Turn on the evening news, and you’ll get a good idea of the main topic on the minds of community association professionals as calendars flip to a new year: It’s all about the money.
Like it or not, financial considerations affect every aspect of association operations—from a property’s curb appeal to replacement of key building components, from insurance policies to the laws impacting home sales. So it’s not surprising that when members of New England Condominium’s editorial advisory board—professionals who are leaders in their fields in the condominium industry—were asked what’s in the cards for 2012, financial issues rose to the top of the prognostication lists.
“I’d love to paint a rosy picture” for the coming year, suggests accountant David A. Levy, “but it really looks like more of the same.” Levy, with a practice in Brookline, Massachusetts, predicts that associations will continue to put needed projects on hold. And that, he says, “is not going to help the marketability of units,” especially in an already-struggling real estate environment.
Smaller associations, that typically lack large reserve funds, will be particularly stressed. “Banks are willing to lend… to associations with strong financial statements, strong collections,” he says. For that reason, he recommends that associations “be more vigilant than ever” about collections.
Show Me the Money
As foreclosures and the number of owners dealing with job losses and other financial problems have continued to mount, condominium associations are facing a growing wave of delinquent fees. “I haven’t had bad debt in 20 years, since the (superlien) law went into effect,” says David J. Levy, president of Sterling Services in Holliston, Massachusetts. “Now boards are going to have to decide whether to raise fees on everyone else, or to cut down on landscaping, or not paint the hallways,” he says. Being a fiduciary means being prudent; being prudent means planning; and planning means being realistic.