Making Cost-Cutting A Priority In Your HOA

Written by Posted On Tuesday, 17 July 2018 12:39

Many homeowner associations find it challenging to accumulate the funds they need to provide a reasonable level of services and maintenance. Simply keeping up with inflation currently calls for a 2-3% annual increase in revenue. But fighting inflation can be easy if the board makes cost-cutting a priority. Start by identifying the high-ticket items.

1. Utilities. HOAs with high utility costs should commission a utility audit. Utility auditing companies verify the accuracy of utility bills, notes discrepancies and assists in refund claims. For example, if examining the water and sewer bills for the past several years may reveal a leak that is spiking costs.

2. Insurance. HOAs can save on insurance premiums by raising deductibles. To offset this added risk, owners can get "loss assessment" coverage for very little money. This coverage kicks in when the HOA has to special assess to cover the deductible on an insurable event.

3. Landscaping. Save on water and maintenance costs by replacing turf with drought-tolerant native species. Install rain override sensors to eliminate unnecessary cycles.

4. Pools & Spas. Adjust heater temperature and pump cycle times for savings. A two degree drop in temperature can significantly decrease the pool heating bill. Use a pool solar blanket to conserve water temperature and reduce heating costs. Consider solar heating panels if feasible and repair them annually for proper operation.

5. Lighting. Use high-efficiency outdoor lighting like compact fluorescent, metal halide, halogen and mercury vapor. Installations usually pay for themselves in one to two years in labor and energy savings while providing better security.

6. Preventive Maintenance. A preventive maintenance program is your biggest money saver since it catches problems when they are small enough to resolve cheaply. Identify the items that require inspection and repair and establish a schedule that maintenance can follow to get the job done.

7. Owner Related Repairs This is a big one. Many HOAs make the mistake of performing repairs on things that are owner responsibility. By designing an Areas of Responsibility Checklist to clarify who does what, the board, manager and owners are all on the same page. Eliminate the cost of owner repairs.

8. Review Contracts Annually. Fixed costs like insurance, management, landscape and pool contracts should be reviewed annually. Physically communicate with these vendors to inquire of ways to trim costs. It may not always be possible but ask the question.

9. Review Variable Costs. Variable costs like gutter cleaning, plumbing and electrical repairs change depending on circumstances. Is there an identifiable trend that can be handled better? Look for "causes and effects" that are driving up costs. For example, by trimming trees away from the roof, can gutter cleaning be reduced?

The board is often responsible for the care of millions of dollars of assets. When spending other people's money, it's easy to get complacent. As Senator Everett Dirksen said, "A billion here, a billion there...pretty soon you're talkin' real money!" Fine tune the HOA budget each and every year.

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