Impose late fees. Late fees send a message to homeowners that it is important to pay on time. Associations owe it to the homeowners who pay promptly to be vigilant in collections. Ultimately the delinquent homeowner should pay for all legal expenses related to the collections process. Avoid any settlement offer that waives any legal expenses the association has (or will) pay out of pocket.
Maintain your reserve fund. A healthy reserve fund goes a long way toward cushioning the economy’s effects on your community. By planning ahead for future repairs and replacements, your association can reduce costs by avoiding unnecessary special assessments or bank loans. The reserve funds will also generate interest income.
Renegotiate long-term contracts. Negotiating contracts to minimize expenses is an important job function of any board. Contractors will frequently provide you with more competitive pricing when the contract is for multiple years. Major contracts should be competitively bid every three to five years.
Perform preventative maintenance. Regular preventive maintenance will increase the life of your buildings, amenities and equipment. Develop a schedule with your property manager.
Monitor Water usage. If the association has an irrigation system, monitor trends in your water bills. Leaks can lead to costly increases. Ensure that the system is setup to provide adequate, but not an excessive amount of water. All irrigation systems need to be winterized to avoid costly damage.
Increase user fees. Consider opening your pool, clubhouse or common areas to nonresidents for a fee. This can bring additional revenue to the association. However, minimize risk or expense to the association by requiring a deposit or requiring nonmembers to be sponsored by association members.
Sell Advertising. Selling newsletter advertising is an excellent way to offset expenses. When mailing the newsletter, you may want to use bulk mail or ask your residents if they would rather receive the newsletter by e-mail. If they prefer e-mail, you’ll save by eliminating postage and paper expenses.
Install Vending Machines. Vending machines in the pool area or other common areas can be a relatively labor-free source of income. A snack bar is always a favorite at the pool, but staffing can be a major challenge. Ask your members what items they would buy from a vending machine.
Homeowners who are nervous about their jobs and concerned about their declining home values have even less tolerance for what they perceive as waste or inefficiency. Board members can’t work miracles. You can always find fat to trim. However, you can carefully explore all of your options and explain your decisions to homeowners on a regular basis. Your overall goal should be to keep costs down while not harming your community’s image or property values.