Topics associated with your wallet can be hard to discuss, but sharing the cost of the upkeep and maintenance of a community falls on the shoulders of every homeowner. It’s the duty of the HOA board to make decisions that are in the best interest of the community as a whole, and unfortunately, that involves deciding when and how much to raise dues. We’ve put together some tips for raising HOA dues in order to help make the process easier.
Why should you raise dues?
The reason behind raising dues usually falls into two categories:
- Inflation and Service Changes – Increases in prices for amenities and maintenance can cause dues to increase to meet those new prices. An addition in services offered or a new contract with a company can also cause dues to increase.
- Reserve Levels – HOAs must maintain a reserve fund to cover the cost of repairs or replacements. HOAs also dip into it in emergencies or when unforeseen occurrences come up; therefore, it’s necessary to have a well-financed reserve ready.
How much should you raise dues?
When deciding how much to raise dues, many HOAs make the same mistake — they base dues levels on a final goal number. Instead of coming up with a goal number for the year, think about the level of service you’d like to offer your homeowners and build out a plan and payments needed to help achieve that goal. Providing services that help grow property values is the main goal of the HOA board, and you want to keep that top of mind.
How to ease homeowners into raising HOA dues
Raising dues can come with some disagreements and backlash, but there are some ways you can make the transition more seamless and get residents on board with the increase.
- Start having conversations about the increase in dues several months before they go into effect. You want residents to have the ability to raise their concerns, get comfortable with the idea, and properly budget for the new cost.
- Be transparent about why the dues are going up and what they will be used for.
- Get feedback from members on the association’s annual budget. By allowing residents the opportunity to read and review the budget, they’ll feel like they’re a part of the process and have a better grip on how the board came to the decision to increase dues.
- Inform residents of the long-term goals of the association and how the increase in dues now will help the community down the road.
- Outline what the next steps will be. Residents want to know the entire process — when the new HOA dues will go into effect, when the association budget will be reviewed again, how much each member’s dues will be allocated in the budget, etc.
- Invite questions, comments, and concerns. The worst thing that can happen when announcing an increase in dues is for residents to let their feelings fester. You want people to voice their opinions, so you can open a productive discussion and show the board’s point of view.
If your HOA board is considering raising HOA dues, needs help creating an annual budget, or simply needs help managing day-to-day tasks, contact Prism Realty Management. Give us a call at 512-676-5842 — we’d be happy to talk to you about who we are, the services we offer, and our process.