Maintenance Fee Increases…Sometimes A Necessary Evil

As a member of a condo it is my dream and fantasy to keep our maintenance fees low and avoid the necessity of special assessments.  I never want to see my monthly fees go up, and it terrifies me that I could get slapped with a special assessment of an unknown amount.  I also wish for world peace, a cure for all diseases, and an end to world hunger.  Unfortunately, as noble as these dreams may be I know that they are not possible.  So what to do?

Community Associations are businesses, but they are not permitted to make a profit so what you collect each year is what you are budgeted to spend.  This means that unless there is no inflationary pressure for prices to rise, and zero delinquencies, sooner or later maintenance fees must increase.  There will always be wear and tear on common area elements so reserves should be funded.  Also, there is no law against improving your facilities so that too must be accounted for.  Plainly said if you want to maintain and increase your property value then you must take care of your facilities and there is the rub.

Good planning and proper preventative maintenance will go a long way to keeping your dues at a reasonable level.  Having a board who watches for financial waste and not tolerating delinquencies is equally important to keep your fees where they should be.  Yet, the winds blow, the rains come, time marches on, prices increase and there does come a time when the fees should be increased.  Fighting increases just for the sake of not wanting to pay more each month will only cost an association more in the long run, and bring about the dreaded “special assessment.”  As the old saying goes “you can pay me now or you can pay me later” the only problem is that later is usually under duress and more expensive.

Not funding your reserves or withdrawing from your reserves for regular operating revenue only serves to exasperate the situation.  If your board and management has run your association well then maintenance fees should not increase any more than the rate of inflation, but eventually they will need to be raised and it’s a reality that board members and owners need to come to grips with.

It’s all about mindset and policy.  If a board knows and understands the upward pressure in costs they should deal with it in a way that is as painless as possible.  Small increases annually are better than getting slammed with large special assessments and funding the reserves is a must.  Efficient collections are also an integral part of keeping the fees at a reasonable level, because spending five dollars to collect one dollar is only going to produce larger increases in maintenance fees.  If you are a member of an association and do not go to any meetings during the year, I suggest that you do take the time to review your annual budget (which you will receive in the mail once a year) and attend the budget meeting to be a part of the process, and If small increases are necessary then accept them and encourage your neighbors to do likewise.  It’s not a matter of paying more it’s a matter of paying a little more now or a lot more in the future and as long as I have lived the future has always arrived with a bill in hand.