etc.). Unfortunately, we don’t live in a dream where at a snap of a finger or a push of a button, we get every item on our wish list without suffering the financial consequences. We do, however, live in a world where wishes can come true… so long as there’s reason and logic to go with it. Bringing an association’s wish into fruition takes more than a simple “wish on a star.” So, if you, the board member, find yourself stuck in a daydream about swimming in a brand-new pool for your community or playing with your pet in the upgraded private park, ask yourself these questions:
Is this a reasonable expectation?
Always consult your governing documents to determine the realities of your wish. Your Declaration and By-Laws and plat of surveys will reveal where you can or can’t build an association item. If your governing documents are vague, consult with the association’s legal counsel who can interpret them and provide you with an answer. If your wish list item is to be constructed in a place that belongs to a homeowner or is public property, it’s best to know beforehand before legal troubles pile up.
What does the reserve study say?
Every association should have a reserve study, and all budgets should factor in its recommendations. A reserve study not only clues you in to the age and life expectancy of your association mechanics and structural elements, but it also informs you when to plan for maintenance, repairs, upgrades, or replacements. You always have the option to work on an update or replacement sooner rather than later, but if there is something in the reserve study that needs prompt attention sooner (i.e. the roof or masonry), that will have to be of higher priority. Likewise, if your wish list item happens to be on the reserve study, but the study’s recommendation is to update, upgrade, or replace in seven to ten years, you can discuss with your community manager ways to plan for that expense to avoid financial troubles in the future.
What does the vendor(s) say?
While the reserve study gives an expected cost, vendors will be able to provide a hard cost of the overall project. Perhaps the best part in soliciting vendors is that you don’t have to consult with just one vendor. Consult with multiple vendors to get a reasonable number that you can afford. If you find that the costs exceed expectations, vendors will work with you in negotiating a price and scope of work that fits your community.
What if contingencies rise?
If your wish list item happens to be a big capital repair project (i.e. pool), and you have all the hard numbers from your
50 | COMMON INTEREST® • Spring 2021 • A Publication of CAI-Illinois Chapter
selected vendor, make sure you also set aside a contingency amount in the budgeted cost of the project in case something happens or is discovered that causes additional costs. Your vendor will be able to tell you what to budget for in case a change order is necessary. While it’s impossible to know how much additional funds would be spent and it’s hoped that the project goes to plan, rule-of-thumb contingency estimates are generally between 15-25% of the entire project cost.
Can the Association’s operating and reserve accounts handle the cost?
Once you know the costs of your wish list item, you and your fellow board members will have to take a hard, realistic look at your financial situation to see if you can incorporate it into your current or future budget. Be honest with yourselves. If your financials show that you’re spending more money in both operating and reserves – and you’re finding that your reserves are being depleted each month or year – you must make your finances a top priority and work with management to find a way to stop the bleeding and increase cash flow before attempting anything on your wish list. Some homeowners may not be happy that their wish isn’t coming true right away, but as a board member, it’s your fiduciary duty to ensure that the association maintains financially sound without reckless spending. As the board controls spending, management can work with you to discuss a budget plan over the course of years, so your condo association can afford that new wish list item that you want – while keeping your finances sound.
If you’ve considered the questions in this article, and you found that your association can incorporate your wish list items,
CONGRATULATIONS! Your management company will assist you in making your dreams into reality. However, if you’ve analyzed your association and its expenses, and found that one or a few of your wish list items can’t come true, don’t fret. Survey your homeownership to prioritize items, or to collect other ideas to incorporate into the community. One of the best things about wishes is that while one may not have come true, you can come up with millions of others that may.
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