Cohousing-L Mailing List: Re: Rate of increase in HOA Dues?

[R Philip Dowds (rphilipdowds]

At Cornerstone, capital replacement planning and reserve collections & savings 
have been a bone of contention for a long time.  We’re doing a medium good job 
of collecting and saving money, but we regularly tinker with the collection 
formula and the process for deciding what to replace, when.  To answer the four 
questions:

 (1) The “fully funded” reserve plan is no longer the gold standard for 
managing capital replacement financing.  In a world of unpredictable inflation, 
morphing technology and code requirements, debatable system life spans, erratic 
supply chain disruptions, and evolving community preferences and priorities, 
“fully funding” maintenance for three to five decades in advance is a fruitless 
activity.
      I will spare you the details of how we’ve been jiggering out 
calculations, but here’s the overview:  We look ahead only a decade, with 
special attention paid to those projects that probably ought to happen with the 
next three years; then we craft a collection program and savings strategy 
intended to make sure we have (more than) enough money for the entire ten year. 
 And afterwards (IMPORTANT!) we update the Plan every three years; that is, 
roll the ten year planning window forward every three years.

(2) Yes, we’re having the same problems with insurance increases everyone else 
is.  With the same undesired impacts on annual dues increases.

(3) Our annual budgets are now usually adopted by consensus (meaning: all 
objections resolved, and unanimity according to the “I can live with it” 
principle).  But if and when we must do a budget vote, it requires a minimum 
75% super-majority.  In recent times, we’ve been tolerating annual budget 
increases in the 6% to 14% range.*  But we do understand that compounding dues 
at 10%, while real family income increases at 3% or less, is a formula for 
eventual trouble for many or most households.

(4) So far, the tension between maintenance and affordability has been resolved 
mostly in favor of maintenance.  We remain alert to the possibility (or perhaps 
the likelihood) that Cornerstone may come to be unaffordable for a few of our 
existing households.  This is not a challenge intrinsic to Cornerstone or 
cohousing; it’s the consequence of an American housing market totally bent out 
of shape by increasing societal inequality in wealth and income.

———————————
Thanks,
Philip Dowds
Cornerstone Cohousing
Cambridge, MA

  *  Also important:  Keep in mind that annual condo dues are only a portion of 
family housing expense — the other portions being the privately paid mortgage, 
insurance, and utilities.  So for some households, a 10% dues increase may 
translate to a 4% housing cost increase.

> On Apr 7, 2025, at 10:39 AM, jpustell--- via Cohousing-L <cohousing-l [at] 
> cohousing.org> wrote:
> 
> Ceil -
> You raise an interesting issue with rapidly rising insurance premiums.  Here 
> in the Boston area we've seen 15% to 20% annual increases in the last 2 years 
> (at my condominium)
> I've been told it is happening to us all (HOA's that is)
> I did find an interesting analysis for the market in MN that really tells the 
> tale.  In MN HOA's have seen a 90% increase in master policy premiums over 3 
> years.  
> https://www.lcc.mn.gov/cichoa/meetings/20241126/HOA-Insurance-Survey-Results
> They also talk about the reasons.  Though it is a MN only analysis - to me 
> the issues they raise probably affect all 50 states.
> There is no magic bullet listed in the article - but at least it provides 
> some independent support you can send your members about why the policy costs 
> are going up so much.
> I do agree with the recommendations I've seen:1) Make sure NOT to drop your 
> coverage limit - it is importnat to carry a high enmough limit., and2) Do 
> consider a higher deductable coupled with making sure your unit owners have 
> enough coverage in their HO6 policies to cover that deductable for damage to 
> their units.
> 
> John Pustelljpustell [at] verizon.net
> 
> 
>    On Friday, April 4, 2025 at 08:17:27 AM EDT, Ceil Malek <cfrenchmalek [at] 
> gmail.com> wrote:   
> 
> Our community, as many others do, faces sharp increases in insurance rates,
> and in addition, we're trying to respond responsibly to a reserves study
> recommendation that we "catch up" to fund reserves at 100 percent of the
> company's recommendation, which means increasing HOA dues significantly
> (10-14 percent, not for a single year but for five years running). Nobody
> in our community questions the wisdom of funding reserves adequately.  What
> we are discussing is the timetable for increases and the way the
> accumulation of increases impacts dues.
> 
> I have several questions of other communities:
> 1.  Do you aim to fund reserve fund recommendations at 100 percent?  70
> percent?  Some other rate?  How do you determine what's responsible?  Our
> community of 34 homes is about 20 years old.
> 
> 2. Are you facing increases in insurance?  What are they? How are you
> accommodating increases in insurance rates and reserve study
> recommendations as well as ordinary expenses in your community?
> 
> 3.  What percentage of your community needs to approve your budget?  How do
> you address homeowners for whom a considerable increase (10-14 percent
> increase each year for five years) in dues  creates a challenge?
> 
> 4.  How do you manage the inevitable tension between wanting to keep HOA
> dues reasonable and needing to respond to the rising costs of
> maintenance and insurance?
> 
> These are big questions.  We're trying to navigate complex circumstances.
> Putting our decisions in the context of how other communities are
> responding would be helpful.  Feel free to respond to some of the questions
> and not all.  I realize I'm asking a lot.
> 
> Ceil Malek
> Casa Verde Commons
> Colorado Springs, CO 80907
> _________________________________________________________________
> Cohousing-L mailing list -- Unsubscribe, archives and other info at:
> http://L.cohousing.org/info
> 
> 
> 
> 
> _________________________________________________________________
> Cohousing-L mailing list -- Unsubscribe, archives and other info at:
> http://L.cohousing.org/info
> 
> 
>