BB5 (Missouri)
Posts: 145
Posts: 145
Posted:
In order for the HOA to raise dues do they need to present a budget for the year ? We pay dues once a year they want to raise dues $150.00 per year.
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MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
They should provide/create a yearly budget regardless if they are raising dues or not. However, that is quite difficult and not all HOA's are capable of doing it properly or at all. HOA's typically are NON Profit corporations. Which means they are to spend in as much as they get in. If the HOA is raising dues, it's most likely they have encountered issues involving collections or not covering enough of their bills.
A HOA is ONLY funded by it's member FOR it's members. An increase may be necessary as expenses and maintenance needs arise. I wouldn't assign anything "fishy" to the need to raise dues unless you notice the raise involves just one project. Otherwise, it's probably a good thing.
A HOA is ONLY funded by it's member FOR it's members. An increase may be necessary as expenses and maintenance needs arise. I wouldn't assign anything "fishy" to the need to raise dues unless you notice the raise involves just one project. Otherwise, it's probably a good thing.
Former HOA President
BB5 (Missouri)
Posts: 145
Posts: 145
Posted:
Not assigining anything fishy but you did answer a question I didn't ask. There is suppose to be several thousand dollars left from last year I was under the impression a non-profit couldn't have excess funds or only a certain amount. And as past Pres. I do have a fairly good idea about the expenses.
JonD1
Posts: 2,350
Posts: 2,350
Posted:
So as a past President you didn't have a reserve fund? And the budget you worked under zeroed out to the penny?
Sounds like an amazing series of events to me. Your understanding of a not-for-profit corporation is incorrect.
And several thousand dollars isn't all that much to be in the black.
$150 more per year will run you about $12.50 per month. Or .41 cents per day.
When was the last time the dues was raised?
What is the dues rate currently?
The increase would be whatg percentage?
What exactly is your concern?
Sounds like an amazing series of events to me. Your understanding of a not-for-profit corporation is incorrect.
And several thousand dollars isn't all that much to be in the black.
$150 more per year will run you about $12.50 per month. Or .41 cents per day.
When was the last time the dues was raised?
What is the dues rate currently?
The increase would be whatg percentage?
What exactly is your concern?
BB5 (Missouri)
Posts: 145
Posts: 145
Posted:
We did have a reserve fund however we did not raise dues as long as there was a reserve. At what point does the not for profit have to pay taxes on excess funding ?
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
BB5,
A reserve fund is used to set money aside to cover the expenses of expected maintenance and repair of common area components (roads, sidewalks, playground equipment, etc.). Additionally, Associations should set aside money as a contingency fund to help pay for unexpected maintenance/repair and to cover expenses while waiting for assessments to be paid.
If you didn't raise assessments based on the fact that you had money in reserves, I suspect that you will be looking at a special assessment in the future. This is because you would not have kept assessments at a level to compensate for inflation. Money in the Reserves should only be used for the planned expenses the reserves were set aside for. Money in the contingency fund could be used to keep assessments low providing that there is enough being set aside to cover that unexpected repair or snow removal due to extra heavy snowfall.
When was your last reserve study done?
If it wasn't within the last 5 years, it's possible that you don't have enough set aside. I know that after my Association completed it's reserve study last year we needed to raise assessments 20% to properly fund the reserves.
Associations who have a non-profit status typically only pay taxes on everything but assessments. This would be things like interest earned on bank accounts, advertising sales in your newsletter, fines, late charges and fees for anything that isn't the annual assessment.
As for who has the authority to raise your Assessments and by how much, you will need to check your governing documents. Some Associations set limits that the assessments can be raised without membership approval.
You might want to contact the Board and ask them on what basis they are determining an increase is needed.
Tim
A reserve fund is used to set money aside to cover the expenses of expected maintenance and repair of common area components (roads, sidewalks, playground equipment, etc.). Additionally, Associations should set aside money as a contingency fund to help pay for unexpected maintenance/repair and to cover expenses while waiting for assessments to be paid.
If you didn't raise assessments based on the fact that you had money in reserves, I suspect that you will be looking at a special assessment in the future. This is because you would not have kept assessments at a level to compensate for inflation. Money in the Reserves should only be used for the planned expenses the reserves were set aside for. Money in the contingency fund could be used to keep assessments low providing that there is enough being set aside to cover that unexpected repair or snow removal due to extra heavy snowfall.
When was your last reserve study done?
If it wasn't within the last 5 years, it's possible that you don't have enough set aside. I know that after my Association completed it's reserve study last year we needed to raise assessments 20% to properly fund the reserves.
Associations who have a non-profit status typically only pay taxes on everything but assessments. This would be things like interest earned on bank accounts, advertising sales in your newsletter, fines, late charges and fees for anything that isn't the annual assessment.
As for who has the authority to raise your Assessments and by how much, you will need to check your governing documents. Some Associations set limits that the assessments can be raised without membership approval.
You might want to contact the Board and ask them on what basis they are determining an increase is needed.
Tim
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