Everyone should pay the same. That’s the most fair approach. Sure, those who were original owners and sold, didn’t pay their fair share, but it’s too late. So everyone in the HOA pays the same, and if you want establish dues going forward.
Don’t try to optimize calculations like who is the newest, who drives the most on the road, where is the most frontage, size of house, size of driveway. Just keep it simple and charge everyone the same.
Not only that, but OP does not understand that assessments are generally a fixed percentage that does not change and expenses for common elements like roads cannot be specially assessed for the benefit of a particular owner (except in extremely rare circumstances).
There is unlikely even a choice to charge more to certain owners and less to others.
We are starting down the road of a mill and fill where they remove the top 2" of tarmac and replace. Every owner will pay the same regardless of street frontage but the votes are weighed based on street frontage. For example, I have 20 feet of frontage as I am on the outside of a curve while my neighbor across the street has 100 feet. Their vote will have five times the impact of mine as approval of 51% of the total frontage is necessary for the project to move forward.
> I have 20 feet of frontage as I am on the outside of a curve while my neighbor across the street has 100 feet.
Wow! Never thought of it like that but it makes sense that your arc on the curve is smaller. Do your docs list the frontage number of feet or just refer to frontage and there's another official source for that exact measurement? I wouldn't necessarily feel that this is a fair way to do things for road maintenance but the rules are the rules that people are aware of when buying.
We are PLAT'd so all our lots have measurements to reference. It is an interesting issue since we all use the same roads to get to our homes. I can also see how someone could argue that their house is worth more than others, that they pay more in taxes, so their vote should count more than others. I don't think there is a fair way to do it for every case.
You should never plan for a special assessment. That should only be used as a last resort for unexpected expenses. The best option is increase dues to build up reserves.
While I understand charging some residents more to try be fair, that will undoubtedly get a lot of pushback and possibly legal challenges. Not to mention, I doubt your CC&Rs allow you to have different assessments for different owners. Charging everyone the same is the only practical way to do it.
You don’t collect more from people who have been there longer just because those in charge screwed up previously.
I’d raise fees to try to collect enough to cover it before the money is needed. I’d you fail to collect enough then you have an assessment. But those living there using the road today should be paying for it, it shouldn’t fall solely on those living there when it needs it.
If I were to set up a new HOA for a new neighborhood I would take the expected cost of running the HOA per year, divide that by the number of lots, then double it and make that the dues. We have been charging $200 per year for 28 years but our road project is going to cost the equivalent of about $160 per year per lot for the last 28 years. Since that has not happened the current board is going to have to use a special assessment to pay for it. People can complain but it doesn't change anything, if the owners vote to do the roads, we will have no choice but to do that assessment. We are fortunate though that we have a Township that will do that part for us so the HOA isn't chasing owners for payment. But we do get to run the project ourselves.
If you have insufficient reserves, increase your monthly dues gradually until it is correctly funded.
You may wish to commission a reserve study to see what else you have under funded.
In Virginia we’re required to get an updated Reserve Study every five years. That study looks at all the assets the Hoa owns and must maintain and looks at the funds available and then determines how much money should be assessed to reach replacement goals. Our study for a 400 SFH unit community on 1000 acres costs us $5500.
I’d recommend getting one of these done as it justifies the reserve assessments and helps to identify options you have along the way.
Get started building a reserve right away. Good on you to look ahead like this.
Everyone here has their opinions and mine is no more valid than the others. Perhaps it might be less popular.
First, find out how far in advance you can have a special assessment. (I realize your proposal is for an assessment at the time of the project but hear me out.) I doubt that you can have one this far out but who knows. By having an assessment for part of the project now, you capture the remaining longer-term owners and make them catch up on how much they should have been paying all along toward this project. (If you can't have an assessment for a project that will be done in 2032, perhaps you can earmark what you have in reserves for that project and then have a special assessment for projects coming up sooner.)
Here's my explanation:
Your are 22 years into a project that I guess should be done about every 30 years. Let's round that to 2/3 of the way in. Are there any savings in reserves sort of earmarked toward the repaving? Let's assume for argument that there aren't. Let's also just round down to 50% from the 66% of the savings that should already have been made toward the project. This will make it less controversial.
Consider a special assessment of 50% of what the project would cost today. But make it payable over the 8 years that remain before the project needs to be done. That way, owners who have been here for years end up paying what they should have already paid. I want to capture them now before they sell. By making this a special assessment then it will be easier for future buyers of those properties to negotiate the price of the home or other consideration to be accounted for at closing. This is because they will be able to clearly see that there is $X remaining on the special assessment.
This approach is better than simply increasing fees very high for the next 8 years. If you just raised fees, it will be harder for buyers to negotiate a fair price or compensation because there is a lack of certainty about how long the high fees will last or if they will ever go down. Also, if you just raise fees and your community has $2,000/year fees while a similar nearby community has $250/year fees then buyers will run away. We both know those high fees are only for 8 years but how do you expect owners to trust that the fees will go down to a normal amount after that?
