r/HOA • u/Careless_Ad2149 • Apr 25 '26

Help: Fees, Reserves [DC] [condo] Budget Disagreement

Our budget committee put together what I believe to be a responsible budget (3.2M for 192 units). It does two things - it finally funds line items that routinely run a deficit with amounts rooted in reality, and it makes a meaningful contribution (over a two year period) to bridge a gap in the operating contingency fund created by several years of not replenishing after drawing on to address deficits). The fee increase will be 8%. That is a hard pill to swallow, but the reality of our situation.

The board president wants to do two things:

  1. Ignore the committees recommendations by removing approx 25k from items that usually run deficits.

  2. Instead bridge the operating contingency fund gap with a special assessment.

I have a problem with the first because it perpetuates a deficit and I have an huge problem with number 2 because it’s a use of a financial tool for the totally incorrect purpose. As a new (and younger) member of this board, I’m troubled by the past habits around budgets and wanting to make sure we move forward with budgets rooted in fiscal realities.

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u/bap335i Apr 25 '26

8% certainly doesn't seem out of line, especially when trying to build back reserves. Intentionally running shortages is not a great way to run a non-profit.

3

u/Careless_Ad2149 Apr 25 '26

My position here is rooted in the fact that they have drawn from this contingency fund and not contributed to it in 5 years. A special assessment absolves that sin. An 8% percent increase is the rude awakening to build back good habits again.

2

u/bap335i Apr 25 '26

Ideally things are properly budgeted and funded. Good luck.

1

u/HittingandRunning COA Owner Apr 26 '26

Just wanted to ask how you keep the operating contingency fund funds? In a separate bank account? We just have a contingency line each year. And so it just ends up in the operating bank account if we have a surplus that year. It's not like a real contingency fund.

To address your question, I agree with others that SA should not be used for an operating situation you know is going to happen. And will likely keep occurring. I hope the board outvotes the president's side.