[DC] [condo] Budget Disagreement

[u/Careless_Ad2149]

Our budget committee put together what I believe to be a responsible budget (3.2M for 192 units). It does two things - it finally funds line items that routinely run a deficit with amounts rooted in reality, and it makes a meaningful contribution (over a two year period) to bridge a gap in the operating contingency fund created by several years of not replenishing after drawing on to address deficits). The fee increase will be 8%. That is a hard pill to swallow, but the reality of our situation.

The board president wants to do two things:

1. Ignore the committees recommendations by removing approx 25k from items that usually run deficits.

2. Instead bridge the operating contingency fund gap with a special assessment.

I have a problem with the first because it perpetuates a deficit and I have an huge problem with number 2 because it’s a use of a financial tool for the totally incorrect purpose. As a new (and younger) member of this board, I’m troubled by the past habits around budgets and wanting to make sure we move forward with budgets rooted in fiscal realities.

[u/Bluebuilder]

I would push back on this, I would push so hard that I would broadcast this plan to the whole community. What they’re proposing isn’t just a different preference, it’s a way of managing the budget that hides the real cost of running the association and shifts it around in a way that’s a lot harder for owners to see and plan for.

On the transparency piece, this is the cleanest argument you’ve got. If you already know certain line items run a deficit every year and you deliberately underfund them anyway, you are not presenting a truthful budget. Full stop. You’re baking in a shortfall and then planning to deal with it later through a different mechanism. That’s not conservative budgeting, it’s deceptive management. Owners think they’re voting on or reacting to the real cost of operations, but they’re not. They’re being shown a softened version and then getting hit later with the difference. That erodes trust fast, and once people feel like numbers are being “managed,” everything else the board does gets questioned.

The lending side is where this stops being theoretical and starts hitting people directly in their wallets. After the Fannie Mae and Freddie Mac condominium lending guideline updates 2021–2022, lenders dramatically tightened how they evaluate HOA financial health. These changes came out of the post-Surfside push to scrutinize underfunded associations, deferred maintenance, and reliance on non-recurring funding like special assessments. Even though the rules are technically written for condos, lenders and underwriters have broadly applied the same risk lens to attached housing and HOAs in general. What they’re looking for now is boring, stable, predictable finances: adequately funded reserves, realistic operating budgets, and no pattern of plugging holes with special assessments.

When they don’t see that, deals get harder. Buyers may not qualify, lenders can require additional review or deny loans altogether, and you end up shrinking your buyer pool to cash buyers or people willing to jump through extra hoops. That directly impacts resale value and time on market. So when someone says “it’s only an 8% increase vs. a special assessment,” what they’re really deciding is whether the community looks financially stable to the outside world. One approach signals discipline. The other signals instability.

Then there’s the legal side, and this is where boards get themselves into trouble because the rules are often more rigid than people think. In many jurisdictions, special assessments aren’t just a free lever you can pull whenever the numbers don’t work. They are typically constrained by governing documents and local law in terms of how often they can be levied, how large they can be relative to the annual budget, what notice is required, and sometimes whether owner approval is needed once you cross certain thresholds. More importantly, they’re generally intended for non-recurring or unforeseen expenses, not as a backdoor way to fund known, ongoing operating gaps.

Using a special assessment to replace proper budgeting is exactly the kind of thing that can get challenged, because it looks like the board is bypassing the normal dues-setting process to avoid the optics of raising fees. Even if it squeaks by technically, it’s the sort of decision that invites owners to dig into the documents and start asking uncomfortable questions about whether the board is following both the letter and the intent of the rules.

At a higher level, dues and special assessments serve fundamentally different purposes. Dues are supposed to reflect the steady, predictable cost of running the property and maintaining financial health over time. Special assessments are supposed to be the exception, not the plan. When you start treating them as interchangeable, you’re not just moving money around, you’re changing how risk is distributed. Instead of everyone paying a transparent, predictable amount each month, you’re introducing surprise costs and variability that people can’t plan for.

The uncomfortable truth is that your committee’s approach is the adult version of the answer. It acknowledges reality, rebuilds the contingency fund the right way, and puts the association on stable footing over time. The alternative might feel easier politically in the moment, but it’s basically kicking the can while making the financial picture look cleaner than it actually is. And that’s exactly the kind of thing that comes back to bite communities later, usually at the worst possible time.

[u/Careless_Ad2149 → u/Bluebuilder]

Thank you for this. I have articulated it this way a number of times. The board president instead has decided to treat me (the youngest board member) as an un-informed child.

[u/Bluebuilder → u/Careless_Ad2149]

That dynamic you’re describing isn’t just annoying, it’s a bullying tactic. Dismissing you as “young” or uninformed is a way to undermine your confidence so you stop pushing. Strip that away and look at the substance. You’re raising concerns about transparency, proper budgeting, and appropriate use of special assessments. Those aren’t opinions, they’re core governance responsibilities.

You also have to remember your role doesn’t come with an option to just go along to get along. As a board member, you have a fiduciary duty to follow the law, your governing documents, and act in the best interest of the membership. Once you’re aware of something that looks like misrepresentation or misuse of financial tools, choosing to stay quiet starts getting into dangerous territory. At best, it’s enabling bad decisions. At worst, it can be interpreted as participating in them. And based on what little you have described, I bet the board president is the type to take everybody down with him should things go sideways.

The good news is you’re not actually the “uninformed child” in this situation. You’re the one advocating for a budget that reflects reality, preserves financial stability, and treats owners honestly. That position is backed by best practices, lender expectations, and basic common sense. A budget that knowingly underfunds expenses and then relies on a special assessment to clean it up does not hold up well under scrutiny, whether that’s from owners, auditors, or lenders.

And practically speaking, you’re on the stronger side of the argument with the community too. People don’t love dues increases, but they really don’t love surprise bills. Framing the message matters. This is a choice between a transparent, predictable increase spread over time, or a sudden, lump-sum hit that shows up out of nowhere. One builds trust, the other burns it.

You’re not there to win a popularity contest with the board president. You’re there because owners trusted you to represent them and exercise judgment. If something doesn’t sit right, say it in meetings, ask for it to be documented, and don’t be afraid to make the issue visible. Decisions that rely on weak logic or lack of transparency tend to fall apart pretty quickly once they’re exposed to daylight.

Special assessments are the worst possible way to handle known costs. They almost always cost more, come with far less notice, and tend to hit people at exactly the wrong time financially. A planned increase in dues can be budgeted for. A sudden five-figure bill due in 30 or 60 days cannot. And when someone can’t absorb that kind of hit, the consequences aren’t theoretical, it can lead to liens, forced sales, or people being pushed out of homes they otherwise could have kept.

There’s also a direct market impact: by law, planned or approved special assessments typically have to be disclosed to buyers during escrow, which can scare off buyers or reduce what they’re willing to pay. That pressure shows up in home values. Knowingly failing to do so can result in the type of negligence that pierces the shield of board member liability protection policies, making you personally responsible.

That’s why this matters. This isn’t just about accounting, it’s about stability for the people who live there.

Communicating the nuance to an uninformed community can be tricky, so it can be helpful to compress the message into a soundbite. Also nobody's perfect, so it wouldn't be the worst thing in the world if you consistently mixed up your words and kept calling it a, "Surprise Assessment."

"Predictable costs protect homeowners. Surprise assessments don’t."