As a condo/co-op board member, you know better than anyone that it takes a healthy budget to cover expenses and keep your building running smoothly. While the bulk of your building’s income comes from monthly maintenance fees or common charges, it’s not the only way to keep your building financially healthy.
- Explore additional income generators, including commercial rent and utilities, rooftop cell towers, laundry machines, and more
- A healthy reserve fund is the sign of a healthy building. By contributing an adequate portion of monthly fees, you’ll be better prepared to handle anything the world throws at you … from capital improvement projects to burst pipes to natural disasters. To learn more about reserve funds, check out our best practices here.
Sometimes things happen that require emergency funds beyond what you’ve budgeted for or saved. So, what do you do? Enter an assessment, a special temporary monthly charge to your owners/shareholders.
We know what you’re thinking - it’s stressful and daunting to request additional monthly funds from your owners/shareholders, especially when they weren’t expecting it. So, we’ve pulled together a few tips to help you out.
1. Accurately name your special assessment.
It’s important to accurately name your assessment to avoid confusion of how these funds are to be used. Lean on your property management company to guide you through this process.
- Capital assessments: Used exclusively for capital improvement projects, which increase the value of your condo or co-op. Maybe you’ve got a big Local Law 11 project coming up that’s costing more than you initially expected, you’re gearing up for a total gym renovation, or your building’s in need of a new boiler. Fun fact: for every capital project, fill out the Certificate for Capital Improvement form to avoid paying sales tax.
- Operating assessments: Has your building required a little more TLC this year? Maybe the elevator’s been temperamental or the plumbing’s been acting up a bit more than usual. An operating assessment is used to help pay off necessary operating expenses that can no longer be covered by your existing budget.
2. Be prepared with facts and figures.
You and your property manager have run the numbers, reviewed your options, and decided an assessment is the best course of action. When making the case with owners and shareholders, it’s important show your work so they also have a good understanding of why an assessment is necessary and how it will improve your building’s health.
- For capital improvement projects, ensure they understand why this is important, how the building’s value will increase, and the benefits to them.
- For operating assessments, ensure they understand the particular issue and how the funds will be used.
By showing your work and being transparent, you’ll gain their trust. They’ll be confident you’ve got your building’s best interest at heart.
3. Confirm your timeline.
Timelines will differ per condo/co-op and project. For example, bigger buildings are sometimes at an advantage with many people contributing a little bit per month, versus smaller buildings where a few people are contributing quite a lot. To help make these extra costs feel a bit more manageable, settle on a payment timeline that ensures your building stays physically and financially healthy while not overwhelming your owners and shareholders.
4. Be open to feedback.
It’s safe to assume your owners/shareholders will have some questions about an assessment. Be open to hearing their feedback and addressing any concerns they may have.
When communicating the need for an assessment to your owners and shareholders, your number one priority is creating a space of mutual trust and respect. While these conversations aren’t easy, following our tips will help instill trust among your neighbors. Working with a strong property management company like Daisy will help make this process easier for you - from financial guidance through presentation and execution.
Have particular questions about your building or looking for additional guidance? At Daisy, our finance team is here to help with whatever you need.