The CAI Board of Trustees approved a newly updated Assessment Increase Limitations Public Policy. This update reflects CAI’s commitment to ensuring a community association board’s ability to retain reasonable discretion to effectively financially manage the community by adjusting assessments.

Such decisions are made thoughtfully and are based on several factors including the need to conduct or update reserve studies and the obligation to maintain adequate reserve funding to perform ongoing preventative maintenance to minimize long-term costs; cover increases in operating or insurance expenses; or perform unplanned corrective maintenance or repairs to common areas to ensure the health and safety of the community.

The revised policy recognizes that state legislatures must understand that a board’s decision to adjust assessments is never made arbitrarily. Rather, decisions are based on in-depth knowledge of community finances and operations with consideration for all parties affected.

CAI supports a community association’s board of directors’ reasonable discretion on determining appropriate assessment levels and favors governing documents that empower a board to raise assessments when necessary.

Key updates to the policy include:

• Explains how and why community association boards may decide to adjust assessments based on in-depth knowledge of community finances and operations and with consideration for all parties affected.
• Adds a comprehensive list of examples for how funds from community association assessments are typically utilized.
• Defines and explains the role of an association’s annual budget regarding assessments and budgeting.
• Emphasizes the importance of transparency, effective communication, and trust between community association boards and community members.
• Discourages governmental or legislative restrictions on the determination and adjustment of assessment levels for individual community associations.
• Differentiates between assessments and special assessments with a focus on the former.

This policy aligns with CAI’s ongoing support of a community association’s board of directors’ reasonable discretion to determine appropriate assessment levels and favors governing documents that empower a board to raise assessments when necessary.

CAI believes these policy updates will provide valuable guidance to legislative action committees and ensure thriving and well-maintained communities. Thank you to all involved in the review and recommendation process.

The Foundation for Community Association Research’s Financial Operations Best Practice Guide is a great resource for associations on this topic.

For more CAI policy updates and resources, visit www.caionline.org/advocacy