Trestle continues to work closely with industry experts to forecast potential financial challenges posed by COVID-19. Currently, many Community Association attorneys specializing in collection believe that most associations will experience a 20% delinquency rate as a result of the economic challenges posed by COVID-19. Anticipating a potential increase in delinquencies can allow communities to strategize and take cost saving measures in advance.
In preparation for a potential increase in delinquencies, Trestle urges associations to maintain their operating funds during this time and avoid any extraneous unbudgeted expenses. As non-profit corporations, associations budget to bring in exactly what they will spend in the year; a 20% decrease in needed and planned income can markedly impact daily operations of an association. At this time, Trestle's clients are strongly encouraged to cancel or delay any non-essential operating expenses such as window cleaning, pressure washing, and landscaping enhancements. While non-essential tasks should be delayed in an effort to reduce expenses and save funds to cover anticipated future delinquencies, more frequent janitorial cleanings should be considered.
In order to protect residents, associations are encouraged to retain a janitorial service prepared to regularly disinfect high-touch common area surfaces such as door handles, mailbox kiosks, elevator buttons, handrails, and bathrooms using materials and methods recommended by the CDC and EPA. Current clients may contact their Community Association Manager for assistance in arranging these services.
Additionally, Trestle encourages associations to consider delaying non-essential reserve projects in an effort to retain funds. In the event that delinquencies increase and there are limited operating funds available, an association may be able to take a loan from its reserve account to cover critical expenses such as insurance and utilities.
For associations currently facing operating and/or reserve fund shortages, it may be a useful time to consider obtaining a bank loan while interest rates remain low. Given the uncertainty of this time, it may not be advisable to obtain or renew a Certificate of Deposits (CD) unless there is ample cash in the operating fund. As CDs retain funds for a set period of time and financially penalize the account holder if the funds are withdrawn before the scheduled end date, it may be best to maintain accessible funds especially if there is a possibility that the funds may be needed to offset upcoming delinquency increases. During the 2008 recession, many associations experienced financial strain and it took time to fully recover funds and/or write off past due balances. While the upcoming financial recovery may be take some time, Trestle is here to help. Planning and coordinating with a Community Association Manager now will help ensure that each community remains on as stable of a financial footing as possible. Please do not hesitate to contact Trestle for more information and assistance.