Raising Assessments

Started by LetA • 22 replies • 486 views

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LetA (Nevada)
Posts: 2,679

Posted:

I just curious to see if anyone else had to raise assessments for 2024 in regards to inflation
and vendor rates increasing. If so, how was it received? We had to raise assessments close to 8%.
Mostly due in part to rising cost in utilities and we hired a new pool cleaner that is much higher than the last company, but
gets high recommendations. I hope that quells the chronic complainers.

The last time assessments was raised was 5 years ago and that increase was HUGE and somewhat unnecessary.

I am expecting the usual keyboard warriors that never show up to meetings, never contact the management company
directly to report issues and concerns, they just hymm and haw on ND.

popcorn from Costco is ready.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

LetA

Dues increases are a necessary evil and should be expected. Be sure your reserves are getting part of it to be properly funded.

Our last dues increase was 25% ($80 to $100) per month. During our recent BOD Meeting it was decided we are holding the dues the same for 2024.

TimB4 (Tennessee)
Posts: 21,059

Posted:

My last Association had to raise assessments 4 to 5 percent every year due to rising costs.

CathyA3 (Ohio)
Posts: 6,299

Posted:

We'll find out next week. The board announced a meeting to discuss the upcoming budget, and they've been sending periodic reminders encouraging people to attend.

Our last reserve study was done five years ago, and the estimates at the time are no longer accurate (particularly the inflation rate). So we'd have to raise assessments for that reason alone. And there are the usual operating expense increases. Fortunately we haven't been hit by any climate disasters lately, knock on wood, so our insurance premium increases should be in the "normal" range.

Our assessments have changed only slightly recently - not enough to reflect what's actually been going on. And the board has been using volunteer labor on top of this. I predict that we're going to get a wake-up call.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We the board was allowed to raise dues up to 3% every year due to cost of living costs. The years I was in did not have to do it. However, if I was there one more year we would have. Last I heard their dues are now $78 a month versus the $50 when I was in office.

Former HOA President

DavidG45 (Delaware)
Posts: 994

Posted:

We will find out shortly - the board meets tonight to finalize our 2024 budget and we are likely going up about 36%. However, in our case it is because we anticipate transition in Q1, meaning we will have to take over the expenses of our common elements. In addition, while our clubhouse and pool are over three years old our reserves fund is tiny - so we are going to have to increase it.

I am currently working on an opening speech explaining what is happening. I know a lot of people understand the process, but a LOT of people do not. I expect a firestorm on social media. My biggest concern, though, is not the complaints (which never end no matter what is happening) but a rejection of the budget. That would place us in a terrible position.

LoriM15 (Florida)
Posts: 1,009

Posted:

We proposed a raise of just over 6% ($25 per month). Half of that is to pay back our reserves for money we spent on hurricane cleanup and repairs. The other half is due to insurance increases and vendor cost increases.

We held a budget workshop and five people (out of 820 homes) showed up. The only real comment was that the person didn't want to hear that we were raising the assessment because of increased costs. He said everyone is using that excuse. I don't know what he wanted to hear - we have real proof of increased costs.

I think this is the year that it's easy to justify increases. Everyone has seen costs going up and understands the HOA has increased costs too.

ND (PA)
Posts: 792

Posted:

Personally I've found that dues increases are palatable to folks if that's the only solution to balancing the budget after the Board/Mgm't Co have proven to the community that they thoroughly explored and exhausted other avenues.

However, if the main reason for dues increase is "inflation" without considering anything else ... then I think that's lame and lazy.

A vendor raises rates? ... The Board should weigh pros and cons of soliciting other vendors for same and/or reduced services.
The cost of supplies has gone up? ... The Board should look for less expensive supplies and/or question if supplies are actually necessary and/or in quantities being obtained.
The project will now exceed available funding? ... The Board should consider spreading the project out over multiple years and/or reducing scope to what is financially available.

It's easy to say that assessments need to go up because what we have been paying for is just getting more expensive. But I propose that what has been paid for should be examined for efficiency and savings to perhaps keep costs the same or (gasp) even look to reduce!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

FYI this is a copy of a letter we sent via USPS to our owners. One note. Our BOD can raise dues as much as we like but it can only be done once a year effective 01/01 with at least 30 days prior notice.

