07/10/2019
5 Ways To Trim Your HOA's Budget Today
“Buy a giant magnifying glass,” advises Luigi Rosabianca, the principal attorney at Rosabianca & Associates in New York City. “There‟s always fat to be trimmed—always.”
Here are five ideas for tightening your homeowner’s association’s belt.
1) Negotiate extremely hard. “You can get great prices on contractors today because they expect negotiation.” says Sharon Glenn Pratt, a principal at Pratt & Associates in Campbell, Calif. “I have clients who have to rebuild after fire damage, and they are experiencing the benefits of having more competitive bidding, which you can also apply to your own contractors. If you’ve always used the same fence contractor or security company, there’s probably more competition today. Bid your jobs out now, ask your present vendors about price reductions, and explore using different companies.”
2) Cut staff and costs where possible. If your association employs staff to maintain or oversee common areas, such as a clubhouse, pool, or grounds, think about whether you can trim positions.
3) Make non-necessities less frequent. “I‟ve had condo associations that have had to really scale back what that cleaning staff does,” says Nancy Polomis, a partner at Hellmuth & Johnson PLLC in Eden Prairie, Minn. “A lot are also scaling back on landscaping budgets.”
4) Put a hold on your wish list. “Many associations are cutting back on anything that’s not a complete necessity,” says Donna DiMaggio Berger, managing partner at Katzman Garfinkel in Ft. Lauderdale, Fla. “For example, they may have been planning to redo the clubhouse, but that’s not going to be happening right now. Others are waiving payments to reserves because owners can’t afford the full assessments with those payments included.” Other attorneys, however, recommend against cutting back on funding reserves. “You can lower assessments to trim the reserves, but we don’t think that’s fiscally responsible,” says Stephen W. Thompson, a partner at Porges, Hamlin, Knowles, Prouty, Thompson & Najmy P.A. in Bradenton, Fla. “Instead of funding reserves to 100 percent, some associations are cutting back to even 10 percent. It‟s not good for fiscal responsibility or for resale because buyers will know they will be looking at a special assessment to fund unplanned projects.”
5) Be creative with utilities. Because the association provides cooling and light to common areas think outside the meter box. “Everybody is looking at anything related to energy consumption,” says Marc Landis, a partner at Phillips Nizer in New York City. “They’re switching to extreme energy saving light bulbs that use less electricity, they buy in bulk as a condo or co-op. That could even be revenue-generating because the condo or co-op can keep an amount that’s somewhere between the original higher price for individuals and the lower bulk price.”
