M.M. from Fairfield County, Connecticut writes:
Dear Mister Condo,
2 questions: We are a 36-townhouse community (in 5 buildings) that is 5 years old. We had a capital reserve study done about 3 years ago and the report we received said we should be putting $45,000 per year in reserves. This seems high – your opinion? We are having a challenge filling a board seat – any advice on how to recruit?
Mister Condo replies:
M.M., two interesting questions, while seemingly unrelated, may have similar answers. If the association had a Reserve Study performed by a reputable company, why would you question the results? There is no magic number that would seem high or low for an annual Reserve Fund contribution. The number is the result of a Reserve Study being conducted and the common elements likely replacement cost and date of the common elements. Per unit that is roughly $105 per month. If the community hasn’t been making Reserve Fund contributions at that level for many years, there will be a budget shortfall at some point in the future. A new roof, parking lot, building maintenance will require a decision to be made by the community. Do we levy a Special Assessment against owners or take an HOA loan for the maintenance or do we “defer” the maintenance until there is enough money? There should always be enough money. Special assessments, increased common fees to cover loans, and deferred maintenance are three things that make volunteering your time to serve on a Board miserable. My guess is that is one of the reasons you are having difficulty in finding interested volunteers to serve. Being a Board Member is hard enough without also having to be thought of as the villain for increasing fees, levying assessments, or not properly maintaining the property for lack of funds. The good news is there is plenty of time to turn things around. Be an advocate for raising fees to properly fund the Reserve. Make sure the community is financially solvent so that people want to get involved on the Board and other volunteer duties for the community. If you keep doing what you’ve been doing, you are not going to be happy with the results. It’s time to make the community vibrant. I think you’ll be surprised at how many people want to be on the Board of a well-run community. Ask each seated Board member to propose one name from within the community to serve. Then invite those candidates to a sit-down to talk about the challenges facing the community and how their involvement could make a difference. All the best!