Use budget data to explain an assessment increase

I've been in board meetings when the current board says they're way short of money and a major repair was not done by prior boards and they didn't raise assessments. It's a hard thing to swallow. But it's unfortunately pretty common. So board members hate to do this work and consider raising assessments. Most board members are on fixed incomes and are retired. Raising assessments on themselves and others in the community is patently distasteful.

But running a corporation and being a member of the board requires hard decisions and really means that you need to look out for the welfare of the corporation. Regardless of your personal situation or how it looks on your neighbors. So here's what I tell every board. Your job isn't to keep assessments low. Two. It's to run the community like a business. And your assets and the property and your income is from owner dues. Three. Your expenses rise.

Just like the cost of groceries and oil change increases over time. And four. So your income needs to go up too. It happens. It's life. Everyone expects it. And if you hold and you don't do those increases, they may start wondering whether you're going to be funded okay in the future. So managers, here's what you want to do. So the board can sell it to the owners. One, have bids from your contracted service vendors and plug them into the budget.

Managers, you take the actuals from the utilities. You call the utilities and ask them what increases they expect from the upcoming year. Three, estimate from the past three years of data what amounts to include for the other line items. And four, hard data will cover your need to show the homeowners that you had no choice but to increase assessments because that's what the numbers told us to do. You want to hide behind the data.

You want to say, I really tried not to increase assessments. However, the data told me that we have to do it. I'm sorry, but we're making a 3 % increase, 5 % increase. But you do want to check your documents and make sure that the percentage you're recommending is allowable because many CC &Rs have a cap on how much you can increase. As a manager, you need to sell it to the board. Follow what I suggested, and it should be easy to follow and get an approval.

Lastly, board, you want to give the homeowners an expectation that as inflation rises every year, so do the costs and managing the infrastructure in a community. Tell them you'll use the math and data to determine the number each year and explain it to the community as well.