Re: HOA Dues Increase
From: Muriel Kranowski (murielkvt.edu)
Date: Sun, 7 Jul 2019 09:40:12 -0700 (PDT)
Our budget system at Shadowlake Village is pretty close to what Diana
described at Mosaic.

Everything that we consider essential expenses goes into our fixed budget,
which is divided equally among all 33 households. All other expenses -- the
things that make it cohousing -- are in the pledge budget, for which each
household determines its contribution, and there's a pretty sizable spread
for that.

 If the first round of pledges comes up short or is a lot more than needed,
we do a 2nd round to get up or down to meet the pledge budget. I don't
recall us ever failing to get to the needed amount, but if we did, we'd
have to consense on what to reduce in the pledge budget.
 Muriel at Shadowlake Village

On Friday, July 5, 2019, Diana Carroll <dianaecarroll [at] gmail.com> wrote:

> What Sharon said is exactly how it goes at Mosaic Commons.
>
> We have one additional thing, though: for complex historical reasons, we
> have two budgets.
>
> One is for typical condo fees and covers required it’s such as plowing,
> insurance, electricity, site maintenance, contribution to our reserves (per
> a professionally-created reserve plan) and so on. There’s not much room for
> debate here: these things cost what they cost. The portion of the budget
> each household pays is based on percentage interest, which in turn is based
> loosely on home size. This is all just like Sharon said about Takoma.
>
> The other is our so-called “cohousing” budget. This covers expenses related
> to community that wouldn’t be part of a typical condo budget. Things like
> furnishings for the common house, fitness room and kitchen (and a small
> reserve fund for replacing those), social events/parties, workshops,
> community gardens, and so on. This is much more fungible than the condo
> budget — if we can’t afford/don’t want to afford a new couch, we can choose
> not to buy one.
>
> The “cohousing” budget is not covered by a specific percentage. Instead
> households make voluntary pledges, and if those don’t add up to fully fund
> the budget, we re-examine the budget and figure out what to cut.
>
> Diana
>
> On Fri, Jul 5, 2019 at 9:28 AM Sharon Villines via Cohousing-L <
> cohousing-l [at] cohousing.org> wrote:
>
> > > On Jul 5, 2019, at 12:58 AM, G/P Looney-Burman <
> > burloon [at] fresnocohousing.org> wrote:
> > >
> > > Our almost-11 year old community of 28 homes has never had an HOA dues
> > > increase, and we are now, obviously belatedly, going to have one.
> >
> > I can’t imagine how you have done this. Perhaps you could share more
> about
> > how you budget and what homeowners pay for vs the Association.
> >
> > > We’re asking for input regarding methods of dues increase: how do you
> > determine
> > > how much of an increase is needed?
> >
> > The admin team looks at increases in things like utility rates, tax
> > increases, income (we have solar panels and sell some of it), etc. and
> > calculates how much that increase is. They also calculate deposits in the
> > various reserve funds — capital replacement, maintenance, emergency.
> >
> > Teams all prepare budgets asking for increases or lowering what they need
> > for various reasons.
> >
> > Then the budget is presented with those amounts. If it is an increase
> more
> > than people want/can pay, the budget is discussed and teams asked if they
> > can lower their requests. The Admin Team also plays with numbers to see
> if
> > some requests can properly be funded with one of the reserve funds
> instead
> > of the operating budget.
> >
> > A new draft is produced and circulated. In the early years this could
> > happen 3-4 times because we needed/wanted more than we could afford. We
> > also had more unplanned expenses so we used reserve funds more frequently
> > and had to pay that back.
> >
> > (Cautionary note: It is not true that new construction is less expensive
> > to maintain than old construction. New construction has to be corrected,
> > particularly if you are trying to use new green materials and
> installation
> > techniques that may or may not work. Or you won’t be able to find service
> > people who know how to maintain them.)
> >
> > > How do you reach consensus or agreement about having an increase?
> >
> > We work it out. Proposals for major projects or new services, etc., are
> > not done during the operating budget process. Those usually come out of
> > reserves and we are well funded on that respect. Those decisions are
> > separate from the operating budget process.
> >
> > The consent problems we’ve had were in the early years when we were
> > inexperienced and had no idea what we really needed, and when we were
> > building up reserves. And most of us were also dealing with a larger
> > mortgage than we planned, arrival of long delayed births and adoptions,
> > adapting to new jobs, etc. The life changes that come with a move.
> >
> > (Ask me about the pile of cardboard boxes beside the recycling bin from
> 43
> > households that are all unpacking at the same time.)
> >
> > > Are your dues based on the size of each home?
> >
> > We have a formula that distributes the fees 50% equally, and 50% based on
> > percentage interest. The percentage interest is a flawed number but is
> sort
> > of related to the size of the unit and other amenities.
> >
> > > Have you had annual increases?  Increases as needed?
> >
> > We only have increases as needed, but I think last year was the only
> > budget in 19 that we didn’t have an increase. Our initial projected fees
> > were woefully underestimated so we had large increases in the early
> years —
> > one being 6% as I remember. We are also blessed with experienced budget
> > people who have worked in government agencies and non-profit
> organizations
> > so they are familiar with this process. For example, they were fully
> aware
> > of how important reserves are. We didn’t have to raise fees later just
> > because we hadn’t prepared for major expenses. After capital replacement
> > and maintenance reserve studies, we have slowly raised reserve deposits.
> >
> > One way to consider the necessity of raising fees is to talk to members
> of
> > the boards of other condos in the area or building managers about what is
> > “normal.” In one way or another, you will have the same costs they do.
> The
> > labor that residents volunteer will be offset by larger expenses in
> social
> > programs.
> >
> > The “standard” in the industry is to expect a 3% increase every year.
> >
> > Sharon
> > ----
> > Sharon Villines
> > Takoma Village Cohousing, Washington DC
> > http://www.takomavillage.org
> >
> >
> >
> >
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> >
> >
> >
> >
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