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Subject: Inevitable Dues Increase
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Author Messages
JohnC46
(South Carolina)

Posts:11665


06/25/2021 9:42 AM  
What would you suggest the procedure to do an inevitable dues increase be done/handled?
BarbaraT1
(Texas)

Posts:589


06/25/2021 9:57 AM  
Be transparent about why it has to happen and give owners plenty of notice.

How much of an increase?

JackJ9


Posts:0


06/25/2021 10:58 AM  
Posted By JohnC46 on 06/25/2021 9:42 AM
What would you suggest the procedure to do an inevitable dues increase be done/handled?




For our association, I created a two line chart where one line showed the dues for the past 10 years and the second line showed the normalized housing value per the county assessors number, and showed how the dues basically mimicked property values. Thus, the dues increase was right in line with the property value increase.

People still complained, but hopefully a couple people understood the chart.
MaxB4
(California)

Posts:1601


06/25/2021 11:02 AM  
Posted By JackJ9 on 06/25/2021 10:58 AM
Posted By JohnC46 on 06/25/2021 9:42 AM
What would you suggest the procedure to do an inevitable dues increase be done/handled?




For our association, I created a two line chart where one line showed the dues for the past 10 years and the second line showed the normalized housing value per the county assessors number, and showed how the dues basically mimicked property values. Thus, the dues increase was right in line with the property value increase.

People still complained, but hopefully a couple people understood the chart.



Are you saying that because values goes up, then dues should go up also. Based on what? Maybe you should have a chart where it shows expenses have increased.

My take on your statement is, because I have increased YOUR home value, I am entitled to some form of compensation. Am I close?
LetA
(Nevada)

Posts:1466


06/25/2021 11:03 AM  
Posted By JohnC46 on 06/25/2021 9:42 AM
What would you suggest the procedure to do an inevitable dues increase be done/handled?




Yes be transparent, not only explain why, show them why.

We're mulling over the same thing. Two key points was cannot escape are landscaping fee are increasing, and security. We really need to install cameras at our two entrances and electronic locks at the pool.
JackJ9


Posts:0


06/25/2021 11:07 AM  
Posted By MaxB4 on 06/25/2021 11:02 AM
Posted By JackJ9 on 06/25/2021 10:58 AM
Posted By JohnC46 on 06/25/2021 9:42 AM
What would you suggest the procedure to do an inevitable dues increase be done/handled?




For our association, I created a two line chart where one line showed the dues for the past 10 years and the second line showed the normalized housing value per the county assessors number, and showed how the dues basically mimicked property values. Thus, the dues increase was right in line with the property value increase.

People still complained, but hopefully a couple people understood the chart.



Are you saying that because values goes up, then dues should go up also. Based on what? Maybe you should have a chart where it shows expenses have increased.

My take on your statement is, because I have increased YOUR home value, I am entitled to some form of compensation. Am I close?




The property values sank for a number of years and the dues sank right in line with the property value. Then as the property value climbed, the dues climbed as well.

You as a homeowner could have any take on it that you like. It probably made sense to some and not others. That's life.
MaxB4
(California)

Posts:1601


06/25/2021 11:26 AM  
I was on a Board during the housing crisis that started in 2007. Our dues never decreased. Starting in 2009, not one property's dues decreased during my 4 years there.
JohnC46
(South Carolina)

Posts:11665


06/25/2021 12:40 PM  
Posted By BarbaraT1 on 06/25/2021 9:57 AM
Be transparent about why it has to happen and give owners plenty of notice.

How much of an increase?




From $70 per month to $90 or $100 per month. We are standalone patio homes. Our dues pay for landscaping and part of each home's fence maintenance/replacement. Our homes are a 10 to 17 years old and fence cost is becoming a major expense. The HOA will also pay for siding and roof replacement and while in the future (commencing in 2027), we are setting aside reserves for it now.

