I was asked a few questions about the recent post on inflation. I have decided to host a discussion group which will delve into some of the aspects of finances and financial planning for unit owners. It will also include discussion of related topics, such as how finances and planning, both short and long term, are vital parts of the work performed by our board of managers, and how they are bound under Illinois law, and the meaning of fiduciary duties.
Before you ask, I am not a CPA. Just a normal person with normal common sense and normal financial acumen. However, I am also a successful businessperson, I have been successfully employed as a manager for very large and complex projects, and I have served on the boards of several corporations. I have about 40 years of "real world" experience dealing with and successfully solving "real world" problems. I have earned a living as an engineer, and I train.
So if you are interested in joining our group, which will include graphical presentations, etc., then give me an email or, you can talk to one of the various people here at BLMH with whom I associate. They'll get the word to me.
Above: Intermittently, for a time, boards informed owners of association finances
Newsletter 2008 excerpt is an example of earlier board willingness to communicate with owners.
The boards of 2019-2021 prefer not to do so.
https://tinyurl.com/BLMH2021
Life and observations in a HOA in the Briarcliffe Subdivision of Wheaton Illinois
Best if viewed on a PC
"Briarcliffe Lakes Manor Homes" and "Briarcliffe Lakes Homeowners Association"
Updated Surplus Numbers
Updated Surplus Numbers: Actual surplus 2018 per audit was $85,163.
Boards 2011-2018 implemented policies and procedures with specific goals:
stabilize owner fees, achieve maintenance objectives and achieve annual budget surpluses.
Any surplus was retained by the association.
The board elected in fall 2018 decided to increase owner fees, even in view of a large potential surplus
Average fees prior to 2019
Average fees per owner prior to 2019:
RED indicates the consequences had boards continued the fee policies prior to 2010,
BLUE indicates actual fees. These moderated when better policies and financial controls were put in place by boards
Better budgeting could have resulted in lower fees
Better budgeting could have resulted in lower fees:
RED line = actual fees enacted by boards,
BLUE line = alternate, fees, ultimately lower with same association income lower had
boards used better financial controls and focused on long term fee stability
Great idea! I for one would be very interested in participating in such a presentation. Thanks!
ReplyDeleteI'd like to attend also!
ReplyDeleteCan you explain the inflation numbers differently? I can't grasp it.
Anon. 5:17pm, here's another way to look at the inflation for the decade January 2000 through December 31, 2009.
ReplyDeleteLet's flip the problem over, and look at the problem another way. Let's assume that the price of goods and services remained unchanged, but that $10,000 in the bank had shrunk as it lost value over the 10 year period.
So with inflation of 2.5% per year, how much value would that $10,000 have lost? Well, upon going to the bank on January 1, you would be surprised to discover that you had "only" $8,032.13 in the bank.
That's what the money is worth in purchasing power after the decade.
So, if that money had been put in the bank with the intention of buying a new roof in 10 years, guess what? It only buys about 80% of the roof.
In the "real world" we attempt to compensate by getting interest on our money. But, the interest we get doesn't always compensate us for the effects of inflation. For example, at present, according to Bankrate.com, the average 1 year CD is 1.56% while the annual inflation rate is 2.7% (as of 12/31/09). Obviously, short term CDs aren't adequately compensating for inflation.