11/11/2022

To our fellow XYZ HOA home owners from your Board of Directors.

Attached please find a copy of our 2023 Association’s Budget.

Please note that effective 01/01/2023, monthly dues (Annual Assessment) will increase from $80.00 per month ($960.00 per year) to $100.00 per month ($1,200.00) per year. This is not an action the BOD takes lightly. Remember, we ourselves are owners.

There are several reasons for this increase. The rising costs from all our suppliers such as utilities, landscaping, and management company. Also, as our neighborhood ages it becomes more expensive to maintain. As far as aging, I specifically refer to fence and sprinkler repair cost drastic increases. This dues increase will allow us to, as we have each year, maintain a balanced budget while properly fund our Roofing Reserves and General Reserve Funds.

Even with the turmoil in the real estate market, our neighborhood remains in great demand. Homes are selling fast and for all time high prices. For the greater good of us all, we must maintain this growth and this increase allows us to maintain the quality and desirability of our neighborhood.

Cordially yours,

XYZ HOA
Board of Directors

SheliaH (Indiana)
Posts: 6,964

Posted:

We're way behind in funding reserves, so our board decided two years ago that assessments would be increased to the maximum (5% - any higher requires homeowner approval and you know how that would turn out).

You might have thought the fee increase five years ago was somewhat unnecessary, but your board hasn't done anything since then, so why are you surprised at an 8% jump? Apparently, your board isn't taking as close a look at income and expenses as it should - they should be reviewing that every year. Sometimes, you can't stop an assessment increase, but I'd rather see something like 2% than being socked with an 8% jump all of a sudden.

You know about the increase in utilities and a new vendor, but you've also seen a few conversations on this website about HOA master insurance and how high it's become (ask anyone in Florida how that's affected that state). There are still supply chain issues, increased labor costs and who knows what this Middle East crisis might do to the rest of the planet.

The best you can do is keep the homeowners informed and show them the numbers - if they have suggestions on how to save money, they need to speak up instead of complaining on Next Door, Facebook or wherever. You might also remind them about Surfside and how those homeowners balked at fee increases for years - didn't turn out will for them, did it?

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

ElleN (Idaho)
Posts: 4,420

Posted:

JohnC46, did you write the letter you quoted above? It is excellent.

KerryL1 (California)
Posts: 14,550

Posted:

So, is Davi's HOA the only one among those who replied where the Owners must vote to approve the budget?? What does this voting comprise, David? Do you need a % of all owners or of those attending a meeting, or? I think I recall that in JohnC's HOA, owners would need to attend a meeting an vote NOT to ratify the proposed budget.

Our Board held an open hybrid budget meeting on 10/10/23. Of 200+ condo units (25% absentee owners) about 30 owners attended. We owners had a couple of time periods to ask questions, make suggestions, etc. No owner vote is required to approve a budget.

Owners in my HOA seem very aware of the increased costs of everything. It's no surprise that the HOA's electric bill went up a lot. So did mine. Luckily, our insurance annual cost went up only slightly, which is a problem for many HOAs in other geographic areas in CA & elsewhere. So

We blew a big hole in our reserves over the past two years with some huge projects--our reserves weren't fully funded in the first place & replacement upgrades put our current % funded below what the we should be. So much of our 7% (it looks like at this moment) dues increase is to rebuild our reserve accounts.

JohnC's letter, it seems to me, is a nice model. It does, though, contain "BOD," which I've never cared for in formal usage such aa a letter like this. It's just me, I guess, but I think spelling out board of directors shows its seriousness of purpose & is more "human" than BOD, which seems like some sort of inanimate object. Oh, yeah, swell there are some like like, but I digress. Another problem is that some think BOD refers to one director. Posters sometime complain, for instance that a particular "BOD" is a bully.

Similarly I always avoided "HOA" in correspondence & in our newsletter when I served on the Board as secretary and reviewed things before they were sent out or co-wrote some of them. To me "HOA" is too often used in a negative way as in, "that's why everyone hates HOAs." So, again this is just me, I always used the word community or, if more formality was need, "Our Association." Using the HOA's name works well, "We here at Bayview are proud to..." I truly think signing off should say the full name of the HOA vs "HOA." But JohnC might have just typed that last "HOA" for us, but not in the letter itself.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By ElleN on 10/12/2023 9:22 AM
JohnC46, did you write the letter you quoted above? It is excellent.

