HOA Fees

Hi All!

Brand new to this forum.

Interested in how fees(HOA)are determined. We live in a community of 120 plus residents and are interested in how we can save our neighbors money in this difficult economy. We have a diverse community of honored citizens some with limited incomes, some with difficult health challenges and some who do not have the ability to supplement their social security.

It appears to me that an HOA is a viable entity that can compliment its community however, its fee structure needs to fall into line with what its residents are able to afford. I recognize that there are those folks who have lived here for a period of time and have accepted the manner in which the HOA accomplishes its responsibilities. What I'm interested in is how to make dues/fees affordable so that the residents who appear to be financially challenged can feel comfortable in where they reside and not to 'feel' treatened that the fees can increase to a point that makes life unbearable.

I believe that HOA's are necessary however, they need to have an accountability as to its eagerness in setting guidelines in terms of fee structure in a manner that will afford everyones opportunity for livability.

Ours is a manufactured home community and am interested in how the fee structure is determined and what decides when fees 'need' to be increased? Has there ever been a time when fees have been reduced or rebates given for exceptional living?

We are looking forward to making a difference in the lives of our neighbors and hope that this is a area we can begin to see some change.

Kind regards,
Joseph

I understand the services end of HOA. What I'm interested in is how the fees can be possibly reworked and or restructured to minimize unnecessary costs. Maybe an example would be ammenities such as club house benefits. Since I'm not too familiar with HOA and new to this whole community cost idea I'm still learning how this whole concept works.

Joseph,

The amenities which are to be provided and how the cost for those amenities, services and Reserves are divided are all determined on the language contained in the deed restrictions (aka Declaration of Covenants, Conditions and Restrictions).

If you want to change what amenities are provided and how they are paid for, you need to change the deed restrictions.

Typically, most Associations have language that requires an equal division of costs. Some condominiums have language that divide the costs based on the percentage of the building you own (size of unit).

If you are a developer, and you want to minimize the HOA costs, don't provide amenities and make an arrangement for all services (trash, recycling, roads, etc.) to be the responsibility of the City or County. Also limit the deed restrictions you place on the property.

Tim

Bruce & Tim, are correct.

1. Read your By-Laws to see which HOA amenities the community is required to maintain. (My by-laws require my HOA to fund a pool operation but we also had installed fountains in our small lake at a time we were cash flow poor. The pool operation continued for us, the fountains were removed at first convenience w/ full transparency between the board, myself as president and any property owner who expressed concern over not having fountains)

2. Once you find those core costs that you can't dodge, review any contracts you may have with a property manager, groundskeeping, etc. These contracts, when not periodically reviewed, tend to see rates the creep slowly higher, sometimes to price points beyond market rates. Vendors who do a great job can get away with this and can deserve "bumps" in pay, but if your residents are strapped, your HOA can likely be very pleased received 4-star service at market rate as opposed to slightly more expensive 5-star service. Try to keep your word on contracts w/ vendors. It's okay not to renew them. Breaking contracts without good reason (not wanting to pay so much $$ isn't a reason).

You can save REAL money by taking those two steps, which will take a little time. But remember, you only set your dues rate once per year.

I would not cut back on mowing grass or street lights to save HOA dues. If you can't offer reasonable security (lighting) and can't mow the grass after a thorough review, it's pretty easy to inform your residents of the situation. If you're focused on cutting spare costs, act transparently and take care of your core operations, residents will understand.

You have a terrific approach to working with your HOA's finances but don't starve the neighborhood of maintenance and care to keep costs artificially low - a tempting strategy all too often.

Good Luck!

You asked how the dues are set. It surprises me that none of the answers so far has mentioned the budget process. That is how the fees are set. A budget must be prepared that explicitly estimates all of the expenses that the association must cover for the coming year. Then that amount is divided by the number of dues paying members and then divided by 12 to arrive at the monthly dues amount.

Now clearly, the board of directors has a considerable leeway to determine what expenses will be planned in the budget. Some association expenses are discretionary and some are not. There are usually some efficiencies that can be gained by doing the things mentioned in earlier posts. If it is known that some members will likely not be able to pay their full dues, an expense line in the budget should be included for "uncollectable dues". However you should recognize that such an expense will result in the calculated dues being higher to cover amounts not collected.

In some ways dues are like taxes. You have to pay them. If you don't like the tax level you have to "vote the bums out".

Because dues payers don't use an offered amenity doesn't necessarily mean they should be exempt from paying to support those amenities. Just so the opportunity exists to use the amenity.

What's a "necessary" versus a discretionary amenity will be determined by your future conversations with your dues payers. If they want it all, then they'll have to pay for it. You've got a necessary discussion ahead, one that's important and, if constructive, will lead to a better informed dues paying public.

Kelly is right. In my last HOA I never used the pool nor tennis courts but I was happy we had them as they added value to my property.

I continue to appreciate the information, the experience and the insightful comments that you all have shared throughout this discussion.

In order for me to be able to carry the conversation in an HOA meeting I appreciate gleaning the undestanding of how all this works and what to anticipate as well as what needs to be discussed and explained for clarity.

I have in previous years watched a fair share of HDTV and their House Hunter programs and others that involved the mention of HOA's. Many of those programs conveyed a nominal to very cost-favorable HOA fee. In order for folks to be able to walk in and begin a new life the rates were very accomodating. Granted in most instances this was condominium living.

Since we live in a manufactured home community my wife continues to share with me the difference between the former and the later. She believes there is a distinct difference between the two since they are two different living situations.

Like I related in an earlier post I pretty much accept the terminology, application and wording that goes into this whole process of HOA fees. My greatest concern are my peers. As far as I can ascertain there is ample reason to understand why the fees are in place for each particular reason. What I am having difficulty with is the perceived difference in fee structure that there seems to been in terms of the difference between condominium living and manufactured home community living.

Granted various age groups live in both types of economies and can accept, deal with and survive the fees and the increases that occur. Most folks it seems to me enjoy there later years and can live quite nicely and still afford this particular life style. When it comes to manufactured home living at least in my experience it appears to me that there are factors involved that create a different type of fee structure than the typical condo experience. I'm trying to understand the great divide between the two since there seems to be to be a great gulf in fees and their charges. So when it comes to a 55+ community I stand back and say whoa help me understand why this is the way it is and how can we agree to fine-tune this a bit to accomdate the older folks who are taking a hit. I'm realizing that my older peers are here because this is there home and why should it cost an arm and a leg to enjoy ones later life.

I know that there are others who would agree with me as well as those who would yawn profusely. However, I'm not the odd one out I guess since I've always been taught to look out for those who've earned their stripes since they have obviously earned then through the years. So my question is how do I approach this whole HOA thing that will benefit them and everyone else. I believe they need to enjoy there standard of living just as everyone else would. I'm sure there is a level playing field here I would just like to know how to play upon it and give everyone a chance to enjoy their later years.

Appreciate you reading and following my thinking. I apologize for the lengthyness of this post just really interested in how I can help these folks.

PS. Condo rates can be as low as $150 monthly. Some communities such as ours can be as high as $650. As you can see there is quite a bit a discrepency. Since the difference could be as much as $500 what on earth appears to be needed that we cannot be content to live without. I could drive a Ford Fusion I don't need a Lexus.

Joseph,

You can not compare Association to Association as the amenities/services provided and the number of members are (typically) never exact.

I agree with Janet. If you can provide some specifics by listing the amenities and services your Association must provide, then identify what you would like to reduce or eliminate, we can probably be more helpful.

Tim