Goods and services go up over time. Doing an annual maintenance plan and having a reserve study done every few years will help your board understand what should be charged for dues each month to adequately fund your HOA. The other part of the equation is accounting for inflation of goods and services year-over-year.
Opening the conversation to assess your dues can be very helpful for boards so special assessments can be avoided.
- Rising interest rates. No matter what we do, we can’t escape rising prices. As prices increase and dues stay the same rate, your spending will become unsustainable. Even if you have a modest budget, you can never tell when an emergency could occur that forces you to use up any extra money you had.
- Ease of payment. Doing small but steady price increases will be much easier on HOA members’ wallets than sudden price jumps every few years. Small increases normally have less backlash and are easier for homeowners to budget around than large, irregular increases. Larger increases are also more likely to go unpaid, reducing your budget even further.
- Caps on annual increases. In most association’s governing documents, there is a maximum percentage that you can increase your dues every year. When you try to catch up with a large due increase, the cap percentage may not be large enough leaving your HOA to run at a deficit until you can increase prices again next year.