Since all Homeowners Associations are unique, there are important steps each Association Board should take to ensure they budget effectively. Here are some tips for planning out your HOA budget:
- It is important for all board members to understand and make decisions based on their fiduciary duty. They have a responsibility to act for the good of the organization, not just their particular preference on HOA fees, etc.
- Each HOA and board has unique laws and rights. Keep this in mind when making any changes, especially with the budget!
- Remember the difference between reserve expenses and operating expenses. Reserve expenses include non-annual costs such as building replacements or pool repairs. Operating expenses are annual expenses such as insurance, legal fees, and routine maintenance.
- Finally, it is necessary for any HOA Board of Directors to take note of any special circumstances that may alter their budget, after all, no two HOAs are the same. These particulars include:
- Accounting for the types of income they receive – from HOA fees to specific utility fees
- Recognizing their history and using it to plan accordingly for future goals
- Taking the reserve study into account
Once a budget has been drafted and agreed upon, be sure to formulate a plan for how to release this information effectively to your homeowners. Don't be afraid to make it specific! Tell them exactly how the money will be spent, so they can visualize the benefits of each dollar spent.
Thanks for reading!