1st year after Developer Assessments...

I would also wear a "Hockey mask" because your going to have to protect your face a bit. The years prior to my being president, we had the OPPOSITE thing occur. We actually LOWERED our dues! Yes! LOWERED! That's because we used to have one water meter for the entire property. If you didn't pay your dues, the water got turned off to your home. About a 2 years before I moved into my HOA, that was changed to separate water meters. The dues amount used to be $75 to cover the water pipe repairs that would occur. The repairs could be up to a few grand each time. The HOA passed a special assessment of $350 and promised to lower the monthly dues to $50 a month if the people voted and paid for the separate water meter work. (It was about $20K to install). So by the time I became President I was dealing with $50 a month dues!!! Much Much lower than the surrounding HOA's.

So you can imagine being stuck with $50 a month dues, 107 homeowners and a promise NOT to raise dues!!! Our CC&R's only allows for an approved 5% annual raise a year if passed by the BOD. Plus we had about $2 - 5K in savings. That money I had to spend on a collapsing pool wall project and a foreclosure. Our monthly bills were $5K a month and I had an average 5 - 7 Non-payers/late payers a month. You do the math and you will see the struggle just to keep my head above water. I never did raise the dues but the board after me did. Boy, did they get pelted with stones!!! No one was happy even with the little 5% they did raise it. ($52.50). The new BOD did try to raise it much higher and got busted!

The way I managed our money, the people did see the struggle. I never hid a balance sheet from them. Ironically, at one point, the members actually asked me why I hadn't raised dues! They clearly saw our limitations. However, my hands were tied by the homeowner apathy issue that would prevent such a vote to increase dues to ever happen.

My best advice to you is to be open and honest. Expose the HOA checkbook. You have to remember that the money in the HOA's budget is NOT your own money but ALL the members. The BOD is just elected to represent the general members in controlling that budget. Show the interested members or have a special meeting, showing what the actual costs are in running and maintaining the HOA will be. Remind them that a HOA is ONLY funded by it's members FOR it's members. Any costs will be passed down to ALL the members.

I would break down the estimated costs and present it to the members. You also have to keep in mind that the money the HOA collects each year MUST be spent at the end of the year. Those expenditures have to be on Maintenance and maintaing the HOA and it's business. That's the tricky part. It's not like your home budget. You have to treat the HOA's budget as an OPEN checkbook. The temptation to close it and keep controlled will always be there. However, you have to overcome that urge and let the members have their say. No matter if it's not always the best ideas.

.... there is no such provision in our governing documents which precludes a 1% or even a 100% increase in our assessments, nor does the budget need to be "ratified" by membership. Our documents only speak to "notice" requirements (thirty days) to the membership, nothing more.

The overall "catalyst" for raising dues, is/was about five line items which the developer, developer board, and MC never placed in previous two year's budgets. Our assessments, as I mentioned, are low for our particular neck of the woods, for the available amenities. It was not until the board reviewed the draft budget saw mistake after mistake, from the MC and the developer board - that we understood that this particular budget was not going to suffice. We recognize also that there are large line items which are the result of contracts entered into by developer/developer board which did not contain the most favorable terms and conditions for the community. Outside of cancelling those contracts (or at best renegotiating), we did have an obligation to still properly fund, until changes could be effected.

PaulM thanks for your response, and great memory....

The reserve study done by the developer/developer board was "academic" (another one of my posts) in that they used drawing/plats/site plans to draft the reserve plan. Even the MC's "reserve specialists" stated in the report that a site visit would be required to fully realize the plan and its dedicated funding. This was never done by the MC, they left it as it was, the developer board never revisited this, and the owner board had to really "dig" just to get this information.

