Friday, August 21, 2009

Neda Firouz - Budget Time

In order to keep the operations of your Association running smoothly, it is a good idea to put together a calendar that includes your Association's deadlines for various disclosure statements and other maintenance schedules. According to Civil Codes, your budget disclosure package needs to be mailed out at least 30 days prior to the end of your fiscal year, unless your Governing Documents are more stringent.

Most Associations are on a calendar year. If this is true for your Association, according to Civil Code, you would then need to mail your budget disclosure package no later than December 1st. The best way to handle your budget process is to start early to give yourselves ample time to really focus on the figures.

In order to determine a schedule for your budgets, you can your way backwards:

1. December 1st deadline to mail out budget and all disclosure statements.
2. Approval of the budget by the Board of Directors in an Open Session Meeting (preferably no later than the middle of November in order to provide ample time to mail the package to your members).
3. Final approval of the drafted budget to be completed by the budget/finance Committee, designated Board Members and/or community manager by the beginning of November.
4. Obtain copies of the completed reserve study and financials to commence the budget drafting process by mid to late-September. Note: in order to keep the budgeting fresh in your mind, weekly or bi-weekly budget meetings is in order until it is completed. Also, each budget meeting can be used to focus on specific categories of the budget (i.e. income, utilities, etc.).
5. In order to get your drafted reserve study, you will need to approve the proposal from your reserve study company. Most reserve study companies base their fees on your required turnaround time. Usually, the cheapest fee schedule is offered when you give the reserve study company at least 8 weeks. That means that you should select the company to conduct your reserve study and approve the proposal by mid-July.

All in all, the process needs to start around 6 months before your fiscal year-end in order to avoid higher fees with your reserve study and also make sure that you have enough time to look at cost-cutting solutions for the various line items in your budget. If you are not on a calendar year, you can still apply these timelines to fit your community.

If you have any questions about budgets, feel free to contact me.

Sincerely,
Neda Firouz

Sunday, August 16, 2009

Neda Firouz - Water Conservation Can Save you Money

We've discussed methods of producing more income for your community (and you as an an individual), but utility expenses are inevitable. In most Associations, water bills are one of the largest expenses. Again, these tips can also be considered and applied to your own individual lifestyles, so continue reading to find tips on conserving water in your own homes as well. We have various scenarios to factor:



1. Planned Unit Development (single-family homes)
2. Condominium Complexes
3. Townhomes
4. Co-ops



This blog will focus on water conservation in planned unit developments, but stay tuned this week for additional information on the other types of communities.



The first type of community to consider is a planned unit development. Generally speaking, the homeowner is responsible for the exterior and interior of their units, which includes water bills. In planned unit developments, you do find a lot of common area landscaping. Maintaining that landscaping includes making sure that your plants are watered. You also may have common area bathrooms in facilities such as community pools or in a clubhouse.



With regards to your landscaping, many communities are on timers. With multiple controllers throughout the complex, it is a tedious job to constantly be vigilant and adjust those timers depending on the weather. Nonetheless, this is something that needs to be delegated to either a maintenance person, your landscaper, your Board Member, or your manager if he or she is willing and able to handle this task. When the climate is cooler or rain is expected, the water timers need to be adjusted accordingly. If this seems like it is too much work, you may also consider installing a satellite-controlled irrigation system. According to some studies, this system has saved up to 80% in water consumption over the conventional irrigation system. This system works with a satellite that essentially is notified about weather conditions and will adjust the plant watering accordingly. Again, this is a great tip for HOAs AND individual homeowners. For individual homeowners, just think of how much money a system like this can save you in the long-run. If you're on vacation, you do not have to go through the hassle of hiring a house sitter to water your plants while you're gone. Your satellite-controlled irrigation system will handle it for you. If you would like further information on the system, please feel free to contact me.



Aside from watering, you may also seriously want to consider installing drought tolerant plants. Utility companies such as LADWP are offering cash incentives for individual homeowners to plant the drought tolerant plants. Remember that aside from the "cash incentives," your long-term watering will be significantly cut by making this conversion. Here is a link to an article in the LA Times regarding the DWP program: http://latimesblogs.latimes.com/lanow/2009/06/water-savings.html



There are actually some really great looking drought tolerant plants. Here are a few pictures of drought tolerant plants:




















































































For a complete list of drought tolerant plants in the LA area (or any other vicinity in California), please visit the following site:
http://www.laspilitas.com/garden/Drought_resistant_plants_for_a_los_angeles_garden.html


As for other minor water conservation tips in planned unit developments, please stay tuned with my condominium complex water conservation tips that will be posted within the next several days. This includes areas to save INSIDE the home or common area facilities.

If you found this blog insightful or useful, please let me know. Feel free to leave any comments on what you would like to see, and I will incorporate my professional expertise on the subject.

