Homeowners Associations – Plan Improvement Projects With Focus
If you are a property manager or a volunteer board member of a homeowner association, planning your 2012 capital improvement projects now is critical for your homeowners association. Define the work that needs to be completed and the overall impact on the community’s budget. Given the seasonal nature of construction projects, the winter months provide a good time to undertake planning of deferred maintenance and needed repairs.
How to Begin – Plan in the Off Season
Does the association have dedicated specific funds to undertake capital improvement projects? This is the starting point of the planning process. Like many associations, overall saving may not be enough and it may need to seek financing options to complete necessary work. Seeking a bank loan to finance large infrastructure improvements is an option that many associations pursue. Keep in mind, the association will need to demonstrate a solid plan and organized financial information if they intend to apply for financing.
What You Need to Apply For Financing
- 3 years tax returns
- CPA prepared financial statements
- Current Profit and Loss Statements
- Accounts receivable aging
- Engineering or architect study
- Project Budget
- Meeting minutes that demonstrate support for the project
The key to a successful project is selecting a team of professionals; a banker, lawyer, engineer, architect, CPA and contractors that can shepherd the project from start to finish. Engaging all parties early will get large scale projects moving in the right direction. The board of directors must have strong leadership and vision to develop an overall plan that will receive majority support from their community. Given the economic times a balance must be made between project completion and overall impact to the community.
Manage Ongoing Expenses & Increase Curb Appeal
Some mix of reserves and special assessments might be necessary to keep the budget impact manageable. Some communities may seek to conduct improvements in various phases, it may make sense to bundle all projects together now. Certainly with the right repairs it may help overall in the long run to decrease ongoing expenses and add increased curb appeal. Seeing the finished product of critically needed improvements will be the ultimate goal for the community.
A reserve plan to fund future projects should always be forecasted and implemented. Separate checking accounts, certificate of deposit, savings and money markets will need to be maintained. As many board of directors change with turnover, it is important to maintain focus and get the leadership to address and protect the value of the community association. Running a homeowners association involves large scale financial decisions and must be treated with a business-minded focus.