Natural Disasters By Lorena Sterling, CAFM
TIPS TO THRIVE DESPITE THEM
“It Never Rains in Southern California…it pours, man, it pours.”
– Albert Hammond
California residents can rely on certain weather conditions, including natural disasters that our climate will deliver to us each season, particularly earthquakes, flooding, and wildfires. Each of these causes damage and wreaks havoc on cities and HOAs. During budget season, some communities plan for the upcoming fiscal year’s expected operating expenses, preventive maintenance, and reserve funding plans with these disaster aftermath plans in mind. On the other hand, some communities ignore the potential for disaster, thinking, “It will never happen to us.” Until it does. Over the last three years, associations have faced the task of becoming creative with their funding plans to prepare for the repercussions that unforeseen weather events and disasters may bring to the community. The clean-up will quickly identify how well the association has prepared in the event of a catastrophic wildfire or extreme flooding from a tropical storm. The most challenging phase of a disaster is the aftermath. A solid disaster recovery funding plan will ease the pressure of the
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clean-up stage while bringing back some normalcy after the disaster has swept through the community, even if insurance funds are delayed or denied. We are seeing this firsthand in the desert regions of California after a tropical storm caused massive damage to infrastructure and buildings. Some communities were prepared and are starting to resume normal life. Others were not and are still living in chaos. Here are some things you can have your boards and communities do to be a wellprepared community instead of one that is reactive due to lack of planning:
SAVING FOR AN INSURANCE DEDUCTIBLE Low premiums, most likely paid by operating funds, will have a high deductible, and vice versa. Many communities go for the low premium with a high deductible scenario to minimize an increase in monthly dues. Doing so is just fine as long as the community has a funding plan to save up for that hefty deductible should it ever become due. An additional reserve account can be opened to separate the allocated reserve funds from the insurance deductible funds. However, some reserve analysts will incorporate the deductible into the reserve study, so isolating these funds is unnecessary.
