FCAP Community

Published July 2020

Florida Community Association Professionals’ (FCAP) training is offered on two levels. Level one consists of courses meeting Florida’s continuing education requirements for CAMs, and level two is the Florida Advanced CAM Studies (FACS) courses. For further information about the more than 50 online continuing education classes available or to pursue the Certified Florida Community Association Manager (CFCAM) designation, please visit www.fcapgroup.com/membership/education-training/.

Marcy Kravit

CAM to CAM
Budget Essentials, Part I
Marcy L. Kravit, CMCA, AMS, PCAM, CFCAM
Florida Community Association Professionals (FCAP) Education and Training Coordinator
Community Association Management Professional

Editor’s Note: This is part one of an article on budget essentials. Part two will be published in the August issue.

The board of directors is required to plan for anticipated revenues and expenses for the upcoming year.  The board and management work together in estimating how much money must be collected in order to pay the annual maintenance expenses. 

The requirements for the preparation of the annual budget for condominium associations are outlined in F.S. §718.112 (2) (f) and for homeowners associations, in F.S. §720.303 (6). Managers and board members are responsible and held accountable to scrutinize, dissect, and assimilate the many challenges that the budget process presents. This process can at times be overwhelming and exhausting. 

The operating budget includes recurring expenses such as payroll, taxes, utilities, insurance, and day-to-day maintenance and operations. The cost of insurance continues to rise; however, it’s an expense that must be figured and factored into the budget.

It is a point of agreement that the budget process requires a detailed examination, evaluation, and assessment of its own. It is a lesson in practicalities, reality checks, analysis, and determination of which services to maintain and which ones to reduce or eliminate. It can be challenging for all, and most fixed costs are scrutinized.

Year to date (YTD) averages for a period of eight to ten months and general ledgers need to be reviewed.  The consumption of items and supplies, and projected costs such as insurance, utilities, and repairs and maintenance need to be measured, compared, and analyzed with regard to the previous year’s expenses. One recommendation is to print out a general ledger and review the YTD variances. Some of the expenses which require review include administration, management fees, maintenance, insurance, taxes, trash collection, pest control, utilities for common areas, and reserves for capital expenditures and deferred maintenance. Competitive bidding and notification to vendors that services are going to be reviewed and contracts renegotiated can sometimes create a bit of concern among service providers.

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Many managers and boards will look closely at each line item and ask themselves the following questions:

• Were there any new expenditures or line items in the operational budget that the association should consider as beneficial to the community?
• What long-term or capital projects need to be addressed immediately?
• When was the last reserve study conducted?
• Has an energy audit been performed?
• Have there been any changes in services needed that may require an increase or decrease in the contract amount?
• How and why was each line item originally established?
• Does the annual assessment need to be raised because of an increase in delinquencies and unforeseen repairs?
• Do we need to eliminate or add any staff positions?
• Where in the budget is there room for the “fat” to be trimmed?
• Should the association obtain a new property insurance appraisal?
• Can the association risk insuring for a lesser property replacement value or a larger insurance deductible?
• Can it afford to reduce the number of trash pickups?
• Should an association reduce the valet service?
• Should the association reduce the hours for the beach/pool attendant and/or number of days to service the pool?
• Can it afford to reduce landscaping services and number of flower/annuals change outs?
• Should it consider placing elevator modernization and cosmetic upgrades on hold? 
• Should the association consider installing LED lights, retrofits, photocells, and motion sensors to reduce the electricity bill?
• Should the board consider reducing the reserve funding?

Betsy Barbieux

Because You Asked
By Betsy Barbieux, CAM, CFCAM, CMCA

Betsy,
I live in Broward County. Since the pandemic we have posted rules and guidelines in the lobby. One item on the list is that no visitors are allowed except for family visiting older residents to check on them.

We have a resident in my building who had visitors, which violates our rules and guidelines. The visitors could be COVID-19 carriers. In addition, these new residents who moved in in October have been noisy and disrespectful. Also, he uses his condominium as a workshop and is always drilling and hammering. How do we handle this?
– Sharon

Sharon,
The board of directors or the manager needs to address the rules violation of the owners who are loud and noisy.

As far as the pandemic guidelines, you don’t say if you have gated or limited access to the property or the building. Part of creating guidelines is they are “guidelines” and probably not really enforceable. While I am sure you are concerned about your elderly neighbors, I doubt you can enforce the “no visitors” guideline unless you have gated or locked access.

I know the Governor has not reopened Broward County yet (as of mid-May), so residents should still be following the quarantine guidelines. Unless law enforcement is willing to arrest residents on/in their private property, I don’t think there is much you can do except hope for voluntary compliance. Otherwise, you could try using the statutory fining procedures.
– Betsy

Betsy,
I wanted to ask again about the financial records. I was told that if any owner asks for the financial records in writing that I have to allow them access to all the financials; the attorney confirmed that yes, this is the case.

However, in class you taught us differently. I really want to get this clarified and discuss it with the attorney, so I’m not subjected to the insanity of these owners.

 A group has initiated a recall, has retained counsel, and has requested records going back to 2010, including ballots, etc., in 10 days. This is not feasible.

Can you please explain to me so I can talk intelligently with our attorney?
– Maria

Maria,
As I recall, your property is a condominium/hotel which has a wholly separate short-term rental business and requires a real estate broker’s license to operate. It would then be my belief those records would not be available to all owners. Owners could have records of the rental income/maintenance of their individual unit but not everyone else’s.

Any of the condominium records that we discussed in your CAM course on pages 102–103, with the exceptions on page 106 that are rela-ted to the community association side of the business, are available for inspection and copying to any/all condominium owners upon request. You have 10 business days to set an appointment for the owner to come to where the records are located and inspect them. You may charge for the cost of the copies, or the owner may use his own portable device to make copies.

The board of directors could consider creating a policy for owners’ requests for records and use a form like the one found on the Division of Condominium website.

The group who initiated the recall cannot ask for financial records back to 2010 because you’re only required to keep seven years’ worth. Minutes, however, are to be kept forever. Also, you are not required to keep any ballots or voting information for more than one year. You do not have to produce records beyond what the statute says, nor do you have to create or re-create any records.
– Betsy