Client Status Request
BLOG
The firm’s latest Miami Herald “Real Estate Counselor” column is authored by partner Shari Wald Garrett and appears in today’s Neighbors section of the newspaper. The article, which is titled “Increases in Community Association Budgets Require Careful Deliberation, Communication,” focuses on the budgetary strains that Florida community associations are now beginning to experience. It notes that directors and property managers are finding it particularly difficult to reconcile required increases with many community home and condominium owners, but there is no avoiding the difficult work that lies ahead. Her column advises:
. . . One of the best budgetary approaches for associations to consider is the use of a finance/budget committee, which is able to give all the important financial questions that come into play the attention and consideration they deserve.
Ideally, finance/budget committees should be composed of three or more dedicated owners who have professional financial/accounting or budgetary oversight experience. This committee should meet year-round to discuss all matters pertaining to changes to the association budgetary plans and finances.
The committee’s focus should be on the implementation of the annual budget for the upcoming fiscal year, as well as all the other financial and budgetary requirements based on the association’s bylaws.
Once the committee completes and submits its proposed annual budget to the board of directors for final approval, its members should attend the coming board meeting(s) to discuss the budget and address any questions or concerns.
Communities that are unable to develop and implement a finance/budget committee should make such matters the primary purview of their board treasurer. This officer of the association, again ideally an individual with professional financial experience, should make all of the imminent increases and their impact on next year’s budget their primary focus. As they are preparing the budget to be proposed to the membership, they should communicate their findings and projections to the other board members and owners during any corresponding discussions at the board meetings.
Just as with proposed budgets that are submitted to boards of directors for discussion and consideration by finance committees, the budgets submitted by association treasurers should also be vetted and discussed in the open forum of the regularly scheduled board meetings. The treasurer should be prepared to address and respond to any questions regarding particular expenses and line items prior to the final vote and approval at the official annual budget meeting.
All of the owners receive notice of this annual budget meeting and are encouraged to attend. Again, all of the increases will be discussed in detail at this meeting, so ideally the best approach is for all the difficult questions to have already been addressed at the prior board meetings.
Of course, significant increases will be likely to fuel major questions and pushback, so boards of directors will be tasked with effectively communicating the needs for all of the changes with detailed responses to everyone’s questions. The new Florida condominium legislation requiring many structures three stories and higher to fund reserves and pass engineering inspections will be responsible for a significant portion of the upcoming increases. However, other expenses such as insurance and staffing costs are also expected to continue to rise, and they too will create budgetary pressures for many associations throughout the state.
Aging condominium communities with significantly underfunded reserves and deteriorating building infrastructure components will face the most difficult financial and budgetary woes in the coming years. In some cases, owners will have no other recourse but to choose between exorbitant assessments to bolster their associations’ financial coffers and conduct necessary repairs, or condominium terminations in which a developer buys out all of the owners in order to raze the building and raise a new one in its place. . .
Shari concludes her article by noting that these and other lesser financial and budgetary strains are certainly going to be significantly impacting Florida community associations in the months and years to come. She counsels that by relying on dedicated and experienced finance/budget committees and association treasurers, and effectively communicating all of the changes and answering owners’ ensuing questions, community associations will be in the best position to navigate the difficult financial straits that lie ahead.
Our firm salutes Shari for sharing her insights into these extremely timely and important matters for Florida community associations with the readers of the Miami Herald. Click here to read the complete article in the newspaper’s website.