Good morning, and welcome to another beautiful day in paradise. Let’s face it, we do live in a great place with many wonderful people who are all willing to help. Thank you, everyone.
This is the time of year that the Board is completing the budget for 2019. This always prompts many to ask me, “Will the monthly fees go up?” I guess I could end this story quickly by simply saying, “yes,” but it is always interesting to explain why to ensure we all have an understanding.
I believe we all have a responsibility to each other to maintain the facilities and services that were installed when we moved here. That is our agreement with one another. It is in our long-term best interest never to let facilities become outdated but to maintain them and provide services that meet the expectations of all current and future residents. This way, property values stay as high as possible; and we all get to use the services for our own enjoyment.
Budgeting is the art of maintaining our facilities in the most efficient way possible without sacrificing long-term benefits. Too often, cuts are made that can lead to diminished maintenance, something we must avoid.
If we don’t want to sacrifice quality, because costs go up each year, we need to match those cost increases to maintain our facilities at an equal level so we don’t reduce quality and services. Reducing quality and services will ultimately lead to lower property values.
Inflation is currently about 2.7%, and that means we can count on costs going up about 2.7% next year. To maintain our facilities at the current level, then, we will need to increase monthly dues at least 2.7%.
I have always been an advocate of modest, responsible increases that match inflation so we can maintain facilities and services. At 2.7% inflation, this would mean a monthly increase in dues of about $7. That would be my goal. I much prefer steady increases that match inflation over the long term that we can plan for, rather than holding dues steady in some years with no increase and then making high increases in other years.
When prospective buyers come to our community, they want to see responsible financial planning with no special assessments. When we can plan on the future and see a track record to support that planning, home values will stay as high as possible.
So, our first task is to maintain current facilities and services, and only after that can we discuss increasing services that will lead to an increase in costs. In addition, such increases need to be in the best interest of everyone, not just to benefit a few. Costs can creep up when we add new services that only benefit a few because all residents pay for these increases.
Let’s use caution in adding any new services that will increase costs to everyone. And keep in mind, our first responsibility to each other is to maintain existing facilities well before taking on new projects that will only increase monthly costs over time.
Every day, I will enjoy the sunset and remind myself, “It doesn’t get any better than this.”