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When the Board Decides to Raise the Monthly Assessments – Telling the Owners

At the end of every calendar year, board members for community associations gather around conference tables, dining room tables, or tables in local libraries to have the unpopular and often dreaded discussion of how to explain to owners in their communities that their association monthly assessments are going to increase for the upcoming year.  We know how stressful this conversation can be and we can relate to that feeling of balancing what is best for the association versus “what will the owners think about raising the fees.”

That said, it is important for board members to realize while these conversations can be uncomfortable, they are necessary.  Board members must keep in mind that they act on behalf of the association as a corporation, not on the behalf of individual owners or a group of owners.  For most community associations, the annual budget does not need to be approved by the owners.  Thus, for many, the board has the ultimate discretion as to the financial decisions that are made for the association.  If the board knows that it is in the best interest of the association to raise the monthly assessments, it should do so.

Following is a list of helpful tips for the board to consider when communicating the fee increase to owners:

  • Don’t wait until the end of the year to explain the increase; if the board knows the increase is coming, tell the owners sooner rather than later. Owners will appreciate the transparency and they can begin to plan ahead for the increase as well.
  • Evaluate and analyze the costs of standard services that the association has paid for annually (landscaping, snow plowing, etc.).  Have the costs increased over the past few years? Identify those increases and use those numbers to explain how assessments must increase since the costs for those services are increasing.
  • Does the association’s reserve study require more funds to be allocated to reserves? If the board is raising monthly assessments to increase reserve contributions, the board is ensuring compliance with Ohio law.  Be sure to explain that Ohio law requires sufficient funds be placed into reserves for the repair and replacement of major capital items so as to avoid “special assessments.” 
  • If the board is aware of the costs for major projects to be completed in the near future, identify those projects and explain how they may be a contributing factor for the increase but will benefit the community in the long run.
  • Lastly, remember to explain that board members are not immune from the increase-board members must pay the increase as well.

 

 

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