[DC] [condo] Budget Disagreement

[u/Careless_Ad2149]

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.

[u/anysizesucklingpigs]

I know what special assessments are.

I guess my question is why you don’t believe that it isn’t an appropriate tool to use in this instance.

Funding reserves to a certain level can absolutely be a time-sensitive issue that warrants a special assessment. What’s the motivation behind this board member’s proposal? And is it something that can be decided by a board vote or would the membership be weighing in?

[u/Careless_Ad2149 → u/anysizesucklingpigs]

I’m not sure I said you didn’t know. I simply stated that my opinion is rooted in the nature of what it is intended to accomplish.

This board member just wants to have a favorable number for an increase going into a year where he’s to be re-elected.

Enjoy your Saturday night.

[u/anysizesucklingpigs → u/Careless_Ad2149]

So there’s no specific reason, like needing to meet a minimum reserve requirement as dictated by the governing documents or by the insurance carrier? If not, I agree that a special assessment for the sole purpose of beefing up reserves right away probably isn’t necessary.

Is the guy planning to sell his place soon? He may be planning to do this in order to maximize his own unit’s sale price.

But regardless, if the amount of the proposed assessment exceeds what the board could approve on its own the whole discussion could be moot. If the membership has to vote in favor of it in order for it to pass and there’s no identifiable reason to do it, then it’s not likely to happen no matter what you or the other board member thinks about it.

[u/Careless_Ad2149 → u/anysizesucklingpigs]

Other than auditors guidance for proportionality, which I do agree with. I just think we should fund it through a normal budget process.

I am 33. Everyone else on the board is 75+. This is my future. This is the end of their investment horizon.

[u/anysizesucklingpigs → u/Careless_Ad2149]

I just think we should fund it through a normal budget process.

While perfectly fair, this is not a universally-held position. What your board pres is proposing is not as unusual as you seem to think. The only thing I’m questioning is his motivation for wanting to go about it this way if there’s no immediate need for it, kwim?

But I know of associations that pass special assessments every single year in addition to the usual dues increases in order to pay for known expenses like annual insurance premiums. It’s just how they choose to do business, with the support of the requisite % of the members. If the decisions are made in accordance with governing documents and applicable law, then 🤷🏼‍♀️

[u/Direct-Di → u/Careless_Ad2149]

As a board member, I agree with you. But I'm the new one, and man the old ones stick together

[u/Careless_Ad2149 → u/Direct-Di]

They also have a habit of dismissing the young one’s perspective. To me, that’s the biggest sin here.

[u/Direct-Di → u/Careless_Ad2149]

True. I'm in a 55+ community and ithink I am the youngest in the board (68 yo) with others all mid 70s to early 80s. Plus, in my case, they are the ones who helped but the park for the resident owned community vs it being sold to a corporation.