Although
most homeowners understand why there is a need for assessments, it doesn’t mean
they like paying them. Even worse is when they receive a notice that their
assessment dues will be increasing yet again. In a day and age where everything
seems on the rise, including groceries, gas, and utilities, a homeowner is
already under pressure when it comes to ensuring their hard-earned dollars get
them everything they need and want.
That’s
why it’s more important than ever for an HOA Board and its members to find ways
to keep assessments from constantly increasing.
It’s a challenge to maintain a
balance between fulfilling the HOA’s financial obligations and ensuring the
assessment fees remain as low as possible. Although it may seem like a
never-ending conflict between those two issues, it is possible to achieve.
The Challenge of Striking a Balance
It’s
not just the cost of consumer goods and services that's on the rise. In
response to the increasing cost of materials, numerous vendors and services an
HOA uses are also going up. Since these products and services are necessary for
making repairs and improvements necessary to maintain an HOA’s value, the Board
must find a way to absorb the higher costs.
The Role of Assessments
This
is where assessments do the work of absorbing those costs. There are two types
of HOA assessments. First, the monthly assessments are for the basic upkeep
like landscaping and amenities maintenance as well as other ongoing expenses.
The
second type of HOA assessment is what’s known as a special assessment, which
covers larger projects and costs that don’t occur very often. For example, a
special assessment may cover extensive pool repairs like re-plastering or a new
pool deck. Or, this special HOA assessment could pay for a new clubhouse roof.
If the regular HOA assessment is low or if there are no reserve funds in place,
the Board may issue a special assessment.
Tips For Effective HOA Assessment
Management
Despite
facing rising product and service costs, there are ways that an HOA Board and
community members can do to keep fees from increasing or, at the very least,
ensure they don’t increase too fast or too often. Here are seven tips for Board
and community members that can help maintain current assessment amounts while
addressing external cost pressures:
- Ensure homeowners pay all fees, including regular and special assessments. One way to help make this happen is to accept automatic payments. This allows homeowners to schedule recurring payments from their bank so they don’t forget about it each month.
- Keep tabs on association money. Regular reviews of the financials on a quarterly basis can help the Board identify how the money is being spent. Unfortunately, there may be unethical Board members so ongoing audits may spot misappropriation of funds.
- Get the best value for critical community services. Each year, it’s a good idea to assess vendor costs and identify any vendor that may not be providing the best value for their services. This may require that you obtain additional bids for certain projects or regular service to ensure you are getting the most bang for the Association’s bucks.
- Reduce overhead costs as much as possible. Since your HOA most likely maintains a budget, it’s a good idea to regularly check on how well you are sticking to those figures. Tracking spending in each area of the Association often helps identify areas that need improvement. For example, changing all light bulbs to LED options around common areas or parking structures could reduce energy costs
- Involve everyone in improving and maintaining the community. Homeowners must take pride in their community. Everyone has to pitch in and keep their homes looking nice as well as following community rules. It costs money to take action against homeowners who violate the community rules. Plus, when community members don’t take care of the community’s parks, pools and other common areas, then this also costs money to clean and repair.
- Take care of smaller issues sooner than later. By addressing problems as soon as they arise, they are less likely to become more expensive issues in the near future. For example, repair a pool leak before it leads to underground flooding that can result in an extensive overhaul of the pool structure and decking.
- Foster community spirit. It's important to create a sense of community where everyone believes they can make a difference and where everyone cares for each other. Share articles in newsletters that illustrate the benefits of maintaining a community’s aesthetic, including how it influences home values. Provide regular information on why and how assessments may be changing or announce the good news that everyone’s efforts helped maintain the assessment amount for another year. Host community events that show gratitude for homeowners' efforts. It's also an opportunity to bring homeowners together so they feel part of something bigger.
It’s a Collaborative Effort
To a
certain extent, most homeowners know HOA assessments will eventually go up.
However, working together on these seven tips are some proven ways to maintain
or slow HOA assessment increases in the future.
For more information please visit: www.AvalonWeb.com
