Small TX HOA with a Big Problem

you must either:

raise the dues to 677 per month

OR

reduce your expenses to 18,554 per year

OR

borrow the difference until the banks say 'no more' then pay up AND pay the interest

IF YOU CAN'T AFFORD TO LIVE THERE, DON'T

ps. do y'all have retention ponds? lakes? storm water drains?

if so, check out what THEY will cost y'all 'down the road'

best of luck

Welcome to HOATalk, Austin.

It does look like you'll need to raise dues. Your current management fee doesn't sound out of line, but what about your landscaping? Hard to know if $900 per month is too much because we don't know what's involved every month at you HOA.

Are you putting anything aside each month or year into a reserves account? This is to pay to replace things that will wear out some day, e.g., fences, sprinkler systems, roads if you're responsible for them.

Sometimes, developers keep dues artificially low to attract buyers.

John,
Although it looks like the dues need to be raised to cover expenses and for reserves, I don't believe raising them to $677 per month is necessary. That's $20,987 per month or $251,844 per year.

Don't be so hasty with your IF YOU CAN'T AFFORD TO LIVE THERE, DON'T. That's not being helpful at all. It's just being rude.

It's a pretty simple concept, raise the dues and reduce your expenses.

Thank you all very much for the input. I agree we're running our budget a little bit like the Federal Government at this point, and it probably is as simple as either raising revenue or cutting expenses. The ship has sailed for awhile on reducing our landscaping expenses because we just entered into a new contract (I was outvoted). No home owner likes hearing the news that we need to raise dues, but the above poster was right: we own things and those things need eventual maintenance and replacement. At this point we aren't putting anything aside, and that's a recipe for an expensive disaster later down the line.

Even though you entered a contract with the landscape company, depending upon the contract, you still might be able to save.

For example, ask for a breakdown of services and be willing to take a critical look at your landscaping. What is the major time-consuming part of the landscaping job?

With the rising cost of water and concerns about drought, is your landscape waterwise?

In most cases, your major expense will be the proper care and maintenance of the lawn. If your landscaping contract doesn't include things like yearly re-sodding or re-seeding, aeration, fertilizing and weeding, then you might also want to get a detailed list of what your contract does include.

Other things that might not be waterwise and thus costly during the summer months are non-native trees or trees that were not meant to be in your weather zone. I also commonly see the usage of annuals in landscaping at institutions and that means a cost of replacement of materials each year as opposed to using perennials.

Depending upon your landscaping contract, you might be able to change things when some services become unnecessary (e.g. the removal of lawn areas means the cost of mowing is no longer necessary).

The removal and replacement of lawns can be a controversial subject, but remember that lawns like the sport golfing came from the United Kingdom (golf came from Scotland) and the climate there is vastly different from the West or Southwest.

When we lived in a HOA, the board did let the lawn die during a drought (Mexican salvia and some other drought tolerant plants were installed at no cost to the HOA and were well-established), however, once the drought was over and restrictions lifted the new board re-installed the lawn and then went after only the treasurer (my husband) to reimburse the HOA for the damage. The decision had been unanimous and with the original restrictions made by the city (watering only twice a week during the summer), was a moot point.

Of course, the board lost that lawsuit and two others in less than a year against us. After we left, they did install a lawn and you might have heard that California is having a record drought. Currently there is legislature being discussed at the state level which would protect HOA members from fines for letting their lawns die and to insure that drought tolerant plants are not banned from HOA boards.

Our HOA community was very small (only 10 units).

Dave,

I Believe that Austin's Association is using a management company or other contractor. I base this on the comment he posted "You might think that with so few homes we could manage ourselves, but due collection, violation notices and yearly tax filings are just not something we want to take "in-house."

Therefore, even though Landscaping is cited as the highest expense, I suspect that it's actually the management company, which Austin has implied they don't want to get rid of as they don't want to do the work of collections and enforcement themselves.

Right Tim, I forgot to add reserves, but with "no amenities" it should be negligible.

I understand not wanting to deal with the hassle of administration, but ~20% of revenue for a mgmt company seems like a lot.

So our landscaping fees ($900 per month) cover the mowing of common areas and the maintenance of our trees, shrubs and flower beds. There is (I believe) two modest change outs of color each year. In my opinion we aren't getting the value for the money with our landscapers. Then our Management company charges us $300 per month to basically handle due collection, paying our bills and filing our taxes. Then of course we have utility bills which are $200-300 a month when the weather gets warmer. These are all single-family homes, so each home owner's yard is their own responsibility.

Dave, I'm curious, how has you experience been self managing? How has managing the community, filing taxes, etc. gone?

Say, Austin, now that others have mentioned it, do note that my first posts suggests you need to contribute to reserves. but I'm not sure what components should be on your reserve schedule. Is your HOA responsible for street lights? ending? Curbs/sidewalks? Sprinler system?

I'm also wondering why your utility bills go up in the summer? Increased water usage? Or?

Question everything set up by the builder, not because they are a bad person necessarily, but because it's your fiduciary responsibility to do so. Question everything that was put into place by the builder and the management co. That's a huge monthly landscaping bill. Crazy that the board voted to sign that contract, is there a way to void it or overturn the vote? Did anyone get other bids or did they just want to keep the status quo? If that's their attitude and you can prove differently then gather support and vote them off.

Assuming you've already sent out a budget and financial statement for them to see for themselves, surely they can the writing on the wall, and if you try to cut down that landscape bill, it would show good faith into increasing the assessments in the near future.

We are trying the self management route now and it's pretty darn easy at this point, but I don't expect that to be the case 100% of the time! Good luck!