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Subject: Dues based on occupants per unit
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TamarB
(California)

Posts:2


08/08/2019 7:32 PM  
We have a small HOA with 4 units in the building, all of differing sizes. The dues for the HOA include insurance, maintenance, electricity, water and garbage. The water and garbage are calculated per occupant in the unit recognizing that 3 people use more water and create more garbage than 1 person. We just had a change in ownership and so 3 people moved out of 1 unit and 1 person moved in, so all of our expenses went up. However, there are now a total of 6 people in the building with 3 living in the smallest unit (the only rental unit). Thus, there HOA has gone up significantly and the owner is upset. She is arguing that other people have visitors, significant others, family members who come and stay for long periods of time. For those who calculate your HOA dues this way, how have you addressed this issue? We have been working well with the current CC&R for the past 13 years without this issue coming up. I would appreciate any advise and/or suggestions.
SteveM9
(Massachusetts)

Posts:3296


08/08/2019 8:21 PM  
Never heard of dues per occupant. Maybe calculate it by 15 minute increments? LOL
RichardP13
(California)

Posts:3763


08/08/2019 8:46 PM  
Well, first any changes have to be amended into the recorded CCRs. Have a lawyer do it and it is a substantial cost given the number of units. My suggestion is make the assessments equal for all units. It will never be equal, but must easier to manage long term.

Been there, Done that
MelissaP1
(Alabama)

Posts:8396


08/08/2019 9:43 PM  
Unusual to base on # of occupancy. That would be a variable all the time. Size of the unit like 1 bedroom versus 3 bedroom makes more sense to me than # that lives there.

The rental owner should be able to take their dues off their taxes while the property is being used as rental. If it was owner occupied, you can't do that. So that money is tax deductible.

Former HOA President
NpS
(Pennsylvania)

Posts:3572


08/08/2019 11:24 PM  
Posted By TamarB on 08/08/2019 7:32 PM
We have a small HOA with 4 units in the building, all of differing sizes. The dues for the HOA include insurance, maintenance, electricity, water and garbage. The water and garbage are calculated per occupant in the unit recognizing that 3 people use more water and create more garbage than 1 person. We just had a change in ownership and so 3 people moved out of 1 unit and 1 person moved in, so all of our expenses went up. However, there are now a total of 6 people in the building with 3 living in the smallest unit (the only rental unit). Thus, there HOA has gone up significantly and the owner is upset. She is arguing that other people have visitors, significant others, family members who come and stay for long periods of time. For those who calculate your HOA dues this way, how have you addressed this issue? We have been working well with the current CC&R for the past 13 years without this issue coming up. I would appreciate any advise and/or suggestions.



Hi Tamar.
We deal with water differently than other costs. Would help if you could provide the following info:
How much do you pay for insurance? maintenance? electricity? water? garbage?
What's your lowest and highest bill for electricity? for water?

Sikubali jukumu. Read all posts at your own risk.
JohnC46
(South Carolina)

Posts:8550


08/09/2019 7:15 AM  
Tamar

I have seen things equally shared, computed by size of a unit, etc. but never by number of people. I would look real hard at my docs to see if they specify.
TimM11


Posts:287


08/09/2019 8:08 AM  
I've never heard of dues being calculated this way, and I agree with the others that you should check the CC&Rs carefully to make sure they really do say this.
TamarB
(California)

Posts:2


08/09/2019 8:31 AM  
Yes, I am sure.
"The Association shall allocate all electricity charges paid by it equally among the four (4) owners. The Association shall allocate all other utility charges paid by it among the Units according the the number of Occupants in each Unity: this allocation shall be determined twice annually by the President and the allocation shall then continue to apply until the next determination notwithstanding that people may move in or out of the Property in the interim"
As I said, we have been operating with this CC&R as written for the past 13 years and have made adjustments when babies have been born. We have asked our lawyer regarding details in the past 5 years ago. I guess I will need to ask our lawyer since this seems unfamiliar to many of you. It might that in San Francisco it is more usual due to the cost of housing and needing to house more people per unit. (speculating)
DouglasK1
(Florida)

Posts:1428


08/09/2019 9:03 AM  
Posted By TamarB on 08/08/2019 7:32 PM
Thus, there HOA has gone up significantly and the owner is upset. She is arguing that other people have visitors, significant others, family members who come and stay for long periods of time.


The CCR section you posted below is pretty clear, the dues are based on a "census" twice a year. If an owner is unhappy with that process, they should work to get the CCRs changed using the appropriate procedure.

Escaped former treasurer and director of a self managed association.
CathyA3
(Ohio)

Posts:338


08/09/2019 10:06 AM  
My community also pays for water out of the assessments (which are calculated according to "par value" of the units, which basically correlates with "how big or nice the unit is").

