Monthly Assessments (maintenance fees) seem high? Maybe they are, often we forget all the things these assessments pay for. Community Associations have many benefits and some drawbacks as well. One of the complaints we here most often is “Our Monthly Assessments are too much.” While this may be true in some associations it’s important for owners to consider exactly what makes up the assessments they pay.
The monthly assessment is your share as an owner of the common expenses for running and maintaining the association. These expenses can be broken into two basic groups, controllable and non-controllable. Controllable expenses are those over which the board and or management have some control as to the amount and timing. Controllable expenses include; accounting, bank fees, repairs, supplies, office expense, labor costs, preventive maintenance, management, legal, landscaping and janitorial. Non-controllable expenses include; property insurance, liability insurance, wind insurance, D&O insurance, utilities, contract services, electric, water, garbage, cable, loan payments and licenses fees.
Over the years non-controllable expenses have become the largest part of most association budgets. Although boards and management work hard to keep these costs as low as possible it is often difficult or even impossible to get competitive bids for such items as insurance. The costs of utilities and water are often controlled by monopolies or governments and while conservation can help it does not eliminate or substantially reduce these costs in the short run. Long term contracts may also lock in such things as elevator maintenance costs, cable TV, and other expenses.
In addition to the increases in these costs over the years as association property ages the cost of maintaining it increases. While putting off maintenance may help cash flow and reduce expenses today it will also cause increases in costs down the road.
All of these things effect the cost of operating and maintaining the association and hence the amount of the monthly assessments. Although the cost may seem high when looked at as a total, this may not be the case when compared with the costs one would have to pay for a home not in a community association. Those that own homes that are not in community associations are faced with almost all of the same expenses, they just write separate checks for each expense and have no board of directors or management to look after their property and see that the things necessary to operate and maintain it are done.