Letting it Slide... The Pitfalls of Deferring Expenditures

 It’s the same dilemma that single-family households across the U.S. are facing:  What bills need to be paid immediately and what bills can wait? And should we  stretch ourselves thin, taking more out of our bank accounts to pay for private  schools and that desperately needed vacation? Or should we cut back on  restaurants and renovations to put more into savings? The same goes for co-op  and condo buildings. While it may be tempting to delay payment on some bills,  or delay expenditures on maintenance or needed repairs, in the long run this  may end up costing far more than we ever realized.  

 Just as the federal government faced a serious financial crisis over the debt  ceiling, which still rages today, boards face some very difficult decisions  when it comes to what bills need to be paid, and what capital projects are most  important. Questions arise such as, do we really need to fix the one pothole in  the parking lot right now, or can it wait a few months? The truth is that  deferring a minor repair now may, in the long run, cost the association a whole  lot more.  

 There are many quick fixes that boards consider when faced with rising costs and  static income. The most tempting is to prioritize and pay the bills that are  the most important, while putting off other expenditures to a later date. This  is a tempting “solution,” but it is one fraught with inevitable downsides and danger.  

 Another option, one that is much more prudent that boards may opt for, is  raising revenue. This option has it's downsides as well, with so many families  living on tight budgets, they may not be able to pay an increase.  

 A third option is to levy a one-time assessment to all households in the  community. This also may seem like a good solution, however, this is only a  stop-gap measure usually reserved to pay for a major capital improvement such  as roof repair or the installation of a new HVAC system.  

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Comments

  • yaya.lettis@gmail.com on Saturday, February 15, 2014 4:24 PM
    can a co op maintenance board borrow money from a bank to fund a certain project--i did not find any reference to this in chapter 719--thank you