Why your Home Owner’s Association fees in Colorado could be on the rise this year

COLORADO SPRINGS, Colo. (KRDO) -- According to industry experts, those who live inside neighborhoods that have Home Owner Associations (HOA's) may see a steep increase in their fees this year. They say it is because of two things: skyrocketing insurance costs and increasing labor costs.

"A lot of our clients are seeing their costs increase up and down their budget, whether it's because of the landscape contract increasing ... or insurance, or the costs of our fees and management costs associated with running the association," Brandon Helm, President of Warner Management said.

Warner Management supports 68 HOA's and property managers across Colorado Springs.

While inflation and increasing labor costs have been steadily adding to the fees homeowners pay, Helm says that over the past four years, natural disasters have been on the rise, putting HOA's in a sticky place when extensive damage happens they didn't plan for.

"I've seen more special assessments in the last four or five years than I probably have over the entire time that I've been in this industry," Helm said. "Associations are having to self-fund their deductibles for wind and hail claims. So, when they lose a roof on 30 buildings and the deductible is a quarter of $1,000,000, those owners have to come up with a quarter million dollars and deductible."

He explained that a special assessment is essentially when an HOA has to go to the property owners and ask for more money to fix something in the neighborhood. That typically happens after something like an extreme hailstorm or fire sweeps through the area they manage.

"You don't just keep a quarter of $1,000,000 in the bank for an insurance claim," Helm said.

Helm said that some people may be seeing increases in fees because of the financial strategy employed by the HOA governing members.

"Hopefully we've gotten to a point where our increases are starting to be things that the boards can get through, and that they can take on those increases without having some sort of really significant need for additional cash or special assessment," Helm said.

Property developer Matthew Dunston, however, has chosen to do away with an HOA for his development entirely because of the costs associated. He says the homeowners in the Walden Creek neighborhood pay a total of $250 per year. That's while the neighborhood has things like pickleball courts, trails and multiple recreational ponds where they will host events.

However, it's not because there isn't a board of people that oversees the maintenance and insurance of the neighborhood.

"To the extent that you can find good volunteers that are capable administratively as well as just logistically, you can get a lot more done," Dunston said.

He explained that he decided to let the management company go for the neighborhood over a decade ago, instead instituting a board of volunteers while hiring one person full-time to oversee the management of the property. It's a strategy that has worked well for him and homeowners in the area.

"It's funny because a lot of people have, of their own volition, offered to pay more. I just tell them we don't need to at this moment. And that's in time just because we're able to operate very efficiently," Dunston said.

Dunston did add a caveat. The neighborhood he developed is more rural, meaning he isn't responsible for costs like maintaining parking lots or roofs. To boot, he carries two kinds of insurance, one for the liability of the property as a whole, and another for the liability of a neighborhood board member getting sued or getting in legal trouble.

He says that makes his alternative to a HOA essentially less expensive.

"They do a lot more and they must charge a lot more. I think they have to resist the propensity to be overly bureaucratic and to try to be as efficient as possible. But they do have a lot more expenses and thus need to charge more," Dunston said.

In terms of a solution for the everyday homeowner, seeking to understand what's happening in their neighborhood, he encouraged more people to get involved in their HOA and volunteer to help if needed.

"There's a tendency to be disappointed by fees going up completely," Dunston said. "I get that. And I guess the only thing I would say is just verify and check it out, but also get involved."