How to set dues for 2023

We're a bit early, but I'm starting to ponder the dues question for 2023. Wondering how high we can set them?

Our CC&Rs have no restrictions on dues or the maximum amount of dues increases, so we can set them to whatever we like. The higher they are of course the more folks will complain. The lower they are the less we can get done, and of course, people will complain about that too.

Historically, we've generally matched home values. As home values plummeted circa 2009 - 2016, so did our dues. As home values climbed recently, so did our dues. Last year was an anomaly as dues decreased while home values increased. This year, home prices have skyrocketed. Would it make sense for our dues to go up as well?

I'm curious about a scientific way of setting dues...right now I think we're more pulling a rabbit out of a hat rather than scientifically setting them to the right level.

Note: I reference 2009 - 2016. I wasn't on the board then (I joined at the end of 2019)...I just pulled historical data from past meeeting minutes and past records of home values.

?

The governing documents of every HOA/COA I have seen states that the regular assessment is set pursuant to the annual budget's estimate of the coming year's expenses, with each owner paying pursuant to her or his lawful interest in the community, as set in Declaration. For HOA's this typically translates dividing the coming year's expenses by the total number of lot owners.

Washington statutes may say more.

What do your Bylaws and CCRs say about how the regular assessment is set?

MichaelT21, isn't your HOA bound by Washington statute section 64.90.525? See

https://app.leg.wa.gov/RCW/default.aspx?cite=64.90.525

https://app.leg.wa.gov/RCW/default.aspx?cite=64.90.080

If so, state statutes require the board to prepare a budget, breaking down the income by category, including computation of the amount of the regular assessment for each unit.

What is the status of your board's budget preparation?

So propose a budget that reflects the amount of renovations you would like to accomplish in the coming year.

Is your HOA even preparing an annual budget, as required by the state statutes and possibly the Bylaws or Declaration?

Michael,

I like your vision and way of articulating your budget needs. If you're not bound to dues increase caps, I'd recommend tracking the CPI-U inflation index for your fiscal year to set your operations budget since those price increases will be felt by your vendors. Then, add more dues to accelerate your parks and grounds renovations if the community supports it. A five-to-seven year refurbishment time horizon seems a bit long unless you have huge acreage that would require a phased approach to the project.

Yes, you are a tad early. And you shouldn't base assessments on home values - you have paid attention to all the discussions on property vvalues, what they consist of and what makes them gonup, down and sideways, haven't you?

Start with looking at your expenses - you may want to wait and not July when you have at least 6 months of data (your income/expense statements). Has something increased faster You anticipated? If so, why? What about reserves, are your deposits keeping up with the study recemmendations? Do You have reserve replacements coming up next year? Are delinquencies under control?

Once you consider that, you can begin to run some numbers for next year. They can be tweaked up to the time you'll need to nail it down in time to send it to homeowners. In my community, we started in August by sending RFPs to current and potential vendors. Once we picked them, our property manager would prepare a draft budget, then haggle over the numbers and sign off on the budget in October or early November (next years budget has to be in the homeowners' mailbox on or before Dec. 1). From thAt point, it's basic math - look at your total and divide by the number of units - that's your new assessment.