How Can a Condo Board Make More Money? It Starts with a Business Approach

The firm’s latest Miami Herald “Real Estate Counselor” column was authored by shareholder L. Chere Trigg. The article, which is titled “How Can a Condo Board Make More Money? It Starts with a Business Approach,” focuses on sources other than members’ general assessments for community associations to generate revenue to offset their growing budgets. It reads:

. . . When associations face immediate and significant needs that go well beyond the line items in their approved budgets, special assessments may be the only viable solution for such shortfalls. These one-time increases in owners’ assessment contributions are typically used to fund necessary repairs and property improvements, especially those arising from unforeseen emergencies that require immediate funding.

In addition to such cases, special assessments are sometimes levied for other types of unbudgeted items that require immediate attention. For example, increased exposure to legal liabilities involving inadequate maintenance or unsafe conditions could precipitate remedial expenses that go beyond what was foreseen under the current annual budget. Rather than allowing such liabilities to persist, a special assessment could be implemented to address them and circumvent the potential for even greater future expenses.

One of the most important tasks for associations and their boards of directors is the enforcement of rules and regulations in an effective manner. Doing so typically entails imposing reasonable fines for documented violations.

With the assistance of experienced legal counsel, associations should implement fining policies that comply with applicable statutes. Communities generally impose fines for violations involving parking, excessive noise, pets, property improvements without prior approval, lease infractions, rule violations involving the use of community amenities, and maintenance issues.

Community association directors should always remember that the primary purpose of such fees is to deter violations, and not to generate revenue. Associations should never take actions on violations to impose fines with the goal of generating income, but rather with the focus squarely on using fines to deter offending behaviors.

Another possible source of revenue for associations to consider is leasing fees, which are charged to allow owners to rent their residences. If authorized by the governing documents, associations can charge fees related to the review, processing, and approval of leases. These fees typically stem from processing rental applications, vetting prospective tenants, maintaining tenancy records, and ensuring compliance with association rules.

Amenity rentals are also a common means of generating added revenue for associations. The exclusive use of clubhouses, meeting rooms, pools, tennis/pickleball courts, and other features for private events can generate income that helps to cover maintenance costs.

Associations with abundant parking and/or storage spaces can also consider renting any unassigned spaces to residents or, if permitted by the governing documents, to nearby property owners that may be in need of such offerings. For some communities, leasing unassigned spaces can be an excellent strategy to utilize common area spaces that may otherwise go unused.

All such rentals of association amenities and features should be offered at reasonable rates. The rental options should also take into account any potential exposure to legal liabilities, so associations would be well advised to first consult with qualified attorneys.

In accordance with the new laws that went into effect on July 1, condominium association directors are now able to use their best efforts with community reserve funds to make prudent investment decisions. Condominium boards are allowed to invest reserve funds in one or any combination of certificates of deposit or depository accounts without a vote of the unit owners. Such investment income will help associations to grow their reserves for their future large-scale repairs or replacements.

Large communities may also turn to advertising and sponsorship opportunities with local businesses and organizations that wish to reach their residents and guests. These could include ads in the community newsletter or sponsorships of resident events, and opportunities for special discounts to owners and tenants could also be in the mix.

There are also a number of small revenue streams that associations can consider. These may include the use of vending machines in the common areas, coin-operated laundry machines, parking fees for guests, and electric-vehicle charging stations. In addition to generating added revenue, such offerings can also provide convenient features for the use of residents and their guests. . .

Chere concludes her article by noting that boards of directors and property managers should consider these and other options for added revenue sources that could help their associations’ bottom lines. She writes that with all the growing financial pressures facing communities, making use of such income streams is a great way to demonstrate to all the members that they are committed to exploring and implementing all the available possibilities to mitigate the growing costs that are impacting association budgets.

Our firm salutes Chere for sharing her insights into these potential revenue sources for community associations with the readers of the Miami Herald.  Click here to read the complete article in the newspaper’s website.

Our firm’s South Florida community association attorneys write about important matters for associations in this blog and our Miami Herald column, which appears every two weeks on Sundays, and we encourage association directors, members and property managers to click here and subscribe to our newsletter to receive our future articles.