Thanks. A collabration of myself (VP) and the President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Kerry

Our owners could call for a Special Meeting before the new budget takes effect on 01/01. If 51% OF ALL OWNERS vote to reject the new budget then the old budget stands with an automatic dues increase of 5%.

We only got 1 of 112 owners voice there dissatisfaction in writing to the BOD. Granted all did not like it, but they seemed to have accepted it.

MarkM19 (Texas)
Posts: 1,459

Posted:

I guess we are on the lucky side of things. We will not be raising dues and have not done it in the 6 years that I have been on this board. As everyone else has stated our costs have gone up in a few areas. We have managed to trim cost in certain areas and cut back on our Pool monitors during the season to make up the difference. When everyone talks about the cost of living in my mind HOAs are different from personal finances. We don't have certain areas that are affected since we do not buy grocery items, gas or school supplies. Sure, our costs are all going up and I am not knocking boards that have to raise dues I just prefer to look inward for savings before outward for dues increases.

One thing that no one has mentioned is CD rates which every HOA should have most of the Reserve Fund money protected in are up considerably. In our case we have over 750K in CDs that for the past 6 years have gotten less than.0025 interest are now starting to get .0475%. This is all new money to the reserves and amounts to an extra 35K. This will offset adding extra funds to our Reserve fund accounts this year and until rates go down if they ever do. Just something to consider.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By KerryL1 on 10/12/2023 10:56 AM
So, is Davi's HOA the only one among those who replied where the Owners must vote to approve the budget?? What does this voting comprise, David? Do you need a % of all owners or of those attending a meeting, or? I think I recall that in JohnC's HOA, owners would need to attend a meeting an vote NOT to ratify the proposed budget.

Our Board held an open hybrid budget meeting on 10/10/23. Of 200+ condo units (25% absentee owners) about 30 owners attended. We owners had a couple of time periods to ask questions, make suggestions, etc. No owner vote is required to approve a budget.

Owners in my HOA seem very aware of the increased costs of everything. It's no surprise that the HOA's electric bill went up a lot. So did mine. Luckily, our insurance annual cost went up only slightly, which is a problem for many HOAs in other geographic areas in CA & elsewhere. So

We blew a big hole in our reserves over the past two years with some huge projects--our reserves weren't fully funded in the first place & replacement upgrades put our current % funded below what the we should be. So much of our 7% (it looks like at this moment) dues increase is to rebuild our reserve accounts.

JohnC's letter, it seems to me, is a nice model. It does, though, contain "BOD," which I've never cared for in formal usage such aa a letter like this. It's just me, I guess, but I think spelling out board of directors shows its seriousness of purpose & is more "human" than BOD, which seems like some sort of inanimate object. Oh, yeah, swell there are some like like, but I digress. Another problem is that some think BOD refers to one director. Posters sometime complain, for instance that a particular "BOD" is a bully.

Similarly I always avoided "HOA" in correspondence & in our newsletter when I served on the Board as secretary and reviewed things before they were sent out or co-wrote some of them. To me "HOA" is too often used in a negative way as in, "that's why everyone hates HOAs." So, again this is just me, I always used the word community or, if more formality was need, "Our Association." Using the HOA's name works well, "We here at Bayview are proud to..." I truly think signing off should say the full name of the HOA vs "HOA." But JohnC might have just typed that last "HOA" for us, but not in the letter itself.

I have no idea how the vote is supposed to happen. Last year I was not on the board. The ratification meeting only had about 20 people (out of 500 homes at that time) and the board did not ask for a vote. This year I am on the board, the PM has not said anything about calling for a vote - but she did mention in passing that our bylaws state if 51% of those at the meeting reject it, then it will be rejected. Until now everyone had felt the wording of our bylaws, which I do believe are vague, suggest it would require 51% of all units to vote it down.

Tonight we just set the budget. Next month will be the ratification meeting.

