This November 18, the Beachwood Villa Association (BVA) board members will vote to approve a budget for the 2022 calendar year. The budget process begins in July. Each of the BVA board members and our Community Area Manager (CAM) is involved and put significant time and energy into creating a well thought out budget from the bottom up.
What do we mean “from the bottom up?” From my experience in finance and accounting, there are two overriding methods for developing budgets; Top down and bottom up. Top down budget development generally starts with a rate increase and a determination of how much revenue or cash flow is forecasted to be collected. Once the rate increase and expected revenue/cash flow are determined, those funds are spread over the expense accounts and capital reserve. In other words, a mindset that you raise the monthly dues payments at least 3%-5% every year and then you figure out how to spend it.
The BVA board believes strongly in and practices the “from the bottom up” method of budget development. We divide our expenses into those with monthly / annual rates and those expenses that are more random in occurrence; when it breaks, fix it. For rate driven expense (grounds & pool maintenance, garbage, utilities, pest control, insurance, etc.), the BVA board members contact the vendors and inquire as to what the 2022 rates will be. In most cases, the vendor can accurately tell BVA what they plan to charge in the upcoming year. For random expenses (building maintenance, plumbing, tree trimming, irrigation, legal, architectural consulting, etc.), the board members and the CAM engage in many discussions and data analysis to accurately budget these costs. Part of these discussions also involve cost control strategies, including preventative maintenance aimed at making the random expense categories more predictable.
Along with budgeting for expenses, we must also project our Capital Reserve funding and spending. Capital Reserve expenditures are big ticket items that have a life of several to many years. Examples are roof replacement, painting & weatherizing, wood rot and balcony replacement, parking lot lighting fixtures, etc. BVA hires an expert to develop and annually update a Capital Reserve spending plan. We currently use Community Advisors out of Jacksonville. This spending plan, along with an analysis of our funds available for Capital Reserve are used to determine our budget for Capital Reserve funding.
Our BVA monthly dues rate increases for 2019 & 2020 combined totaled less than 1%. Those budgets were very accurate also. The small rate increase was a product of cost control strategies, preventative maintenance, good contractor work and the time and attention given by the BVA board members and our CAM. In 2022, with inflationary and supply chain pressures driving costs higher, we expect an increase in the 4% – 5% range. We will continue to work hard to keep costs down and deliver value to the Beachwood properties.
Bill Quam-Secretary / Treasurer
Hi Bill, Andrea Grossman suggested I contact u w my query. Since 2019, my Beach Wood townhouse real estate taxes have significantly increased, with this year’s being $1350 higher than 2020. I assume other Beach Wood owners have experienced similar increases. I live in Chicago and it is a common practice for condo associations to appeal taxes as a group. I’m wondering if this is a possibility for Beach Wood or if appealing taxes is standard practice in Nassau County?