If you have lived in a condominium association or known of someone that has lived in one, there is the common fee. The common fee is collected from each of the unit owners to pay for the common expenses and to set aside money for future major repairs and replacements.
The future major repars and replacements is referred to in condo lingo as the Reserve Fund. Finally, throughout the country, condominium accounting and finances have received more attention. It's about time. The Reserve Fund is, in my opinion, the most important part of the condominium financial ownership equation. In the last two years, the Federal government got on track to say to condo associations, Freddie Mac and Fannie Mae won't be underwriting your home mortgage unless the association is saving at least 10% and has some type of reserve funding and savings balance.
When I moved here, I volunteered to do the study for the reserve fund. My previous experience at my first condo and my professional training in the speciality of condo accounting allows me to do the calculations with ease. I knew when I purchased that their reserve fund was in very bad shape.
The board approved that I do the study. During the first year I couldn't get them off the ground. So at the next unit owner's meeting, I spoke up for the second time. I had reworked the numbers and handed out a sheet at the meeting (not to the pleasure of the board). Oh well, I thought to myself, maybe it will motivate them. It did in one way, as several of my neighbors volunteered to help out. Community involvement is crucial!
Fast forward - the group met once and we all learned from each other. As this past spring and summer went by, I collected information. Received another 'nod' (finally) to go forward with the change in format of the budget. Barbara & I began a inventory of the windows and doors (another big conflict in the association). It's really amazing as we learned lots about each of the units/buildings in our community.
Last week I completed a packet on the Reserve Fund. It was given to the Board just as they received the first draft of the budget for next year. I was thorough, attempting to include all repairs and replacements that the Association is responsible for. In our case, that's just about everything someone could imagine. Looking up costs, some of it science and some of it estimated, the back up of the data is daunting. In the end, using several samples from others, why invent the wheel, I laid out a scenerio to look at.
The news is not good - is it doable one should ask? Yes it is doable, though it will take serious backbone, dedication, and discipline of how the common fee is calculated and subsequently how the common fee is spent. One thing that was said at the meeting by one member, "oh we are only having a 3% increase this year". Wow, this person hasn't seen the results, but they must have the magic crystal ball.
Stay tuned - while I'm not on the board - I am hosting, at my home, the board and those interested the budget work session for our association. I've got my work cut out for me in preparing for the meeting.
PS I just recieved the "budget" worksheet from the board, time to get to work :)