Condo association assessment increases are a topic that often stirs discussions and concerns within communities. Misconceptions can lead to misunderstandings, unnecessary anxiety among unit owners and tension within the community. Below are some common misconceptions we hear about assessment increases in Chicago and how board members can help dispel them.
“Assessments Only Increase When There’s Mismanagement by the Board”
One of the most common misconceptions by condo owners is that assessment hikes are the sole result of fiscal mismanagement. In reality, assessments can increase due to rising costs of maintenance, utilities, insurance, and other necessary services. Board members should be transparent with the budget and clearly explain how funds are being allocated.
“The Board Can Raise Assessments Arbitrarily”
HOA boards cannot increase assessments without valid reasons. Increases are typically in response to rising expenses or planned community improvements. Boards must follow the association’s bylaws, hold transparent discussions and obtain a majority vote before implementing an increase.
“Reserves Mean Assessments Should Never Increase”
Having reserve funds is essential, but they may not cover all future expenses, especially for major repairs or improvements. Regular assessment increases ensure reserves are gradually built and allow the community to face unforeseen challenges without imposing sudden, large special assessments. When discussing financial planning with your HOA, be sure to explain how your budget is allocated into two main financial accounts – an operating fund and a reserve fund.
“Assessment Hikes Always Lead to Improved Amenities”
While assessment increases might contribute to community enhancements, they are not always earmarked for visible upgrades. Assessments also cover essential services, emergency reserves, and ongoing maintenance. Open communication should ensure that residents understand the diverse ways in which their contributions are being allocated and spent.
Dispelling myths about HOA assessments can foster a more informed and cohesive community. For help with budget planning, communication and all your association management needs, consider working with a condo association management company. For help here in the greater Chicago area, get in touch with our team at First Community Management.