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 flashing on the roof 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 building and the board 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 its 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.