What to Do When Inflation Hits Your HOA

By Steven Shuey, PCAM

Every day we hear daunting economic news… prices are rising in almost every area. While politicians argue about whether to call it “inflation,” there is no doubt that rising costs are hitting HOA budgets at all levels.

Many HOAs have been through hard times before and, painful as we remember it, everyone survived. Some learned a lesson and took action to plan for unexpected cost increases in the future and others focused on keeping assessments low.

One of the most noticeable factors this year has been the spike in natural gas costs that happened in January. Gas prices for most tripled, a greater increase than anything we have seen in the past. The cost-per-therm went from under a dollar to well over three dollars in less than three months! Unless you had a crystal ball, you didn’t see it coming. It was certainly a surprise for me.

Because HOAs set their budgets well in advance - a month or two before the end of the current fiscal year - they often choose to suffer through surprise increases, rather than call for a special assessment or have a mid-year increase. Most non-HOA businesses just raise their prices when costs go up. We see it at the gas pump, we see it in the grocery stores and at restaurants. Should HOAs start thinking about raising assessments when prices go up? Perhaps.

Some associations are paying for increased costs by “robbing Peter to pay Paul” year after year. They regularly use reserve funds to pay operating expenses!

While this can be a short-term solution for some, it does not address the fundamental problem of spending more than you are taking in.

HOA Directors in California have a fiduciary duty to prepare a budget that will meet expenses – short-term and long-term. Those who don’t are failing their homeowner members.

I know raising assessments is not popular, but it is time for HOA boards to be honest with their residents and budget for and then adjust assessments accordingly. Boards, if you haven’t already done so, start communicating with residents about increasing costs immediately. They need to know what costs are going up and why the association needs to increase assessments.

It is the responsibility of HOA directors to preserve and enhance the values of homes in the community. Directors have a responsibility to put the community’s interests above their own – and above a few disgruntled residents who may complain.

I hope all our HOA board members and managers will attend our Board Member Workshop on utility cost increases, on Tuesday, June 6th via

Zoom. The workshop is free. You can register here by clicking on or scanning the QR code on page 48.

Budgeting on the high-end with proper anticipation of increases is far better than merely hoping costs will not go up. A small increase each year is better than a large increase any time. Start preparing for next year’s budget now and look closely at the monthly financial reports (as the civil code requires) and stay alert to the cost of providing adequate and desired services for your community. In the long run, you’ll be glad you did.

Steven Shuey is a retired community association consultant from Personalized Property Management in the Coachella Valley. Steven serves on the Education Committee, serves on the chapter Strategic Planning Committee as a past board member, and maintains his designation as a Professional Community Association Manager (PCAM). He also serves on the National Faculty of CAI and is a past board member of the APCM. He may be contacted at IslandMgr@aol.com.