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Scott Brizendine

5 tips for CDD budget season

The deadline for Community Development District (CDD) budgets is looming, whether you’re billing fees through your county’s tax collector or directly to homeowners. There are several things you’ll want to consider when preparing your budget – from funding for landscaping to having reserve funds for unforeseen natural disasters.

Here are five tips to keep in mind as you draft your budget from Rizzetta’s Manager of District Financial Services, Scott Brizendine:

  1. Look at prior year’s budgets. Analyze historical spending trends and review any outstanding contracts. If you’re unhappy with a vendor, see if there is the possibility of picking a new vendor through an RFP or reworking your existing agreement. Also, look at requests from the board and residents for upcoming projects, then gather price estimates.
  2. For CDDs in the development phase, it’s important to plan ahead. New developments in the growth stage should remember to plan for upcoming major expenses such as landscaping. Also, be sure to negotiate landscaping estimates with a contractor since landcaping is often one of the largest expenses.
  3. As districts mature, assess projected capital repairs. In 10- to 12-year-old communities, consider any needed major repairs or improvements, such as to clubhouses or pools. In this instance, a reserve study may be beneficial. This is where you hire a firm to provide cost estimates of repairs that can be included in the new budget and how much needs to be saved for the future.
  4. Remember to include all your expenses. An important line item that’s often overlooked is the cost of on-site staffing, such as maintenance crews or amenity management. Law enforcement, aquatic maintenance, and maintenance of roadways and amenities are other larger line items that are sometimes missed.
  5. Prepare for unforeseen natural disasters. Remember last year’s active hurricane season? Be sure to include a line item to cover damage to landscaping, which is typically not covered by insurance. For example, a community in Orlando that Rizzetta manages had significant tree and landscape damage from Hurricane Irma, exceeding $100,000 in cleanup and replacement costs.

 

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Rizzetta & Company, Inc., does not represent the Community Development District as a Municipal Advisor or Securities Broker nor is Rizzetta & Company, Inc., registered to provide such services as described in Section 15B of the Securities and Exchange Act of 1934, as amended.  Similarly, Rizzetta & Company, Inc., does not provide the Community Development District with financial advisory services or offer investment advice in any form.