Subject: Long - Re: New pedestrian gate
From: Jim Thomas (jthomas@sun.soci.niu.edu)
Date: Mon Apr 17 2006 - 22:18:27 CDT
Sorry for the long post....
I assume that most residents review the annual budget and other
documents, so this is probably nothing new. But, as a quick summary:
> My assessments went up this year... It was a small amount, but yes- they
> did go up.
For better or worse, our monthly assessments haven't changed much in the
past 7 years. Somebody might double check, but here's the record I have:
--2000: Rezmar (original developer) paid assessments through 1999. They
were way too low, not surprisingly, and we had a big jump in 2000 to
bring them in line with expenses.
--2001: no change
--2002: A small special assessment accompanied by a modest raise in
monthly assessments
--2003: No change
--2004: The mega-special assessment for the facade, accompanied by
an increase in assessments (4 to 8 percent, I think).
--2005: no change
--2006: no change
--2007: ??
Our assessments (#501) started at around $275 in 2000. It's now about
$312, about a 13 percent increase. This hasn't kept up with inflation or
with escalating common-area heating and other costs over which we have no
control.
In short, neither our assessments nor our reserves have kept up with
inflation or with unanticipated costs (eg, elevator, facade, security
system).
None of us like to pay more money, and all of us have to economize in
today's tighter economy. But, we also want to make sure that we protect
our rather substantial investment in our homes and to make them secure.
When we sell, if buyers use attorneys, attorneys look at monthly
assessments, at the reserves, and they should be looking at the 2001 reserve
study (on line at:
http://venus.soci.niu.edu/~vg1/Docs/vgressty.pdf
The reserve study suggests an "ideal balance" of about $200,000
for 2006 (inflation not accurately factored in). Current reserves are
less than half of that, with $50K in the primary reserves and $40K
in secondary reserves. Dipping into reserves to avoid a special assessment
will only deplete the reserves further and put us at risk for a much
higher special assessment later. It also risks reducing sales price
if a sharp attorney urges that the selling price be lowered because of
the risk of a special assessment in the near future.
Our current reserves are half of the amount recommended by the reserve
study. While some of the projected expenses anticipated through 2006 have
been addressed, unanticipated expenses were not.
The bottom line is this: We can dip into the reserves now and further
deplete them, and live by the "special assement as needed" strategy,
would would not be in our collective or individual interests, or we
can have a fairly modest special assessment now and then take a realistic
look at projected costs, inflation factors, and current monthly
assessments, and try to bring our reserves in line with the idea to
minimize the need for special assessments.
In looking at what other condo associations do and at existing law, there
is no set dollar amount or percentage that a reserve fund should be.
The law states only that reserves should be "adequate" to meet anticipated
expenses, based on realistic assessment of expenses in the next year or
two.
As a resident, I would want the Board to comply with both the spirit
and the letter of the law, while also keeping resident expenses low. As a
Board member, I (and other Board members) will be making a careful
assessment of anticipated expenses by examining the reserve study,
factoring in inflation and potential expenditures over the next two years,
and trying to find the least-intrusive way to assure that we have
sufficient funds on hand to be able to meet maintenance and security
needs.
Suggestions for dealing with these issues are always welcome, either
on the list, in private email, or--best--by attending board meetings.
Jim Thomas / #501
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