Raising homeowner dues can be a difficult decision for a condo board to make. Unfortunately, as the cost of everyday living continue to go up, it is sometimes necessary to raise condo fees to help cover those increases. If fees are not increased to keep up with the cost of living, the communities that chose not to raise assessments will usually find themselves in worse financial shape than expected.
How do residents usually find out about an increase in fees? Most governing documents and state statutes require condo associations and HOAs to notify owners at least 30 days in advance of the effective date. Many times when the fees are raised, however, the residents are blindsided with the increase by receiving the first notification in the mail in the form of a statement without as much as an explanation, only a due date to avoid a late charge. That scenario engenders hostility and anger, just the opposite of the harmonious relationships we encourage in community associations. Therefore, it is extremely important that the board present such an increase in a positive and proactive manner.
The following tips will help alleviate some of the problems that may arise due to an increase in assessments:
- Draft a letter explaining the increase. If the budget allows for the expense of copying, send the letter out as soon as the board approves the increase or include it with statements. Even better, throughout the year inform the owners about the financial condition of the association to prevent unwelcome surprises when they open their dues statement.
- Provide the residents with detailed information regarding the increase such as copies of the condo association budget, most recent financial records, and results of a reserve study. Include charts or graphs from utility and insurance companies that detail their rate increases over the past five years. Providing the residents with these items will help justify the need for the increase.
- Reassure the residents that the board has exhausted all avenues to cut cost. Provide reports showing bids requested and how costs were cut. This will help residents understand that the board did everything in their power to reduce the expenses as much as they could and that the increase is still necessary.
- Offer payments plans if it's an annual or quarterly maintenance fee. Let the residents know that the board understands that the increase may cause financial strain on the household and, therefore, the board is allowing the residents an opportunity to pay their assessments over a short period of time instead of the entire lump sum at the beginning of the year or quarter.
Using a few or even all of these tips when preparing to increase assessments will help preventpotential problems that may arise. Instead of being reactive when owners request justification of the increase, be proactive and provide them with all of the information they need to understand that raising the assessments was a necessary action.
Source: Association Times
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