In this challenging economy, many co-op and condo buildings are struggling to pay their bills while planning for future needs. Still, most building boards and HOAs are loathe to raise maintenance fees or levy special assessments on their residents until there are no other options. And while sometimes a fee increase is inevitable (and may even be overdue), often there are other ways for buildings to increase their revenues. Knowing when to do one, or the other, is a matter of prudent planning.
Some of these alternative sources of funding, such as allowing advertising space to be leased on a building, are fairly obvious. But others are less apparent, which is why it’s smart for a board to involve professional consultants in such matters.
Dialing Up Cash
When a community is strapped for cash, it can be tempting for a board to create new fees, raise maintenance fees, or enact special assessments. It might seem like the path of least resistance—money is needed ASAP, and raising a fee might seem to take care of the need. But many governing documents in Chicagoland limit such moves and the fee hike can be subject to challenge. Often such moves are contentious and sometimes require a vote of the board of directors or board of managers, which doesn’t always end happily.
"If you think owners will be upset when you raise the annual assessment a few dollars, imagine how they will feel when you are required to pass a special assessment for thousands of dollars per unit and, by the way, that assessment is due in 30 days," explained Craig Finck, vice president of Alliance Association Bank, a financial services firm in Plainfield.
And, whether or not such a vote is successful, it is a short-term fix at best to what could be a chronic cash flow problem. Other solutions are needed.