Page 9 - New England Condominium July 2019
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NEWENGLANDCONDO.COM  NEW ENGLAND CONDOMINIUM   -JULY 2019     9  Newsletters, monthly open meetings with  dodging this inevitability is sure to back-  a clear agenda, and proper notice will all  fire. It’s important to thoroughly show the  without a fee increase, and then you come  they’re letting those things atrophy, then   help get owners on board with these deci-  sions.”   “Nobody can  punch  holes  in  some-  thing that’s properly prepared and un-  assailable,” adds Eberhardt. “Accurate  operating  financials are key, because you cannot ar-  gue with numbers—although people will  tentially  argue about everything else. It’s a deli-  cate balancing  act. Raising  maintenance  nance charges, or   charges and communicating that a por-  tion will go to the reserves generally helps   to not raise owners’ hackles.”  Consequences of Inaction  If it comes as any comfort to boards  them. “If a board   worrying that increasing maintenance  with some extra   charges  might  stoke  the  ire  of  the  resi-  dents,  the  alternative  may  be  much  percent increase,   worse—and in some cases, could actually  they might only   sink the association.  “Refusing to raise fees when an in-  crease is needed will leave an association   high and dry when it is time for a major  operating money that they’d not allocated  the reserve study,” Jordan continues. “The  pitchforks.   maintenance project,” says Stark. “Boards  to their reserves,” says Jordan. “They’ll be  reserve study takes for granted that the   don’t always want to increase because of  burning free cash, but I don’t recommend  association is doing preventative mainte-  the  pushback  from  the  community,  but  doing that for a particularly long period of  nance on a regular basis and fixing any-  community at annual meetings how the  in and hit them with what is basically the  by the time they get around to fixing their   budget works, and why increases are nec-  essary.”  A board with some excess cash in its  1  percent per  year  over  five  years—less  the long-term planning.”  ac-  count  can  po-  defer  raising  mainte-  increase  them  at a lesser rate,   but this too can   come back to bite   money needs a 10   adapt a 5 percent   uptick,  instead  opting to use that   time. I’ve seen communities go for years  thing wrong sooner rather than later. If   same increase it would have been before,  equipment,  they  won’t necessarily have   say 5 percent. But what would have been  the money to do so, and that messes with   than  inflation—at  5   percent is a lot more  in time’ remains true here: the association   jarring. It’s easier to  that makes the necessary decisions—even   wrap heads around  unpopular financial ones —when the sit-  a minor routine in-  crease than a larger  survives over the long term. Most own-  sudden one. There’s a  ers, begrudgingly or not, understand that   psychological factor.  “Also, if the asso-  ciation doesn’t main-  tain its equipment,  responsibility to explain that to them. It’s   then the useful life  when a board avoids implementing a re-  of  that  equipment  quired increase for whatever reason, only   is reduced, which  then to disclose after several years that   in turn increases its  the association will be underwater if they   maintenance sched-  ule and throws off  that the residents are likely to grab their   In the end, the old adage about a ‘stitch   uation demands it is the association that   a slight increase in maintenance charges   from year to year is the cost of doing busi-  ness—and if they do not, it is the board’s   don’t drastically increase maintenance,   n  Mike Odenthal is a staff writer/reporter   for New England Condominium.  “Every association   should have a nominal   increase to common   charges and maintenance   on a yearly basis, just to   keep up with the cost of   living.”             — Mark Liberman

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