Need to increase annual assessment

Well you need to update your CC&R's to incorporate this change. You will also may be required to have a special meeting to do so. It's a good time to make other additional changes including technology changes. (Ie..satellite dishes, green energy improvements). Your HOA will probably need an attorney to help with some areas such as filing or even helping redline the documentation. There are ways to skip the special meeting requirement with still being able to gather the required votes...

We could raise our dues about 2-3 percent a year, if a majority ruled to allow it. If we wanted more of an increase, it required a vote by the General membership to pass. Usually that was 5 - 10 % raise and then we would go back to the regular 2 -3 % after that just to get a "Kick-start" to increasing our income. That may be an easier temporary approach. It can take years to get the rules change.

A special assessment may also be implemented temporarily to cover certain repairs if people revolt against that much of an increase to go yearly. It may also be needed to cover the legal costs for the changes. Which can cost 2 - 5K to get done depending on how much you rely on the lawyer and what you do yourselves. That cost is of course equally divided amongst ALL the owners.

It's never easy to increase the dues no matter how necessary it is. Remember it isn't just your money, it is EVERY member's money. Let them know and explain why things are the way they are. Show them the books. Make sure they understand if they want improvements to happen...they have to pay for it.

There are other methods to generate income for your Association, that may not require a change in your covenants.
Here is what we have done, the increase in funds it will depend on how large you are. We charge 18% APR on the principal of fees that are late. Secondly, if we have to send a demand for payment letter / intent to lien notice, the owner's account is charged $10 (Our actual cost is $8.36). If we place a lien, since we have an automated system, we charge $150, our actual cost to lien and release lien is $72. When we generate an estoppel letter we charge $150, since our system does it automatically,our cost is $0.00.
This does not include CC&R violations.
And we have not raised our fees in several years because of this.
By us having a method to track intent to liens, liens, intent to foreclose, foreclosure, and are able to track and maintain payment arrangements, we have been successful in generating enough additional income to offset the dues increases. This year, it is being discussed to raise them 3% due to some road maintaince we are currently doing. But, that is less than the rise in fuel cost this year.

I believe, with the correct tools, self management is the way to go. We self manage almost 2000 units and have 22 miles of roads to maintain. We do it with a BODs consisting of 5 members. So, we cut the cost of a CAB / CAM and the use of the software allows for easy turn overs. A $100 a month for the software is way cheaper than the CAB we were using. Not only were they charging us, but they were making more money by charging for CC&R violation letters and estoppel letters. Now, we have a HOA attorney on retainer to file the actions and advise us if we need help.
He charges us $50 to file a lien, we file to release, the cost of filing is $12. So, all that money we keep instead of handing it over to the CAB.

I recently recommended another president to look at the software, I called her the other day. They are now using the software, and have made their CAM use it so they can see what he is doing. They are evaluating if they want to leave their cam and become self managed.I will be interested in seeing what her evaluation is. She said she had nothing to loose since the software was free for 12 months.

Back on track, so for the ramble, but look for other methods to increase your cash flow. We felt, since we were carrying the late payer and the non payers, they should be the ones penalized. We track and place liens quickly, as soon as the law allows, to protect our interest, and this has generated a lot of income from forcing the banks to pay up on the liens after they foreclose. Before, we were loosing a lot of money because we were not liening on properties fast enough.
Thanks for reading my ramble this morning.

Charles
What is the name of that software

or post your E-Mail address and i will send you the link to it.

That last message, asking for text from covenants, was meant for Petukna in Florida.

I thought that if I replied under the specific post I was replying to, my post would appear subordinate to that particular post. I'm new to this forum, and learning how to use it. Bear with me a bit, please.

Our fiscal year is the calendar year, Jan 1-Dec. 31. Annual assessments are due in August. Some Board members believe that we can't use the money collected this August until next January, on the theory that we are collecting this year for next year's budget. There's nothing in our governing documents about this, one way or another.

Do other communities operate on a collect-as-you-go policy?

Mary,

You're on the right track in modernizing your dues rates. My HOA can raise dues by following the inflation rate of a sub-set of the Consumer Price Index. Anything more than that rate requires a special notices, meetings and a vote of the property owners. When I joined my board, our monthly dues were below what was necessary to save guaranteed funds for our Reserves in an amount our auditor deemed "healthy."

This will be a multiple year process to get your budget tweaked and, I bet, your neighbors will understand IF your board has looked at the existing budget and sought new bids on services (to lessen the cost that tend to creep up over years) while finding waste to eliminate. People aren't against paying dues. They oppose paying dues, especially higher rates, to HOAs that can't explain how they spend their money and where they seek savings and efficiencies.

Management Company: No, we do not have a management company.

Fines as a source of income: State law allows us to charge $20/month late fee on overdue annual assessments. That brought in maybe $100 last year. We have no provisions for any other fines.

Special assessment: Yes, we have a mechanism in our covenants to ask for a special assessment. We have to call a meeting for that purpose and get affirmative votes from owners of 2/3 of lots. That had to be done the last time our one paved road needed repaving, because there was not enough money in the reserve funds to cover repaving.

It requires basically the same threshold of approval to revise the covenants or to get a special assessment. Since we are running a slight deficit just with ongoing expenses, apart from the repairs to aging infrastructure, we need to change the cap on annual assessment even if we get a special assessment for repairs to infrastructure.

We have an available income of about $20,000 a year. Grading our gravel roads now costs about $15,000 annually. (That figure has doubled in the last five years or so. We found a less expensive grading contractor who does good work, and we negotiated a contractor's price on gravel, but the costs of gravel and hauling it keep going up.) We spend another $4,000 a year mowing the roadsides and weed-whacking the dam at the man-made pond. That leaves $1000 for insurance, legal fees, etc. There's no way this will work any longer. The basic problem is twofold: the increase in the CPI has hot kept up with the cost of road maintenance (for that, we need a higher annual assessment), and we have multiple problems in our aging infrastructure that need to be addressed -- rusting culverts under the roadways, neglected entrance with falling-down rock wall, etc. These could be done by a special assessment.

The primary information I'm looking for is: What kind of cap do other associations put on increases in annual assessments? I appreciate the efforts to help with other suggestions, but I think I led us off-target in throwing out a more general question.