HOA Community Planning: The Key to Resiliency
In our sixteen years in this industry, we’ve had the chance to watch associations thrive while others flounder. Here’s an example: consider two mid-rises from the 1960’s. Each is dealing with major refurbishments. Each has serious financial considerations, hefty budgets, shifting owner demographics. They’re the same height, have the same components, the same structural integrity. And yet, they’re also fundamentally different. One HOA has contentious board meetings, suspicious owners, a stressed-out Board, vendors who are wary of projects, and below-average property values. It operates from a place of stress, reaction, and fear.
The other HOA somehow avoids all of these negative outcomes. Meetings are engaging and productive. The board are effective. Owners are, generally, satisfied. Projects are well-executed. Property values are above average for a building of the era. Vendors offer discounts and compete for projects. Perhaps, insurance rates fall. This HOA, despite being structurally identical to the former, operates in a proactive, productive, purposeful manner.
Of course, everyone want’s the be the latter example. Who doesn’t seek a stable association with togetherness, shared purpose, financial stability, and a predictable future? After all, HOAs are our homes and largest investments. But we can’t arrive by clicking our heels – it’s a deliberate path that we have to navigate ourselves.
The purpose of a guiding and actionable Community Plan is to navigate your association to a more sustainable and resilient future. By utilizing a comprehensive and collaborative planning process, a community plan aims to set the strategic direction for an association to thrive both today and for decades into the future.
Advantages of Community Planning:
- Increases the operational efficiency of the community by aligning short-term actions with long-term goals
- Reduces common industry risks associated with unplanned expenses, negligence, funding gaps, and costly emergency response activities
- Sets precedence for strategic management for future Boards to follow and build upon while meeting the current needs of the community
- Preserves and maintains property value by completing reserve projects and proactively solving issues to enhance community well-being
The ability to plan projects dynamically gives the association a significant advantage in project scheduling, bidding, and financing. The purpose of working on a 10-year timeline ensures the association is following the Reserve Study recommendations by proactively planning for future project expenses.
Sample 10-year Project Planner:
Benefits of dynamic project planning:
- Enables the association to anticipate and plan for upcoming expenses with the advantage of a 10-year perspective
- Allows the association to schedule projects in efficient sequences and phases (e.g., painting every 7 years after new siding is installed, as shown above)
- Visually displays the impact of a significant change in scope, schedule, or cost
- Sharing the 10-year project timeline with community members demonstrates the Board’s good intentions, while keeping residents informed and excited about future improvements to the property
A financial model empowers community associations to take control of their long-term financial planning and reserve budgeting. A Cash Flow Projection is primarily used to plan for reserve fund expenses against annual contributions. This dynamic model allows for adjustments of variables like reserve transfer increases, special assessments, and project costs. Here’s a sample 10-year cashflow projection:
Advantages of financial modeling:
- Allows board members to visualize the long-term effects of reserve project expenses and reserve fund contributions
- Highlights potential gaps in funding over a 10-year period
- Reduces the risk of conducting a special assessment or construction loan by displaying when large expenses are likely to occur
- Creates an equitable funding strategy by distributing reserve expenses over the entire lifespan of the property, not just during the years of the expense
- Enhances the overall financial literacy of the Board, helping them make confident and timely decisions on the association’s financial matters
The purpose of a Predictive Maintenance strategy is to solve problems before they happen. The protocol relies heavily on the recommendations put forth by professional evaluations, including Reserve Study analysis and specialized contractor inspections. From there, an association can begin to prioritize maintenance issues based on risk tolerance, anticipated costs, and effectiveness of preventative measures. Predictive Maintenance vs Deferred Maintenance:
Benefits of a proactive approach to maintenance:
- Predictive maintenance slows the daily rate of deterioration of the property’s physical assets and extends the useful life of HOA components
- Strategically timed repairs and restorations will limit the occurrence of emergency repairs, saving a significant amount of money in the long run
- Frequent inspection and reporting measures lowers the risk of catastrophic failures, making the property more attractive for insurance providers and residents alike
Let’s get started!
We can help you create a guiding and actionable plan custom-built for your association. Fill out this form to tell us a bit about your project, and our team will be in touch!