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Subject: Pool Use Service Fee

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MikeS1

Posts:0

05/07/2008 7:52 AM
Our HOA has a small/med size community pool and it's use has traditionally been included as part of the ammenity package. There are roughly 300 townhomes and 47 single family homes and the quarter assesments pay for use of the pool. I'm wondering if anyone else out there has tried charging a small service fee for the use of the pool. There doesn't seem to be anything in the docs that would prevent the Board from inplementing this. The pool service contract, supplies, lifeguards, and other incidentals make up a huge percentage of our budgent. With all the skyrocketing expenses, we've got to try to keep the assessment hikes down and considering the fact that less than 10% of the folks actually use the pool, it just seems like the logical thing to do. Has anyone else tried this? Any other thoughts?

EdieL
(Virginia)

Posts:74

05/07/2008 8:12 AM
MikeS1 Do your CCR's make ref. to the BOD adopting rules and regs. for common areas? If so, maybe they could add fees for owners private parties, or even fees for public events (such as swim lessons for children, etc.) You mentioned your HOA is paying for life guards. I was not aware that a Va. POA privately owned facility needed to have a life guard as long as the pool is posted as no life guard on duty. Edie

GlenL
(Ohio)

Posts:1470

05/07/2008 8:16 AM
Mike IMO this would not be proper if you need more money then assessments should be raised across the board. What do your docs. say about equal access to the common areas and how assessments are used?

CharlesW1
(Georgia)

Posts:821

05/07/2008 8:27 AM
MikeS1, It’s very clear to me, as too your intentions, and in theory that sounds good. However, I personally don’t feel that would be “fair” to those who purchased in your community, due to the fact that they may have based their purchase on the FACT that they can use the pool even if they themselves aren’t much for swimming. I would suggest mailing out a survey to the community? Hearing what they have to say. It’s highly probable that those who NEVER use the pool will be all for your proposal. Unfortunately, those who use the pool regularly may not feel it is proper to assess an additional expense to just them either. Even though, they use the pool far more than those who may not. I would seriously reconsider that as an option. I would raise assessments/dues before I would even consider something of that magnitude. Chuck W.

Charles E. Wafer Jr.

BradP
(Kansas)

Posts:1742

05/07/2008 8:30 AM
Mike: Glen is right, I don't think this would be right as well. If it is part of the amenity package for the neighborhood you can't charge extra, IMO. I would either increase assessments across the board or look at ways to cut costs.

ClaytonG

Posts:0

05/07/2008 8:33 AM
Mike, Check your CCR's. Many contain the following boilerplate language: (a) the right of the Association to charge reasonable admission and other fees for the use of any recreational facility situated upon the Common Area. I'm addressing a similar issue. Our BOD funnels more than 60% of the annual assessments into a common area that is used by maybe 20% of the community for 5 months of operation. The only reason they haven't instituted a 'usage fee' is because they treat it as their own personal playground along with family members. Pools are often both underutilized and a significant drain on an HOA budget.

PatrickH
(California)

Posts:197

05/07/2008 9:06 AM
Hi Mike, I think you got good advice from all the other posters in regards to the fees. Trying to set up an extra "user fee" on top of the dues is unweidly and may not be in compliance with the CC&Rs. The other side of the coin are your operating expenses. Take a look at every expense in the budget for the pool and see if they can reduced. Start with the five largest expenses and see if they can be reduced first. If you can save 10% on each of those five items, it may reduce the total operating expense by 15-20%. Then if you can save a little on the smaller expenses, it might push your savings up to or even over 20% of the budget. I've been the head of our Recreation Center Committee for almost ten years and I work with our Treasurer each year on the budget. We are always looking for ways to save money anywhere we can to keep the operating costs as low as possible. It can be done, it just takes some time and effort. Good luck.

BruceF1
(Connecticut)

Posts:696

05/07/2008 9:09 AM
Mike, There may be IRS tax implications with charging a separate fee for pool use. The IRS has strict rules on what is considered exempt income and what is nonexempt income, which often depends on how the fees are charged. See the attached (partial) document from the IRS and read the sections on exempt and nonexempt income. Not that this is not the complete document.
Attachment: 15791730571.pdf

MikeS1

Posts:0

05/07/2008 11:11 AM
Thanks for all the responses. These are all good ideas, but this seems to be a case of "been there, seen it, heard it, done it." Re - Expenses, All contracts and contract proposals are reviewed by an ad hoc budget commitee, so we're always reviewing these and looking for savings. Because of spiraling energy costs, our main vendors are passing on large increases and at the same time, we've raised assessments by some very, very large percentages over the last two years. Most residents understand why the assessments were increased so much over the last 2-3 years and we're seeing it elsewhere (all over)... Real Estate taxes, insurance, fuel, groceries. It's no secret that everything is spriraling in cost. The biggest pieces of the budget are trash, pool, and groundskeeping. Those are the big ticket items. We've even noticed that since the pool is such a large expense, that some communities are opting to close the pool for 2-3 years so that they can get caught up on reserves. Yes, our pool budget is very large since we're in an area that requires a certain number of lifeguards on duty (depending on how many people are in the pool), so it's not like so of these pools in the southern resorts where there are no lifeguards. When so few people use the pool, it just seems like an unfair drain on resources. I was just trying to feel out everyone in order to see is anyone else had seen where additional service fees (IE - Like the pool ID passes that we issue)were passed on for common area elements and I guess the answer is no.

MaryA1
(Arizona)

Posts:2505

05/07/2008 11:34 AM
Mike, Read the attached provided by Bruce very carefully. In one section it says fees for use of facilities paid by members is NOT exempt function income. However there is a special rule that says if those fees are paid only once during a 12-mo period, then they can be considered exempt function income. In other words if the assn. puts into effect a yearly membership plan, payable in one payment, for use of the swimming pool, that income would be exempt function income and not subject to income tax. Having said that, personally I would strongly object to doing this. When buying into an HOA a potential buyer looks at the amenities available. Considering the fact that yearly assessments are part of living in an HOA, it's not unusual to feel that that assessment should include use of all the amenities (golf course excluded as they are in most cases private). As someone else suggested the fairest thing to do is to raise assessments. If you were to survey the members (which I don't believe is a good idea in this case), IMO, you most definitely will get a lopsided opinion as only those who don't use the pool will be in favor of a user fee. People cannot be objective when the pocketbook is involved!!

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