I would love to say that I am in a jurisdiction which support/legislated that the developer needed to incur the cost of the reserve study, transitionng engineering inspection, or the transition audit - but I do not. The MC, has resisted any and all attempts to assist the board in any of the above interactions with the developer. While I know that this is not an "indictment" of the wonderful MC pro's we have here on this site, it is the reality that find myself. It was only after we had the HOA's legal counsel involved, that the MC "took notice" and even then the attorney was shocked at levels of indiffernce suffered by the board, at the hands of the MC.

Yes the larger contracts are being reviewed for performance and conformity. However, and this is not a "cop-out," undergoing transition from developer to owner, AND moving to a new MC, etc - is not a good idea from my perspective. I realize that it has a lot to do with board personnel, and how involved the community is - but right now, out of 9 members we have replaced three, and we have not reached the six month mark after elections. Further the community of 500, has not participated in board meetings - the total from all meetings, attendence-wise is less than 10% total - as in we have about a dozen members attend total, not counting the "regulars."

With regard to the MC, and interactions with vendors, and I quote "the board is not to have contact with vendors, contact should be done by us (MC), when you have multiple interactions, it confuses the vendors, and the board is "just" volunteers, we have the expertise and this is what you pay us for..." (end quote, from senior VP with MC at an orientation session for the owner board). The times where it was absolutely necessary for me, as President, to speak directly with a vendor, the vendor did not know who I was, as the MC did not inform, nor send out letters of introduction to anyone. Aftwards, I personally received a "sharply" worded letter (and was sent to the entire board) that my interaction on behalf of the community was "improper" and that I should in the future refain from doing so.

I agree with your advice about seeking competitive bids in my area, I just do not have the time with everything else needing to be done, and the support from the other board members is just now starting to "see the light" with regards to "what should be done, and what went wrong..."

I know that we recently had a post about "paying" board-members and I agree that it is a "no-no." But do you think that I could justfy the super-bulk store sized bottle of Excedrin as a proper reimburseable expenditure for the President....? The taste horrible when you chew them, but after awhile you get used to it, when you are popping them like Altoids....

Jadedone:

I understand the reserve study the developer did for you may be insufficient due to lack of an on-site inspection. However, numbers are numbers and are based on square footage of capital reserve items. Not to be discounted lightly.

Yes, I am concerned over the situation you find yourself in with your management company. I have been concerned since you first posted the situation sometime ago. It is glaringly obvious to me why the MC would NOT want the Board to interact with 'their' vendors.

I would definitely compare your MC contract with other contracts held by local communities. I realize you feel you may not have 'time' to spend on doing this, but if the community's finances are of concern, then it is at this juncture that you need to begin your investigation of costs to arrive at an acceptable solution. Good Luck!

Jadedone,

Roger, Paul and you are right on the money. I would not give a thought right now to apathic owners. Build your own organization and incorporate all these concerns to committees. If you have ten you can depend on to support your presidency and work for the good of the association, you will get the job done. Do not discount the personal satisfaction there is in your undertaking. Cuts down on the medications taken. It is not uncommon for the developer to do a number on the new association, comes with the territory and can become way to important if you worry about it. I have no doubt you can meet the challenge and the developer is just trying to see how much he can get away with. It becomes a chess game and all will have poker faces, and when reality sets in the developer finds he can't have unfinished business hanging over his hear. So, take his challenge and drag it out if it is easier for you. He only wants to win the game and he knows he if push comes to shove he will be happy with a tie.
Best of luck and good wishes.

Hi Jadedone4,

Our dues increaded dramatically. From $168 to $228.

Come to find out we all signed this little piece of paper when we purchased our homes that said we understood that the developer was substidizing the dues. No one realized it was to the tune of 40k over the 3 years he had it.

So sticker shock would be an understatement. The numbers don't lie. We brought a printout of all the payments the developer had put in over the 3 year period. We showed where every penny was going and how we were behind because when they turned over the association it was with the padded budget, but there was no padding coming in from the developer that year. It was rough, but we are turning it around.

I will say it was the most people we ever had at a community meeting.

Good Luck!