Contributed by Maureen Radon, CMCA
Facilities and finances probably weren’t top of mind for many community association residents before the COVID-19 outbreak. Now, as residents spend more time at home and household income possibly decreases, association expenses have come into focus. Are costs going down because the pool is off limits? Is the association saving money since the clubhouse is closed and kids can’t play in the playground? How does this impact my assessments? Will the association continue collections?
Homeowners are asking whether associations plan to decrease or completely hold off on charging assessments. It’s a tough conversation for community association board members and community managers to have because we know this isn’t a possible outcome regardless of the circumstances.
Those of us who have managed communities through tough economic downturns know that collections will be challenging, and it will take a while for association finances to recover. That still doesn’t mean assessments can stop or decrease for contracted maintenance and upkeep, or that the value of our management services goes down.
Temporarily closing the pool doesn’t stop ongoing maintenance requirements. Cancelling the contract would have an adverse impact on property values once the pool fills with algae and parts break, requiring larger expenses than would have been incurred to maintain it as usual.
Cutting back on landscaping services would have a similar result, as overgrowth or dead plant material would negatively impact the community both short- and long-term. Minimizing the value of contracted security takes away a great asset that keeps eyes and ears on the property and enforces facility closures. These contracted expenses were put in the budget for a reason, and they’re still important.
Projects that have been budgeted in the reserves fund and planned for years should go on as long as proper safety and social distancing measures are taken by contractors. Managers and contractors may find it’s easier to accomplish some projects while fewer owners are in the common areas, such as repainting interiors, replanting areas with heavy foot traffic, and making repairs to laundry facilities that have constant use.
If it can be avoided, the reserve fund should not be used to offset operating costs; associations that use reserve funds in this way will take years to recover.
How about the community management contract? Homeowners may believe that community managers now have fewer obligations since amenities are closed, but there are still contracts to coordinate, residents to assist, and legal requirements to meet. It’s not an option to let the insurance lapse or choose to let litigation go unanswered. Someone needs to pay the association’s bills, process architectural review applications, and keep the proverbial wheels for the association going in all sorts of ways.
Now is the time when community managers can become familiar with their association’s budget and figure out if there are any places to cut costs, deploy resources to accomplish projects under a changing timeline, and build deeper relationships with the contractors who service their communities.
How will your community handle questions from homeowners about assessments and continue collections? Comment below.
Maureen Radon is a senior community manager with Aperion Management Group, AAMC, in central Oregon.
>>Read more about the importance of paying assessments and the CAI Board of Trustees’ statement calling for a moratorium on foreclosures.
Great article Maureen!
I’ve had this very conversation with many homeowners and Board Members, especially in the first few weeks of closing down HOA facilities.
Management also responds to emergency situations such as; roof leaks, plumbing leaks, broken entry gates, elevator issues, etc.
Communication needs to be provided to the Membership from the Board and from legal counsel regarding updates throughout this situation.
All of those things are facilitated by Management.
Those are really good observations and very viable. Thanks for your well-made points! –Maureen