By Greg Ashworth, CFCAM, PCAM, MBA / Published November 2022
Budget season is always a challenging time of year for community associations, but this year is more daunting than ever. With the national inflation rate being higher than it has been in the past 40 years, the line items in association budgets are feeling those effects. Operational costs such as landscaping, insurance, and utilities are increasing. Mix that in with the pressures on reserve contributions that new legislation and historically high building material costs have had, and board members and managers alike are left tasked with answering to the restless membership.
Ultimately, there will be some difficult decisions that board members will have to make this budget season when it comes to evaluating services that the community has become accustomed to. Even after carefully combing through the budget and potentially developing creative strategies to minimize the impact of rising costs, the association will find it nearly impossible to avoid the inevitability of having to increase member assessments moving into 2023.
So, what can you do to soften the blow? Remember, Remind, and Relax.
Remember every business is being affected by the rising costs, and our associations are not immune to those same factors. By properly educating and updating the membership throughout the budget season on all the variables that are impacting the association’s finances, board members can help prepare the membership for what they can expect when the new assessment amount is officially determined. Scheduling budget workshops, distributing newsletters, posting announcements, and even providing a budget cover letter explaining some of the variables within the budget are all good ways to explain the realities that every association is currently facing.
Remind yourself that you have a job to do! The primary purpose of the association is to maintain and enhance property values. This purpose does not change just because the inflation rate does. Remind the community members that cheaper is not always better, and usually you get what you pay for. So, by keeping your landscape costs to bare-bones, or by not paying your on-site management team a fair and competitive salary, those decisions will ultimately have graver consequences on the community than the decision to increase assessments will. By hiring “on the cheap,” it will become extremely challenging to keep committed business partners, employees, and vendors. Remind your community that the vendors and the staff that are employed by the association are valuable resources for your community. Properly maintaining the “green assets” and community common areas is likely more beneficial to everyone’s long-term investment than saving some money on the monthly assessments in the short term. Remind the membership that real estate and property values within the state of Florida have been prosperous over the past several years. So, now is not the time to skimp on mulching the plant beds, defer painting the clubhouse, or underpay quality and loyal staff members. These are people and mechanisms that help achieve maximized property values within the community, and it is vital to remind the membership that should always be the top priority.
Relax and maintain a peace of mind, knowing that doing your best to balance the budget, while also continuing to adequately maintain the community, is your fiduciary and professional obligation to the association. Although keeping the assessments from increasing might win you a few friends or even win you a few votes, the consequence of underfunding the budget is sure to have lasting impacts on your association for many years to come. Also, remember that the economy and rate of inflation fluctuate. Hopefully sooner rather than later, history will repeat itself, and the inflation rate will “normalize” and maybe also the association budget process.
Greg Ashworth, CFCAM, PCAM, MBA
Vice President, Leland Management
Greg joined Leland Management in 2006 and was promoted to Vice President in 2020. His responsibilities include supervision of both on-site and portfolio managers, and he is heavily involved in business development. A Central Florida native, Greg joined the Leland team after attending Florida State University, where he received a B.S. in economics and a master’s degree in business administration (MBA). Greg holds the CMCA, AMS, and PCAM designations through CAI as well as the CFCAM designation from Florida Community Association Professionals (FCAP). He was recognized as a 2014 “40 Under 40” nominee by the Orlando Business Journal.