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JanM
(Texas)

Posts:142

07/10/2007 7:41 AM
We haven't had a dues increase since the late 1980's. It keeps getting voted down every time it comes up. We are a rural gated community and we maintain and repair everything within. One of our BOD has come up with an idea to base dues on ones tax appraisal. It would be 1/4 of 1% (.0025%) of your county tax appraisal and would only increase dues to those who own property appraised at more than $96000. There would be a minimum and maximum amount and dues would freeze at age 65. Has anyone tried this method and what was the response? This idea is going to be presented at tonights meeting and planning to put this on t he ballot next month.

PaulM
(Pennsylvania)

Posts:1347

07/10/2007 8:34 AM
JanM: check your official documents, CC&Rs/Declaration, for any statement that would dictate...common expenses, including reserves, are to be divided equally among unit owners/residents, etc. ...and paid monthly....

GloriaM
(North Carolina)

Posts:778

07/10/2007 8:49 AM
Jan: Also check your documents for the section that would allow the board to raise the dues each year could be 5%, 10% or according to the CPI Index. Therefore each year the board could raise the dues accordingly.

Dr. Gloria J. Martinez, CFO Official HOATalk.com Sponsor Author of "A Guide to Community Living" Faith Management Services, LLC (North Carolina) (704) 799-3791 www.FaithManagementServices.com *See legal notice below (end of page) or go to www.hoatalk.com/legal

JoeW1
(New York)

Posts:728

07/10/2007 8:52 AM
JanM - The amount to collect in dues should be based upon the costs to cover the repair and replaement of budget line items that are shared equally among all owners in the Association (common elements). The fact that you haven't had an increase since the late 1980's could be troubling. Common elements deteriorate and the cost of repair and replacement increase over time, inflation must be accounted for. Sounds like your Association could be way behind the 8-ball. Freezing dues for those at age 65 will pass costs off to everyone else. Nice for those 65 and older but discriminatory to everyone else. How often do you have tax re-assessments? Not too often I bet. How many Board members are 65 and older?

JanM
(Texas)

Posts:142

07/10/2007 1:38 PM
If this passes by a majority vote, it will change the by-laws and CCRs so there's no sense looking there. Our county sends out tax appraisals yearly. Only a couple on the board are around 65 and a couple of others will not be affected due to their property being under the $96000 mark, but there are others who will have a fairly large increase that are all for it. There are still those who think you can get blood out of a turnip and unfortunately, there are quite a few in my HOA. As for 65 and older, their dues would increase if over $96000 but will not increase each year.

MelissaP1
(Alabama)

Posts:650

07/10/2007 2:45 PM
Your Property Tax appraisals have NOTHING to do with the amount of dues your HOA collects. It's apples and oranges. Matter of fact, the taxes are probably another part of what the HOA is responsible for paying for anyways. A HOA is typically, a NON-Profit CORPORATION. It must spend as much money as it recieves in on operational and maintenance costs. (Can include a reserves account limited). The HOA's budget must be based on dividing the number of members (homeowners in the association) and the operational costs of maintaining the entire HOA. Everyone must pay an equal share. (In most cases). So if your HOA has routine bills of $5K a month (landscaping, maintenance, pool care etc...) and has 10 members. The members should be paying their share of $500 as a minimum a month. However, there should also be a "fudge factor" of accounting for atleast worst case scenerio 25% members not paying and some money for an reserve fund. So your HOA may want to charge $525 a month to each member instead. That would provide some "cushion". That would be an extra possible $250 a month to cover overruns or emergencies. Your HOA doesn't need too much of a "cushion" because it can be considered a tax liability. If your books don't equal out at the end of the year, there could be tax considerations. Budgets are hard to understand in a HOA. It sounds like your HOA may need some outside help. We were self-managed but had a Bookkeeper/accountant. Alot of HOA's have Management companies. All of which are sub-contractors to the HOA and their pay comes from the HOA's budget. So that is another factor to figure in and divide equally.

Former HOA President

JanM
(Texas)

Posts:142

07/11/2007 8:15 AM
Well, well, the proposal was a dead stick. The board member withdrew due to all the cussing out phone calls he had prior to the meeting. Some of these same people showed up at the meeting and our prez made an eloquent speech about owner apathy and asked for help. There is not a snowball chance in hades that we would hire a management co. We are already strapped for cash. So there will be a $5 increase on the ballot next month and hopefully this year it will pass. If not....

JoeW1
(New York)

Posts:728

07/11/2007 10:07 AM
JanM - Unless a "Board decided" increase in dues exceeds a monetary threshold prohibited in your by-laws, a vote of owners is unwise. The Board members are fiduciaries which have to budget for the maintenance and replacement of the common elements, and operating expenses whether the owners like it or not. I fail to see why a $5.00 increase is a ballot question. Please explain.

PaulM
(Pennsylvania)

Posts:1347

07/11/2007 10:21 AM
JanM: Do not see how your assn. can explain NOT RAISING assessments since the 1980s. In 20+ years, how have you managed with the same income (assessment fee) coming in vs. expenses being increased?

JanM
(Texas)

Posts:142

07/12/2007 8:11 AM
There is no dollar amount mentioned in the by-laws, just "current maximum" which is a paultry $240 yr. It states, "The current annual assessments(which constitutes the current maximum) may be increased by a majority vote of a quorum present, or represented by absentee ballot, at a meeting of the members of the corporation; and if an increase is approved and so voted, in writing, the new amount becomes the current maximum". Amounts set for permit fees, fines, and safety tickets are determined the board w/o a vote. But assessments have always been voted on. To answer the second question of how we still operate and maintain our amenities...by the skin of our teeth.

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