When Raising HOA Dues Is a Good Idea
Dues are always a hot topic for HOAs. The collection and allocation of dues can be a touchy subject for the membership since it directly affects their wallets. However, successful homeowners association management wouldn't be possible without everyone sharing the cost. Board members get in a tricky situation: they want to please the membership. Still, they are also obligated to make decisions in the best interest of the community.
While keeping dues as low as possible sounds like a good idea, it's not always the best idea. Read on to discover when raising dues is actually in a community's best interest.
Fee Stagnation is a Bad Idea
Some homeowners associations work very hard to keep dues at the same level for as long as possible until they absolutely must be raised. To do so, HOA boards find ways to cut corners: delay landscaping upgrades, cut back on lawnmowing in the summer, scheduling janitorial services one less time per week, raising the deductibles on the association's insurance policies.
Dues must be adjusted to meet a community's evolving needs, or the HOA risks running out of cash. While well-intentioned board members think they're "cutting costs" by holding fees steady, they're just chipping away at services. Doing so starts gradually diminishing property values and sets up members for potentially costly emergency spending plans. These plans are called special assessments that address unforeseen expenses beyond the original scope of a project. Therefore, failure to raise dues with changing times doesn't address the problem—it just puts off the inevitable.
Keep Up With the Times
A more innovative way to manage dues is for board members to question a reasonable amount to pay to maintain equal service levels over time. For most HOAs, adjusting dues to keep pace with changes in the CPI (consumer price index). For example, the upcoming minimum wage increases in Florida will raise costs for all hourly workers. These landscapers, janitors, security guards, and painters are crucial to keeping a community looking top-notch, so cutting back on their services is not a great idea.
Therefore, incrementally adjusting dues to keep pace with current—and foreseen—economic changes allows the membership to adapt to inevitable cost increases without getting hit all at once with a significant increase.
How to Approach Changes in HOA Fees
When determining how much to raise dues, boards should avoid basing dues levels on a final number. Instead, they should think about the level of service they would like their community to receive and then build out a dues schedule to enable the HOA to achieve it.
By figuring out what it takes to provide successful homeowners association management that grows property values over time, boards can take the best action to meet those expectations.
Here are some tips to ease membership into upcoming dues increases:
Begin laying the groundwork at least six months before changes go into effect
Remind the members of the use of the dues
Invite membership to read and review the association's annual budget
Inform members of upcoming upgrades to common areas
Share the "why" behind the increase (e.g., minimum wage increases)
Be completely transparent about the entire process
Invite membership to contact their property manager with questions
Contact Us
Significant fee increases—especially if they're a surprise—are not a great way to engender goodwill from the membership. However, planning, frequent communication, and complete transparency help soften the blow for inevitable increases in the community's best interest. Need help? Call Condominium Associates today!