According to Florida state law, HOAs need to create a budget each year estimating specific costs and how HOA fees will cover them. If you've recently started an HOA community, you may not know what that entails.
HOA fees (aka HOA assessments) are the monthly or annual payments your members make to your HOA board. That part is simple enough, but what happens next?
We're here to explain and demystify the basics of HOA fees, what you can use them to cover, and why they're crucial to HOA living. Read on to learn more.
Municipal and Community Services
HOAs are often in charge of their community's municipal services. That can include things like trash and recycling pickup as well as water and wastewater management. HOA fees cover these services so homeowners don't have as many individual bills to pay.
HOAs may also provide services that aren't managed by the city. For example, your HOA may decide to increase neighborhood security with a gate guard and surveillance team. HOA fees can cover these types of private services, as well.
Community Maintenance
One of the most important roles that an HOA plays is maintaining and improving community spaces. For example, the HOA should oversee the maintenance of things like:
- Neighborhood pools or gyms
- Tennis and basketball courts
- Parks and playgrounds
Generally speaking, community maintenance will make up the majority of the HOA budget. Annual meetings to assess the state of your community amenities and the work they need (as well as new projects your members want to invest in) are a must. They allow you to accurately predict how much money your HOA needs to collect.
Reserve Funds
No matter how thorough your budgeting is, unexpected costs can arise. For example, a storm could knock out your clubhouse roof. A plumbing leak could cause damage to your pool area or community laundry facilities.
Maintaining a reserve fund protects your HOA community from disaster. Your HOA board should only dip into the reserve fund to cover emergencies and out-of-the-ordinary costs.
Raising HOA Assessments
The cost of municipal services and maintenance does tend to increase from year to year. As a result, you'll need to increase your HOA fees to continue to provide the same services.
There are few limits on HOA fees in Tampa, resulting in major HOA fee increases that alienate HOA homeowners. When you're raising HOA fees, always host open meetings with your community members. Explain the reason for your increases and try to avoid increasing fees by more than 5-7% per year.
Need Help Managing Tampa Bay HOA Fees? PMI Is Here for You
If your community is adopting an HOA, it's important to recognize that HOA fees are a necessary component. Learning about what HOA fees are and how to use them can ensure that your community gets the best services and amenities without pricing out your homeowners.
Does your Tampa Bay HOA need professional help? PMI has the digital programs and legal knowledge you need to run an effective and efficient HOA that remains compliant with the law. Contact us to learn more.