Our Declaration states specifically that including utility charges in the assessment may provide an unfair advantage to certain unit owners and an unfair disadvantage to other unit owners. We looked into what it would take to separately meter water usage, and the cost was over $30,000 to retrofit approximately 35 units. We also looked at how other communities handle water charges - for example apartment complexes have separate charges for water, which are calculated based on the number of residents. We concluded that there was no way we could make that work. We would need an exact resident count per unit - info that I don't think we could legally require - and it would give people an incentive to lie. It also would not address issues like guests or generally wasteful usage.

Once in a while someone may fuss about this, and we point out that they were provided with this information when they bought here. Those who are truly bothered by the unfairness need to live in a community where the utilities are separate from assessments and paid for by the owner.
SheliaH
(Indiana)

Posts:2621


08/09/2019 10:31 AM  
I think it's a silly idea - if you're going to set the assessment based on the number of people in the units, you'll have to keep track of who moved in or out, how long did they stay (you really can't mandate the maximum amount of time someone can stay in one's home). Will you adjust the rate after someone moves out, and by how much. Too much of a headache.

Your assessments will increase anyway because insurance, maintenance, electricity, water, and garbage are bound to go up anyway. A better approach would be to look at people's actions and see what behavior changes can be made there. For example, you could reduce garbage by getting some recycling bins so some of the stuff could go in there, thus reducing what goes to the landfill. Check around the buildings to see if there are issues with water leaks and fix them. Encourage everyone to use compact bulbs.

As for insurance, try shopping around for that. Unfortunately, you may find HOA insurance can be hard to get and it's not at all cheap. You might want to talk to your agent to look through the policy to see where you can add or subtract coverage. Of course, that may also mean homeowners will have to take on more maintenance so the association won't have to. Which will also mean an adjustment to your governing documents.

I assume everyone's on one water and electrical line - is there a way you can put everyone on separate meters so each household can pay their own bill? In my last apartment complex, the management was on a budget plan with the electric company, and at the end of the winter, they'd get a bill for the difference, then that would be divided among the tenants. They'd send a separate bill for that and you knew to expect it because it was written into your lease.


ND
(PA)

Posts:330


08/11/2019 12:41 PM  
In my opinion, insurance, maintenance (although its unclear what that actually covers), and garbage should be divided equally among all units.

Electricity and water should be charged/billed according to usage (unless your units aren't individually metered).

Charging by occupant doesn't seem to be a reliable method. You could have a unit w/ 1 owner who leaves lights on 24/7 and has a space heater in each room. And on flipside you could have an energy-conserving unit with 5 occupants. In this case, the 1 owner should pay more. Similar for water usage.
AugustinD


Posts:1886


08/11/2019 3:26 PM  
Posted By TamarB on 08/08/2019 7:32 PM
We have a small HOA with 4 units in the building, all of differing sizes. The dues for the HOA include insurance, maintenance, electricity, water and garbage. The water and garbage are calculated per occupant in the unit recognizing that 3 people use more water and create more garbage than 1 person. We just had a change in ownership and so 3 people moved out of 1 unit and 1 person moved in, so all of our expenses went up.


Just saying: The unit that just had a change of ownership should see its expenses go down, from 3/8 to 1/6 of the total bill for {water and garbage}.

I imagine water is pretty expensive in California.

However, there are now a total of 6 people in the building with 3 living in the smallest unit (the only rental unit). Thus, there HOA has gone up significantly and the owner is upset. She is arguing that other people have visitors, significant others, family members who come and stay for long periods of time. For those who calculate your HOA dues this way, how have you addressed this issue? We have been working well with the current CC&R for the past 13 years without this issue coming up. I would appreciate any advise and/or suggestions.


TamarB, thank you for later quoting the covenant verbatim. Some approaches I would consider:

-- Write the upset landlady a polite letter saying: (1) you understand she feels the covenant is unfair. but respectfully, and pursuant to California condominium disclosure requirements, she knew about the covenant at the time she made the decision to buy a unit; (2) If she wishes to change the covenant, then pursuant to CC&R ___ (the covenant on amendments), she needs to lobby the other owners (all three of them). Else the board is required to comply and enforce the covenants as written.

-- Write the upset landlady that there is no perfectly fair way to allocate water given the infrastructure of the building. She might bear in mind that one person could easily use more water than say two people who are careful about their water use, showering at the gym and being out of town a lot, say.

-- Propose to the upset landlady that she pass the cost of water and garbage along to her tenants. One of the bonuses of this is that it is more likely to compel the tenants to be careful about water use.

-- Is it possible to "sub-meter" each unit so that each unit receives its own water bill? Many condos in California have done this. Companies exist that specialize in sub-meter installation. They advertise the savings in water bills that results, on account of residents being more mindful about their water use.

RichardP13
(California)

Posts:3763


08/11/2019 4:39 PM  
First, California is governing by a set of Common Interest Development rules, not one separate for HOA's or Condo's like, say, Florida for instance. Second, I have managed a lot of HOA over ten years, and never has one ever switched over to sub metering. Is there some statistics you draw your conclusions from?

As a general rule, rentals tend to have more occupants than ones occupied by their owners. That is just a fact. The easiest approach for a complex of 4 homes is to divide equally. This would require to change and vote on an amendment to your CCRs. It would not be expensive and once approved, would need to be recorded within the county in which the complex resides.

