a lot on your plate, two or three sets of volunteer eyes to assist you may be useful.

Good luck
BillC17
(Texas)

Posts:9


10/02/2021 1:10 PM  
I live in Texas too, but the neighborhood is smaller, 176 single family residences. I'm the board president, and I had initiated a budget meeting with the property management company (the 'community manager') and our treasurer a few days ago on Zoom. The community manager had prepared a spreadsheet of categories and line items based on a few months of expenditures. She shared her screen and we went over them one by one. Some numbers were adjusted up or down a little after we talked about them.

Our bylaws were written about 20 years ago and they state that the treasurer is supposed to receive and disperse all money. That isn't realistic for a volunteer board member, we pay the management company to do all that and the treasurer just keeps an eye on things.

What you'll find is that, much like your personal finances, your HOA has a monthly 'nut'. Utilities and recurring contract services that don't vary a lot over the year and they must be paid. These are pretty easy to determine because you can see the bills and the contracts. Then there are maybe some optional things like upcoming maintenance and enhancements to the property that you can estimate. I had hired the management company and made darn sure they knew who is the boss. We see any bills or financial documents we want, and I don't mean maybe. They've been very cooperative so far.

The previous management company had been much more secretive about our expenses, and brushed away our attempts to get more info about them. It always made me suspicious that they were siphoning off our cash here and there. Sure enough, we were mysteriously able to allocate about $6,000 more than usual to the savings account in next year's budget.

We also made arrangements to have a $10,000 'petty cash' account in a local bank that the treasurer can access directly by writing checks or with a debit card. This gives us considerable independence from the management company. I don't have to beg them to hire somebody to fix something. If they don't take action pretty quick I'll do it myself, and have the money to pay for it if necessary. Also we've got access to that cash in the unlikely case we have to take some kind of legal action against the management company, and our treasurer also has signing access to all of our bank accounts and the ability to look at them directly. I think this is super important.

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