Sincerely,
Neda Firouz

Saturday, August 15, 2009

Neda Firouz - Increasing Income in HOA Budgets

HOA Budget - Increasing your Income by Neda Firouz



As a community manager, I have come across many homeowners associations, each of which have unique needs. Lately, we have found that interest rates have plummeted! This does not just affect homeowners associations, but each of us as individuals. If you do not live in a homeowners association, you may be able to learn a few tips from this blog, so keep reading...



With more stringent reserve measures, Board of Directors are faced with the difficult task of properly budgeting not just for the upcoming year, but for the general future of the community. Often times, this may require dues increases and/or special assessments. With a steady incline in delinquencies and the current economic climate, increasing assessments and collecting funds have become more difficult. With a little research and work, producing more income without assessments is possible. Here are a few areas to focus on that may have tremendous impacts on your budget:

Many communities invest their reserve funds with brokers, but interest rates have not been as competitive as they were in the past. If you are an individual reading this blog, you may have experienced that your bank is also not offering competitive interest rates. If you are currently earning less than 1%, you may consider researching alternative options. The CDARs program has been one solution for some Associations (and individuals). Many of the banks that offer this program offer interest rates at 2% or more, and you can invest up to 50 million dollars and still be protected by FDIC insurance. For more information, you can visit http://www.cdars.com/_docs/news-articles/SmartBusinessCDARS.pdf. When working with various banks that participate in the CDARs program, many of them offered to first open a CD account at a much higher rate. The highest I found was 3.25%. As you know, the FDIC Insurance limits have been increased to $250,000, so you can invest somewhere around $240,000 with the bank directly, then invest the rest of your reserve funds through the CDARs program. Alternatively, if you need to keep some funds liquid, there are banks that have HOA departments that offer rates of 2.25% or greater for Money Market accounts. For homeowners associations, you can contact banks that have HOA departments. If you want references to those institutions, feel free to send me a comment.

Other income producing methods include locating vending machine companies that will offer a percentage of their sales back to your community. You can also promote paid advertisements in your community newsletters as a means to generate more income, or at least offset your printing costs.

Then, there are those communities (predominantly condominium Associations) that have limited storage space within the units, and they also have strict Rules and Regulations regarding patio/balcony storage. One of the suggestions that has worked for homeowners AND the Associations is to have the Association purchase fire proof storage spaces for the subterranean garages. There are construction stores or products offered online that sell the storage spaces from anywhere between $500-$2,000 per space. Remember that it is important to find fire proof spaces because of the possible fire hazard. Also, before purchasing the storage spaces, make sure to talk to your insurance agents to confirm that your carriers will not have liability issues. In any event, depending on the demand in your community, the general storage rates range between $50-$100 per month. Your Association can earn back the initial investment in as little as ten months, then generate income for the future. Lastly, remember that this would be a new component that the Association would be responsible to maintain and replace, so if you decide to implement this suggestion, let your reserve study company know so that the storage spaces are added to your reserve study and factored.

Also, take a look at some of your utility expenses. There are many rebates and free products available to help cut your utility usage. I will be blogging about utility expenses in the near future.

Again, if you have any questions above the CDARs program, banking options, income generating ideas, etc., please do not hesitate to leave a comment.

Sincerely,
Neda Firouz

Neda Firouz - Managing Diverse Associations

As published in a Community Association Management magazine in November of 2006, here is an article by Neda Firouz regarding Managing Diverse Associations:

As a community manager, it sometimes seems like we need a psychology degree - especially since we are always interacting with people who have a multitude of different personalities and who come from many dissimilar backgrounds. The reality is that one of the most difficult issues for managers to deal with (and one which may not initially be apparent) is the diversification within each community.

I have come across more than one hundred homeowners associations, in locations from Calabasas Park to Santa Monica, and from Los Feliz to Long Beach. Each association is unique in terms of its needs and the demographics of the area. One of the factors which has contributed to my success as a community manager is my sympathy for and awareness of the various needs and personalities within each community. My experience has shown that there is one thing which all these people with different backgrounds have in common: they merely want you to listen. The key for managers is to differentiate how to listen and react with a mixture of different people.

One of my experiences included a community with over 500 units, which includes a very diverse group of residents. My method of communicating with the members was very different, depending on the circumstances. For example, when I would speak to a college student, I would tend to communicate more casually. If I seem like a very strict authoritative person with these younger groups, I am not well-received. When I deal with various ethnic backgrounds, sometimes I find that it helps for me to relate to them with my own personal diverse background and upbringing. In the end, however, all people simply want to feel is that they have been heard. Even if I cannot accomplish what the resident exactly wants, if I have truly listened to all concerned persons and have taken into account their respective needs, the underlying problem or issue is much closer to being resolved.

By Neda Firouz