I wanted to post a bit of a breakdown to the 2018 budget so everyone has a better-defined picture of where our annual dues are going and some more background information on the budgeting process.

The Budgeting Process

The Board reviews expenses throughout the year and tracks variances across categories.  The board also works with the community at large to make sure the services we’re paying for are meeting expectations.

In the last calendar quarter of the year, the budgeting process starts.

• Any contracts that need to be replaced or changed are sent for bid.
  • At least 3 vendors are interviewed and quotes requested for services; the best value vendor is selected by board. This process does not always select the cheapest price.
• A proposed budget is assembled by the board and reviewed.
• The proposed budget is then sent to all homeowners via US Mail for review and comment.
• The budget is reviewed at a special budgeting meeting, typically held before the end of the year.
  • In this meeting, the budget is automatically ratified unless the majority of homeowners vote otherwise.
  • Additionally, dues changes of up to 15% do not require community vote.
• Annual invoices sent out to homeowners, usually a few days after the meeting.

This most recent budgeting cycle was a bit more chaotic than we wanted.  From the time the new board took over from the developer, we started working right away reviewing contracts, previous expenditures and bidding out our current services.  We also wanted to ensure continuity of representation during the first budget meeting, so we pushed the meeting to the first available date in January (based on meeting room availability and board members’ work schedules) so that we could have Port Gardner, the new property management company, at the meeting.

For those that want to reference the CC&Rs for the budgeting process, this starts in Article 7 of the declarations document.

Components in Our Budget

Our largest single expense is Landscaping.  We have quite a few areas that are considered HOA common areas and should be maintained.  The previous landscape vendor hired by Pinnacle wasn’t covering all areas.  We also had feedback that our previous landscaping company wasn’t meeting the community’s expectations, so we put the contract out for bid.

Our new landscape company was selected after an interview and bid process.  Multiple vendors were contacted, a small number of vendors showed up to scheduled meetings and walked the community and provided us with bids.

Some areas we’re responsible for:

• Our 5 detention ponds
• The entry area near the Hidden Ridge II sign on 200th Ave SE
• Common areas on 109th St, 107th St, 204th Ave and 107th Place
• Additional buffer space between several lots within the community.

Q: Can we reduce our landscaping expenses by doing work ourselves?

A: It is possible, but it takes a commitment from the entire community.  This was discussed during the budget meeting and discussed further with several homeowners afterwards.  The consensus reached was that a vendor should be handling general maintenance (the stuff that is not fun) and we as a community can do the fun stuff (improvements to existing landscaping.)  We’ll be exploring setting up a new landscaping committee to lead these efforts.

Our second largest budget item is Property Management.  In 2018 we changed property management companies, which has resulted in an annual savings of $3,780.  Additionally, this new property management company has been providing us with overall better service, has been available every time we have a question and has been providing us invaluable guidance and advice.  Additionally, they have helped the board track down and recover funds from expenses that we should not have incurred.

This was another service we put out to bid in October 2017.  We solicited bids from at least 4 property management companies, checked references on the top two organizations and based on feedback, price and value for money, we selected the new management company.

Q: Why do we need a property management company?

A: There are multiple reasons we continue to have a property management company.

1. We’re still a new community and the process, procedures and controls that are required for our association to be successful still need to be worked out.
2. There are lots of administrative tasks, including auditing, regulatory filings and the day-to-day business that are better suited to an experienced management company rather than to the board doing this in their off-hours.
3. They provide the board with guidance and assistance to adhere to state and county laws, tax issues (yes, we have them) and overall assistance in helping us to run our community, including:
   1. Assisting with enforcement of community rules, regulations and ensure that everyone is paying their fair share.
   2. Documentation and records management
   3. Making sure our bills are paid on time

Q: If we saved money on property management, why did our dues go up?

A: The increased cost of a comprehensive landscape maintenance contract exceeded what was saved with the new property management company.

Other Costs and Expenses in our budget

• Property tax – we have to pay taxes on our common areas.
• Insurance – to cover certain aspects of our common areas and protect both the community and board members in the event of a lawsuit.
• Office supplies – printing costs, postage and any other direct expenses for running the community.
• Legal Fees – Covering costs if an attorney is involved for updating and filing community documents or resolving disputes with homeowners.
• Reserve Contributions – This is discussed more below.

Our budget includes a contribution to reserves – essentially, this is savings account for the community.  These reserves are used for long term, large or unexpected expenses, including:

• Repair/cleanup of common areas after storms (downed trees, fence repairs, etc.)
• Maintenance of detention ponds (these can need cleanup every 10-15 years and might not be covered by the county)
• Unexpected legal expenses
• To cover operating expenses in the event homeowners don’t pay their dues on time.

Our reserves were seeded by the $500 initial contribution from the original homeowners in the community.  About 7% of the annual dues is budgeted for reserves.  Having proper reserves keeps us from requiring special assessments to cover these long-term or unexpected costs.

Homeowner Responsibilities / Rights

As a homeowner in this community, you have specific rights and responsibilities, including:

• Attend the budget meeting. In this meeting, the board discusses the changes to the budget, if annual dues are changing and if enough homeowners participate, an opportunity to reject the proposed budget.
• Pay your annual dues. These are usually due by Feb 1 each year and should be paid by check or bank transfer as this is the most cost-efficient way for the association to collect money.   Our new property management company also allows payment by credit card; however, they charge extra for this convenience to cover credit card processing fees, otherwise we’d have to raise dues to cover this extra cost
• Audit the Association’s Financials. It is your money that is being spent and it is your right to audit. (Section 3.8)
• There are times where the community needs volunteers – we have committees to help organize and make decisions, if cleanup is needed after a wind storm, or when it is time to replace board seats, volunteers are needed.
• Communicate and provide feedback to the board. We are working on your behalf to uphold the standards set for our community.  If you have questions, concerns, comments, praise, or criticisms about the job we’re doing, the community or just want to say hello, please reach out to us directly.  Email is the fastest way to reach the Board (bod@hiddenridgehoa.com), but we’re all happy to talk with you in person or on the phone to make sure we’re communicating effectively and you’re getting answers to your questions.  Discussions are kept confidential from other homeowners, so we’re not going to bring up your business to others, unless you provide explicit permission or it is required by law.

There’s a lot of information here about the budget, process, and decisions that went into the 2018 budget.   The Board of Directors strives to be as open and transparent as possible when it comes to matters of the community, especially when it comes to our HOA’s finances.

As always, should you have any questions, please reach out to the Board directly – bod@hiddenridgehoa.com.

Michael

Secretary/Treasurer | Hidden Ridge II HOA