Although the economy is recovering from the devastating economic downturn, a lot of homeowner associations are still
As homeowner associations approach the budget season, the process typically involves management and the board analyzing financial reports and budget spreadsheets. As those are reviewed and discussed, the conversation usually turns towards reducing expenses and avoiding assessment increases. While these conversations are important, they aren’t the only relevant topics to be considered.
Associations need to look beyond the numbers and look at internal and external factors of influence that affect the bottom line. The most advantageous influences on a budget are the relationships an association maintains with their vendors, neighbors, management company, and even local and state level officials who have a sphere of influence on the property.
If a property has a strong relationship with these groups, they are more likely to receive greater benefits than simply the deliverables written in a contract. For example, let’s say a building has a strong relationship with a plumber. The plumber has worked at the property for years, has provided great service, and is welcomed warmly by building staff upon arrival. In this scenario, the property and the vendor have built a strong relationship. Often times in this situation, the plumber will be inclined to keep his rates low, he
more hours than required. They are also more likely to attend local community meetings outside the confines of the property that benefit the association. The managers aren’t typically paid extra for this, they do it because of the relationship that has formed. The manager also develops relationships with community leaders and when the property needs extra attention to get something done, there is a direct line to individual(s) who can make that happen.
IT IS HIGHLY ENCOURAGED TO DEVELOP A STRONG
RELATIONSHIP WITH YOUR PROPERTY MANAGER AND MANAGEMENT COMPANY.
will forgo billing on certain items due to the familiarity that he has developed with the staff, he will also provide excellent service and take more time and care because a relationship has been established. These types of relationships you cannot quantify on a spreadsheet but undoubtedly do affect the bottom line.
Likewise, it is highly encouraged to develop a strong relationship with your property manager and management company. Become partners with them and avoid micro- managing their activities. Let the experts do what they do best and the rewards will come. Many managers will have stories of occasions where the board didn’t heed their advice and things went awry causing costly mistakes. Avoidable mistakes can be hard to quantify on a spreadsheet but certainly affect the budget.
As your relationship grows with your management company, so does their care and concern for the property and residents. A manager that has a long tenure at a property and is treated well is more likely to contribute
Having an experienced and knowledgeable property manager is a huge asset for any association and their guidance will undoubtedly have a positive impact on the financial condition of the association. For example, managers will often have knowledge of local initiatives that otherwise might be overlooked by others. One example is Chicago’s Shared Cost Sidewalk Program whereby associations can reduce expenses by sharing the cost of necessary sidewalk repairs with the City. Another is awareness of energy saving programs whereby a vendor will tap into the energy conservation funds of utility companies and will subsequently provide free parts and labor to retrofit fixtures or provide and install lightbulbs in common areas, which all lead to a significant reduction in energy and supply expenses.
Another vendor that a board should develop a strong relationship with is the association’s attorney. The most expensive mistake a board can make is to avoid consulting with an attorney to avoid attorney fees. A one-hour review of a vendor’s contract by the attorney can save thousands and thousands of dollars by avoiding contract disputes. Consulting the attorney on matters also ensures the board is complying with the laws that govern associations. This is important in preventing costly lawsuits that can be devastating to an association’s budget. If cost is a concern, there are prominent law firms that specialize in association law that do offer monthly retainer programs. These retainer agreements are right for some but might not be right for others. It is recommended you discuss the available options with your attorney.
Although forming relationships is important, there are also some other concrete ways to improve the budget. One such way is through contract negotiation. Every association should have a contract log that clearly spells out the
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