Gigantic Increase in Dues

Your governing documents may limit how much your assessments may increase each year.

This part of the statute refers to a section a, which you didn't include - and that's where you should start. How does the law define "inadequate reserves?" When does this law take effect?

Actually, it would have been easier for you to just Google the law because some reserve study specialists and HOA law firms may already have something on their websites that explain it in plan English - start with this one: https://www.lawnj.com/news-resources/important-changes-in-new-jersey-law-requiring-structural-inspections-conducting-capital-reserve-studies-and-funding-reserves-for-condominium-associations-and-cooperatives/#:~:text=The%20new%20law%20requires%20community,that%20the%20association%20is%20obligated

I think some (maybe all) of your questions are answered in that article, but I think the primary takeaways are:

(1) do you have a reserve fund, and if so, has it been funded according to the reserve study recommendations?
(2) how old is your last reserve study - if you haven't had one in the last five years, get that done THIS YEAR so if you are behind (and most HOAs are) you'll know how underfunded you are

You can forget about avoiding assessment increases - that's how many HOAs wound up in this position. Budgeting isn't easy, but for some reason there are homeowners who think things will cost the same as they did when they bought their home. You can plug any number in an inflation calculator (there are several on the web) and you'll see prices from two years ago doesn't buy the same amount in 2024.

Will you have to increase assessments by 10% a year for the next 10 years? Possibly, but get your information first and review it with the last 3-5 years of income/expense reports, so you'll be able to provide homeowners with the numbers. It might be easier to tell homeowners to expect a 10% increase starting in 2025 and continuing for the next 10 years unless they'd rather pay a special assessment now to infuse cash into reserves. Maybe you'll have to consider doing both.

In my community, we had a reserve study two years ago and found we were horribly underfunded (we already knew we were, but this study showed how bad things had developed), so at our annual meeting, our president said from now on, assessments will be increased to the maximum allowed by the documents for the foreseeable future. I'm sure there was some grumbling, but those of us who attended also heard a presentation by the reserve specialist so we weren't surprised. I was surprised even less because I remembered how awful the numbers were when I served on the board, and at the time, I remember saying we'd probably have to resort to this because too many people would say no to a special assessment. Even that may be something the board will have to consider in the future because we also have roof replacement on the horizon.

A few more suggestions:

When you look at the last 3-5 years of operating expenses and reserves, consider which line items in the operating budget have increased faster than others and figure out why. For example, you've probably seen plenty of conversations on this website already about insurance, so it might not hurt to have a chat with your insurance carrier about this law and any implications for coverage. Premiums have spiked and the last thing you need is for them to have a look at your reserve study and use major underfunding as a reason to jack them up even more - or drop you altogether. They might even give you guidance on doing it or suggest someone who can do this for you.

On another conversation, I suggested that the poster get a complete risk assessment for the community so you can identify problem areas and what you can do to reduce risk (e.g. half dead trees that should be cu. t down down, otherwise they might land on a building from a storm)

Have your reserve study specialist attend a special homeowner's meeting where he or she can answer questions about the study. If people see what's at stake from someone who doesn't have any skin in the game, they might not howl about the board not caring about people on "fixed incomes." Most of us are on fixed incomes anyway (some more than others), but housing isn't cheap and never has been. The specialist might also be able to educate people on the new legislation and why it came to be.

Hopefully, you don't have the kind of delinquency issues that plagued my community for so long (a big reason why we're underfunded today), but it still wouldn't hurt to take a look at your collection policy to see if something needs to be changed. Ditto for reviewing the performance of your attorney in collections. Sometimes, it's better to get a specialist and leave the association attorney for general issues.

Amenities are great, but it may be you'll have to make a hard decision on what's really useful. For example, we got rid of our pool because it was old and really needed replacement, plus we had issues with people misbehaving that sometimes led to increased repair costs (I don't know why kids thought it was funny to toss crayfish in the pool, but they did). We also saw that the percentage of users compared to the number of residents was really too low to even justify keeping it. We had homeowners vote on what they wanted to do after showing them the numbers and the vast majority voted to kill it. It's not missed.