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Expense Reduction Group – Initial Ideas & Participation Options
HOA increases are causing concern for many. Let’s get a group of people to work together with the Board to lower existing and future expenses so members of our community can rest easy.
Main Problem: The main concern people expressed at the meeting was the HOA cost due to higher expenses. The vision of this group is working to reduce current and upcoming expenses to get HOA dues closer to where they were before the increase while maintaining the reserve accounts so there is not a large special assessment later.
Initial Plan: Review each existing expense and new potential expenses (like replacing fire water lines) to explore the possibility of reducing the expense. Taking a top down approach (starting with the largest expense and working down) the goal is to reduce expenses which may include: negotiating with providers, sourcing new providers and evaluating alternative options.
Participation: Open to anyone that wants to contribute toward conducting research, contacting service providers, meeting contractors and others for bids, writing statements of work, acting as a liaison with the Board and other activities focused on lowering the expenses.
Process: Over the next few weeks, I will upload the budget and other details to the forum. From there, will open discussions with the Board to see the best way this group can collaborate with them to work toward lowering expenses and how we can communicate with service providers. The vision is to work down the list of expenses from highest to lowest and finding opportunities to lower costs.
Timeline: With the uncertainty of the recall and new management company, my guess is this will take a few months before we can be contacting the companies that are servicing this community.
Open for Ideas, Comments & Participation: These are just my initial thoughts. From the meeting we heard from people with diverse backgrounds and experience – all ideas are welcome and open to modifying this initial plan to best achieve the goal of lowering expenses charged to the community.
Working together with the Board we can work toward lower HOA dues.
Would you like to participate?
If so, respond on this message board and I will keep you posted on next steps.
This is great Vince, a very well put together post!
In regards to uploading budgets/docs, there is no feature yet that allows for direct file upload via the forum UI (although it can be added.) But it may be better to use an external service like Dropbox or Google Drive, then the URL can be shared here.
That is unless there are some special requirements per the management company, HOA, or the Davis-Stirling Act which I admittedly know little about, but have heard some mention of possible caveats.
Thank you, Vince. I agree. I have contacted and received, currently, only one bid for pool, gardening and was looking into laundry, but there’s other options to look into for laundry, such as, perhaps, owning our own. I think we should consider gardening going to half time since they increased our contract from around $800 to over 1,000/month this year. We should vote on AB968 again, the change in CC&Rs, to maybe take that $35/month and put it into our reserve pot. Most lenders require owners get homeowner’s insurance, so it doesn’t quite make sense to pay for internals twice. And our current insurance only covers slab leaks and burst pipes, with a $5,000 deductible, so anything other than that, such as a maintenance issue, like leaking water heater or toilet, is not covered by HOA insurance, so that’s coming out of our HOA cash pot, if repaired by the HOA at all. I’ve spoken to many homeowners that would like us to consider looking at getting rid of cable. I use the cable, but if the majority of our homeowners don’t use it, then I think that’s something to look at as far as putting that amount in the reserve pot. By law, no more than 5% homeowner amenaties can be taken away annually, so there are parameters.
In the spirit of community, I had mentioned to the board, I think two years ago, that we should consider community planting days. Instead of paying money to a gardener, we can ask for resident donations and volunteers, instead of doing what we did this summer, which is pay our gardeners $1,100 to plant plants. It also helps residents know their neighbors, and thereby promotes safety within our community.
I have, in the past, let the board know I have a flexible schedule and would be willing to schedule and meet with vendors for proposals, etc., and, in fact, met with and received proposals for garage door replacement, but unfortunately it was a year out when the board finally passed and announced the new garage door initiative and, therefore, the proposals had expired. That time aside, the board has not reached out to me for assistance. It’s my recollection that Kristine has also offered her assistance and, to my knowledge, has not been asked for assistance by the board.
You can lead a horse to water, but you can’t make them drink.
I appreciate your involvement, Vince, and look forward to your support and expertise. Thank you.
Great post Vince, thanks. I want to remind you that I am still holding you to that one hour of time you pledged monthly to pitch in! {wink-wink} This is a great starting point to getting the community to understand the issues and get them involved. I have to say that we have attempted to open such conversations with the Board but they have been resistant.
To speak to that point, I would like to clarify, why the dues have increased this year. While the cost to operate the community certainly do increase each year, its incremental. The recent increase is due to the low levels in the reserve accounts and the need to save for the planned re-pipe of our fire suppression system. The prior year’s increase was due to AB968, which I cannot emphasize enough, that we need to reverse. Typically, I am the sole homeowner at the meetings and I have to say none of the serious issues we currently face have been discussed during the homeowner session. At best, it was briefly touched on. Only my attendance at the My questions and concerns go unaddressed and seem to be dismissed.
I did obtain the financials – meaning, I compared the annual projected budgets beginning from 2012 to 2017 to the actuals (P&L). There were some misrepresentations in the budget and there was a mysterious line item in the actuals that I have yet to obtain an answer on what exactly the expense entails. I see no intentional malice but there does seem to be room for improvement on how the dues are spent.
I also reviewed the reserve studies where I identified concerns in the calculations. I am happy to share with everyone what I have identified.
The immediate concerns I identified that would get us back on track would be as follows:
- Reverse AB968
- Alternate solution to the unfeasible re-pipe solution currently in place. Were you aware that currently the Board’s plan is that we save for 24 years, intermittently re-piping one building every 6 years. Which building goes first? Well, they will be tossing a coin (!). The current increase is to fund the reserve account for this re-pipe. Our budget simply will not survive chasing leaks until all the buildings can be re-piped. A more rational cost effective solution would be epoxy. It is cheaper, non invasive (a re-pipe requires cutting into everyone’s walls) and would not require the additional expense of relocating residents. It is also warrantied and estimated to last for 30-50 years. I have spoken with several vendors that can provide this service and verified that our city is APPROVED for this.
- We have identified potentially that Fire Safety First, who maintains and repairs our sprinklers is doing our community a disservice when they repair leaks. They should be replacing pipes joint to joint. Instead, they cut into a compromised pipe and fuse a new section to it. The stress of the repair can and does cause a secondary leak. I have personally experienced this situation this year. It was a needless additional expense. These scenarios are draining our reserves.
Michelle and I have done our homework. What you have outlined eloquently is exactly what we and a few other homeowners have discussed among ourselves adnausium over the last several months. Questions of this nature posed to the Board are routinely unanswered or dismissed. I am perplexed by certain seemingly systematic expenses when our reserves are so low.
In order to get us back on track, at this point in time, and to effect the action items you identify, we need a changing of the guards so – to – speak, hence the recall effort. With the current Board in place, I don’t see a path to resolve.
Apologies for any typos, as it is late in the evening but I did want to add a couple other points. I am not of the belief that we will be able to reduce the dues because the reserves are so low and it is imperative that we replace those funds, however, the exception would be if we are able to reverse AB968, we could potential reverse the $35 increase that was put in place to fund that.
To piggy back Michelle’s post, we currently have an interior and exterior termite contract in place. We propose to eliminate the interior contract portion, keeping the exterior contact in place until we can fund the reverses to an acceptable level. Additional, we do not believe the benefits of the external contact are being maximized.
From a quick skim of the posts – all great ideas Shelly & Kristine. Sounds like you have already made progress in some research, look forward to learning more about you efforts and what you learned so far. Think with all of our involvement and focus on expense reduction we can make some good progress toward lowering dues. Thanks for your participation!
Shon – thanks again for the site set up. Great work! No worries about the upload, think you google doc or other solution will work perfect.
Thank you Vince for getting this conversation started!
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