- The 2010 budget was drawn up assuming assessments were being paid by 159 households. Unfortunately all households are not keeping current on their assessments, and the budget should have assumed about a $15,000 shortfall for the year.
- Given this shortfall, the only way for the association to maintain its current level of services would be to completely stop funding the reserves.
- There are about $22,000 worth of immediate cuts that can be made to the budget, but it will require a fairly deep level of cuts to services. Possibilities include reduced security patrols, reduced watering of common areas, shortening heating times at the pool (or not heating it at all), putting tree trimming on hold, etc.
- Because it is already [late] February, the $22,000 above has to be reduced by 1/6 to approximately $18,000. This number reduces by approximately $2,000 for every month that the budget is not amended.
- The utility costs were extremely high for the first month of the year.
- The "Printing" line item in the 2010 budget is already at 95%, and a number of other items are already projected to be over budget for the year.
- The association was significantly over budget in fiscal year 2009.
- The 2009 reserve study, conducted in September of 2009, shows the association starting fiscal year 2010 with approximately $177,000 in reserves; however, January's reconciliation statement shows just over $100,000.
- The association transferred $10,000 from its reserves to its operating account in November of 2009 to cover day-to-day operating costs. (
I don't believe that the association met its notification requirements under Civil Code 1365.5(c)(2) for this transfer.The board approved this transfer early in 2009.)
Thursday, February 25, 2010
Closer look at finances
This past Tuesday, I sat down with our association's treasurer to review the association's finances. Fortunately, our treasurer is a pretty smart guy. Before I had even arrived, he had really done his homework, and here are the highlights of what we discussed:
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John, this is beyond disturbing. I'm really glad that you and Tom B are looking at this, but I'm concerned that you're a minority. Particularly given the propensity of the board president and vice president to discount anything homeowners they may personally dislike have to say. I would volunteer to come speak out, but as I fall into that category, I'm afraid all I'd be doing is raising blood pressure. Thoughts?
ReplyDeleteBelieve it or not, there is at least one member of the board who, as of two weeks ago, said he thought "we are fine". (I heard this second-hand from another board member, so phrasing may not be exact.) From what I can tell, the board has been marching in virtual lock-step with its President without question for some time.
ReplyDeleteI say that to encourage you (and everyone else) to speak up, loudly. I completely understand what you're saying about raising blood pressure, but the board will likely not act unless and until it actually sees/understands the problem or feels enough pressure from the community. As I've said before, silence from the community *has* to be regarded as acceptance of/agreement with the board's actions.
I think the best thing you (or anyone) can do is get the word out and bring as many people as you can to the meetings. Even if the majority doesn't want to hear what you have to say, they can't ignore a showing of a significant number of homeowners once actual discussion takes place during the meeting proper, and I won't let them.
Between you, me, and the other 2 readers (which may be an overstatement), I don't think that the other board members are very cognizant of the relevant laws regarding HOA operations. A showing of discontent by "significant" number of homeowners at meetings coupled with their new found knowledge that it only takes 8 homeowners to call a special meeting may light a fire under them.
It's the 18th, right? I'll try to be there. In the meantime, like the general population in the U.S. we need to get this situation under control. Those of us hanging on by our fingertips do not need our property values to sink further nor do we want to become "undesirable" as far as financing for buyers are concerned...
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