The Swan Point at Lake Elkhorn Condominium Association is a not-for-profit private corporation with an income of about $300,000 a year. The income is, of course, from the fees paid by unit owners plus the interest from invested reserve funds. Approximately 18 percent of these monies are set aside as a reserve to replace or repair our infrastructure. The remaining 89 percent is used for day-to-day expenses. The table below lists a sampling of these items.
| Reserve | Day-to-Day |
|---|---|
| Roadway repair/replacement | Area Lighting |
| Storm Drain repair/replacement | Audits, Taxes |
| Walkway repair/replacement | Communications |
| Insurance | |
| Lawn Care | |
| Leaf Removal | |
| Legal Services | |
| Rodent Control | |
| Snow Removal | |
| Tree & Shrub Spraying | |
| Meeting costs | |
The association’s financial management task has two parts:
- To budget for and pay expenses;
- To invest the monies not required for immediate expenses in such a way to safely maximize investment income and yet have money available when bills come due.
Day-to-day expenses are usually foreseeable–with some glaring exceptions (e.g., snow removal). Predicting needs for reserve funds is based on a regularly performed reserve study, providing for regular contributions and planned withdrawals for infrastructure projects… There usually is little excess to invest from our current expense account. Our reserve account, on the other hand, often has substantial amounts to invest.
Our reserve investments are restricted to instruments backed by the full faith and guarantee of US Government. Unfortunately, current interest rates are low and, with an aging infrastructure, our expense high.
The financial management task is to juggle these conflicting demands and to minimize the fees needed from the unit owners.