How to Build an HOA Budget: A Mountain-Town Guide

HOA Money · Budgeting

To build an HOA budget, start from the last few years of actual costs, get real numbers for insurance and snow, add the reserve contribution from your reserve study, then divide by each owner’s share. Mountain associations also need a cash cushion, because snow, heat and repairs bunch up in winter.

Step 1: start from actuals

Pull budget vs actual for the last two or three years. Patterns matter more than any single year.

Step 2: list every expense

Step 3: get real numbers on the big lines

• Insurance: ask your agent for a renewal estimate early. It’s often the biggest surprise.
• Snow: use a 3- to 5-year average, plus any contract changes.
• Heat and utilities: check rate changes and usage for buildings that pay for every unit.
• Contracts: confirm renewal prices for landscaping, trash and cleaning.

Step 4: plan for mountain seasons

In Summit and Eagle County, costs bunch up in winter:

• Snow plowing, shoveling, roof snow removal and hauling
• Higher heat and electric bills
• Ice dam and freeze repairs

Summer brings its own: landscaping, painting, decks and paving in a short building season. Keep an operating cushion, often a few months of expenses, so winter bills don’t force a reserve loan.

Step 5: set the reserve contribution

Use the reserve study’s funding plan. If you don’t have a current study, that’s a priority. Every Colorado association must have a reserve study policy (C.R.S. 38-33.3-209.5). See operating vs reserve funds.

Step 6: estimate income

• Dues, using each owner’s share from the declaration
• Other income: interest, parking, laundry, common-room rentals
• A realistic allowance for late payments

Step 7: do the math and set dues

Total expenses plus reserves, minus other income, equals dues needed. Divide by each owner’s share. If the number jumps, show why: the two or three lines driving it.

Step 8: adopt and ratify

1. The board adopts the budget at a meeting where owners can comment.
2. Within 90 days, send owners a summary, by mail, delivery or posting on the association’s website.
3. Hold the owner meeting. The budget stands unless a majority of all owners veto it (C.R.S. 38-33.3-303(4)).

More on that process in can an HOA raise dues?

A quick example

A 40-unit Breckenridge condo building averages $38,000 a year for snow over five winters, but last year cost $52,000. Budgeting $38,000 risks a shortfall in a big year. Budgeting $52,000 overcharges owners most years. A common answer: budget around the average, and keep the operating cushion large enough to absorb a big winter.

We build budgets with boards every year. See our HOA accounting services and pricing. Denver metro boards can see our HOA accounting services in Denver.

Budget checklist

• Three years of actuals reviewed
• Insurance estimate from the agent
• Snow, heat and utilities based on multi-year averages
• Contract renewal prices confirmed
• Reserve contribution tied to the reserve study
• Operating cushion for winter months
• Owner shares checked against the declaration
• Summary ready to send to owners

Related: budget and finance committees and how to lower HOA fees without shortchanging reserves.

Key takeaways

• Start from actuals, not last year’s budget.
• Use multi-year averages for snow.
• Get the insurance estimate early.
• Tie reserves to the reserve study.
• Keep a winter cash cushion.
• Follow CCIOA’s notice and ratification steps.

This is accounting education, not legal or tax advice.

FAQ

When should an HOA start its budget?

About three to four months before the fiscal year starts. For a calendar-year association, start in September so the board can adopt it in the fall and owners can meet in December.

How should a mountain HOA budget for snow?

Use a multi-year average of actual snow costs, not last year alone, and keep an operating cushion for a big winter.

Should dues be the same every month if costs are seasonal?

Usually yes. Even monthly dues with a cash cushion is simpler for owners. The cushion covers winter months when costs run high.

What does Colorado require once the budget is drafted?

The board adopts it, sends owners a summary within 90 days and holds a meeting where a majority of all owners can veto it, under C.R.S. 38-33.3-303(4).

Sources

• C.R.S. 38-33.3-303 (budget ratification)
• C.R.S. 38-33.3-209.5 (reserve study policy)