pricing models for HOA dues in a community comprised of several different sub-communities

Started by EricS19 • 11 replies • 691 views

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EricS19 (Arizona)
Posts: 1

Posted:

I stumbled across your website dealing with home owner association issues and thought I would send an inquiry related to a dilemma we are dealing with:

I am writing to ask whether you, or someone you know, has experience in the setting of pricing models for homeowner HOA assessment fees. I live in a community here in Arizona that is comprised of ten sub-associations, each of which is somewhat different in terms of the types of homes (ranging from condos to luxury) and its size (44 to 183 lots). Not all communities receive the same benefits due to the non-contiguous nature of the development where two sub-associations, which are separate from each other, are separate from the other eight. We currently live with a decades-old model where each home owner is assessed the same dues fee; i.e., the same per lot charge. This model has come under question as to whether it is appropriate today; especially so given the range of assessed property values from $120K to over $1M.

Are you aware of any pricing models for HOA assessment fees that may deal with this scenario? If not, do you have any suggestions of where we may turn for advice? Thanks for your time.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Its nearly impossible to change how house dues are allocated. You would need 100% votes to change. Why would someone with a $1m house vote to pay more? Not to mention how much it would cost in legal fees. If everyone is paying the same share in dues, that is the way its going to be forever.

Basically, its not changeable. Dont waste your time.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You don't set dues at "Home value". You set the dues at what it costs to run/maintain your HOA. It's the number of lots that contribute to the budget. A HOA is ONLY funded by it's members for it's members. So it's best to divide by the # of lots. Houses get destroyed. Land stays.

Not sure why you all want to change other than maybe need to do an increase overall if expenses are not being met.

Former HOA President

DouglasK1 (Florida)
Posts: 2,046

Posted:

As Steve implied, the dues responsibility is usually defined in the covenants, which would have to be amended to change the allocation. Typically covenants have a fairly high requirement to change, often 2/3 or 3/4 of all lots.

Are your dues allocation defined in the covenants or elsewhere?

Escaped former treasurer and director of a self managed association.

CjC
Posts: 210

Posted:

This is the exact scenario where I live. We unfortunately set the dues based on a percentage of the County Assessment of your property. This means that the $1M homes pay more than the $120k homes. But both may have the same number of people in them using the amenities. We use the average assessment of all the home in each sub-village as the basis for that village. Even within a village we may have $1M homes down to $300k homes. We would like this moved back to a flat rate (that it once was, still not sure the covenant change was legal) but it would be near impossible to do. The kicker is that the county used to bill you on 40% of the assessed value of your home and moved it up to 100% (while dropping the tax yield). What this did was double our assessments overnight and the HOA thought, great, it's a windfall for us and never corrected it.

SamE2 (New Jersey)
Posts: 310

Posted:

I would think the fees should be based on what you get from the Association. I don't really get why the value of the house should play into it. When I drive my Corolla to the gas station I pay the same for gas as when I dive my Mercedes. If the amenities and services are the same all units should pay the same. I would expect the condos to pay more if the HOA is responsible for more upkeep like siding, roof and so forth than a single home. I understand condo fees being based on square footage of units. Not sure why you would want to change things unless you have a million dollar house and want your neighbors to subsidize the amenities for you.

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By SamE2 on 05/09/2019 7:18 AM
I would think the fees should be based on what you get from the Association. I don't really get why the value of the house should play into it. When I drive my Corolla to the gas station I pay the same for gas as when I dive my Mercedes. If the amenities and services are the same all units should pay the same. I would expect the condos to pay more if the HOA is responsible for more upkeep like siding, roof and so forth than a single home. I understand condo fees being based on square footage of units. Not sure why you would want to change things unless you have a million dollar house and want your neighbors to subsidize the amenities for you.

precisely correct reasoning

RichardP13 (California)
Posts: 3,868

Posted:

Pricing should be based on a few different factors. First, it should be based on the annual budgets of the association. It could be different if you're a single family-detached property, townhome or condo.

Single family are generally the easiest to price. Expenses plus reserve allocation divided by number of units. Unless some of the single family detached have special accommodations that could effect the budgets. I have seen some of them. Single family detached homes generally pay there own insurance and utilities.

Townhomes and Condo should, but not always, be based on the square footage of the unit, depending also on what utilities are included. Properly created budgets will have variable cost and non-variable costs.

More importantly, how your assessments are paid by your members should be found in your governing documents, more specifically your CCRs.

FredS7 (Arizona)
Posts: 927

Posted:

The question only matters when a community is established, that is, if you are a developer.

Once established, the allocation of expenses will be impossible to change.

Try to solve a more tractable problem, like global warming or electoral redistricting.

GlenM4 (Tennessee)
Posts: 141

Posted:

what i wonder is if the 120k community gets to use the common areas of the 1M communities.? IF not then i would surely divide up the community. Where the cost to run the 1M community is paid by them and the cost to run the 120k community would be there hoa fees. no reason why a 120k community has to pay for a pool and club house that they cant use.

if they can use it then it would have to all be even.. unless.. i would think one community is 2 hours away..

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By FredS7 on 05/10/2019 8:42 AM
The question only matters when a community is established, that is, if you are a developer.

Once established, the allocation of expenses will be impossible to change.

Try to solve a more tractable problem, like global warming or electoral redistricting.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Eric

I believe cost could be broken out for each section and dues based on those costs. As an example, let us say Section A has fencing around it. Well that fence will eventually have to be repaired/replaced so Reserve Money for this should be collected and set aside. Let us say $100 per year, per home. Now another near identical section, Section B has no fence around it thus no need to set money aside.

Based on the above fence example, the dues for Section A should be $100 per year, per home more than Section B regardless of the home values.

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