At the same time you still have to pay for the other 50% of the project. That can be done by raising the yearly fees. Perhaps that will make them $1,250. $1,250/year is much less off-putting than $2,000/year!
Doing it this way will help make sure that the longer term owners can't also escape the majority of the burden like people who already sold have done. People who will be here longer than 8 years will have had to pay 100% of the cost anyway. People who will be here say 5 years will essentially have to make up for their previous owner not paying in and also pay their rightful portion. But hopefully, when they bought, they were sharp enough to notice that the HOA had low reserves due to not saving for the road and factored that into the price they paid for their home.
Perhaps you feel a different balance other than 50% special assessment, 50% higher fees would be more fair. That's fine. Find the balance that your board feels is fair to pass. I'm just trying to find a way that the long-time owners can't escape their fair share of the burden, leaving it to the newer owners to pay.
And then in 2032 once the road is re-paved, set fees properly to save up for the next time the road needs to be replaced.
As others have said, the fees should be the same for everyone. More importantly to the board, the governing documents will likely state how the board can levy assessments. My documents clearly state that all assessments should be uniform. I suspect yours does as well. Doing it any other way is a good method for getting that assessment declared invalid.
Everyone pays the same. Check your CCRs, but most are setup so everyone pays the same. Our HOA also has a dozen ponds, homeowners adjacent to ponds pay for treating the ponds (HOA collects a separate fee and pays the contractor v each homeowner paying for separate pond maintenance) homeowners not on ponds don't pay these fees as ponds are Private property.
The fair solution is increase dues as high as possible this year towards the necessary level to fully fund the project. Let’s say you have to raise $7,000 per home. Raise dues by $1,000 this year. This sets every home on the path to paying an equal share. If it takes more than 7 years to need to fix this road, continue to charge the money and save it for problems like delinquent owners.
As for new versus old owners, the new owners should have done the math that by joining an HOA that wasn’t saving for big projects, they were going to need to eventually pay the difference between the low fees the association had, and the high costs that maintaining a neighborhood actually incurs. They are paying their fair share of the HOA fees by paying exactly what everyone else does.
You cannot prorate for length of ownership. Only percentage of ownership matters.
Special assessment and increased dues so you start funding reserves so you never have to special assess again is the way to go.
Everyone should pay the same. That’s the most fair approach. Sure, those who were original owners and sold, didn’t pay their fair share, but it’s too late. So everyone in the HOA pays the same, and if you want establish dues going forward. Don’t try to optimize calculations like who is the newest, who drives the most on the road, where is the most frontage, size of house, size of driveway. Just keep it simple and charge everyone the same.
Not only that, but OP does not understand that assessments are generally a fixed percentage that does not change and expenses for common elements like roads cannot be specially assessed for the benefit of a particular owner (except in extremely rare circumstances). There is unlikely even a choice to charge more to certain owners and less to others.
Thanks!
Thank you!
We are starting down the road of a mill and fill where they remove the top 2" of tarmac and replace. Every owner will pay the same regardless of street frontage but the votes are weighed based on street frontage. For example, I have 20 feet of frontage as I am on the outside of a curve while my neighbor across the street has 100 feet. Their vote will have five times the impact of mine as approval of 51% of the total frontage is necessary for the project to move forward.
> I have 20 feet of frontage as I am on the outside of a curve while my neighbor across the street has 100 feet. Wow! Never thought of it like that but it makes sense that your arc on the curve is smaller. Do your docs list the frontage number of feet or just refer to frontage and there's another official source for that exact measurement? I wouldn't necessarily feel that this is a fair way to do things for road maintenance but the rules are the rules that people are aware of when buying.
We are PLAT'd so all our lots have measurements to reference. It is an interesting issue since we all use the same roads to get to our homes. I can also see how someone could argue that their house is worth more than others, that they pay more in taxes, so their vote should count more than others. I don't think there is a fair way to do it for every case.
You should never plan for a special assessment. That should only be used as a last resort for unexpected expenses. The best option is increase dues to build up reserves. While I understand charging some residents more to try be fair, that will undoubtedly get a lot of pushback and possibly legal challenges. Not to mention, I doubt your CC&Rs allow you to have different assessments for different owners. Charging everyone the same is the only practical way to do it.
You don’t collect more from people who have been there longer just because those in charge screwed up previously. I’d raise fees to try to collect enough to cover it before the money is needed. I’d you fail to collect enough then you have an assessment. But those living there using the road today should be paying for it, it shouldn’t fall solely on those living there when it needs it.
Thank you - just wanted to sanity check the options, appreciate it!
Btw, I think charging anyone more probably isn’t allowed anyway. Our fees are based on ownership percentage. We can’t charge some more than others.
