Long-Term Community Planning is Your Legacy
Our lives touch many others, and we influence the world in ways we might not even recognize. What will be your legacy? An association board of directors, as well as individual residents, leave a legacy through the decisions they make for the good of the community. Long-term plans and wise financial decisions will enhance the lives of future generations living in a community association. In this way, our efforts live on after us.
“Inexperienced board members sometimes ask why they should care about the pool repairs in 15 years, if they might not be living there to enjoy it,” says Charles Perry, Business Development Director at FirstService Residential. “I always tell them that this is an endowment for future residents, just like the investment that previous residents left for them.”
What's in your long-range plan?Long-term planning is a collaboration between the board of directors and the management company. Because board members serve a term of a few years at a time, today's board may be following plans set in place years ago. A good long-range plan provides consistency while individuals on the board of directors may change. The plans a board makes today will guide future leaders.
A long-range plan begins with a good reserve study. This study, performed by expert engineers, analyzes each component of the community association’s structures against their expected lifespan. They base this prediction on the actual condition of the common area elements. It is presented to the board as a 30-year, two-part plan — what expenses are predicted when, and how the association should save enough money to cover them. For example, if the study predicts the roof will last 15 years with preventative maintenance, the board can budget for maintenance as well as setting aside funds for replacement in year 15 without a special assessment.
The yearly budget cycle is another opportunity to consider the future needs of the community. The budget may balance funding for short-term and long-term initiatives. Each year when reviewing the annual budget, the board of directors should review the reserve study to see the estimate for the next five years, at the least, and put those into the capital budget. Both the association budget and the reserve plan should be reviewed when the condition of the common elements change. A long-term plan is a living document that is made to be updated, and it can be amended from time-to-time.
The value of maintenanceDay-to-day community association stewardship occurs with routine maintenance. “By taking care of small problems now, the board could prevent larger issues in the future,” says Jessica Towles, Vice President at FirstService Residential. “For example, fixing a dip in the sidewalk that collects freezing water in the winter can avoid a trip and fall liability, and it also prevents that fault from affecting larger sections of the sidewalk or lawn. A smart board will ensure the manager has the funds and the discretion to fix issues as they come up.”
In addition to long-range budgeting, a careful board of directors will look at their resources for potential association improvements that could increase income or reduce expenses. At one Illinois association, the community had a party room that was hardly used. The area has dated wallpaper and old carpeting; poor lighting made it unwelcoming. The board decided to invest in redecorating and adding features that would attract residents, and now the room is consistently booked. It now brings in an excellent return on investment.
With proper association budgeting, a reasonable reserve study and a board that supports proper financial planning, your community can be prepared. This preparation will position the community association to weather unexpected situations and will maintain the association’s value for the future. As a board member, the decisions you make today will affect the lifestyles of people who will live in your condo or HOA community in the future. Your efforts will live on – and isn’t that a meaningful legacy?