So you write your check and you think, “I pay them a bunch of money. Where does it all go?” First and foremost, since you took the opportunity to read this post we’ll tell you this straightaway: it does not go to Community Management Group. All of these funds are accounted for separately in the association’s own bank accounts and never become commingled with management funds.
CMG ≠ HOA
Your manager is not your HOA. CMG is essentially just another contractor. A homeowners association management company is a completely separate financial entity and should be managed separately on a separate computer system with separate accounting software.
When your association bills for your scheduled assessment payment, you’re asked to write your check to your association. You are a member of your HOA and your HOA is you and your neighbors.
An HOA is a business entity created for many purposes, including maintenance of your common areas and grounds, enforcement of rules and standards and to perpetuate the standard of living to which all owners purchased at the time of your closing.
Your homeowners association develops a budget which lays out the actual costs to operate the Association for which the members must all send a balancing assessment payment. A budget effectively starts with tabulating all of the operating expenses to take care of the costs. This budgeting process looks that categorical needs of the association. These can be broken down into repairs and maintenance: items such as pressure washing, landscape supplies, general maintenance, irrigation, elevator service, common area air-conditioning, permits, courts, tree maintenance, docks, janitorial, gates, fire systems, pools, ponds, parks, playgrounds, parking lots, poops and roofs! (Yes, you read poops)
There are general and administrative costs from postage and printing to websites and legal and professional work, CPA and administration, insurance, social activities and pest control and termite bond.
There are utilities such as electricity and water for the common areas and grounds as well as for most communities since 1999, street lighting. There may be a telephone and Internet system and telephone service at the amenity center. There can be other expenses such as state federal and county property taxes.
As the board considers all of these, they consider bad debt and reserve fund contributions.
There are a number of potential income sources for homeowners association’s but most are nominal or not relied upon to offset expenses. These can include interest and even enforcement fines prescribed by Covenants and Board Policies. There’s an infrequent but troubling misconception that these are paid to the management company. They are not.
In its ultimate form the association takes the cost to operate the association and divides them by the ownership interest in all members. If there are 100 owners, each pays 1% of the budget. As everyone pays, this funds the association operation for the year and the work for the Board becomes, “Don’t run out of money before you run out of year.”
Your input drives the budgeting process and your Association is always interested in your needs and interests.