Budget increase question

All - we are trying to see if we are reading our docs correctly and would like to ask for your interpretation.

This is all concerning how much we can increase dues.

The covenants read ->

Adoption of the Operating Budget ->

If the proposed operating and applicable captial budget requires an annual assessmnet of 115% or less of the annual assessment then currently in effect, the assessment so proposed will take effect at the commencment of the next ensuing fiscal year without further notice to and Owner. If such budget requires an annual assessment that is more than 115% of the annual assessment then currently in effect, then however, the board must call a special meeting of the members not less than 15 days prior for the purpose of approving such an increase. To be effective, the disapproval of the proposed increase must be by a vote of 2/3 of the membership. If approved by the membership, ther approved assessment will take effect at the commencment of the next ensuing year without further notice to the membership. If the proopsed assessment sis disapproved a majority of the votes will determine the annual assessment for the ensuing year, which may not be in any amount exceeding that stated in the meeting notice. In the absence of any action by the board or the membership to the contrary prior to the commencement of any fiscal year, the annual assessment then in effect, will automatically continue for the ensuing year.

so is the budget for 2010 is $1000 how much could the budget be raised wihtout having to have a vote of the membership?

Based on your posting, it sounds like the Board could raise the assessments up to and including 115% of the current assessments without a vote by the membership. However, that's not what it is saying. Your documents specifically talks about the budget.

If this years budget is equal to or less then 115% of last years budget then the Board can raise assessments to cover the budget without membership approval.

If this years budget is more then 115% of last years budget then membership approval is required to raise assessments to a level that will fully fund the budget. Note: The section you cited also states that if a meeting of the membership is needed, and the increase fails, the membership shall set the assessment for that year (it does not go back to the Board).

Using your numbers:

2010 - $1,000 Budget $1,000 Assessment

2011 - $1,150 Budget Budget is no more than 115% of the previous years budget. Therefore, the Board can increase the Assessment to pay for the budget without membership approval.

2011 - $1,151 Budget Budget is more than 115% of the previous year, therefore - membership approval is needed to fully fund the budget.

Effectively, the Board is limited to a 15% increase without membership approval. However, it is tied to the actual budget and not the desire to increase the assessment. In other words, they must account for the increase in the proposed budget vs. just increasing the fees because they feel they should.

That's my layman's interpretation.

Tim

Thanks everyone - we were reading it wrong - would have thought a normal person would have said 15% and not 115%

Well....
if dues are $100 and you pay 90% of dues you pay $90.
if dues are $100 and you pay 100% of dues you pay $100.
if dues are $100 and you pay 115% of dues you pay $115.

Yes, its written weird, but that's what lawyers do. They write things so only lawyers can understand them, then you need to hire them again to explain it to you. Its called job security.