***

...Unless at that meeting a majority of all Lot Owners reject the budget the budget is ratified, whether or not a quorum is present.

KerryL1 (California)
Posts: 14,550

Posted:

David, thanks. If your citation at the end is from your Bylaws, and there's nothing in some other document or statute to conflict with it, to me the "all" means all owners not all who attend the meeting. The wording see, too, the same as JohnC's. Again--yes, get off rid of that PM!!

Do, David, your Bylaws call for a "Ratification Meeting" by that name? Is it a board meeting, or a meeting of the members? If not in your documents, does Delaware require it?

Our Board looked hard for savings in our '24 budget, Mark, and found some. Still--you can imagine what an electric bill is in 25 story twin towers -- $47,000 for 8/23 for the common areas only. Minimum wage in our area went up so our custodians & 24/7 security officers (all got raises and the newest ones rec'd more). Plus employers are still crying & vying for workers so we have to be competitive.

MarkM19 (Texas)
Posts: 1,459

Posted:

Kerry,
I get it. California and High-Rise building compared to 1450+ SFHs in Texas are totally different.

One thing I did back many years ago just before I became president of the Ca. HOA was to get the board to buy into sending a letter 3 months before we were set to start budget talks. It went to every vendor including the PMC and was very simple they had 30 days to reply if they had plans to raise rates in the next 15 months. If they said yes, we told them we would go out to bid on their contracts. During those years we never lost a vendor or had a price increase. It is much easier for a Vendor to keep an account than find a new one.

LetA (Nevada)
Posts: 2,679

Posted:

Thanks for the replies, our increase is very conservative at best. As for the reserves, they are beyond "well" funded
according to NRS 116 requirements. The good news is we can complete reserve projects a bit ahead of schedule.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Just last evening our BOD voted to put our roofing reserve fund ($200K) into a 23 month CD yielding 4.75%. We choose to use a bank that our PMC has an already working relationship with so as to make the transfer and future reporting seamless.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By KerryL1 on 10/12/2023 3:14 PM
David, thanks. If your citation at the end is from your Bylaws, and there's nothing in some other document or statute to conflict with it, to me the "all" means all owners not all who attend the meeting. The wording see, too, the same as JohnC's. Again--yes, get off rid of that PM!!

Do, David, your Bylaws call for a "Ratification Meeting" by that name? Is it a board meeting, or a meeting of the members? If not in your documents, does Delaware require it?

Our Board looked hard for savings in our '24 budget, Mark, and found some. Still--you can imagine what an electric bill is in 25 story twin towers -- $47,000 for 8/23 for the common areas only. Minimum wage in our area went up so our custodians & 24/7 security officers (all got raises and the newest ones rec'd more). Plus employers are still crying & vying for workers so we have to be competitive.

My citation is from our bylaws, which are nearly word-for-word a match with Delaware statute. Yes, it is a ratification meeting, as outlined below.

(a) The executive board shall, at least annually, prepare a proposed budget for the common interest community. In a condominium or cooperative, the proposed budget shall include a line item for any required funding of a repair and replacement reserve. Within 30 days after adoption of any proposed budget after the period of declarant control, the executive board shall provide to all unit owners a summary of the budget, including any reserves and a statement of the basis on which any reserves are calculated and funded. Simultaneously, the executive board shall set a date for a meeting of the unit owners to consider ratification of the budget not less than 14 nor more than 60 days after providing the summary. Unless at that meeting a majority of all unit owners or any larger vote specified in the declaration reject the budget, the budget is ratified, whether or not a quorum is present. If a proposed periodic budget is rejected, the periodic budget last ratified by the unit owners must be continued until such time as the unit owners ratify a subsequent budget proposed by the executive board.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

David

I would check one thing you mentioned and that is 51% of owners at a meeting versus 51% OF ALL OWNERS. I have seen confusion more then once when it was 51% of all owners not just 51% at a meeting.

KerryL1 (California)
Posts: 14,550

Posted:

Looks to me like 51% of ALL owners must object to the new budget at your ratification meeting, David. We have heard of such the meetings in other states over the years --don't recall which ones. I don't recall any having anywhere enough votes to not ratify the proposed budget.

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