Condo Media - July 2014 - 47

by Barbara Saxton, CMCA, AMS, PCAM,
and Rebecca Vorsteg, CMCA, AMS, PCAM

SELLING the
SPECIAL ASSESSMENT

The Presentation Can Make a Huge Difference

The following article discusses special
assessments. In states that have adopted
the super lien law, the board should never
use the phrase "special assessment," but
rather, the board should amend its budget
to increase the condo fee. The effect is the
same: Funds are raised. The following
article discusses how to communicate the
shortfall in the budget.

S

pecial assessments happen.
Community association boards
and managers do their best to
create a budget that will avoid
the need for a special assessment, but
often unexpected and unbudgeted
costs arise.
Unforeseen circumstances, such as
an unusually heavy snowfall - or many
unusually heavy snowfalls - can send
community association budgets spiraling
out of control. No one likes a special assessment, but as authors Barbara Saxton,
CMCA, AMS, PCAM, and Rebecca
Vorsteg, CMCA, AMS, PCAM, suggest,
the way the board or manager presents
the need for a special assessment to
community association members can
make a huge difference.
Here is a sample letter from fictitious ABC Community Association to

homeowners after incurring higher than
budgeted expenses for snow removal:
April 8, 2014
Dear Homeowner,
For the fifth year in a row, we have exceeded our snow removal budget. Effective
April 1, 2014, the board has imposed a
$50,000 special assessment, which translates to $1,000/unit. This assessment is
payable in two installments, due May 1
and June 1, 2014. Failure to pay the assessment in a timely manner will result in
late penalties.
Please be reminded that this assessment
is for 2013; if the snow budget for 2014
is again inadequate, another assessment
will be likely.
Sincerely,
The Board
Yikes! This is so wrong on so many
levels. Let's start with the first sentence:
"For the fifth year in a row"?! When
will this board "get" that they are not
budgeting adequately for snow removal?
A special assessment is not intended

to make up for improperly budgeted
operating expenses. Clearly, this association needs to increase its maintenance
fees. Frequent special assessments send a
red flag to lending institutions who are
backing mortgages as well as to potential purchasers. Not to mention they
create a lot of unhappy homeowners.
Wow, $1,000 per unit. That's not
chump change. And the board is announcing that the first $500 installment
is due in - what? - less than a month.
While some lucky folks may be able to
come up with an extra $500 in three
weeks' time, most will take at least that
long to recover from the shock. And
another $500 in another 30 days? While
it's nice to collect that money as soon
as possible, asking for a large sum of
money in a short amount of time is a
recipe for disaster - and delinquencies.
Obviously, the demographics of the
community must be considered any
time a special assessment seems inevitable. Giving homeowners at least 60 days
advance notice is the minimum, as well
as stretching out the payments in accordance with the community's tolerance.
Starting this assessment June 1 and
allowing for monthly payments until the
end of the year might be less of a bitter
Condo Media * July 2014

47
Condo Media - July 2014

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