Increases in Florida community association budgets require careful deliberation, communication | Opinion [Miami Herald]

The budgetary strains that Florida community associations are now beginning to experience have been daunting, and boards of directors and property managers are finding it particularly difficult to reconcile required increases with many community home and condominium owners. Significant increases in insurance and staffing costs, combined with the coming reserves and inspection requirements for many condominiums, are creating the need for budgetary growth that requires substantial raises to monthly association dues.

Unfortunately, such is the financial reality that many Florida associations are now facing, so there is no avoiding the difficult work that lies ahead.

One of the best budgetary approaches for associations to consider is the use of a finance/budget committee, which is able to give all the important financial questions that come into play the attention and consideration they deserve.

Ideally, finance/budget committees should be composed of three or more dedicated owners who have professional financial/accounting or budgetary oversight experience. This committee should meet year-round to discuss all matters pertaining to changes to the association budgetary plans and finances. The committee’s focus should be on the implementation of the annual budget for the upcoming fiscal year, as well as all the other financial and budgetary requirements based on the association’s bylaws.

Once the committee completes and submits its proposed annual budget to the board of directors for final approval, its members should attend the coming board meeting(s) to discuss the budget and address any questions or concerns.

Communities that are unable to develop and implement a finance/budget committee should make such matters the primary purview of their board treasurer. This officer of the association, again ideally an individual with professional financial experience, should make all of the imminent increases and their impact on next year’s budget their primary focus. As they are preparing the budget to be proposed to the membership, they should communicate their findings and projections to the other board members and owners during any corresponding discussions at the board meetings.

Just as with proposed budgets that are submitted to boards of directors for discussion and consideration by finance committees, the budgets submitted by association treasurers should also be vetted and discussed in the open forum of the regularly scheduled board meetings. The treasurer should be prepared to address and respond to any questions regarding particular expenses and line items prior to the final vote and approval at the official annual budget meeting.

All of the owners receive notice of this annual budget meeting and are encouraged to attend. Again, all of the increases will be discussed in detail at this meeting, so ideally the best approach is for all the difficult questions to have already been addressed at the prior board meetings.

Of course, significant increases will be likely to fuel major questions and pushback, so boards of directors will be tasked with effectively communicating the needs for all of the changes with detailed responses to everyone’s questions. The new Florida condominium legislation requiring many structures three stories and higher to fund reserves and pass engineering inspections will be responsible for a significant portion of the upcoming increases. However, other expenses such as insurance and staffing costs are also expected to continue to rise, and they too will create budgetary pressures for many associations throughout the state.

Aging condominium communities with significantly underfunded reserves and deteriorating building infrastructure components will face the most difficult financial and budgetary woes in the coming years. In some cases, owners will have no other recourse but to choose between exorbitant assessments to bolster their associations’ financial coffers and conduct necessary repairs, or condominium terminations in which a developer buys out all of the owners in order to raze the building and raise a new one in its place.

These and other lesser financial and budgetary strains are certainly going to be significantly impacting Florida community associations in the months and years to come. By relying on dedicated and experienced finance/budget committees and association treasurers, and effectively communicating all of the changes and answering owners’ ensuing questions, community associations will be in the best position to navigate the difficult financial straits that lie ahead.

Shari Wald Garrett is a shareholder with Siegfried Rivera who is based at the firm’s Coral Gables office. She focuses on community association law and litigation, and she is a contributor to the firm’s association law blog at www.FloridaHOALawyerBlog.com. The firm also maintains offices in Broward and Palm Beach counties, and its attorneys focus on real estate, construction, community association, insurance and bankruptcy law. [email protected], www.SiegfriedRivera.com, 305-442-3334.

========

Read past ‘Real Estate Counselor’ columns at www.miamiherald.com:

—3 reports of association fraud on same day show importance of prevention, vigilance

—Community association disputes? Here’s how to minimize and avoid them

—HOA policies on signs, flags require diligent discussion and deliberation

—Drones can get tempers flying high in Florida HOA communities

—Don’t let down your guard yet: Here are some hurricane-prep, recovery reminders

—The real costs of community association lawsuits and how to avoid them

—Ruling shows pitfalls of associations enacting changes without required votes

—Condo terminations need ample consideration by association directors, unit owners

—Community associations should consider amending their amendments process

—Community associations should break ties with developer, board members during turnover

—Legislature delivers monumental milestone in evolution of Florida’s condo laws

—Federal and state reforms necessary to address Florida’s residential insurance woes

—What are some common traits of excellent community association boards of directors?

—Possible $8 million fraud against Florida community associations is a wake-up call

—Southwest Florida community associations appear to fall victim to massive fraud

—Water-leak suit at Jacksonville condo makes local headlines, reveals telling lessons

—Electric vehicle chargers at or near top of many condo community wish lists

—Condo terminations take hold as an exit strategy for owners at aging towers

—What’s next for condo-safety reforms after Legislature fails to act?

—All eyes on Florida Legislature for high-rise condo safety reforms

©2022 Miami Herald. Visit miamiherald.com. Distributed by Tribune Content Agency, LLC.