[Goldwingnut]

Bill14564’s answers here have been spot on.

Concerning the Prevailing rate adjustments, they usually happen in January, right after the developer closes out their books for the previous tax year. Unlike the clowns in Washington who use the CPI as a political football and tinker with the calculations each year to try to make themselves look good, the developer has to live in the real world of real cost increases. The amenities for the developer are simply another business unit (applies only to the ones they own - those south of SR44) and have to calculate exactly what it costs them to run and maintain the amenities they own and adjust the Prevailing rate each year to ensure they operate a sustainable business unit. Once they know the number then a new prevailing rate for new homes is established.

The deed restrictions define how the amenity fee can be adjusted. Annually the CPI is used to make this adjustment in what each home pays (it’s calculated every month for the past 12 months which is what homes next to each other may get different adjustments). The CPI is however a looser from a financial prospective as it doesn’t ever keep up with the real cost increases, so each year the boards have to work hard to try to contain costs with the effectively decreasing budget (due to inflation). The only relief to this losing battle comes with the reset that occurs when a home is sold and the new owner pays the current prevailing rate.

Many falsely believe that as the villages grows and more homes pay amenity fees that that should cover the cost increased due to inflation. What they fail to understand is that these new homes are paying for the organic growth in the budget and not the inflationary budget increases. Organic growth being the increase in budget costs caused by adding new amenity facilities (and their O&M costs) as the community and number of homes grow. The CPI adjustment tries to address the inflationary budget increased, but as said earlier, it does a poor job at keeping up with inflation.