Been there, Done that
AugustinD


Posts:1886


08/11/2019 5:15 PM  
Googling on {sub-metering California} yields a number of sites that have testimonials from satisfied customers. This came to my attention several years ago when my former condominium was considering sub-metering.

CathyA3 is correct to point this out. It appears she too is familiar with companies that specialize in this.
RichardP13
(California)

Posts:3763


08/11/2019 9:10 PM  
Posted By AugustinD on 08/11/2019 5:15 PM
Googling on {sub-metering California} yields a number of sites that have testimonials from satisfied customers. This came to my attention several years ago when my former condominium was considering sub-metering.

CathyA3 is correct to point this out. It appears she too is familiar with companies that specialize in this.



Actually, I know a little about sub-metering having own such a company. We did it to read and bill HOA's who already had sub meters, but didn't have a local utility agency reading the meters. I did a lot of googling when I started the company and actually found that the meters are put in while the apartment or HOA is being built, NOT afterward and to upgrade is cost prohibitive.

Been there, Done that
AugustinD


Posts:1886


08/12/2019 7:00 AM  
My former condo's cost-benefit analysis likewise indicated the cost of retro-fitting would not pay for itself for many years. Still, as the cost of water goes up, and depending on how the present piping is laid out, it may make sense. Also the OP's four-unit condo may have a shutoff valve for each unit. This makes sub-metering much easier.

Then again, thee solution for the OP's situation seems to me to be for the landlord to put in the lease that the occupants pay for water and garbage.
RichardP13
(California)

Posts:3763


08/12/2019 8:06 AM  
Posted By AugustinD on 08/12/2019 7:00 AM
My former condo's cost-benefit analysis likewise indicated the cost of retro-fitting would not pay for itself for many years. Still, as the cost of water goes up, and depending on how the present piping is laid out, it may make sense. Also the OP's four-unit condo may have a shutoff valve for each unit. This makes sub-metering much easier.

Then again, thee solution for the OP's situation seems to me to be for the landlord to put in the lease that the occupants pay for water and garbage.



I am sure a smart operator would have done that, after all, if the shared utilities are put into the rent, their electric, water and garbage is my tax deduction.

Been there, Done that
AugustinD


Posts:1886


08/12/2019 8:13 AM  
Not sure what your meaning is. Just sayin': I do not believe in letting the (tax) tail wag the dog.
NpS
(Pennsylvania)

Posts:3572


08/12/2019 9:30 AM  
We looked at sub-metering around 5 years ago.

Installation cost was close to $1k per unit. Contractors would have done 100% financing, so up front cost wasn't the issue.

The issues were:

- We would still get only one bill from the water utility. Would have to hire someone to read the individual meters and then allocate the cost in accordance with some formula to the individual owners.
- The allocation formula would be subject to challenge and dispute.
- We might have a new set of collections issues that made things more difficult to manage.
- At the beginning, we would need access to private space, which could open us up to claims of damage.
- The biggest water hogs would probably refuse access. Why would they cooperate if their cost was going up.

But here, the OP's situation might be a lot different. 4 units with a single meter is much easier. I've seen many apartment buildings converted to condos. Depending on where the water lines are, it can be done at a reasonable expense with independent billing from the water utility.

Re discussion about billing the tenant - I think the landlord will lose tenants quickly if, like many of you have said, the cost allocation system doesn't come close to actual usage for the particular unit

Sikubali jukumu. Read all posts at your own risk.
AugustinD


Posts:1886


08/12/2019 11:05 AM  
It was about six years ago that my former condo was looking at sub-metering. The three or so companies who provided promotional material all offered remote reading sub-metering systems. The plan was for the condo management to remote read (via computer) the water usage, and bill accordingly. One of my concerns is that I felt the high-school diploma'd management had many a time shown they could not handle arithmetic very well. Plus I had seen the manager urge fining one owner x for a certain violation and ignore other owners committing the same violation. A sub-metering system where the management figured the billing would have been just one more tool for the manager to use to harass residents. Plus, OMG, the sub-metering could only be done on the hot water supply line, so the total water usage would be an estimate(!) based on the hot water usage. Tack on the cost of condo labor, and it was hard to make sub-metering attractive. The manager was strangely eager to sub-meter the units, arguing inter alia that her health insurance costs (paid for by the condo) were going up, and the condo would have to find the money somewhere. I privately rolled my eyes. The board never bought the manager's arguments for sub-metering.
RichardP13
(California)

Posts:3763


08/12/2019 11:21 AM  
I happen to do the water billing for two HOA's I manage. I use professional utility billing software and hand held meters to input the usage. All the sub meters are hooked up to the street side line, so not ever hooked into hot water (besides never heard of hooking a meter to the hot water line). The meters were installed at development.

It is a easy process, but you will always have delinquency issues one way of the other. Unlike dues, you can shut water to a delinquent owner. How fast they are able to pay when they need to take a shower and go to work.




Been there, Done that
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