How to Raise HOA Assessments in Arizona the Right Way

How does Arizona’s 20 percent assessment cap work?

Under A.R.S. § 33-1803(A), which is part of the Planned Communities Act, unless your community documents impose a lower limit, the association may not impose a regular assessment that is more than 20 percent greater than the immediately preceding fiscal year’s assessment without the approval of a majority of the members. Key points for boards:

• It compares year to year. The measure is the prior fiscal year’s regular assessment.
• Documents can be stricter. If your declaration caps increases at a lower percentage, the lower limit generally applies.
• Member approval is the path above the cap. A larger increase requires approval of a majority of the members, conducted in the manner your documents and Arizona law allow.
• Condominiums are different. Condominium associations are governed by the Condominium Act (A.R.S. § 33-1201 et seq.) and their declaration. Do not assume the planned-community cap language applies; ask counsel.

Exceptions and specific calculations, such as how special assessments or certain charges are treated, depend on your documents and facts. Read the Arizona assessment increase limits page and the Planned Communities Act overview.

This is general information, not legal advice; your governing documents and an Arizona HOA attorney control.

Why skipping increases puts your HOA at risk

Many boards keep assessments flat to avoid complaints. Over several years, inflation in landscaping, water, electricity, insurance, and labor erodes what the same dollars buy. The usual result is deferred maintenance, a drained reserve, and eventually a special assessment or an increase much larger than owners would have seen with steady adjustments. Because the 20 percent cap limits how fast you can catch up without a member vote, falling behind can box the board in.

Small, predictable increases tied to a budget and reserve study are usually the least painful path for owners.

Steps to plan an assessment increase

1. Start with the numbers: Prepare the draft budget using actual costs and vendor renewals; see the HOA budget guide.
2. Calculate the change: Compare the proposed regular assessment to the prior fiscal year’s and confirm the percentage.
3. Check your documents: Look for a lower cap, notice requirements, or approval rules.
4. Model alternatives: Compare a one-time increase to a multi-year schedule and to a special assessment.
5. Discuss in an open meeting: Let owners hear the reasoning before the board votes.
6. If above the cap, plan a member vote: Work with counsel on ballots, quorum, and timing.
7. Notify owners early with the new amount, effective date, and payment options.

What if the increase you need is above 20 percent?

Sometimes a community has held assessments flat for years, or faces a sharp jump in insurance or water costs, and the budget truly requires more than the cap allows. You generally have three paths:

• Phase it in. Raise the regular assessment up to the allowed limit this year and plan further increases in following years, adjusting spending in the meantime.
• Seek member approval. Present the budget and ask a majority of the members to approve the larger increase. Work with counsel on the ballot, quorum, and the method your documents allow, such as a meeting vote or ballots by mail or electronically where permitted.
• Use a separate funding tool. For a defined project, a special assessment, reserve draw, or loan may fit better, subject to your documents.

Owners are more likely to approve an increase when they see a clear budget, a reserve study, and the consequences of a no vote. Hold an informational meeting before ballots go out. Our guide to annual meetings and elections covers voting logistics.

Assessment increase checklist

• Draft budget complete and reviewed by the treasurer
• Percentage change calculated against the prior fiscal year’s regular assessment
• Declaration and bylaws checked for lower caps and notice rules
• Reserve study recommendation reflected in the budget
• Open-meeting discussion held with owner comment
• Member vote planned with counsel if the increase exceeds the limit
• Written owner notice drafted with the new amount, effective date, and payment options
• Billing and auto-pay amounts updated before the first new due date

Explaining a dues increase to homeowners

Keep the message clear and factual. The board communication guide has more tips, and owners can review the reasoning in our HOA dues explained page.

How Transcend helps boards manage increases

Transcend prepares annual budgets, delivers monthly financials and bank reconciliations, and uses Predictive Insights to help analyze budgets and accounting trends so your board sees cost pressure early. We help draft owner notices and coordinate with your attorney when a member vote is needed. And because management is part of your budget, our Fee Lock lifetime guarantee keeps the base management fee for base services from increasing as long as your association keeps auto-renewing and stays on our Remote Management option. Explore budget and reserve planning or request a proposal.

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