Say the notice puts dues at $80 in January, up from $70. At the budget meeting, the first hand goes up before the treasurer sits down: "Why ten dollars?"
To present an HOA dues increase so owners understand it, send them one page with the proposed budget: each cost line per home per month, last year's actual beside next year's plan, and one sentence, with the paper behind it, for every line that moved more than 10%. Then take questions on the lines, not on the total.
If the answer to "why ten dollars" lives in a spreadsheet only the board has seen, the next half hour is about trust, not arithmetic. Owners can argue with a total all night. A line with its reason beside it is much harder to argue with.
The short answer
- Put the whole budget on one page, per home per month, last year's actual beside next year's plan.
- Give every line that moved more than 10% one sentence and the paper that proves it.
- Send the page with the proposed budget, then answer questions line by line, never on the total.
The page: Seven lines owners can read
Here is the page for one example community: 100 homes, dues of $70 a month, and a reserve study that asks for more than the dues have been setting aside. Every figure is illustrative. Swap in your own.
Have not built the per-home numbers yet? Start here, then come back to this page:
How to Calculate HOA Dues Per Home, and Find the Gap
| Line | Last year (actual) | Next year (plan) | Change |
|---|---|---|---|
| 1. Fixed obligations: insurance, utilities, contracts | $45.00 | $45.00 | 0% |
| 2. Reserve contribution | $15.50 | $25.00 | +61% |
| 3. Administration: bookkeeping, legal, bond, mailings | $6.00 | $6.00 | 0% |
| 4. Collection allowance: dues that go unpaid | $3.50 | $4.00 | +14% |
| 5. Per home per month | $70.00 | $80.00 | +14% |
All figures are per home per month. Under the table go lines six and seven, which finish the page:
- Today's dues against the total: $70.00 against $80.00.
- One sentence for each line that moved more than 10% (below).
That is the whole page. An owner can read it standing at the mailbox.
The ten-percent rule: One sentence per line that moved
A line that moved more than 10% gets one sentence. Each sentence has four parts: the line, the amount, the reason, and the paper an owner can ask to see.
One sentence, four parts.
- Line: Name it as it appears on the page.
- Amount: Up or down, per home per month.
- Reason: What changed, in plain words.
- Paper: The quote, renewal letter or study that shows it.
For the example community, the two sentences read:
- Reserve contribution, up $9.50: our reserve study calls for $30,000 a year, and last year we set aside $18,600. The study is available to any owner who asks.
- Collection allowance, up $0.50: last year about 5% of what we billed went unpaid, and the same share of a larger bill is a larger amount.
And one more line, because owners will look for it: Fixed bills and administration: unchanged.
Compare those with the sentences owners often get: "rising costs", "inflation", "to protect property values". Each might be true. None tells an owner which line moved, by how much, or where to check it.
A reason without paper is an opinion. A reason with paper is a fact owners can check.
The run-up: Five steps before the meeting
From last year's bills to the owners' mailboxes.
- Actuals: Fill last year's column from bills and bank statements, not last year's budget.
- Plan: Fill next year's column from quotes, renewal letters and the reserve study.
- Sentences: Write one for every line that moved more than 10%.
- Board read: Read the page aloud at a board meeting and fix any line nobody can explain.
- Send: Mail the page with the proposed budget, inside your notice period.
Step four matters more than it looks. If a board member cannot explain a line out loud, an owner will not understand it on paper.
The deadline for step five depends on where you are and what your documents say. California shows how much can ride on it. Its Civil Code § 5300(a) requires the association to distribute the annual budget report to owners 30 to 90 days before the fiscal year ends, and § 5605(a) bars an annual increase in regular assessments unless the board complied with the budget-report items it lists from § 5300(b), or won approval from a majority of a quorum of members at a member meeting or election. So in California the report is more than good manners: under § 5605(a), without it or that member approval, the increase may not be imposed.
Not a California board? Notice periods, increase caps and owner votes differ by state and by declaration. Your governing documents and your attorney decide.
The meeting: Take questions on lines, not totals
Put the page on the screen, or in every hand, before anyone speaks. Then walk it in this order:
- The total and the gap. "$70 today, $80 to run the community. Here is where the $10 comes from."
- The biggest mover first. In the example, the reserve line is $9.50 of the $10.
- The unchanged lines last, in one breath.
When someone says the total is too high, answer with a question: which line would you change? Then read what that line pays for. A cut to the reserve line is a real option an owner may propose, and the page shows what it means: less set aside for the repairs and replacements the reserve study lists.
Write every question down as it is asked, with the line it is about, who will answer, and by when. Read the list back before the meeting closes. An answer promised and then delivered does more for the next budget than anything said on the night.
Before the budget meeting: Five things to do
- The lines add up to the per-home total, to the cent, in both columns.
- Every line that moved more than 10% has its sentence, and its paper sits in one folder you can hand over.
- The page names the date, time and place of the budget meeting.
- Every board member can explain every line out loud.
- A blank question log is printed: question, line, who answers, by when.
Download the free Per-Home Cost Sheet: the one page above, ready to fill with your community's numbers and send with your proposed budget. To see what next year's lines do to the monthly dues before you fill it in, try the free dues increase calculator.
Frequently asked questions
How do we present an HOA dues increase so owners understand it? Send one page with the proposed budget: each cost line per home per month, last year's actual beside next year's plan, and one sentence with its paper for every line that moved more than 10%. At the meeting, take questions on the lines, not the total.
How much notice do owners need before a dues increase? It depends on your state and your governing documents. In California, the association must distribute the annual budget report 30 to 90 days before the fiscal year ends (Civil Code § 5300(a)). Elsewhere, your documents and your attorney decide.
Is there a limit on how much an HOA can raise dues? Sometimes. In California, a board may not raise regular assessments more than 20% over the prior year without approval from a majority of a quorum of members (Civil Code § 5605(b)). Your declaration may set its own cap. Your governing documents and your attorney decide.
What if a line went down? Say so, with the same four parts. A line that fell is as useful to owners as one that rose: it shows the board reads the bills.