Condo Media - July 2012 - 33

by Nena Groskind

Some New (and Not-so-New) Ideas for Cutting Costs and Boosting Income
ommunity association board members wrestle with their budgets every year in a perennial struggle to control costs, maintain services and minimize increases in common area fees. Never easy in the best of times, this effort has become excruciating for many boards during the prolonged economic downturn, as the financial problems of individual owners have compounded the budgetary strains on their communities. For the volunteers charged with managing an association’s finances, walking barefoot across hot coals might be easier, and certainly less painful, than creating a workable budget. Those who have been through multiple budget cycles develop asbestos toes and an understandable conviction that they have “been there, done that” — scrutinized every line item, challenged every cost increase, extracted every possible savings to be squeezed from budgets that have been subjected to the financial equivalent of liposuction, leaving nothing more to be trimmed, tightened, tapered or tweaked. Perhaps these battle-hardened budget warriors have seen it all. But Condo Media loves a challenge. So we asked some industry executives to help us identify “road-less-traveled” suggestions for reducing association expenses and increasing their revenues. Our hope is that board members (and managers) will discover that there is, in fact, something new to be found under the budget sun. We cover budget-cutting ideas in a list of “dos and don’ts” beginning on page 35. We tackle the revenue-raising suggestions here.

ing on any community’s board who wouldn’t jump at the opportunity to increase the association’s income by means other than raising common area fees or levying special assessments. There aren’t many income-generating alternatives available for a community association, whose primary business and sole reason for existence is to manage the community. But there are a few ideas that may be worth considering.

renting their units. Some communities also offer babysitting services — popular with both owners and renters, Graham says, during prime vacation times. But he cautions that boards in communities offering this service must select staff members carefully, supervise them closely, and make sure the association’s insurance adequately covers the potential liability involved. Third-Party Fees: Liability concerns also loom large for communities offering parking and shuttle service to nearby events — another income generator for some associations in resort areas, but one that many managers discourage because of the potential liability involved. Some managers think the same concern argues against allowing non-residents to pay to use common area facilities — clubhouses, exercise rooms, swimming pools and the like. “We think the liability issues [and management headaches] far outweigh any income generated,” one manager said, adding, “That’s not what common area amenities are for.” On the other hand, Nancy Mandino, CMCA, AMS, vice president and director of property management for The Dartmouth Group, AAMC, AMO, says that one downtown condominium community has had success with a different type of third-party fee arrangement: leasing spaces to Zipcars, a shared automobile service. “Everything is between Zipcars and its customers,” Mandino says. “There is very little association involvement,” other than collecting the fee Zipcars pays for the spaces it rents. Maintenance Services: Some community associations are boosting their income by offering maintenance and repair services to owners. On-site staff

Provide fee-based services to owners
Rental Pools: In second-home communities, owners who rent their units for significant periods sometimes form rental pools and pay the community association a fee for managing them. This arrangement, common in resort communities, can generate significant revenue, according to Jeffrey Graham, CPA, CFF, CFEP at Graham & Graham, an accounting firm with offices in Vermont and New Hampshire. Brokerage Services: Less common for community associations, but another potential source of revenue for them, Graham says, is having a licensed real estate broker on staff who can handle the sale of units in the community. Brokers can’t share commissions with non-brokers, but they can pay for office space, supplies, administrative services and other costs related to the brokerage business, generating income for the association. Discounts and More: Communities can also earn income by providing a variety of concierge-type services to owners. Graham says some of his resort community clients will purchase tickets — for ski lifts or area events — in bulk and then sell the tickets at a profit to owners or to the vacationers

A Dollar Here, a Dollar There: Increasing Revenue
There probably isn’t a volunteer serv-

CONDO MEDIA • JULY 2012

Condo Media - July 2012

Table of Contents for the Digital Edition of Condo Media - July 2012