Additionally, the BOD wants to turn more of the day to day management over to our MC as in go from limited service to more full service from the MC.

We could do as we want now with only a $15 to $20 per month increase but we would have to go back in a few years for more so I say increase it $25 to $30 now. Fight the battle once and be done with it.
MarkM19
(Texas)

Posts:844


06/25/2021 12:56 PM  
JohnC,
I personally would keep the increase under what your CC&Rs allow without going out for a Vote. I think most documents allow for a under 9% increase at the boards discretion. I would obviously do as others have recommended and be as transparent as humanly possible. By taking the larger increase you will have the short timers who will fight it because they do not plan on being around for 10 years. If you need to get a Super majority it is always tuff becuase you are reaching into everyone's pocketbook and no one likes that.
TimB4
(Tennessee)

Posts:17852


06/25/2021 1:06 PM  
As others have said, be transparent.

The board I was on was able to obtain a vote for a 20% increase by:

1) showing the need (a breakdown of where the assessment goes helped).
2) demonstrated that the board has done what it could to minimize expenses.
3) since most of this was going to reserves, we explained what reserves were for, how they worked(saving a little every month vs. having to pay a large sum at once) and by doing this special assessments shouldn't be required.
SheliaH
(Indiana)

Posts:4290


06/25/2021 1:12 PM  
I like Jack's idea about the chart - if you like, you can stick to the last five years of expenses, perhaps selecting the items that have gone up the most and explain why.

Don't forget to include reserves in your argument - people need to understand that if reserves aren't funded properly, they may risk paying an expensive special assessment down the road on top of regular assessments, which have to cover routine expenses. They may think they won't be around by the time the piper comes calling, but life has a funny way of doing what it does and doesn't really care to wait just because you'll have the time and money to address whatever at X point in time. And you may find you're still here in 10 or 15 years and if you haven't saved your money, then what?

As for the property value stuff, this may be a good way to explain that the amount of assessments isn't necessarily equal to property value. The word alone indicates it's subjective - what makes a house more or less valuable to you may not be the same for me. For HOAs, I think it's best to focus on managing the money properly and enforcing the rules consistently and fairly to help make the community a nice place to live (at least it'll look good). Prospective buyers will make their decisions based on a bunch of factors and the HOA can't always control them.
BarbaraT1
(Texas)

Posts:589


06/25/2021 1:13 PM  
Posted By JohnC46 on 06/25/2021 12:40 PM
Posted By BarbaraT1 on 06/25/2021 9:57 AM
Be transparent about why it has to happen and give owners plenty of notice.

How much of an increase?




From $70 per month to $90 or $100 per month. We are standalone patio homes. Our dues pay for landscaping and part of each home's fence maintenance/replacement. Our homes are a 10 to 17 years old and fence cost is becoming a major expense. The HOA will also pay for siding and roof replacement and while in the future (commencing in 2027), we are setting aside reserves for it now.

Additionally, the BOD wants to turn more of the day to day management over to our MC as in go from limited service to more full service from the MC.

We could do as we want now with only a $15 to $20 per month increase but we would have to go back in a few years for more so I say increase it $25 to $30 now. Fight the battle once and be done with it.




That's a considerable increase!

Just be honest. Have lots of documentation for the increase in expenses, explain that saving now is cheaper than a special assessment if you don't have enough savings. Will this be starting in 2022? I'd tell them now so they can start adjusting their budgets at home.
JohnC46
(South Carolina)

Posts:11665


06/25/2021 1:13 PM  
Posted By MarkM19 on 06/25/2021 12:56 PM
JohnC,
I personally would keep the increase under what your CC&Rs allow without going out for a Vote. I think most documents allow for a under 9% increase at the boards discretion. I would obviously do as others have recommended and be as transparent as humanly possible. By taking the larger increase you will have the short timers who will fight it because they do not plan on being around for 10 years. If you need to get a Super majority it is always tuff becuase you are reaching into everyone's pocketbook and no one likes that.




