Gradual Gains: Five Unexpected Benefits of Raising Dues

As budget season arrives once again, it's time to reassess the financial strategy for your community. What drives your decision-making process? Are you crafting a vision for the future? Aiming to maintain harmony in the neighborhood? Or simply avoiding a rise in dues?

If your focus has been on keeping dues fixed, it's worth reevaluating. Board members have a responsibility to safeguard property values, and dues play a crucial role in supporting this objective.

Many board members hesitate to ask residents for higher contributions, fearing backlash or loss of their positions. There's a concern about being perceived as poor financial planners if they propose an increase. However, as costs inevitably rise in areas like insurance, utilities, and salaries, a static budget will eventually face challenges.

How can a budget-conscious board meet its community's needs while minimizing conflict? By shifting the narrative to highlight how gradual dues increases can benefit everyone.

A striking 72% of boards are underfunded in their reserves. A significant portion of this deficit arose because boards avoided hiking dues during economic downturns. Even when state laws mandate it, loopholes allow communities to vote against such increments, with homeowners betting on selling their property before repairs are needed.

Nonetheless, necessary expenses emerge, often resulting in hefty special assessments. By implementing small, regular dues increases, communities can avoid these burdensome payments in the future.

With inflation averaging around 3% annually, most individuals grasp the rationale behind minor yearly adjustments. It's crucial to steer clear of dramatic hikes, opting instead for modest increases that are more manageable.

Financially and emotionally, smaller, consistent increments in dues are less taxing for homeowners. Most are unable to handle large special assessments, which creates undue stress.

Special assessments can appear unjust, impacting all homeowners equally regardless of their length of residency. This can breed discontent, as new residents may feel unfairly penalized. Planned yearly increases in dues are more predictable and equitable.

Today's homebuyers are discerning. They seek transparency in financial matters and want assurance that reserves are well-funded and financial planning is robust. Communities with financial gaps may see potential buyers walk away, which could ultimately lower property values for everyone involved.

Investments in community amenities like new playgrounds, dog parks, or tennis courts can increase property values for all residents but do require financial input. Residents are more likely to support dues increases when they see direct benefits from enhancements they desire.

It's important to convey that postponing maintenance for the sake of maintaining a flat budget ultimately leads to increased costs. Emergency repairs and hurried purchases due to deferred maintenance often result in significant expenses. Small dues increases facilitate proper upkeep, providing long-term savings. Loans or special assessments bring greater financial strain than gradual increases.

Not funding reserves or delaying maintenance can lead to a cascading effect, increasing operating expenses and affecting insurance costs and claims. Clear communication about the necessity of dues increases can foster understanding and acceptance among homeowners.

Keeping budgets flat may seem appealing, but over time, it results in greater financial, emotional, and temporal costs. Adopting a strategy of small, steady dues increases pays off by ensuring the community's well-being and stability.