As one of your BRRA Directors, it feels good to boost BRRA member morale with social activities and small charitable donations, but it’s considered bad practice for an HOA to fund these expenses using the member assessments. Member assessments are intended only for costs related to the management and maintenance of the common areas which includes landscaping, fountains, neighborhood monuments, and amenities (like the beach cabana).
Social activities and cash charitable donations are driving up the member dues. While this expense is small, it does add up.
My scruples no longer allow me to support use of member dues for these purposes.
I am saddened by this decision, but it’s the right thing to do. It feels good to contribute to the enjoyment of BRRA membership, but it’s wrong to use the assessments for this purpose.
I have read about an HOA that has a separate source of money precisely for this purpose. The separate money is distinct and can be spent on feel-good activities without risking controversy. Now that sounds like a community where everybody wins!
I want to live in a community like that!
The HOA I read about has a special fee on property transfers that provides revenue totally separate from member assessments. The BRRA has just such a property transfer fee (the 1% fee), so we have the revenue tool to become like the community I read about.
The HOA I read about has a segregated account for the special money. The BRRA doesn’t. It reports the 1% transfer fee income in the same “unspecified” account along with all the member dues.
The BRRA should change this for several reasons:
- It’s a best bookkeeping practice for reduced opportunity for error.
- It will correct the chronic invalid income variance on the BRRA financial variance report.
- It’s required to be segregated by the BRRA governing documents.
If the BRRA had a segregated 1% Fee sub-account, like its Beach Club/Cabana account, it could report the transfer fee separately. The feel-good expenses could be accounted in this 1% Fee account and drive the member dues lower.
I am proposing the following 1% Fee Account initiative to solve this issue:
- Assign Finance team with task of creation of a 1% Fee sub-account.
- Form a working group to propose business rules for the new account.
- Invite BRRA Committees (Lifestyle, Website, Strategic Planning, etc.) to propose 1% fund expenses for budget planning.
To be in position for the 2020 budget cycle, this needs to be in place soon. Please contact your BRRA representative and join me in supporting this 1% Fee Account initiative as the first of many steps toward a better BRRA future. Let’s aim to be a best practice community.