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SamV2 (California)
Posts: 7
Posted:
A broad member wants to decrease the HOA fee to make residents happy. There are 17 houses, fee is $135 /mo. We just got all the wooden fences fixed, has about $3000 left only. Still have some landscaping to fix (some residents planted things infront of their houses in the past) but can't because some residents are complaining about wasting money. I think we should save for the reserves instead. What should I do? He'll be the new Prez.
MikeS1
Posts: 521
Posted:
Not adavisable;. Do a reserve study.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Sam,

Ask those owners who want a reduction in fees to provide your board with a proposed budget and a reserve study for future capital expenses. Let the complainers do the work. Any time they complain, ask them for that budget and reserve study.

TimB4 (Tennessee)
Posts: 21,059
Posted:
Sam,

The amount of assessments should be set to meet the amount (or expected amount) of expenses. The amount of money set aside to the Reserves is considered an expense in this case.

Since you are in CA, you should be aware that CA law requires the Association to have a Reserve Study done. Additionally, per CA laws, a Reserve Funding Plan must be adopted and published to the membership. Find out more about how CA sees Reserves by visiting davis-stirlings Reserves menu web page.

As a Board member, bring this information up.

Just because someone has a title, it does not mean that they have the authority. The President is allowed to set the agenda, preside over the meetings and cosign checks. That's it. Unless your governing documents specify additional authority, that is all an Association President may typically do. However, many Boards relinquish their authority to others because they don't want to do the work. The entire Board makes the decision by majority vote.

My suggestion is to remind the Board of their responsibility to do what is right for the Association as a whole and that doing this does not always mean doing what the membership desires. Then suggest that the Assessments should be established to fully fund the Reserves before any consideration is given to reduce the amount of assessments. Perhaps you can even provide handouts of the legal requirements for Reserves. Then, all you can do is vote against reducing the amount of assessments, make sure that your vote and the reason is included in the minutes and abide by the decision of the entire Board.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
A simple rule of thumb to keep in mind in a HOA: A HOA IS ONLY FUNDED BY IT'S MEMBERS FOR IT'S MEMBERS. The money it has is EVERY member's money. The board is elected to represent the HOA and the general membership on how/what to spend their budget on. A HOA typically being a "non-profit" corporation means that it should collect as much money in as it spends on expenses/reserves. That collection is through dues and special assessments.

It is NOT what the individual member wants to pay into their HOA. It's what the HOA NEEDS to cover what the members want the HOA to maintain and have. It would always be great to pay less dues. However, reality is that dues are set at the rate they are so that they cover expenses for all.

The advice for a reserve study to be done is solid and good advice. Time to evaluate what your HOA spends it's money on and what it needs to fulfill current and future needs.

Former HOA President
CarolR11 (Colorado)
Posts: 2,563
Posted:
Good replies to you above, Sam!

Here's the citation from the CA HOA attorneys who put together this site: "DUTY TO FUND RESERVES
There is no statute that specifically requires associations fund their reserves."
Read more: Duty to Fund Reserves http://www.davis-stirling.com/tabid/1602/Default.aspx#ixzz2yieFFzP9
from Davis-Stirling.com by Adams Kessler PLC.

There is, however, a requirement to send HOA owners a reserves plan every year in CA. So it's not just "advisable," you must do it.

You directors all must act; don't let the new prez bully any of you! How many are on your Board?

I've been sort of puzzled about why you have a PM for such a small HOA. But surely s/he can inform you about what your monthly obligations are and what you should reserve for.

In addition, I think you wrote in a previous thread that that your long-time, but now former president will be advising you. If he was any good, listen to him.

To make owners "happy" is a terrible reason to lower dues!!

SG3 (Pennsylvania)
Posts: 63
Posted:
$135 per month won't cover much. Work that is needed will have to be accomplished by special assessment. Don't fall into the trap. When the time comes, everyone will not be ready or willing to outlay large sums of cash.

Getting a reserve study is very good advice. Start planning now.

Here, someone just posted this simple explanation. ...what needs to be maintained or insured in the neighborhood?

-------

the hoa owns things

these things have an expected 'life' and will need replacement

all the owned stuff needs to be funded as it is 'used up'

eg:

start with a new roof which cost 50,000

expected service life may = 20 years

1/20 of 50,000 needs to be saved every year

repeat for EVERY item owned by hoa

it is actually CRYSTAL CLEAR

y'all own stuff - y'all need to pay for it

ps. a community roof is a lot cheaper per 'unit' than individual roofs in detached homes

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