June 1 marked the start of the hurricane season and a lot of condominium, homeowner and co-op associations have noticed that their preparedness needs have changed drastically due to several factors, from changing weather patterns to labor shortages and repair cost surges. At Popular Association Banking, we are happy to see many community associations being proactive with their contingency planning and setting aside money for repairs, replacement reserves and emergency funds, but it is critical that those plans are kept current. Staying up to date on hurricane season disaster planning helps prevent repair costs from escalating to a point where the financial impact is detrimental to unit owners and their resilience is jeopardized.

Expect an active hurricane season.

Year after year, we are seeing storms that form earlier in the season and weather patterns that are more difficult to predict. Florida already saw the downpours of its first named tropical storm of the season, Alex, that left parts of Miami under nearly a foot of water.

For the seventh year in a row, National Oceanic and Atmospheric Administration (NOAA) predicts a 65% chance of an above-normal hurricane season, a likely range of 14 to 21 named storms of which three to six could become major hurricanes (with winds of 111 mph or higher.) In addition to the windspeed, tropical storms pose a risk of flash flooding and storm surges, making hurricane season disaster planning even more critical for a faster return to normal.

At the same time, we are still in a tight labor market and are just starting to repair our supply chain issues of the previous two years. Florida also saw a population surge during the pandemic and the shift to remote work, possibly making the demand for post-storm recovery outweigh the supply.

For community associations, preparedness is key.

At Popular Association Banking, we continuously encourage clients to plan early and often. Considering the factors mentioned above, hurricane season disaster planning this year can mean the difference between your association’s ability to offset the recovery costs with proper financial planning or depleting reserves before the repairs are even completed.

Here are 3 hurricane season disaster planning tips we give our clients.

1. Establish a financial committee.

Task the committee members to assess the current and potential needs and to work with a banker on selecting financial products that align with the association’s short- and long-term goals.

2. Find the right financial partners.

Consider financial soundness, experience, and the level of support a lender can provide. No two community associations have the same challenges and a partner that can address the unique needs of yours makes a big difference. An experienced financial partner will help you understand loan structures or implement customized deposit plans. They will offer solutions that allow for necessary repairs today – for projects such as a new roof, painting, waterproofing and concrete restoration – while giving the unit owners ample time to make payments over a 10- or 15-year period, without depleting their individual funds.

3. Stay in the know.

Get familiar with your financial options. Popular Association Banking, for example, offers 100% financing on insurance premiums¹ which has become essential given the increase in insurance premiums. This financing allows associations to keep coverage while amending their monthly budget for the shortfall between the anticipated premium and the actual invoice.

Your association’s speed of recovery is a factor in community resilience.

How quickly your building can return to “business as usual” is a good indicator of your community association’s financial health and knowledgeable disaster planning.

Here are 3 things we recommend our client do when disaster planning.

1. Develop a comprehensive plan.

Responding to a disaster calls for a plan that outlines response efforts. With the help of your association’s attorney, draft a resolution that appoints certain members of the association with authority to act in the event of a disaster. In addition, including your banker in this planning process can help you better understand all financial options. For example, does your association need a contingency line of credit? It ensures that a loan facility exists for the association to utilize in case of emergency.

2. Safeguard and update documentation.

Having a fragmented approach to preserving documentation can turn costly very quickly. Maintaining and updating documentation, making sure that it is backed up and stored securely is a key factor in staying prepared. Understanding insurance coverage, the exclusions under the existing policies and the communication of this coverage to unit owners is essential. 

3. Revisit your preparedness with your banker.

Deciding on an optimal financial solution (i.e., loan services) can be a good safety net in case of hurricane damage or a city evacuation that disrupt living conditions until the repairs are made. The key is to evaluate the risk an association has and ensure they have enough in their reserves to better handle any future disruption. An open channel of communication with an experienced banker will also help to act as a soundboard on decisions and efforts that may be benefit the association as well. 

Popular Association Banking is here to help.

Although this hurricane season is expected to be active, it certainly is not our first one. Our experienced team can help you plan, update, and enhance your hurricane season disaster planning initiatives to help you weather any storm.

Jane E. Bracken, PCAM
Commercial Relationship Officer
Popular Association Banking