Our docs only allow for some government COL increase which would be less than 3%. We do not need our owners approving a dues increase.. The BOD alone can do it. As mentioned earlier, our owners could reject it but it would take a Special Meeting with 51% OF ALL OWNERS DISAPPROVING IT..
MaxB4
(California)

Posts:1601


06/25/2021 1:17 PM  
Posted By BarbaraT1 on 06/25/2021 1:13 PM
Posted By JohnC46 on 06/25/2021 12:40 PM
Posted By BarbaraT1 on 06/25/2021 9:57 AM
Be transparent about why it has to happen and give owners plenty of notice.

How much of an increase?




From $70 per month to $90 or $100 per month. We are standalone patio homes. Our dues pay for landscaping and part of each home's fence maintenance/replacement. Our homes are a 10 to 17 years old and fence cost is becoming a major expense. The HOA will also pay for siding and roof replacement and while in the future (commencing in 2027), we are setting aside reserves for it now.

Additionally, the BOD wants to turn more of the day to day management over to our MC as in go from limited service to more full service from the MC.

We could do as we want now with only a $15 to $20 per month increase but we would have to go back in a few years for more so I say increase it $25 to $30 now. Fight the battle once and be done with it.




That's a considerable increase!

Just be honest. Have lots of documentation for the increase in expenses, explain that saving now is cheaper than a special assessment if you don't have enough savings. Will this be starting in 2022? I'd tell them now so they can start adjusting their budgets at home.



I still like the idea of sending charts out showing increased property values thereby justifying dues increase.
KerryL1
(California)

Posts:8729


06/25/2021 6:41 PM  
Say, Jack. Ignore Max's nastiness. This week alone, he's been rude to JohnC, elsewhere, and to me too. He's one unhappy soul.
ChrisP5
(Missouri)

Posts:153


06/25/2021 7:22 PM  
You mentioned doing it all at once, as painful as that is I can’t recommend comend that enough. We did our first ever reserve study shortly after I joined the board and it became readily apparent we were woefully underfunded (previous boards thought 10k per year to reserves for a 200+ unit condo was plenty). We took the approach of a phased in increase to avoid the shock of trying to get where we needed to be. Lots of painful arguments at many meetings after that. 60% of the total ownership has to veto a budget so increases passed but there wasn’t a lot of love. Arguably we are now in the best shape of any condo association in town but still underfunded but should avoid any majorly nasty assessments.
ChrisP5
(Missouri)

Posts:153


06/25/2021 7:22 PM  
You mentioned doing it all at once, as painful as that is I can’t recommend comend that enough. We did our first ever reserve study shortly after I joined the board and it became readily apparent we were woefully underfunded (previous boards thought 10k per year to reserves for a 200+ unit condo was plenty). We took the approach of a phased in increase to avoid the shock of trying to get where we needed to be. Lots of painful arguments at many meetings after that. 60% of the total ownership has to veto a budget so increases passed but there wasn’t a lot of love. Arguably we are now in the best shape of any condo association in town but still underfunded but should avoid any majorly nasty assessments.
MaxB4
(California)

Posts:1601


06/25/2021 7:26 PM  
Posted By KerryL1 on 06/25/2021 6:41 PM
Say, Jack. Ignore Max's nastiness. This week alone, he's been rude to JohnC, elsewhere, and to me too. He's one unhappy soul.



I think these guys can stand up for themselves without you.
AugustinD


Posts:1920


06/25/2021 7:33 PM  
Posted By MaxB4 on 06/25/2021 7:26 PM
I think these guys can stand up for themselves without you.
Shut

up.
MaxB4
(California)

Posts:1601


06/25/2021 7:47 PM  
Posted By AugustinD on 06/25/2021 7:33 PM
Posted By MaxB4 on 06/25/2021 7:26 PM
I think these guys can stand up for themselves without you.
Shut

up.



WOW, now that's intelligence speaking.
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