Thank you to the homeowners who attended the Budget Q&A last Wednesday. Here is a Q&A summary of the topics discussed:
(Q) Cost savings are great. But should we expect the quality of life to go down? Will we hurt our property values?
(A) No. We are committed to protecting home values, and maintaining our community’s established standard of living. We were careful not to cut spending in a way that diminishes our quality of life or risks our property values. For example, we will save money on landscaping, but will do so without reducing our service levels. (We went through a competitive bid process, with seven vendors, and selected a landscaper with comparable service levels at a reduced cost.) Another example: we will save money on insurance, but will do so without sacrificing any coverage. (We simply pushed to negotiate lower rates on our existing policies.) That said, the Board has decided to eliminate funding for non-essentials until our Reserve Fund is more fully-funded. For example, we will not spend the money for bee removal as we did in 2009.
(Q) Why is there $0 in the landscaping improvements budget?
(A) Simply put, we are eliminating funding for non-essentials (like additional landscaping) until our Reserve Fund is more fully-funded. It's worth noting that all the great landscaping improvements in 2009 were completed without any HOA funds. We hope this will continue in 2010.
(Q) What exactly are the risks of a low reserve fund?
(A) Basically, inadequate reserve funding threatens: [A] high risk of special assessments (i.e. hitting each of us with a bill for more money, to meet the association's costs), [B] damaged ability to sell our homes (because mortgage lenders don't want to lend on homes with poor reserve funding), and [C] lower property values because of these two things.
(Q) How funded is our reserve fund now? Are we at risk now?
(A) We are currently more than 40% funded, and improving monthly. (This represents a major improvement from one year ago, when we were less than 27% funded). We have reached 40% funding by managing 2009 expenses carefully. 40% funding is classified as "fair". While we will continue to improve, we are NOT currently at risk for special assessments.
All homeowners are encouraged to be familiar with the Reserve Study, available on our Association's web site.
Our five-year plan projects that we will reach 70% funding by 2015 (70% is classified as "good", and we believe 70% to be a responsible & realistic target.) Faster funding would be possible, but it would require increases to our monthly assessments. We believe this current funding plan balances our community's need for adequate reserves with our desire for low assessments.
(Q) Should we expect assessments to go up again next year?
(A) Here's what we know for sure: we do need to increase our reserve contribution again next year. (Next year, our plan calls for increasing reserve contribution $6/month/home). But this does not necessarily require an increase to assessments. If we can further reduce expenses enough to offset this increased reserve contribution, an assessments increase will not be required. If we cannot further reduce expenses enough to offset this increased reserve contribution, an assessment increase is likely. To avoid future increases, your participation & input is required. We cannot succeed without informed participation.
(Q) Why do we spend so much on a management company? Do we need them?
(A) Yes, we need a management company. Running any business requires a lot of time, resources and expertise -- including our HOA, which is a $12-million corporation. Having the help of a management company is essential to our success. Unless & until our association has [A] very high homeowner participation, and [B] a Board with strong executive experience & more available time, a management company is important. The CWD Group has agreed to hold their contracted rate for 2010 (i.e. no increase), and the Board plans to carefully monitor any extra management costs.
(Q) Aren't our dues unreasonably high already?
(A) Frankly, no. It's a fair question (and one that each Board member has asked as well), but here is a look at Snoqualmie/North Bend comparables. You will see that Mt. Si Cottages compares very favorably. The Falls, $352/month (69 units); The Cottages, $227/month (50 units); three others in the Snoqualmie area, $256, $227, $267. We remain committed to maintaining Mt. Si Cottages as an affordable community.
