THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, November 5, 1994 TAG: 9411030287
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: Common Ground
SOURCE: G. Robert Kirkland and Michael A. Inman
LENGTH: Medium: 90 lines
As it is that time of year when the board is considering the budget for the next year, we are hearing all of the complaints and even a few threats concerning a proposed dues increase.
Do you have any possible solutions for either avoiding the increase or finding alternatives?
Our first comment reflects a statement that we have made a number of times: If the board knows that an increase is necessary to maintain the property, then the board must pass the increase in the new budget.
There are, of course, a number of alternatives to a dues increase. They fall into three basic categories:
A reduction or change in services.
Deferral of a planned service or improvement.
Alternative funding.
The first category is both the easiest to do and the most difficult to live with. For example, it is generally cheaper to use dumpsters than to have curbside pickup of refuse.
However, many residents do not like the smell or debris problems that often result from dumpster use.
Examine each of the services that the association provides and determine whether there are alternatives for providing the same or similar services at a reduced cost.
Recognize that each alternative will have its pluses and minuses.
If you cannot find acceptable alternatives, then consideration of reducing the service may have to be undertaken.
Associations have reduced grounds maintenance costs by changing the type and frequency of the maintenance performed.
One large association took all of its large fields and converted them into wildflower meadows. This meant they had to be cut only once a year instead of once a week.
Another association found that it could save over $50,000 a year by replacing all the toilets and faucets with low-usage hardware. While there was a high initial cost, it was offset by the first-year savings, not to mention future savings.
The second category could mean postponing a planned playground or landscaping project. In most cases, this tends to irritate a few individuals while gaining support from the majority.
The other side is that a proposed improvement can be the best way to sell an increase in assessments.
Do not defer improvements or projects that affect the safety or necessary appearance level of the community. If the roof really needs to be replaced, do it.
The third category has the largest number of possibilities for helping with an increased cost. Associations can, in most cases, levy user fees on residents as well as guests. Some of these fees include:
Parking permits.
Guest passes for recreational facilities.
Rental of the clubhouse.
Lease registration.
Pool passes.
Athletic teams.
Ads in the newsletter.
Social functions.
Utility consumption.
All these alternatives and many similar approaches can result in additional income for the association. One of the most successful has been the submetering of utilities such as water, and then passing the direct cost back to the resident.
This results in a reduction of the assessments as well as greater fairness in the billing. The high users pay more than those who use less.
All these approaches require that the board examine the decision to ensure that it does not conflict with the legal documents of the association or state or city codes.
Once a decision has been reached, a general meting of the association should be held to inform all the owners and residents of the change.
Expect and plan for opposition. Not everyone will agree with your decision.
Put the facts together and show the savings and the equity resulting from the decision and all should go well. MEMO: G. Robert Kirkland, president of a Virginia Beach property management
consulting firm, and attorney Michael A. Inman specialize in Virginia
community association issues and are affiliated with the Southeastern
Virginia chapter of the Community Associations Institute. Send comments
and questions to them at Real Estate Weekly, 150 W. Brambleton Ave.,
Norfolk, Va. 23510. To submit questions by phone, call 446-2033; fax:
446-2531. by CNB