MONTHLY CONDO FEE -- HOW IT IS DETERMINED AND WHAT IT COVERS

HOW IT IS DETERMINED

For both current condominium owners and potential buyers, questions arise as to how the monthly condominium fee is determined and what it covers. The Bylaws of the Heritage Hunt Condominium I Unit Owners Association (HHCI) basically state that, except for those common expenses which may be specially assessed against one or more condominium units, the total amount of the estimated funds required for the operation of the condominium property as set forth in the association budget for the fiscal year shall be assessed against each condominium unit in proporation to that unit's proportional interest in the common elements.

In HHCI, there are 76 units and the governing documents establish each unit's assessment share as 1/76. Assessments are for the entire year but are billed and payable monthly in an amount equal to 1/12 of the yearly amount.

For each year the association's board of directors devlops a budget that estimates the total expenses, total investment income, and total other income. Total assessments to be paid by the unit owners are then determined by subtracting total investment income and total other income from total expenses. The monthly condo fee is equal to 1/76 x 1/12 of the total assessments. Unit owners are encouraged to participate in the budget-development process.

WHAT IT COVERS

What the condo fee covers can best be understood by looking at the budget categories:

• Administrative Expenses -- including such things as office supplies, postage, printing & copying, telephone, web site, permits & licenses, community mailings, resale account setup, etc.
• Professional Services -- including such things as legal fees, audit/tax preparation, management fees, delinquency processing, consulting/engineering, emergency/after hours calls, etc.
• Board expenses
• Utilities -- including water/sewer, electricity & gas for the common elements plus water/sewer for the condo units
• Contracts -- including landscape maintenance, snow removal, janitorial, elevator, common area HVAC, trash/recycling, alarm monitoring, and fire suppression equipment inspection
• Repair & Maintenance -- including entry system, common element pest control, emergency generator, alarm system, landscape enhancements, irrigation system, lighting, general repair & maintenance, elevator, common area HVAC, roof, fire suppression equipment, common element plumbing, electrical, painting, doors & locks, caulking, etc.
• Taxes & Insurance -- association income tax, building master insurance policy and director's liability insurance
• Reserve Contributions -- including self-insurance, repair & replacement, & painting. The Virginia Condominium Act requires that the association maintain adequate reserves as determined by reserve studies conducted every five years.
• Other Expenses -- such as bad debt

In developing the budget, expenses are offset by projected income from investment of operating and reserve funds as well as other income, primarily from late fees and reimbursements from the HOA for trash service. The remainder necessary to balance the budget determines the required assessments.

Budgets are formally adopted by the board at the November board meeting and copies of the budget are mailed to each unit owner. Additionally, the current budget and monthly financial reports are kept in note books in the lobbies of each building.

WHAT IT DOES NOT COVER

The condo fee does not cover:

• Maintenance and repair to, or inside, the condo unit itself
• Electric and gas utility service
• Repair of consequential damage attributable to utility and mechanical services, defined as pipes, wire, conduit, etc. that serve just one unit. See HHCI Bylaws Exhibit A Maintenance Responsibilities.
• HH Homeowners Association (HOA) fee. Condo unit owners are members of both the HHCI Unit Owners Association and the separate HH HOA, each with its own fee.
• County real estate taxes
• Unit owner's insurance

CONTRIBUTION TO WORKING CAPITAL FEES

When a condo unit is purchased, two separate one-time Contribution to Working Capital fees are assessed at settlement:one to the condo association and one to the Heritage Hunt Homeowners Association. The condo fee is currently equivalent to three months of monthly assessments. The HOA fee is currently equivalent to 12 months of monthly assessments.