Fiduciary C.P.R. for COAs - Houston's Key Takeaways
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Couldn't make our discussion about high-rise fiduciary responsibility? Were you there, but now can't decipher your notes? We've got you covered! Take a look at the event’s key pointers about managing a financially sound condominium association.
What are the top 4 COA budget best practices?
1. Plan. Your budget should span between 3-5 years. Start by using your previous statements and assess how residents responded to its effectiveness. Next, establish your needs and wants. Then, create a contingency plan worth 3-5% of the overall budget.
Did you know? The biggest mistake boards make is not raising dues or planning for "bad debt" (a debt that can’t be recovered).
Did you know? The biggest mistake boards make is not raising dues or planning for "bad debt" (a debt that can’t be recovered).
2. Communicate. The best way to express your proposed budget to residents is by using a pie chart. This is the most effective approach and sets the stage for mutual expectations, including when to expect fee increases.
3. Execute. Now that you created and communicated your COA needs/wants, included a contingency plan and considered "bad debt," it's time to put it to the test!
4. Monitor. The hard part may be over, but there's still work to do. Keep an eye on how your COA is doing and, more importantly, if you're spending or saving money with the best intentions.
What are the ideal coverages Houston COAs should have?
1. Contractors Insurance. This includes processes/procedures, the "additionally insured" and explains how you're covered.
Tip: Keep a personal copy of this coverage. If you don't receive a written request, you may not be covered as "additional insured."
2. Flood/Hurricane Insurance. Just 50 miles away from the Gulf Coast, it's no wonder why having this coverage is essential. Did you know 80 percent of claims are water-related? As a bonus, those with this insurance will get a 2 percent storm deductible in correlation to your property value.
Extra tidbits:
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A penny saved is a penny earned. Be sure to complete your financial reserve studies and update them regularly.
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Know your worth. Get an official appraisal of your property to determine the value of your building.
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Got a new budget coming up? Seek out feedback from residents! July is considered the best time to gather information and create a plan that everyone can be proud of.
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Annual audits are required by state law. Prepare for yearly reviews with detailed recordkeeping. If you recently transitioned to a new COA management company, gather all documents from your former company to make for a seamless preparation.
CONNECT WITH OUR SUBJECT MATTER EXPERTS
If you have specific questions about your building's budget, auditing, financial transparency, insurance coverage, or just want more information please feel free to contact us or reach out to our partners:
Taylor Bacot, area vice president, senior executive, Arthur J. Gallagher & Co. Insurance
Jeff Canady, president, CPA, Canady & Canady
Adrian Jackson, business development manager, FirstService Residential
For more great budget information, read our article "Quick Tips to Preparing an Annual Association Budget".