As you should now be aware, beginning May 1, 2015 the monthly dues will be increasing from $145 to $175. The Board understands that this puts an extra burden on the community, and they spent a good deal of time reflecting on our current situation and the inevitable expenses that will be coming in the years to come.
Unfortunately our community has not done a good job at planning for the future in past years, and it is up to us now to make a change. In 2013 the community had our first reserve study completed, as is required by Utah law. The reserve study was performed by 3rd party professionals who are experts at gathering and studying an array of elements, such as future maintenance cost, replacement cost, and other aspects needed to maintain our community and its standard of living. This Reserve Study is a crucial element in terms of both valuation of the property and maintaining a properly funded reserve balance for repairs and maintenance of all common areas and components. An added benefit of a well-funded reserve is that it positively impacts the value of your home. Conversely, the opposite would also apply. A low or lack of reserve funding will negatively impact the value of your home.
At the time of the study our community was under funded by over $400,000. Shortly after receiving the completed study, the dues were raised minimally to help move us in the right direction. Unfortunately this increase is not enough to make up for the lack of reserve contributions and savings since the community was established. In raising our dues in 2014, our community leadership acknowledged that another increase would be necessary. Our community demographic cannot support the burden of a future special assessment, of several thousands of dollars per homeowner. So we elected to gradually increase our dues over an extended period of time to decrease the burden on our community.
Our current 2015 year budget designates a total of $14.50 per month per unit to be set aside for capital expenses, through the reserves fund. In addition to the reserve savings we have on hand already, this will not be enough to cover the capital expenses for 2015, let alone the years to come as you can see in the chart below.
Current Reserve Contributions
|Starting Reserves||Current Contributions||Reserve Expenses||Year End|
While being under funded by $24,000 this year is shocking, the main concern for the board comes in 2023 when several large repairs are anticipated. These repairs will cost over $500,000, and without proper funding will cost each homeowner an assessment of almost $6,000 per unit in that year alone, in addition to the normal monthly due payments. We need to prepare for these expenses now.
It is for this reason that the board has voted for a $30 per month per unit increase in the dues. This additional $30 per month per unit will be designated directly for our reserve study expected expenses, and will help us be better able to pay for them, without large special assessments.
As you can see in the chart below this $30 dues increase, with an anticipated 3% dues increase per year moving forward, will still not be sufficient to fund our 2023 expenses. But it is the hope of the board that we will be able to continue making every effort as a community to eliminate unnecessary expenses, combine similar jobs to reduce the necessary expenses, and making sure jobs are done timely, properly, and in a manner that will provide longevity. With this attitude in mind, we are hopeful that come 2023 we will have eliminated enough expenses that there will not be a need for an additional special assessment to cover the repairs outlined in the Reserve Study.
Proposed Reserve Contributions
|Proposed Start||Current Contributions||Proposed Increase||Reserve Expenses||Proposed Year End|
(Please note that the chart above shows the proposed increase for 2015 beginning in May. For this reason the proposed increase between 2015 and 2016 appears larger than 3%.)
This increase will still leave the community a little shy for our anticipated expenses this year, but the Board is hopeful that we will be able to find other areas in our operating budget that will help make up this different, however, if we are unable to, a small special assessment, in addition to the dues increase may be necessary.
Please also note, that the 2013 reserve study only takes into account the upkeep/repair of current assets. Any amenity or improvement to the community, such as updated security fencing around the community, a gate at our front entrance, improved lighting, security cameras, etc. would cost the community the upfront expense to install such amenities and then additional expenses for the maintenance and upkeep. These expenses would most likely result in a special assessment.
Reserve Study Update – Coming 2016
Next year we plan to have our current Reserve Study updated. This update will provide the board with additional and updated information on how our reserve plan will play out. The use and upkeep of our assets determines their life. The better we take care of the things in our community, the longer they will last, and the lower the expenses to repair and replace them will be when divided out over their life.
For this reason we encourage everyone in the community to do your best to help protect our assets. If you see something that needs fixing or replacing, submit an action item. If you see someone purposefully damaging assets, please report it to the police and submit an action item. If you see someone in violation of the rules, submit an action item. As a member of this community it is your responsibility to help in this process. Do not solely rely on the board and managing agent to do this. The more eyes we have watching out for our community the better. Please do your part.