Saturday, November 15, 2008

Woodlands Association Dues and Budget for 2009 - a few things every resident should know

At times, we see the advantages of paying for projects and services through taxation rather than through association dues, especially from the governmental position. In that we are in transition from one method to the other, we need to pay attention to the observed advantages of one over the other. We all should be equally concerned about the possible issues that could come from taxation and from taxed being assessed association dues. As a reminder, since we are speaking about WCA in this article, the WCA is the association for Grogan's Mill, Panther Creek and the eastern of Indian Springs. Its residents were promised two years of low association dues because of the excess money in the WCA bank accounts at the beginning of the transition to a township entity. When WCA dissolves in 2010, the residents do not want to transfer the cash over to the new Township. That would be applying past collected dues to the future benefit of all Woodlands home owners. Since the method to be used now is considered logically to be a tax, it would not be right to use the funds for the Township when residents were over assessed in prior years to build bank account padding for a future "rainy day". WCA had been using a higher rate than required to meet financial obligations. So this strategy to return the excess money to homeowners is reasonable to me. Instead of paying so much for association dues, this year we paid a low rate of 14%. Next year we would pay the same low 14% on assessments. However, accounting for the committed expenses by the WCA to be incurred in 2010 after the merger, WCA needed to raise that rate to 16.5% to give the Township about $1.1 million to meet those commitments that need to be paid after the dissolution of the WCA. That will balance the books for the Township during the transition, meeting WCA's obligations described in the transition agreement. WCA will exit its current domain leaving no burden on the remainder villages. I hope this makes sense without visibly doing the math. This 2.5% increase in dues will fulfill a requirement of the transition agreement

On Wednesday night, November 12th, 2008, The WCA board passed this increase but had two conflicting proposals amongst its members. All in all, the resultant accepted proposal was a compromise, because some board members wanted to just cut the accelerated capital projects from the 2009 budget and continue with the 14% assessment rate. The compromise comes as a check and balance measure. Each and every capital project will be reviewed individually in 2009 to make sure the economic climate supports executing the project(s). In other words, if there is a reduction in property value and our assessment base decreases, we may need to cut projects. The board has indicated that it will. Right now, we go forward with the intention of executing the capital budget in its entirety. Remember this! Lowered value is a real possibility. Homes are being foreclosed here. People are beginning to leave their mortgages just like everywhere else. We may be slow to be recognizable victims of the crisis but not immune to these difficult economic times evidenced throughout our nation and world.

So what does 14 billion 320 million 302 thousand 913 dollars have to do with this? That is the 2009 total assessable value in the WCA. If this were a tax, I would probably and simply call it the tax base from property values. But for now, it is merely a means to fairly assess the association dues to pay for all the services and capital projects the association administers. Home value is a critical component of that.

Increases in assessable value as a result of market pressure will likely halt as the economic crisis takes hold here and home values stop increasing 10% per year. Actually, assessment revenue increased a whopping 12.6% for 2009. I for one cannot continue to pay taxes on assessments that are increasing at such an alarming rate. The tax rate must be reduced to compensate for rising assessment value. We should not have inflation of our operations at 12.5%.

In 2010, our dues will all change to a uniform tax rate for all residents in The Woodlands. Of course those taxes will also be computed from the county assessment values. We all remember the promised lower association dues in the form of a Township tax. 2010 should be the beginning of that new method and lowered rates. In the meantime, we in WCA get to enjoy the extremely low rate of 16.5% in 2009, but it will be higher in 2010 as we assume our responsibility as an equal taxpayer in the Township. That means we assume some debt from newer villages. There will no longer be separate entities for paying down debts. As home owners in the Township, we all will equally share in that responsibility starting in 2010.

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