Condo Media - December 2019 - 46
Taking Control of Future Fees
Operating Account Fees
$400
$350
$300
$250
$200
2036
2038
2032
2034
2028
2030
2024
2026
2022
2020
2018
$150
$100
$50
$0
Figure 1. No Fee Increases
Operating Account Fund Balances
$500K
$K
46
CONDOMEDIA December 2019
$-2000K
2033
2034
2035
2036
2037
2038
2030
2031
2032
2028
2029
2025
2026
2027
2023
2024
2020
2021
2022
2018
2019
$-2500K
$-3000K
$-3500K
Figure 2. Resulting Deficit Projection
2038
2036
2034
2032
2030
2026
2028
2024
2022
2020
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
2018
Operating Account Fees
Figure 3. No Fee Increases (Just-in-Time)
Operating Account Fund Balances
$60K
$50K
$40K
$30K
$20K
2038
2037
2035
Figure 4. Resulting Operating Balances
2036
2033
2034
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2021
2022
2019
$K
2020
$10K
2018
MANAGING FEES
In the extreme case, while not widely advertised,
condominium bankruptcies are not uncommon,
but setting aside the obvious need to avoid these
disastrous situations, there are strong arguments
for including fee management policies in long-term
plans. Among them are the need to keep future fee
levels competitive with other nearby associations;
to not outpace the membership's ability to pay; and
to be sensitive to those members who retire on a
fixed income and prefer to age in place.
Perhaps the strongest argument is that fee
management gives the association more ability to
control its future. In particular, it gives the association some level of control over unit resale prices
because purchasers tend to consider fee levels as
the most significant criterion in the decision to
buy or not buy. The level of capital reserve funds
is important as well, but relatively speaking, it is
the monthly fee level that is dominant. It not only
affects the purchase decision but it affects the price
the buyer is willing to pay. That being the case, more
attention should be paid to the growth in operating
expenses since over any extended period of time,
the contribution of annual expenses to the fee level
is typically much larger than that of the capital
expense component.
Against this background, it's fair to say that budget
planning is common in the HOA industry, but forecasting and strategic planning of future fee levels
is generally absent. Forecasting future fee levels is
complex and tedious, and its benefits have not been
well articulated, so this is no surprise. But with the
ability to now automate the forecasting task, there is
the potential to change the attitude across the industry from passive acceptance of annual fee increases
to active fee management, oriented toward longterm strategic goals.
$-500K
$-1000K
$-1500K
Condo Media - December 2019
Table of Contents for the Digital Edition of Condo Media - December 2019
Contents
Condo Media - December 2019 - Cover1
Condo Media - December 2019 - Cover2
Condo Media - December 2019 - Contents
Condo Media - December 2019 - 2
Condo Media - December 2019 - 3
Condo Media - December 2019 - 4
Condo Media - December 2019 - 5
Condo Media - December 2019 - 6
Condo Media - December 2019 - 7
Condo Media - December 2019 - 8
Condo Media - December 2019 - 9
Condo Media - December 2019 - 10
Condo Media - December 2019 - 11
Condo Media - December 2019 - 12
Condo Media - December 2019 - 13
Condo Media - December 2019 - 14
Condo Media - December 2019 - 15
Condo Media - December 2019 - 16
Condo Media - December 2019 - 17
Condo Media - December 2019 - 18
Condo Media - December 2019 - 19
Condo Media - December 2019 - 20
Condo Media - December 2019 - 21
Condo Media - December 2019 - 22
Condo Media - December 2019 - 23
Condo Media - December 2019 - 24
Condo Media - December 2019 - 25
Condo Media - December 2019 - 26
Condo Media - December 2019 - 27
Condo Media - December 2019 - 28
Condo Media - December 2019 - 29
Condo Media - December 2019 - 30
Condo Media - December 2019 - 31
Condo Media - December 2019 - 32
Condo Media - December 2019 - 33
Condo Media - December 2019 - 34
Condo Media - December 2019 - 35
Condo Media - December 2019 - 36
Condo Media - December 2019 - 37
Condo Media - December 2019 - 38
Condo Media - December 2019 - 39
Condo Media - December 2019 - 40
Condo Media - December 2019 - 41
Condo Media - December 2019 - 42
Condo Media - December 2019 - 43
Condo Media - December 2019 - 44
Condo Media - December 2019 - 45
Condo Media - December 2019 - 46
Condo Media - December 2019 - 47
Condo Media - December 2019 - 48
Condo Media - December 2019 - 49
Condo Media - December 2019 - 50
Condo Media - December 2019 - 51
Condo Media - December 2019 - 52
Condo Media - December 2019 - 53
Condo Media - December 2019 - 54
Condo Media - December 2019 - 55
Condo Media - December 2019 - 56
Condo Media - December 2019 - 57
Condo Media - December 2019 - 58
Condo Media - December 2019 - 59
Condo Media - December 2019 - 60
Condo Media - December 2019 - 61
Condo Media - December 2019 - 62
Condo Media - December 2019 - 63
Condo Media - December 2019 - 64
Condo Media - December 2019 - Cover3
Condo Media - December 2019 - Cover4
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202307
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202306
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202305
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202303
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202201
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202112
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202111
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202110
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202108
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202106
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202101
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202003
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202002
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202001
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201912
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201911
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201911_v2
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201909
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201905
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201903
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201902
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201901
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201812
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201811
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201810
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201809
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201802
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201801
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201712
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201711
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201710
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201709
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201701
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201612
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201611
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201610
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201609
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201601
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201512
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201511
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201510
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201509
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201501
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201412
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201411
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201410
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201409
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201312
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201311
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201212
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201211
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https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200912
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200911
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200910
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200909
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200908
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