Community association boards and finance committees soon will be sitting down to create their 2016 budgets. It's a weighty job. Assessment dollars, which come from the owners' pocketbooks, are the primary source of income. Each expense must be considered thoughtfully.
We asked several industry veterans how associations can hold down their costs. Some of their suggestions will save money now and others in the long term. Before you wrap up your new budget, consider their advice:
Buy only what you need. Review every detail of every contract every year, said Tom Skweres, regional vice president at ACM Community Management in Downers Grove.
"Maybe you don't need mulch every year, or you don't need to sealcoat your parking lots every year," he said.
Volunteerism can get some jobs done, he said.
"Some communities have a lot of people involved," he said. "If they want to spread mulch, a big pile is dropped on someone's driveway, and everyone puts down his own."
Shop for utilities. Electricity, gas, sewer, water and scavenger costs take a big chunk of your budget. Look for alternative suppliers, or use an energy consultant to do it for you.
"If you find the right numbers, lock them in," said Joel Garson, president at Hillcrest Property Management in Lombard.
Water discounts usually aren't available, but water-saving plumbing fixtures will slow the money flow, he added.
Fine-tune your insurance. Check your loss history report to make sure claims from a similarly named association aren't there, said insurance broker Karyl Dicker Foray of Rosenthal Bros. in Deerfield.
She added: Get competitive quotes. Raise your deductible. Get an insurance appraisal of your property's value to make sure you're not over- or underinsured.
Sign your best contractors early. "If you have been happy with the service you receive, take advantage of early-bird pricing," said Craig Finck, vice president at Alliance Association Bank in Plainfield and a former board president.
Re-evaluate fees and fines. You should be charging fees for pets, moving in and moving out, late payments and rules violations, said certified public accountant Chris Nyborg of Batavia.
"Associations are realizing that those privileges have a cost, and they have been undercharging for them," she said.
Be proactive with big-ticket items. Budget money for routine inspections and repairs for mechanical systems and the building exterior. It's cheaper than waiting for an emergency, said Salvatore Sciacca, president at Chicago Property Services in Chicago.
"Once you have cracks and openings, just a small amount of water can infiltrate and end up costing exponentially more money," he said.
Ditch the irrigation system. When it comes to watering the grass, associations increasingly are letting nature take its course, said Mike Baum, president at Baum Property Services in Aurora.
Irrigation systems are costly to operate and prone to malfunctions, he said.
"They are an expensive vanity," he said. "If the grass turns brown like everyone else's, that's just part of life. Water resources are getting scarce around here."
Switch to LED lighting. Sciacca explained why: The bulbs last longer. They don't have to be replaced as often as other bulbs. You'll have fewer complaints from owners about burned-out bulbs.
Raise assessments frequently and modestly. As the cost of living increases, so should your assessments, said Cathy Ryan, president at Property Specialists Inc. in Rolling Meadows.
"Keep your community used to smaller incremental increases rather than keeping assessments flat for several years and hitting them with a big increase at one time," she said. "It's fairer to everyone that way."
Get into show business. Allow your buildings and common areas to be used as sets for television shows, movies and commercials, and you'll be paid for it, Nyborg said.