By Gianna (DeCastro) Rahmani, LCAM, PCAM / Published January 2021
If there’s anything positive to be gained from this pandemic, topping the list would be the focus on our health and personal hygiene. Remarkably, we were reminded of simple, basic tasks like washing and soaping our hands. Then, the use of additional tools such as hand sanitizers and masks became necessary. Similarly, your community budget is a vital planning tool that, if done and used correctly, helps to protect both your association’s financial health as well as the health of your physical assets.
By definition, your association budget estimates your income and expenses for a given period of time. While there are steps to take to anticipate what these amounts will actually be, there are inevitable variances to be expected. Throw in the uncertainties of COVID-19, and it becomes even more important to work closely with your management team in creating your 2021 budget.
We can draw from the parallels between how we tackle the coronavirus in our personal lives and how we should address it in terms of budget planning. A good way to start is to get down to basics, just like washing our hands—review the statutes, the governing documents, and the latest reserve study; analyze historical trends; evaluate current expenditures; calculate year-end projections; and determine contractual increases or the costs of new contracts—let’s delineate what we know before working on what we don’t. Then, consider the additional tools available in case the “soap” is not enough, such as lines of credit, bank loans, and special assessments.
Next comes the challenge of incorporating the effects that the ongoing pandemic or the resulting “new normal,” once the pandemic hopefully ends, may have on your budget. While it would be unreasonable to increase your budget just for the sake of increasing it, it would have been naïve to assume that closing amenities, as this year’s quarantine required, would have resulted in a decrease in costs. A close look at our 300-plus community partners’ current financials have certainly indicated otherwise. Therefore, this has to be taken into account in your 2021 budget.
Again, we can find parallels with living in and operating in a COVID-19 world. Both at home and in our communities, we’ve always had hand soaps and cleaning products. However, the costs have increased due to low supply and high demand. We now also have increased or, more likely, added new expenses for hand sanitizers, sanitization stations, disinfectant wipes, and sprays, gloves, and masks. Moreover, both the usage and costs of package and food delivery services have certainly increased.
More than these parallels are how the effects of being home consequently impact our associations. With many neighbors teleworking or distance learning from home, water usage and the amount of trash may have increased. With more patrons and less-accessible amenities, trespassing, civil unrest, and property damage issues may have ensued. With COVID-19-related personal injury claims arising, liability and workers’ compensation policy rates may have spiked. With people testing positive or with new executive orders being issued by the governor, site response and re-opening plans and association operating policies and procedures (for code enforcement, meetings, etc.) are continually being revisited, thus making it imperative to engage the association attorney more frequently.
Take these expenses into consideration when looking at your staffing, maintenance, security, insurance, and legal line items. Along with these possible increases to your expenses, also consider how the unfortunate loss of employment for several neighbors and a possible economic downturn may impact the association’s income, delinquency rates, and collection efforts.
The good news is that with every challenge comes opportunities for growth. Perhaps, creating your yearly budget has become a mundane exercise in which you simply go through the motions, like washing your hands. If anything, this pandemic has emphasized the need to take our time and focus on our health. Of course, every household has been affected differently, just as every association has been. Thankfully, you can take advantage of Castle’s ability to benchmark your income and expenses with those of hundreds of comparable associations. With our people, systems, and technology, we won’t just “splash” your budget with short-term thinking; we will lather it with creative ideas and scrub every line item to plan for your association’s long-term financial health.
Gianna (DeCastro) Rahmani
Having already been in real estate and property management for five-plus years, Gianna entered the community association sector in 2007, soon earning the designations of Certified Manager of Community Associations (CMCA®), Association Management Specialist (AMS®), and Professional Community Association Manager (PCAM®).
She is active with the Community Associations Institute (CAI), being once named a Rising Star and, most recently, the Northeast Florida Chapter’s 2019 CAM of the Year.
Gianna’s principles perfectly match Castle Group’s core values, and she proudly represents Castle in creating an unparalleled resident experience in communities throughout Florida. For more information, visit www.castlegroup.com.