Running an Aurora, CO HOA, much like owning a home, involves various maintenance levels as the property ages. While care may be minimal in the first few years — fixing minor damage as it arises — the scope of the issues and the costs associated with them tend to rise drastically as the years go on. Repairs become replacements, and your community association management strategy will almost certainly need to evolve to meet these evolving needs.
If your community can measure its life in decades, you may find that your 30-year-old reserve studies don’t accurately estimate the current costs of replacement and operation. As such, it’s important for HOA management to reassess these costs periodically and anticipate future financial needs. Here are four simple steps to doing so:
1. Establish a Clear Vision
The primary purpose of an HOA is to maintain the value of its properties and the quality of life for its members. As a community association ages, it is important to have a clear vision for the future. Take time to consider what you would like the community to look like five, 10 or 20 years from now. This can include things like increasing property values, maintaining the integrity of the community and providing amenities that are attractive to homeowners.
Once you have an idea of the long-term vision for your HOA, you can begin to create a strategic plan to make it a reality. This plan should include actions that the board will take to achieve these goals as well as financial milestones that will need to be hit to successfully fund these initiatives. If you’re struggling with where to start, ask your HOA management firm for examples of strategic plans from other communities in your area.
2. Prioritize Long-Term Financial Success
To ensure that your HOA is able to meet its long-term goals, it’s vital to prioritize long-term financial success over pleasing residents in the short term. While residents are never happy about increased dues, it’s a necessary evil as inflation increases and maintenance costs rise.
Take a realistic look at your current and future financial needs, and allow dues to track incrementally alongside the cost of maintaining property values. Many community associations are tempted to cap association dues at an arbitrary ceiling. However, this often hurts the HOA long-term and leaves it with lower reserves than are needed to successfully operate. Prioritizing accurate reserve estimates will ensure that the association can cover its costs in the future.
3. Evaluate Your Reserve Studies
A reserve study is an essential tool for HOAs. It helps the association plan for long-term maintenance, repairs and improvements, and it provides a realistic assessment of how much money is needed in reserves to cover those costs. Some states have requirements about how often reserve studies must be conducted, but it’s always a good idea to take a closer look at your reserves every few years.
Compare your current reserves to your anticipated maintenance and repair plans, both in the immediate future and over the next 15-30 years. Draft a strategic plan that ensures your HOA collects enough money to fund its vision over that period. If you’re feeling overwhelmed, your HOA management firm can help you draft a plan and compare it to your current reserve study.
4. Have Clear & Consistent Communication
All of these financial plans, studies and regulations are hugely important for the success of your community association, but they aren’t often top-of-mind for your residents. When it comes time to raise dues in accordance with anticipated costs, HOA boards can often be met with a lot of resistance because homeowners are only privy to short-term plans, not long-term necessities.
It’s important to clearly and concisely communicate the financial objectives of your HOA to all community members. This ensures that everyone understands the long-term plan and is more likely to support future dues increases. Make sure to provide regular updates and discuss any changes or modifications to the financial plan. This will help build trust and create a sense of solidarity within the community.
If you want to implement more modern resources for your community members but you’re not sure where to start, contact The Management Trust today. We have a comprehensive range of community management services, including HOA financial management, and a team of experts who can assist you in every aspect of community association management. To learn more about how The Management Trust can enable your Aurora, CO community’s success for decades to come, give us a call at (303) 750-0994 or fill out our online contact form today.