4.9 min read


Categories: BudgetingPublished On: January 17th, 2024


Pop quiz for Utahns living in a homeowners association: what do your HOA dues pay for? Ideally, it’s all useful bits and bobs, and not a 50’ yacht for the community pond (and if you see that in your budget, we seriously recommend you speak up!) Instead, your HOA fees should cover a few major components: 

  • Operations – for example, salaries for the staff who help keep things running smoothly
  • Reserves – the most important rainy-day fund you’ll ever pay into
  • Maintenance – necessary repairs and upkeep to ensure safety
  • Services – kind of like staffing, but more specific, like security or garbage pickup
  • Insurance – another incredibly important pool of money that will keep the HOA safe

Unfortunately, few, if any, of those costs are a one-and-done payment or come with a locked-in price point. Which is why, every year, Utah homeowners find themselves asking, “Why are my HOA fees increasing?”

Why are my Utah HOA Dues increasing

Why are my Utah HOA Dues increasing?

Overall, this cost increase is unavoidable, and in the best circumstances, is annoying but not outrageous. But in recent years, the dues increases have drifted closer and closer toward outrage for many communities.

The reality is that, while some HOAs have governing documents that enforce a percentage cap on how much assessments can be increased per year, many states (including Utah) do not set such a restriction. So, for communities without a self-imposed limit, there’s always the risk that monthly assessments can skyrocket.

But why do they go up in the first place? Typically it comes down to just three: external economic factors, insurance premiums, and community reserve funding.

Reason #1: The Economy is Rough

It’s true, we all know it. Everything is getting more and more expensive by the minute–the price of groceries and gas just never seems to stop going up. So it makes sense that those same cost increases are hitting your HOA, both directly and indirectly. 

As supply chain shortages and inflation have raised prices of goods, those prices directly impact the cost of labor and services. Your HOA may not have grocery bills to pay, but they have gas or other utilities. Golf carts need gas, clubhouses need power, and pools need water. All of these bills add up over time, and that cost is covered by monthly HOA fees. 

Additionally, every extra penny being paid to those utilities is almost certainly being paid by all of your community vendors, as well. The cost of the contract to remove garbage and recycling or snow removal has gone up as these services also have to pay higher rates for gas and labor. 

The economic turmoil we’re all facing doesn’t appear to be slowing down, so price increases due to a changing economy not only can be expected, but should be accounted for by anyone living in a community association.

Reason #2: Insurance is a Little Out of Control

The past two years have been messy for the community association insurance industry. On the heels of the condo collapse in Miami back in 2021 was a slew of natural disasters that left many insurance companies feeling the heat. Florida saw four separate providers leave the state in a single year, and California was close behind. 

Sadly, HOA insurance policies do not live in their own bubbles–market changes are a huge factor in how those prices are determined. So even though Utah has been fortunate to maintain our providers, the rapidly rising rates elsewhere have set in motion price increases here.  Insuring your community is critically important, so that cost isn’t one that can easily be mitigated. 

Reason #3: Your HOA Reserve Fund is Low

Funding reserves is one of the trickiest parts of HOA budgeting. For many communities, it’s hard to justify putting away more than the bare minimum for a rainy day. But, once a community has to dip down into the reserve fund and deplete it, it takes some work to get it back to where it should be to cover the costs of replacement due to aging infrastructure, acts of nature, and regular wear and tear on community assets.

If your community has a major project coming up within the next 10 years, such as a roof replacement for a condo building, or repaving the roads in an HOA, the reserve funds need to be able to cover that expense, or homeowners like you could be hit with a huge bill called a special assessment. So having the reserve fund at a high enough level to cover aging infrastructure is critical to the future of your community – and your pocketbook.

To maintain a proper reserve fund your HOA will be required to increase dues to replenish the reserves and ensure that the community can continue to provide necessary services and maintain the property properly.

A Difficult Necessity (That Absolutely Pays Off)

Money is tight for many people–and that exact fact is directly impacting the continual rise in fees like HOA fees. But, that added money is important to the success of your community. Don’t forget that HOA dues cover more than just reserve funds and day-to-day fixes. They deal with operating expenses (such as goods, labor, and services), and as those operating expenses increase, so will the assessments. Everything is interconnected, and for many that can mean some steep (but necessary) assessment changes. 

Annual assessment increases are a vital part of maintaining property values and assuring the safety of residents, but they shouldn’t be so high as to drive you out of house and home. If your community is struggling to walk the line between protecting the community and its assets without bleeding homeowners dry, contact us today to see how optimizing a strategic approach to HOA management can trim down spending and help curb annual assessment fee increases.