Board Responsibilities to Homeowners - Raising HOA Fee

I have a question that our board will be putting forth to our attorney. We need to raise the HOA fee by $30 - 50 in 2017. Some board members seem to think that the board has the power to do that without a majority vote from the homeowners. After I read the excerpt from our Declarations, I think we do need a majority vote. One of the board members has said that if we do need a majority vote, we do not have to tell the homeowners that they can dissent.

Personally, I think his approach is very cold. (he's an accountant by trade).

Here's the excerpt: (your views would be much appreciated).

"..If the estimated budget proves inadequate for any reason, the Board of Directors may levy at
any time a further assessment against the Unit Owners and notify the Unit Owners accordingly.
If for any reason an annual budget is not made as required hereby, a payment in the amount
required by the last prior assessment shall be due on the first day of each month until changed
by a new assessment. Notwithstanding the foregoing, except for the first year after the
relinquishment of control of the Association by the Declarant pursuant to Section 9 hereof, any
increase in the annual assessment in excess of a percentage equal to the annual rate of inflation
as measured by the Consumer Price Index for all Urban Consumers for the immediately
preceding twelve (12) month period may be disapproved by the Unit Owners holding a majority
of the Association vote...."

Regards,

Carolyn

IMO: your 'docs' permit only a raise in assessments up to the 'inflation rate' UNLESS a greater increase is voted AYE by the membership

Carolyn,

My reading of the quoted passage is that your board has all the authority it needs to raise assessments whenever the board deems it necessary. The unit owners may veto the increase only if a majority of them vote to do so.

The part about the CPI is interesting because it seems to provide a trigger for when a vote may be taken but I think it is not realistic. For example, the costs for water or taxes for your project may rise drastically while the CPI remains unchanged.

I am one who favors giving the board full authority to set assessments based on its knowledge of current costs and future needs. In my association the board has the duty to base the budget on expected costs. Despite that duty, the board fears increasing assessments and tends to write next year's budget based on last year's expenses. While I understand that no one wants to be the one who tells the members to dig deeper, associations are limited to raising funds by levying assessments. Your investment will be lost if assessments are not adequate to cover current costs and reserve requirements.

I normally oppose any scheme that requires members to approve a budget. There is no point in electing a board if their actions are subject to the whims of the members, who retain the ultimate power over the board by way of elections. In the real world, my home is subject to many different taxes levied by several different bodies and not once have I been asked to vote on those rates. I see no reason why a condo should be run differently.

I read it that the BOD has the ability to raise the dues without the owner's voting on/approving it. The owners do have the right to overturn the amount by calling a Special Meeting and rejecting the increase which then defaults to an increase equal to the CPI (about 2-3% I believe)..

Personally I would raise the dues and show the owners why such was needed. I would not call for a vote on it. If the owner's want to call a Special Meeting and vote on it, so be it but I would not enable such.

Our Covenants are similar. They allow the BOD to raise due as they see fit but they must notify the owner's on or before 12/01 and unless the owners call for a Special Meeting and rejects it, it goes into effect on 01/01. I have recommended my BOD do such. In our case from $600 per year to $720 per year. A 20% increase.

Our documents require 60% of members to vote against a budget otherwise what the board develops goes into effect. We have been raising dues about 10% per year for several years trying to get somewhere close to what our reserve study recommends and still barely manage to make quorum at our annual meetings. For $30-50 per year you will probably have some people irritated but I doubt you will have a group successfully mount opposition and get 50% to overturn it.

We do send out a pretty detailed narrative of any major changes with the annual meeting materials so most people have a pretty good understanding of why their dues are increasing.