Landscape maintenance budgets can be a major component for homeowners associations and in some cases condominium budgets. What should your association be prepared for in your 2017 budgets? Unfortunately, there are several market forces that have resulted in increased costs for landscape maintenance companies over the past few years.
1. As the development of new properties and renovation of existing properties has increased over the past few years, there has been more competition in the same labor pool that supplies landscape maintenance workers, which has driven up wages in South Florida by 10% or more.2. Obamacare, officially known as the Affordable Care Act, requires businesses with more than 50 employees to offer insurance to employees and cover some or all of the cost. The cost of this insurance can increase the cost to employ a single landscape worker by more $3,000 per year, an increase of 15% or more in labor cost.
3. Workers compensation insurance has increased across the market by over 10% in the past few years.
4. A Florida Supreme Court Decision in April of 2016 may result in further increases in workers compensation insurance by as much as 18-20% - more info.
We are also seeing situations where landscape installation/upgrade projects have significantly improved the appearance of the community, but they are also more costly to maintain. This is something that Boards and Managers need to be careful to consider in planning landscape projects – not just the upfront cost, but the long-term maintenance cost. Your landscape architect or landscape supplier can help guide you in this process.
As communities mature, trees and plant materials grow and may become more labor intensive to maintain. This is something to keep in mind if you have not seen increases in your costs over the year, they may finally be coming, given the market factors above.
Some communities have addressed these cost increases by adjusting the specifications, for example, reducing the number of cuts. However, reductions in service level should be a last resort. Spending money to properly maintain the common area landscaping is one of the best ways to maintain or enhance property values and one of the easiest ways to damage property values if not done well.
If you have not spoken with your landscape maintenance company about their fees for 2017, now is a good time.