By Sam Richards

Staff writer

Friday, August 15 (8:30 a.m.): There are plenty of reasons for leaders of homeowners associations – Mutuals, in Rossmoor parlance – to plan carefully for the future, and to not skimp on necessary maintenance. Two people with experience in helping homeowners’ associations budget properly had plenty to say about that, and related financial decisions HOA/Mutual boards constantly face, at a gathering last week at Creekside.

“If you have work that needs to be done anyway, waiting could cost you more because of price inflation,” said Adam Haney, CEO of Sacramento- based CiD Consortium LLC, which provides various operational, financial and consulting services to “common-interest developments” such as Rossmoor. “You want to have the freedom to make these expenditures when it’s the best value for the community.”

Having that freedom is largely a function of good planning by a Mutual board, including building future budgets around big-ticket projects, being realistic about what spending is needed, and by being honest and transparent with Mutual residents about what money must be spent on, Haney said.

He and Derek Eckert, president at Association Reserves, a San Francisco-based consulting firm, spoke to about 40 people Aug. 6 at a quarterly forum hosted by the Echo Club of Rossmoor (TECAR), a Rossmoor club affiliated with the nonprofit Educational Community for Homeowners (ECHO). That statewide group supports homeowners’ associations by consulting on issues like budgeting and understanding the ins and outs of the Davis-Stirling Act, a state law regulating formation, governance and operation of homeowners’ associations in common-interest communities like Rossmoor.

Both men talked about the importance of the “reserve study” to the budgeting process.

That is a planning tool used by homeowners’ associations/ Mutuals to estimate the cost of big-ticket community expenses and major repairs over a defined period, typically 30 years.

It should be a “living, breathing document,” Haney said, that should be updated as conditions change. One such change, they said, can be insurance: In some years, rates can go up by 3%, or the rate of inflation. Other years, they said, premiums can double or triple, requiring some nimble adjustments by a Mutual board.

Planning for major construction projects, replacing or repairing pipes and other infrastructure, and other largescale work requires that money be raised for it, Haney said. Though special assessments are sometimes needed, solid planning before the work must be done often allows for less painful ways than last-minute special assessments of raising the money needed.

“Some of the items (Mutual boards) never thought about are now coming due,” Haney said.

Both Eckert and Haney said deferred maintenance should be avoided whenever possible. Doing so almost always costs more money in the long run, they said, as it usually results in more extensive repair or replacement work needed, done at higher cost than if the work was done earlier. Doing the work early, they said, reflects the mantra “Spend now to save later.”

“Avoid putting your community in a position of constantly applying band-aids,” said Eckert, who also noted that staying ahead of maintenance pays off for everyone in the Mutual when any resident sells their home. Home prices in communities where maintenance is done regularly and in a timely way have been shown to be 12% higher than in communities where maintenance is lagging, Eckert said.

Haney and Eckert fielded audience questions for about 25 minutes after their presentation, on topics ranging from handling discretionary budget items to making sense of board actions (“The board members may know something you don’t,” Haney cautioned) to the best ways to replenish reserve funds.

Rossmoor’s First, Second and Third Mutuals, accounting for about 40% of Rossmoor homes, are currently members of ECHO. Pam Grove said she hopes more join the fold.

“We believe the other Mutuals could benefit by being part of ECHO; there are a lot of resources at our fingertips,” said Grove, a Rossmoor resident and treasurer-secretary of TECAR. “People need to understand how policies are delivered, and how Davis-Stirling impacts that.”

In addition to TECAR’s quarterly forums, Rossmoor is scheduled to host an annual Legislative Update and NorCal Seminar on Saturday, Nov. 15.