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Advanced Number Crunching

For those of you whose eyes haven’t glazed over from last week’s budget primer, here are some other items to look out for as we head into the new year.

  • Have legal expenses spiked?  Could mean there is litigation brewing, not a good sign. At a minimum, I’d want to know what the fight’s about.
  • Is there a line item for replenishing cash reserves? If there is, it probably means the building’s reserves are running low and the board plans to gradually replace them.  If not, either the building is awash in cash (good) or the board figures it’s not politically expedient to increase maintenance to bolster reserves, which could be bad.
  • numbersHow much will you pay for oil? With prices already up nearly 80% this year and by many estimates set to continue their rise, the answer depends on whether — and if so, at what price — the board has locked in needed supplies.
  • Is there a stealth assessment?  Maybe the board thinks another assessment isn’t the best Christmas present, so instead of telling owners they are paying on a monthly basis for the loan it took out to buy new boilers, it folds the annual cost into repairs and maintenance, hoping no one will notice the difference.
  • Have auditing fees gone up more than usual?  This could indicate some financial problem – unpaid bills, inability to account for expenses on the last capital project, or even that the board couldn’t prepare the budget on its own and had to call in the auditor for help.
  • Is there a significant line item that shows a steep hike out of sync with overall market trends? Say the cost of insurance is going down for most buildings and up for yours. Either: a) the board isn’t getting the most bang for its buck, or b) there was some incident that the insurance company actually paid out on, so now they’ve raised rates for the building.
  • This one’s for extra credit: Is it a condop – which means the building is divided into condo and co-op units. Beware if the condo shows a big surplus and as a result no maintenance hike is imposed because the budget makers figure all that cash is owed to the co-op  Odds are it’s not real money, but only an accounting glitch caused by the fact that the expenses between the two units haven’t been trued up. Chances are you’ll suffer twice the pain the following year when someone figures it out.
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