We asked a panel of association veterans for cost-cutting ideas. Consider their advice, and perhaps you can avoid a stiff assessment increase.
Fine-tune this year's budget first. Don't simply increase each category by some decided-upon percentage. Adjust the 2012 line items for actual expenses, not the projections, or you'll throw off the new budget, said Kara Cermak, president of Rowell management company in Elgin.
Create a management plan. This document identifies the upcoming year's major concerns and activities like goals, capital projects, contract renewal requirements and deadlines and meeting dates. Use the plan to guide your budget process, said Carl McElroy, operations manager for Cornerstone Management Group in Chicago.
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Practice proactive maintenance. Making repairs and replacements according to a schedule saves money because you can negotiate prices and avoid expensive emergency work, said Salvatore Sciacca, president of Chicago Property Services in Chicago.
Firm up your contracts. You know what types of work you'll need. Hire your contractors now, said Andrea Sorgani, president of ALMA Property Management Services in Schaumburg.
"This allows you to know the exact costs to budget for," she said. "It also gets you on the contractor's schedule early in the year, and the homeowners can enjoy and benefit from the finished product rather than having them done later in the year."
Increase fees. Real estate agent Ellen Silverman of ReMax Vision 212 has sold condos in associations of all sizes. She notes the professionally managed ones usually charge fees for services such as move-ins, move-outs, assessment closing letters, disclosure forms and pet deposits. Small and self-managed associations often charge very low fees or none at all.
"It seems reasonable to consider charging something to compensate the association for its time and wear to the building," she said.
Automate your banking. Suggestions from Silverman: Pay bills online to save on stamps, envelopes and checks. Offer homeowners automatic debit for assessment payments. You'll get your money on time and won't have to chase down late payments.
Switch to LED lights. Associations have many common areas to illuminate, including exits, stairs, signs and elevators. The initial cost of LED lighting is higher than fluorescent or incandescent lighting, but the useful life is many times greater.
"The bigger the building, the more savings," Sciacca said.
Buy trees. The emerald ash borer has devastated millions of trees and will continue to do so. If your property needs replacements, you can find excellent deals. Many nurseries have had excess inventory since the building industry went into decline, Sorgani said.
Maximize insurance premium credits. Ross Buchmeuller, president of PURE Insurance in White Plains, N.Y., and Chicago, gave these tips: Make sure your agent is aware of all your association's loss-prevention efforts and safety measures — such as a sprinkler system, fire escapes and emergency lighting — to lower your cost. Then ask what else you can do for further reductions.
Consider a large deductible, he added.
"Some insurers offer rewards and incentives for associations and boards that demonstrate confidence in the quality of their building and responsibility of tenants," he said.
Hire consultants. Some jobs, like deciphering utility contracts or roof replacement, require expertise beyond that of most property managers and board members. Professional help is worth the expense, Sciacca said.
"You don't want to take the lowest bid and spend $50,000 for tuck-pointing and have to redo it because of poor quality," he said.
By Pamela Dittmer McKuen
Taken from: http://articles.chicagotribune.com/2012-08-30/classified/ct-home-0831-condo-living-20120830_1_management-plan-budget-process-association-budget