“Why are our dues higher than the HOA next door?” Or perhaps: “My sister’s HOA dues are less than our dues.” No matter what the one-dimensional analysis of another HOA’s dues are, a great deal of further research is needed. As with many situations, the answer to this may appear to be straightforward, but the answer is rarely clear cut.
For obvious reasons the age of the HOA generally has the largest impact on the expenses. As with any aging property, maintenance and preventive maintenance expenses only increase with time. The composition of maintenance items has an enormous impact on expenses; for example, a swimming pool constructed of concrete has a different lifespan and maintenance needs than a pool constructed of fiberglass.
Another factor with the age of a HOA is the reserve funds. Or more precisely, how well funded are the reserves or conversely how underfunded are the reserves. Ideally, capital expenditure funds would be drawn from the reserves and not the general operating funds. If reserves are not sufficient, dues would have to be increased to make up the deficiency. Conversely, if there are sufficient reserves, these capital expenditures should not negatively influence normal dues amounts.
What a particular HOA is responsible for maintaining is as varied as the colors of a rainbow. Common elements could be nominal such as what is found in many single family home HOAs; for example, just a front entrance sign. Conversely, HOA responsibilities could be as comprehensive as what is found in condominiums communities. The point here is that no two HOAs are the same when it comes to common elements.
Style or Configuration of Home
Notwithstanding common elements, the style or configuration of the homes within a HOA plays a factor in HOA responsibilities and the related expenses. For example, there are a number of HOAs that have “townhome” configurations (multiple floor dwelling with no unit above or below), but the declarations are written as to reflect the dwellings are condominiums. Situations such as this can even be found in single family home structures that have declarations reflecting patio home maintenance responsibilities.
Utilities & Municipal Services
Depending on the municipality or service provider, water/sewer or trash collection may be an individual HOA member expense or could be a HOA expense. Municipalities on multifamily developments will many times only install one master water meter to reduce monitoring and billing expenses. Trash collection is another service that municipalities may not provide for HOAs without additional fees. Our company manages two HOAs that neighbor each other and were built by the same developer; the only difference is one HOA was built before the municipality ceased providing trash collection services for new developments.
Amenities can be one of the most difficult expenses to compare and contrast to another HOA. Amenities can have varying degrees of maintenance requirements and staffing requirements. For example one HOA may have lifeguards, while another HOA does not employ lifeguards.
HOA Size/Number of Homes
An aspect that is often overlooked with regard to expenses is the size of the HOA. With certain expenses such as pool maintenance, a kind of an economy of scale occurs. Consider the fact that an Olympic sized pool costs the same to maintain no matter if the HOA has 100 homes or 250 homes. So the costs can be spread out over 250 homes instead of only 100 homes.
William Douglas Management, providing excellent management services to HOAs and condominium associations since 1980.
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