When a common-interest subdivision includes common facilities or services that are provided to a limited number of lots or units as a special benefit available to some purchasers but not all, a Cost Center should be created.

It would be unreasonable to collect assessments from all members of the HOA if only a limited number of lots/units are benefitting. Thus, the creation of the “Cost Center,” which creates the vehicle for allocating the special benefit costs directly to the recipients.

Current DRE guidelines require that a Cost Center be established when there is at least 10% cost benefit to those certain owners.

The structure for a Cost Center is created in the CC&Rs and brought to life in the HOA budgeting process.  A separate Budget must be created for the benefitted lots or units to address the additional costs.  The Cost Center Budget is reviewed and approved by the DRE in conjunction with the overall project budget.

Examples of Cost Center budget items include:

  • Front yard landscape maintenance
  • Shared private access
  • Gated neighborhood within a community
  • Roof deck for top story units

The DRE is currently reviewing their guidelines for Cost Centers.  The last formal guidelines were created more than 10 years ago and a lot has changed in the makeup of common-interest developments since then.

If the development consists of detached and attached products, then a Cost Center may be used to address the common exterior and roof maintenance of the attached dwellings, however, it might be wise to consider a Sub-Association to address those costs.

If you aren’t sure whether a Cost Center or Sub-Association is right for your development, we invite you to contact us – we are happy to assist!

Stay up to date.

Sign up our newsletter for latest article and news.
2025 Housing Market Predictions

2025 Housing Market Predictions

According to the California Association of Realtors (C.A.R.), 2025 is looking to be a year of opportunity for the housing market, with home sales and prices expected to rise. Buyers and sellers appear to be returning to the market as lower interest rates and better housing supply conditions increase. For those curious about what next year’s market will look like, California Builder Services is here…

Read More »
Reserve Study Frequency: How Often Do HOAs Need to Perform Reserve Studies

Reserve Study Frequency | How Often Do HOAs Need to Perform Reserve Studies?

Often, managers of Homeowners Associations (HOAs) are hesitant to conduct special assessments, as the money required to perform them may not be recovered, and the frequency of these payments can be unknown. That’s why it’s important to have reserve funds readily available to pay for these repairs and replacements. The question is, how does the HOA board know how much money it needs to set aside?

Read More »
reserve studies blog with the hands of people that seem to be signing paperwork

A Crash Course on Reserve Studies

According to the Foundation for Community Association Research, around 75.5 million people in the United States live in a homeowners association (HOA) community, which is more than 30% of the U.S. housing stock. Reserve studies refers to a vital capital planning tool for Homeowners Associations and condominium associations that provides directional guidance and an in-depth analysis of community assets.

Read More »

The Effects of Lower Rates on New and Existing Home Sales

The Federal Reserve is hoping to provide some economic relief to Americans through an interest rate cut made in September, as preparation for a potential recession continues. Higher interest rates have stunted the housing market, as home buyers are pulling back due to high borrowing costs and soaring home prices.

Read More »
Schedule a Call
Discuss your project or needs with someone from the California Builder Services team.