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Budgeting for Variable Assessments

Not all lots or units are created equal.  Sometimes the range of differences is based on square footage, location, or certain amenities like ADUs or outside patios.  Other times it may be simply that certain groups are designated as “affordable,” which requires a lower dues assessment level.

If the difference is due to size, determining the variance is a function of calculating the unit sizes of the various models to be sold, which may involve some assumptions.  One basic assumption is the more bedrooms in a unit, the more residents that will live there.  The trickle-down of that assumption is:

  • More resident occupants = more water usage
  • More electricity (if utilities are included in the assessments)
  • A larger unit takes up a larger percentage of the buildings’ exterior and roof allocation

If the difference is based on private road access, the argument may be made that the lots furthest from the public road access should pay a higher percentage of the costs associated with the road.

If a variable assessments approach is a fit for your development, the CCRs should contain specific provisions that allow the HOA to vary the assessments.  The document must clearly identify the different line items in the budget that are to be collected in a variable manner.

Please feel free to call one of our consultants to answer any questions you may have about HOA Budgeting and Variable Assessments.