What to Expect When You Are … Increasing Your Dues!
In the vain of the popular pregnancy book, What to Expect When You’re Expecting, this article will discuss what to expect to hear from members of your communities when you are increasing your dues. Many association assessments will increase in the new year and it isn’t news that most homeowners want to hear. But sometimes a fee increase is the best way to keep the association in good financial health – and, sometimes, increases are unavoidable. The following are some of the reactions that homeowners typically have when they hear that their fees are about to increase, followed by the related rationales for an increase.
- “I can’t afford the increase.” When owners choose to live in an association, they must be willing to share the costs, as described in the governing documents to which they agreed at closing. In most instances, assessments are increased in order to be able to continue providing the maintenance to the property that comes with time and to fund reserves for large projects that are expected in the community in the future. Keep in mind that if the association does not maintain the property, real estate values can decline.
- “I probably won’t be living here in 15 years when the streets need repaving. Why should I have to pay now?” According to the US Census Bureau, only 37 percent of Americans have lived in their homes for more than 10 years, with a median duration of 5.9 years. Senior citizens, as well as people living in condos or homes they consider “starter properties,” often ask why they have to fund the association’s future projects. The problem with this “short-timer” logic is that these people are themselves benefiting from the use of the streets, pool, and other common assets paid for by members who lived there before. Members living in community associations agree to abide by the covenants of the community in which they reside. As such, there are certain benefits which come along with the obligations of paying dues. Amenities such as recreation centers, pools, tennis courts, etc. are obvious, but snow removal and exterior maintenance of the property and buildings is often overlooked. Homeowners pay for the incremental use of these items each year they live there with assessments (which sometimes must be increased), which will hopefully keep at bay the dreaded special assessments.
- “Why don’t we just have a special assessment for a specific project?” Suppose you’ve been told that your association’s reserve fund isn’t adequately funded due to non-payment of assessments by many members, or a long history of keeping assessments low. The property is now in dire need of siding repair, but that is going to be expensive. So, the board decides to levy a special assessment to the tune of $5,000 per owner! It can be difficult to collect money when you suddenly have a large expense. We live our lives on budgets and when a large expense arises, it can certain cause financial hardship to some owners. It’s better to collect it gradually (through assessment increases), so the funds are there when you need them.
These are just a few of the reactions you may hear from your owners this time of year when assessment increases are discussed. If you have questions about increasing assessments, or just how to communicate with owners regarding the topic, please contact us at email@example.com or at 720.279.4351.