Recently, Florida passed SB 4-D, a new safety regulation for condominium and cooperative association buildings. The law centers around inspection requirements, mandatory reserves and more transparency for unit owners and prospective unit owners on information regarding the condition of the buildings.
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Revisiting your budget plans and working closely with your banker to address the association’s priorities and challenges will remain critical in the next few months. |
What should property managers or
associations do now?
At Popular Association Banking, we have been advising our
clients to engage a structural engineer and a reserve study
analyst as soon as they can. Such studies will help estimate
the additional costs and the reserve amounts needed. The
demand for such projects is also likely to increase in the
coming months.
With a better-defined estimate amount, associations can
focus on developing a budget planning strategy to fund
reserves without having to pass larger assessments to their
members. Such planning will also help identify financial
gaps and financial solutions to help address those.
What funding options are there to consider short term?
Given the impact of these changes, it is important to
communicate with your banking and financial partner early
and often. And in those conversations, consider external
factors that are outside of your control — inflation, rising
costs of labor and supplies, as well as an anticipated spike
in demand for the very services your association is
considering.
In addition, the rates for insurance policies necessary to
have in place have also been hardening. If you are faced
with a sudden increase in expenses, consider talking to your
financial partner about a bridge loan to fund reserves and
alleviate the short-term financial burden, which you put an
updated fiscal plan in place.
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What about the long-term financial strategy?
As SB 4-D takes shape, continue to plan for what is now
expected. Make certain your association budget properly
allocates funds for reserves, repairs, insurance and other
required expenses. And then develop contingency plans for
the unexpected.
For example, consider discussing contingency lines of credit
with your banker to help with potential expenses after a
hurricane or a tropical storm that require immediate funding
(structural damage, debris removal, etc.) We are seeing a
lot of such projects going over budget, requiring additional
labor and insurance; having a contingency line of credit in
place can help alleviate a financial burden without the
association having to take out a new loan.
Revisiting your budget plans and working closely with your
banker to address the association’s priorities and
challenges will remain critical in the next few months. Your
financial partner’s knowledge of available options to guide
you through them will offer peace of mind for property
managers and for the unit owners going forward.