Has anyone successfully reduced assessment $$?

Adam

What about the Reserves? Are they fully funded?

Assessments are the annual operating budget divided by the number of lots.

If you want to reduce the assessment, reduce the annual operating budget. You can do that by deferring maintenance, eliminating or reducing services, engaging volunteers to take over for paid services, lowering reserve contributions, or disposing of assets.

Whether those are good or viable ideas for your association, I don't know.

I think Henry is largely exercising the correct strategy. Simply saving money as a strategy is not wise nor is lowering assessments unless you're fully funded for today's monthly bills and every future, expected capital project for the next 20 years.

Set aside the "feelings" about what's expensive and not and, at best, hold the line on monthly dues. Don't go backwards unless you can prove you're fully funded for today and about 20 years from now per your capital replacement schedule.

Shaking up vendors is also a good thing unless you're firing vendor simply for being under contract when you become the new president.

We have never lowered our assessments but our CC&Rs restrict raising them enough to even keep up with the cost of living, effectively reducing our spending power each year.

In an ideal situation, the HOA would charge what is needed for the budget and to fund reserves and reduce the assessments if they have excess. Because the cost of living continues to rise most years, that would be unusual. The reality is that if your HOA were able to lower your assessments this year they would just have to raise them more next year or the year after. Prices may drop one year but they will always go back up.

They could cut fat but, my guess is, that many homeowners probably like the fat. All you can do is try to vote for directors who feel the way you do.

Our HOA had a board for a few years that was dedicated to lowering the monthly assessment. You can always look at rebidding contracts and cutting expenses, so that's a good thing. However, it's not a good thing if you are spending down cash on hand in the bank every month and also spending down the reserves. Our HOA, unlike a condo association, is not required to have the reserves restricted, so they were able to touch the funds. Luckily they were voted out after the treasurer revealed that we were using reserve money every month to artificially lower the monthly fees. Spend now and pay later is not a good thing for an HOA.

You may feel like you get very little for your monthly fee. But as others have pointed out, there is liablity and D&O insurance, reserves for future replacement, management fees, audit fees, utilities, etc.

Does your HOA do a detailed budget each year so you can see where the money is going?

this is the crux of the problem. There's been no budget nor operating statement for years and years. I've been able to strong-arm the PMC to print out a current expense report, showing potentially a lot of "fat" in many of the line items, like $35k going to maintaining a small amount of greenspace, $12k going to "other maintenance" with no explanation, $9k going to some account called "other"....as well as a well funded Reserve account already (the HOA has been around since the 90's). ... just seems like we're collecting $100k/yr in assessments and then the money is just disappearing....

I'm in a smaller condo community, 74 units with no amenities. Our annual budget is just under $200,000.

Of this, $55,000 goes to reserves, and the rest is current operating costs. Our community manager charges just under $11,000 per year, or about $147 per unit. Our single largest expense is water and sewer (around $42,000), followed by landscaping and snow removal ($32,000) and insurance ($19,500).

The landscaping budget is very lean since our current board is trying to stretch our dollars with volunteers (that's a rant for another time).

One thing that will vary by community, and which seldom gets discussed, is bad debt expense. Putting it bluntly, a certain percentage of homeowners will not pay their assessments, and the association may or may not be able to recoup these lost dollars. They can add up to a significant chunk of change, depending on a community's demographics and the state of the larger economy.

As Melissa said, there are many HOA expenses that homeowners don't see: legal, accounting (including tax prep and audit), electric (street lights), postage/printing/supplies (correspondence, welcome packet, coupon books, materials for the annual meeting) and the cost of doing periodic reserve studies. Some HOAs also maintain websites, which can be bare bones or more involved and the price will vary.

HOAs are a business, and there are costs associated with keeping the business running - they aren't optional, but they can be invisible to people who've never been involved in keeping a business going.

This is not to say that the OP's board is doing a good job. Rolling several expense categories into a large bucket can make it harder to track and manage them. Yes, it's possible that there is some "fat" in there, but it's also possible that the board has no experience with budgeting and are fumbling around.

I think what the person meant is that most homeowners don't realize how money is spent on things that they don't pay attention to. These same people, at least in my community, are the first one's to complain and the last ones to actually look at the budget/expenses. For example, we spent a ton of money on flood issues that were impacting some condo owners. Another example is the money we spent repairing neglected 40 year old siding. The list goes on and on. The only thing most people here pay attention to is landscape and yard work.

Good comments from everyone.

To say assessments are "too high" is subjective - what's too much to you may be just fine to someone else, so when I served as board treasurer, I never make recommendations based on that. Instead, I look at the quality of the work provided by our vendors - if there was someone who could bring the same level of services for a more competitive price, we'd consider them, perhaps giving them a one-year contract to see how things went. Reserves are also a factor - as Cathy noted, a lot of HOAs (including mine) are underfunded. You get the reserve study and try to find as close as possible to the recommendations - and pray nothing crazy like a fire or a tornado comes through to throw the whole damned thing out of whack.

You and a lot of other homeowners tend to forget about inflation as well. What a dollar bought five years ago is likely to cost more today, and some things cost more than others. Take postage - it's going up yet again this month. Your documents may require some things to be sent via snail mail so you have to think about that. The cost of materials used for maintenance and repairs continues to go up, along with labor.

Barbara noted you could reduce or drop services or defer maintenance. Or skip funding reserves - I think Florida law gave HOAs that option if the homeowners approved it. Surfside and Hurricane Ida should demonstrate that might not be a good idea in the long run. You may not think you'll be in that community 10 years from now and don't have to care about this, but life (and shit) happen when you least expect it.

Delinquencies also play a factor. I can testify that if you have too many, you end up spending more money chasing that - money that could be used for maintenance. The bills continue to go up and those who do pay end up indirectly subsidizing those who don't. That's not fair and that's why I take a dim view of deadbeats. Note I'm referring to homeowners who refuse to pay, not the ones who've had financial hardship like job loss. As long as they're honest and come to the board, we would work with them.