Raising dues

We are considering raising our HOA dues. At this time they are some of the lowest in the area. We have little liabilty, but going into our 4th year, I feel we need to plan for the future, upkeep, improvements ect. What is the proper way to raise dues?

Thanks

Check your CC&R's. You may be able to raise your dues annually by anywhere between 3 - 20%. It depends on what is in the rules. It is any dues hike higher than the allowable that needs a special meeting and majority member vote to raise. All of which is also covered.
Don't raise dues for dues sake. Just because your neighbor's HOA has higher dues doesn't mean your HOA needs to. Our HOA dues were only $50 a month. The next HOA by us was $135 a month. We had similar properties and even shared the SAME landscaper at one point. Surprisingly, the difference in our dues and others didn't make much of a difference when it came to buyers. Each HOA had their own issues that made them attractive enough for purchase despite dues rates.
It is a good idea to have a review of the needs of the HOA. It is always a good time to find out what the future or current needs are so that long-term planning can go into effect. I always say it's good to have what is equal to 3 - 5 months of dues collections in the bank/savings. Emergencies happen. Dues don't get paid and legal costs arise.
Your HOA still has the option of special assessments if need be. If the raising of the dues doesn't agree then maybe just assessments for work that needs to be done is a better option. Remember the money raised should be for a specific purpose with specific price. That has to be divided evenly amongst ALL the homeowner's. The HOA is ONLY funded by it's owner's for it's owners.

Our dues are annual dues, $150 per year. Before the HOA was turned over from the Developer, he raised them to the $150. They had been $120.

But, again, as others said, check your CC&Rs and By-laws to see what you CAN raise them without calling for a vote.

The suggestion to develop a budget, both short range and long range, is an excellent one. Even though you may have enough money now, things change. What happens in that year you need to replace some of the trees or do a major landscaping redo? Or repair or overhaul a signature entrance?

But I have to say, I have never heard of the IRS getting involved in what associations charge for their dues. Granted, we are a non-profit, and we have been fortunate enough to not be in the red at the end of the year, but I'm not aware that being in the black would be deemed penalizing from the IRS, as long as all the revenue came from the non-profit source, assessments.

MindyR - Great question. You are on the path to success!! The proper way to raise dues is to vote upon them in accordance with your By-Laws, and to make sure the increases cover the elements the Association Board is responsible to maintain and replace so as to protect the welfare of the residents and their investments. Have you had an engineering firm perform a Capital Reserve Replacement Analysis and Transition Engineering Evaluation on the elements the owner controlled Association Board is responsible to maintain? If not, your increases may not adequately cover what is necessary to fund the repair and replacement of the elements over time.

Harold, why would you not prepare for the future? For example, what if our pavilion or picnic tables needed repaired? Or the trees in our walking trail needed trimmed back, or the trail becomes onsafe to walk? What if we wanted to improve our landscaping in our entrance? Upgrade signs? Are these not valid reasons to want to prepare for?

MindyR:

I’m in agreement with many of the previously written posts you’ve received, just to reiterate though. I too believe (from what you have stated) that your assessments may be a bit low for you to better operate your HOA properly for all residents in your community.

I’ve received some very good advice from many of the people of this discussion forum and I can assure you that wasn't his intent, perhaps you may have misinterpreted what HaroldS1 had posted.

Although I do believe that PaulM’s post has clarified much of what he may have been trying to express much better for you.

I can agree with much of the advice given thus far and you should use the search box above( as suggested to read more on this particular subject, b/c it has been discussed often.

Best of luck and please keep us posted
We are all learning to ultimately better our selves, our family, and our community.

Chuck W

Thanks again everyone! You have been a great help once again. Harold, your web link was also very helpful......I'll study up and present it to the board.

Thanks again

What you need is a BUDGET! You can not just pick a figure that looks or sounds good. What does it take to run your association? Make a budget for operating expenses for the year, included a well thought out reserve account for , long tearm improvements roofs etc. then break it down by owner then present it to the owners. You must be able to justify every item! Good luck!