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I need a fast education

14
Posted by2 months ago

I need a fast education

New homeowner. 144 single family residences in a central Florida gated community. No pool or anything really other than the front and back gates and a simple park with one swingset.

The annual meeting is coming up. I plan to attend. Based on past evidence there won't be many others attending aside from board members. Dues are increasing by 25%. Some of my neighbors think the board members might somehow be profiting off the proposed budget and while I have no idea whether that is true I do see some areas of concern.

Questions as follows:

Is it common practice for the HOA to budget a fee to the management company AND a separate expense for postage when presumably the management company handles the mailings?

It appears the GL premium is increasing nearly 300% to almost $10,000 annual. Is that to be expected for some reason?

I've read how reserves are often based on a percentage of depreciation of common areas, which we have very few of as described above. Does it make sense that reserves should be increased from $45k to over $66k in a single year?

Is it proper to request evidence of bills for things like electricity and landscaping?

Should the budget contain seperate line items for grounds maintenance, mulch, and landscaping enhancement? That seems overlapping.

Edit: thank you! In a short amount of time I've been set straight. Very much appreciative of all the responses!

9 comments
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level 1

Is that to be expected for some reason?

Yes, inflation is rampant these days. Everything is going up especially insurance, and especially in the state of Hurricaneland.

11
level 1

Should the budget contain seperate line items for grounds maintenance, mulch, and landscaping enhancement? That seems overlapping.

I'd rather the budget be exploded like this rather than "maintenance". I'd rather know what they mean by "maintenance". You can't have TOO much detail in a budget like this.

9
level 1

Is it common practice for the HOA to budget a fee to the management company AND a separate expense for postage when presumably the management company handles the mailings?

Yes. Postage and other payments to third party service providers (USPS in this case) is typically paid directly by the HOA or as a reimbursement to the management company, and not included in the contract management fee.

It appears the GL premium is increasing nearly 300% to almost $10,000 annual. Is that to be expected for some reason?

Expected? no. Unheard of? also no. Insurance is going crazy now.

I've read how reserves are often based on a percentage of depreciation of common areas, which we have very few of as described above. Does it make sense that reserves should be increased from $45k to over $66k in a single year?

This may be normal, due to inflation of materials and shipping costs. You can find more details about how this is calculated in the "Reserve Study".

Is it proper to request evidence of bills for things like electricity and landscaping?

Yes. You are a member and should understand what your club is paying for. If nothing else, it will set you up to be a helpful volunteer for your community.

Should the budget contain separate line items for grounds maintenance, mulch, and landscaping enhancement? That seems overlapping.

If that makes sense for the Board, management company, and/or CPA, then yes. It may help them see if there is a spike in expenses or otherwise help them to budget their expenses more accurately.

5
level 1

Yes, it's common to have a separate line item for management fees and admin fees. Most management contracts are not all inclusive, and bill separately for paper, postage, etc.

Insurance rates can increase if you had a claim, if any property in your general area had a claim, if the wind is blowing in from the north - so yes.

Do you have a reserve study? That would show you what you need to have in the reserve and when.

Yes, Florida allows owners to inspect the books and records. You need to submit a written request and they can charge you for copies. Google "Florida HOA records request" for the process.

Some HOAs budget with separate line items, some have broad categories like "common area maintenance" it doesn't really matter, it's really just a matter of preference. There are pros and cons to both.

6
level 1

Everything you've described appears normal to me based on the HOAs I've lived in. Everything is costing more next year. Contractors are charging more for everything, prices for even things like mulch are going up, insurance rates are going up especially in Florida after the condo collapse.

My HOA also breaks out a lot of categories that sound like they might overlap but don't (common area landscaping, townhome ground maintenance, mulching, irrigation, etc). For example, replacing mulch is a once a year cost that the landscaping company charges for separately from the contract for regular weekly services like lawn mowing, which is why it's separate in our budget.

My advice is to go into the meeting with an open mind and the attitude that you want to be involved or be helpful, not adversarial. There's no reason to assume the HOA isn't being properly managed from the get go.

2
level 1

READ, READ, READ your covenants and by-laws. Your board ONLY has power based on these two documents and nothing else!!

2
level 1

There are a lot of questions here. First, remember that the HOA board is to run the HOA through the bylaws. The board is directing the money received from the HOA members on how it is spent. This is your money and you are entitled to see how it is spent. If that's asking for a breakdown of what's being spent, that's what you should see.

As for the budget increase, ask to see why they believe that it's going up by that much. Was a reserve study done? Did the reserve study show that they were underfunded and the increase is needed to become fully funded again? There's a lot that goes into this.

As for the postage and management company fees, yes there should be separate line items. Not everything is run through the management company and the budget should be there to accommodate for that. If you're wondering where they get the numbers from, ask. They should provide you with their justification.

Bottom line, the HOA money is your money being spent and you should be able to see how it is spent. If the board is a quality board, they will be ready to show you with minimal delay (sometimes accounting reports take a minute to run). The books should be open for review at any time. If the board gets evasive on any of this, then you should be getting worried.

1
level 1

I'm in a 600+ house over 55 community in CA. My HOA sends out the budget yearly before the annual budget meeting so we can see what is in it.

You will receive a copy of the approved budget at the beginning of December in the Annual Budget & Disclosure Packet. You will be notified when this is available via: eblast, email...

As for insurance I found this article online about condo rates going up in Florida this year. While you're not a condo there are some similarities.

https://insuranceresourcesllc.com/condo-association-rate-increases-fl-2021/

1
level 1

Yes to all your questions...

Some management companies charge all in one. Others charge for services as used. So there is a base fee plus. Some associations do better with one kind. Some the other. My company is the latter and we always add on postage.

Yes insurance is absurd this year. You also don't know what could have come up in your insurance last year.

Yes the reserve recommendation could jump that high, especially if the reserve wasn't funded properly. Again, costs have soared.

1
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Created May 9, 2016