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IF YOU ANSWERED “A”, READ ON!


There is nothing to be proud of in not raising assessments in a community. It is a sign that a board is not running the business of the association properly. Although owners will temporarily appreciate not having an increase in the amount of monthly expenses, it will surely be a short-lived relief to the membership. Not raising assessments on a regular cycle will eventually end up costing owners more. The cost of living rarely, if ever, goes down! Even if the budget looks reasonable and the reserves are being funded, the assessments should be raised at least every 1-2 years to offset the cost of living, the increase in contracts, fuel, insurance, taxes, etc. If the assessment income doesn’t follow the increases of the rest of the world, the money will certainly run out. We don’t usually see vendor contracts, utility bills and supplies stay at the same cost year after year, so how could we expect the rising costs to not catch up with the lack of consistently rising income?


Some might argue that the budget is adequate and raising assessments isn’t necessary. Reviewing contracts at budget season and projecting expenses is a typical and historical way to determine assessments. But keep in mind it does not take future expenses, economic downturns or possible catastrophic scenarios into account. If the association’s income stays the same over the years and something happens that isn’t part of the budget, it could realistically cause the financial destruction of the community. The property could potentially fall out of repair, property values could go down and the lack of reserve funds could inhibit new buyers from getting loans.


By Karen Pontoriero, CMCA, AMS, Vice President of Association Operations, Advocate Property Management


Think for a minute what would happen if there wasn’t a proper financial plan in place for unexpected maintenance/ repair events in the community. Ongoing low assessments may very well be a high price to pay if a special assessment is needed to cover the unexpected costs. And we all know the words “special assessment” could possibly be the dirtiest words in our industry! It almost screams “financial mismanagement” and could cause very serious problems for the association, as whole. Not only could it influence


A. GET REWARDED FOR KEEPING ASSESSMENTS LOW?


B. GET EDUCATED TO UNDERSTAND THAT RAISING ASSESSMENTS IS ESSENTIAL TO THE LONG-TERM SUCCESS OF THE ASSOCIATION?


www.cai-illinois.org • 847.301.7505 | 49


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