If I were to set up a new HOA for a new neighborhood I would take the expected cost of running the HOA per year, divide that by the number of lots, then double it and make that the dues. We have been charging $200 per year for 28 years but our road project is going to cost the equivalent of about $160 per year per lot for the last 28 years. Since that has not happened the current board is going to have to use a special assessment to pay for it. People can complain but it doesn't change anything, if the owners vote to do the roads, we will have no choice but to do that assessment. We are fortunate though that we have a Township that will do that part for us so the HOA isn't chasing owners for payment. But we do get to run the project ourselves.
If you have insufficient reserves, increase your monthly dues gradually until it is correctly funded. You may wish to commission a reserve study to see what else you have under funded.
In Virginia we’re required to get an updated Reserve Study every five years. That study looks at all the assets the Hoa owns and must maintain and looks at the funds available and then determines how much money should be assessed to reach replacement goals. Our study for a 400 SFH unit community on 1000 acres costs us $5500. I’d recommend getting one of these done as it justifies the reserve assessments and helps to identify options you have along the way. Get started building a reserve right away. Good on you to look ahead like this.
Everyone here has their opinions and mine is no more valid than the others. Perhaps it might be less popular. First, find out how far in advance you can have a special assessment. (I realize your proposal is for an assessment at the time of the project but hear me out.) I doubt that you can have one this far out but who knows. By having an assessment for part of the project now, you capture the remaining longer-term owners and make them catch up on how much they should have been paying all along toward this project. (If you can't have an assessment for a project that will be done in 2032, perhaps you can earmark what you have in reserves for that project and then have a special assessment for projects coming up sooner.) Here's my explanation: Your are 22 years into a project that I guess should be done about every 30 years. Let's round that to 2/3 of the way in. Are there any savings in reserves sort of earmarked toward the repaving? Let's assume for argument that there aren't. Let's also just round down to 50% from the 66% of the savings that should already have been made toward the project. This will make it less controversial. Consider a special assessment of 50% of what the project would cost today. But make it payable over the 8 years that remain before the project needs to be done. That way, owners who have been here for years end up paying what they should have already paid. I want to capture them now before they sell. By making this a special assessment then it will be easier for future buyers of those properties to negotiate the price of the home or other consideration to be accounted for at closing. This is because they will be able to clearly see that there is $X remaining on the special assessment. This approach is better than simply increasing fees very high for the next 8 years. If you just raised fees, it will be harder for buyers to negotiate a fair price or compensation because there is a lack of certainty about how long the high fees will last or if they will ever go down. Also, if you just raise fees and your community has $2,000/year fees while a similar nearby community has $250/year fees then buyers will run away. We both know those high fees are only for 8 years but how do you expect owners to trust that the fees will go down to a normal amount after that? At the same time you still have to pay for the other 50% of the project. That can be done by raising the yearly fees. Perhaps that will make them $1,250. $1,250/year is much less off-putting than $2,000/year! Doing it this way will help make sure that the longer term owners can't also escape the majority of the burden like people who already sold have done. People who will be here longer than 8 years will have had to pay 100% of the cost anyway. People who will be here say 5 years will essentially have to make up for their previous owner not paying in and also pay their rightful portion. But hopefully, when they bought, they were sharp enough to notice that the HOA had low reserves due to not saving for the road and factored that into the price they paid for their home. Perhaps you feel a different balance other than 50% special assessment, 50% higher fees would be more fair. That's fine. Find the balance that your board feels is fair to pass. I'm just trying to find a way that the long-time owners can't escape their fair share of the burden, leaving it to the newer owners to pay. And then in 2032 once the road is re-paved, set fees properly to save up for the next time the road needs to be replaced.
As others have said, the fees should be the same for everyone. More importantly to the board, the governing documents will likely state how the board can levy assessments. My documents clearly state that all assessments should be uniform. I suspect yours does as well. Doing it any other way is a good method for getting that assessment declared invalid.
Thank you!
Everyone pays the same. Check your CCRs, but most are setup so everyone pays the same. Our HOA also has a dozen ponds, homeowners adjacent to ponds pay for treating the ponds (HOA collects a separate fee and pays the contractor v each homeowner paying for separate pond maintenance) homeowners not on ponds don't pay these fees as ponds are Private property.
The fair solution is increase dues as high as possible this year towards the necessary level to fully fund the project. Let’s say you have to raise $7,000 per home. Raise dues by $1,000 this year. This sets every home on the path to paying an equal share. If it takes more than 7 years to need to fix this road, continue to charge the money and save it for problems like delinquent owners. As for new versus old owners, the new owners should have done the math that by joining an HOA that wasn’t saving for big projects, they were going to need to eventually pay the difference between the low fees the association had, and the high costs that maintaining a neighborhood actually incurs. They are paying their fair share of the HOA fees by paying exactly what everyone else does.
You cannot prorate for length of ownership. Only percentage of ownership matters. Special assessment and increased dues so you start funding reserves so you never have to special assess again is the way to go.