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Tag Archives: capital

HOA Bank Sold to PNC

Pittsburgh-based PNC bank buys RBC for $3.45 billion

In a move sure to negatively affect Homeowners Associations, Condominium Associations and Property Owner Associations and the professional association management companies who use their services, Pittsburgh-based PNC Financial Services Group is buying Raleigh-based RBC Bank in a deal worth $3.45 billion.  The deal was announced early Monday after media reports over the weekend said PNC Financial had topped Winston-Salem based BB&T in the bidding for RBC.     

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RESERVE STUDIES-BEYOND HOW MUCH IS ENOUGH

Every community association has three functions – to serve as a business, a government and community.  Community associations are generally nonprofit corporations, functioning in many ways as businesses with revenues (association dues) and expenses.  Money

YOUR BUSINESS PLAN

As a business, the board needs a business plan for the maintenance of the assets of the association. Which assets for parts thereof (i.e. partial pavement replacements, phasing roofing replacements) will require repair or replacement, when will they need replacement, and at what cost are the most important questions one must ask in determining a forecast of future capital projects.  When managing the contributions (assessments) of hundreds of homeowners, it is essential to provide as accurate a forecast as possible.  Professional Reserve Study providers have the extra expertise from conducting hundreds of assignments each year to apply engineering success stories from other associations and determine the most reasonable reserve budget that is consistent with Board objectives.  The benefits to homeowners are that present and future owners are treated fairly and equitably.  As an example, special assessments are typically conducted because those who lived in the community previously did not pay their fair share and as a result, current owners have to pay extra. 

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On the Fence

Fences provide privacy, boost safety and security and can add just the right aesthetic touch to the landscape.  But they also require maintenance, repair and replacement. 

 

Fencing can be an ongoing problem for all associations, especially as communities and their features begin to age. Associations must budget for the care of these integral structures. Deciding when and how to repair your fencing, replace worn down or rotting parts or hire someone to handle maintenance can mean the difference between meeting or exceeding your annual budget. Fence

 

When faced with aging fencing and the high costs of replacement, community associations have to form a strategic plan of action to ensure a cost effective use of operating funds, while at the same time employing an effective use of reserve funds. The case study that follows demonstrates how investigation into a current maintenance process can result in better service for residents, cost savings, improved budget forecasting and an increase in reserve funding levels. 

 

FINDING A FIX

A community of approximately 700 single-family homes located in North San Diego, Calif, was recently faced with the challenge of developing a long-term strategy for managing its fences. Like many communities, this association had been allocating resources for fencing only through reserve funds, and solely on the basis of major component replacement and repair.  The existing wrought iron fence was installed in 1990, and originally was painted with two-part epoxy paint that lasted about nine years. Subsequently, the fence was painted in 1999 with Frazee Am-Plate paint, which did not last as long and is currently deteriorating.

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Homeowners Associations Use Bonds to Fund Improvements

As planned communities across the country enter their third or fourth decade in service, there’s a growing need among homeowners associations to finance major building and facilities improvements to maintain the safety, desirability and resale value of the homes in their communities.

A common problem

The traditional practice of financing major capital projects with large special assessments is often very unpopular with homeowners. Even essential projects that are favored by many community residents may be strongly opposed by some homeowners if a large special assessment is required. Managers of homeowners associations and their boards of directors often face a difficult dilemma – impose a special assessment and upset homeowners or neglect a major capital need.

Alternatively, financing major capital projects with bank loans can be prohibitively expensive for homeowners associations, due to the high interest rates and the relatively short repayment terms required by most banks.

Now however, just like large private corporations and most state and local governments, homeowners associations are realizing they too can use long-term bonds to finance large capital improvement projects.

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