subject: Property Management Encinitas - How to Increase Reserves [print this page] Property Management Encinitas - How to Increase Reserves
Property Management Encinitas: How to increase reserves amicably
It must be stated that no-one really ever wants an increase, just as no-one wants to pay more taxes, or have to pay additional costs for anything for that matter. At Pilot Property Management Encinitas we deal with situations like this all the time; and in this day and age, with the economy the way that it is, we all actually want the opposite, something for nothing.
Having said that, it may come as no surprise that almost every Homeowners Association in Encinitas and the rest of California is under-funded. Another reason for this though, is that at present, the law does not require fully funding reserves or partially funded reserves for that matter. Although a new regulation that was imposed by the government lending agencies required that a certain percentage of annual expenses be placed in the reserves each year, (which currently stands at 10%), a loop hole in this regulation has been found. 10% may have to be put away each year, however Homeowners Associations can freely spend this 10% throughout the year, so in actual fact even though money has to be put in the reserves each year, in most cases there is actually no increase.
As a result of this, a new provision was introduced that claimed the Boards must inform the membership how much the funding shortfall is, and note what the Board plans to do regarding this shortfall. However, most Boards plan to do nothing at the time, maybe thinking to themselves, now is not a good time, maybe in the future, (much to the relief of many homeowners), as they would have been spared an increase in their Homeowner Association dues.
At Pilot Property Management, we would recommend that you decide on a funding plan for five to ten years, share this plan with the members in advance and then start collecting. Although it would be ambitious to think that all of the underfunding issues would be resolved rapidly, the goal is to reduce the shortfall by a certain percentage, or increase the funding to a certain figure or percentage by a desired goal year. The goal must be reasonable in order for the members to view the increase without too much distaste, and, in this way have a potentially successful long term plan in order to reduce the shortfall. Although it may take as long as 50 years to fully fund, it can be said it would be better to have this long term plan with more content members, and a goal that is still in sight, than a potentially unsuccessful, over ambitious increase that will leave members disgruntled. Although there will perhaps always be some members that will be unhappy about any kind of increase, the majority rules. Remember, slow and steady wins the race.
Following this approach can help ensure a smooth transition that satisfies both homeowners and homeowner associations. Property management is all about managing situations by finding a compromise that works for all parties, and at Pilot Property Management we have the experience and know-how necessary.
We hope that this article helps your Homeowner Association increases it's reserves - amicably. Property Management Encinitas can be pleasant and enjoyable when all concerned parties are listened to, and dealt with fairly.
