Many HOAs would like to know how their association compares with others in their area. Measuring one's own financial situation against that of one's peers is often a good way to gauge financial solvency and level of preparation for things like capital improvements or unforeseen repairs and maintenance. Some of the answers many boards and managers are interested in knowing include:
• How do our assessments compare with communities of similar size?
• How frequently do other associations update their reserve studies?
• Is our municipal reimbursement similar to other associations of comparable size?
• Are our operating expenses higher or lower than other comparable
In 1996, our company created our first comprehensive, industry-wide survey of the financial data for New Jersey homeowner associations. In doing this, we were able to provide answers to our clients' questions, and at the same time provide industry colleagues with useful financial benchmarks. Based on the very positive feedback we received in response to the survey, we updated it in 1999 and again in 2003.
Now we are pleased to provide the 4th edition of the survey, which is based on 2005 year-end financial data. The aggregated results are based on financial data from more than 400 associations. Participants represent a full spectrum of associations in terms of type, age, size and region. In a few circumstances, where appropriate, we have used our insight and expertise to make some "judgment calls" in order to provide a reasonable basis for comparisons.
In keeping with the changes in the industry, we have created a new section of the survey regarding associations with outstanding loans. An increasing number of HOAs have been using bank financing for a variety of purposes, and we felt it would be appropriate to include some relevant data on this subject.
We encourage you to use this survey as a comparative tool to assess your own association's position relative to similar communities. As we have mentioned when publishing prior surveys, these numbers should be used as reference points—they are not recommendations or strict guidelines that an association should follow. Every association is unique, with its own particular set of financial and operating circumstances. This survey is meant to provide HOAs with benchmarks and a frame of reference that may be helpful in future planning and decision making.
We would be remiss if we didn't recognize the diligent and tireless efforts of Anita Argenzio and Sam Schneider, who assisted us in compiling and organizing the survey data. We hope you find the survey informative and useful.
Daniel Manning and Donna L. Peskin are CPAs at East Brunswick-based Wilkin & Guttenplan, a certified public accountant and consulting firm representing more than 1,000 associations.