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Based on these restrictions, can this POA raise rates only 10% of base each year, or cumulatively?

Started by RogerJ15 replies • 239 views

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RogerJ1 (Texas)
Posts: 550
Posted:
Based on the restrictions cited below, can this POA raise rates cumulatively 10% year after year without membership approval (for example, $200 to $220 to $242. etc.), or can it only raise them any year to a maximum of $220 (for example, $200 to $220 to $220 to $220 but no more than that)? Basically, cumulative increases vs only 10% on a static base.

(sorry if there are typos in this. I had to typed it from a PDF that had no way to copy the text)

6.03. RATE OF ASSESSMENT
The annual and special assessments shall be fixed at a uniform rate for each Tract as hereinbelow set forth. The annual maintenance assessment pursuant to Section 6.01 of this Declaration shall begin to accrue on each and every Tract as of the date the original Restrictive Covenants were recorded. All maintenance assessments on all Tracts will be assessed and collected annually, in advance, and shall be due and payable on January 1 of the calendar year for which such maintenance charges are assessed. The rate at which each Tract will be assessed will be determined annually and may be adjusted from year to year by the Board of Directors, as the needs of the Subdivision may require, in the judgment of the Board of Directors of the Association. Such annual assessments shall be uniform and such assessment or charge shall not exceed the amount of $200.00 per acre or for any fraction thereof (the “Annual Assessment”), unless the Annual Assessment is increased as provided for in these restrictions. The Association may collect special assessments as we as annual assessments whenever the members of the Association so vote as provided herein.

6.04 ASSESSMENT INCREASE
The Annual Assessment may be increased each year by not more than ten percent (10%) per year without a vote of the membership. The Annual Assessment may be increased above the ten percent (10%) yearly increase described above only by approval of a majority of the members of the Association wo are present and voting, in person or by proxy, at a meeting duly called for this purpose, one vote per Tract. The Board of Directors shall fix the amount of the Annual Assessment against each Tract at least thirty (30) days in advance of the Annual Assessment period, which shall begin on the first day of January each year. Written notice of the Annual Assessment shall be sent to every Tract Owners subject thereto. The dates shall be established by the Board of Directors.
DouglasK1 (Florida)
Posts: 2,046
Posted:
I would guess cumulative. Each year it can be 110% of the prior year's amount.

Escaped former treasurer and director of a self managed association.
BillH10 (Texas)
Posts: 1,217
Posted:
Roger, I agree with Douglas. The base increases to the new amount of Previous Base+10%, the following year the calculation is New Base+10%.
RogerJ1 (Texas)
Posts: 550
Posted:
Thanks
CathyA3 (Ohio)
Posts: 6,299
Posted:
I agree with the others. Basing the percentage on a one-time base doesn't make financial sense, since it guarantees that you'll never keep pace with rising costs. It would eventually bankrupt the association if the owners get stubborn.
LetA (Nevada)
Posts: 2,679
Posted:
State law gives us the ability to raise assessments up to 14% annually. Do we need to, NO!

That don't mean you can raise assessments in back to back years to have on-hand cash for special new projects
then reduce assessments the next year.

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