The formula for calculating each year’s monthly assessment from the original Lake Braddock Covenants (the Declaration) is a simple formula consisting of:
- A ratio of the new CPI (January CPI from the previous year) to the Base CPI (CPI from January 1970)
- Times a base assessment (the original monthly assessment of $12.50)
Title VI, Section 3 Basis and Maximum of Annual Assessments: Until January 1 of the year following the conveyance of the first lot to an 0wner, the class A members assessment shall be $12.50 per month.
Title VI, Section 3(a): From and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased effective January I of each year without a vote of the membership in conformance with the rise, if any, of the Consumer Price Index (published by the Department of Labor, Washington, D. C.) for the preceding Month of January 1970.
The third proposed amendment to the Declaration is to replace the National Average CPI with the Washington-Baltimore Area CPI. The amendment replaces the existing Section 3 with a new Section 3 as follows:
Section 3. Basis and Maximum of Annual Assessment.
(a) After consideration of current maintenance costs and future needs of the Association, the Board of Directors may fix the annual assessment at an amount not in excess of the maximum as set forth in this Section 3.
(b) From and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased effective January 1 of each year without a vote of the membership in conformance with the rise, if any, of the Washington Baltimore Area Consumer Price Index.
The problem is that there is no reference to a base assessment or a base CPI included in the proposed amendment. In fact the amendment specifically states that the Board may fix the annual assessment anyway they want as long as they somehow use the Washington-Baltimore Area CPI. In addition, Section 3 (b) is unworkable on its face simply because the Washington-Baltimore CPI is a relatively new creation with no data prior to the mid 1990s and certainly no data going as far back as the conveyance of the first Lake Braddock lot.
In my opinion this is a formula for disaster. With no specified base assessment or base CPI; each Board will have the freedom to set the assessment to just about any dollar amount they want simply by selecting a new base each year and base assessment at will. There are no protections to the homeowner’s whatsoever from a run-away Board that wants to jack up the assessments on a whim.
This is a bad amendment that leaves the homeowner’s vulnerable to sky-high assessments and I urge all homeowners to reject it.
Boy this this blog in general, and the post about the proposed Assessments Amendment, stir up a hornets nest in "HOA Industry Land."
ReplyDeleteI was copied on this:
Mr. Frank Wrathbone, CAI National:
Mr. Wrathbone:
I'm afraid the unit owners in Lake Braddock aren't as easy to indoctrinate as the Board members.
It seems that some of the unit owners are actually familiar with the governing documents and can foresee the effect of the proposed amendment.
As you know, the process is all about getting more power for the Board and more money for, well, you know, the "industry" members.
Some of the owners here think that because they may be on a fixed income from Social Security, military or government retirement pay, etc, that this amendment will deprive them of the "protections" on assessment increases to which they're entitled by the current formula.
Well, that's true, but it's beside the point.
The POINT is, we want more money.
I'm still working with the HOA on one of the first projects for the use of the new money, and even these complaining unit owners will LOVE it: It'a a BEAUTIFUL community entrance sign that reads "Welcome to Lake Braddock, a Wholly Owned Subsidiary of the Community Association Institute."
Just writing that brought a tear to my eye.
Almyra Gulch, PCAM, CAI Action Committee.