The New Mark Commons Board of Directors on April 6 unanimously adopted a final 2017 budget that reduces earlier projected expenditures and results in an average 8% increase in resident dues.

Board members said they wanted to signal to the community that they had heard the protests late last year against proposed increases of at least twice that amount. In the face of strong opposition, the Board withdrew that proposal and voted instead to hold expenses at the 2016 level as an interim measure.

Under the new 2017 budget, homeowners will incur an annual dues increase ranging from $76 to $94.

We’ve had a lot of turmoil in the neighborhood this last year,” Board President John Daroff said, urging his colleagues to “step back and get through this year.”

The Board agreed that it cannot fund necessary operating expenses for 2017 using only the October 2016 CPI increase of 0.8%. They voted unanimously to apply Article VI, Section 5a of the NMC Covenants – that allows dues increases commensurate with the cumulative increase in assessed property values – to authorize the dues increase.

“Our obligation is to pay our bills,” John said. “I hope as budgets change and evolve, we can bring the community along.”

Board member David Schwartzman said the CPI figure was “unrealistic” and was “tying our hands in a way that will harm this community in the long run.”

Board member Alex Belida noted that the board had “succeeded in trimming expenses below what we had anticipated.” He said the budget decision signaled that “we believe we are on the way to a more stable budget and dues process.”

Among the expenses that drive the $468,077 budget is the $15,000 to cover the HOA’s direct payment of the City of Rockville stormwater management fees that had previously been collected from owners as an extra fee in their dues statements. The Montgomery County Commission on Common Ownership Communities (CCOC) ruled in February that New Mark must absorb those costs within the budget and reimburse up to $219 to each townhome owner fees that had been collected since 2011.

Another new expense this year is $10,000 for the new Assistant Administrator.

A major issue over the past months has been whether the Board has the authority to increase dues beyond the current Consumer Price Index of 0.8%. The NMC Covenants provide for two ways to hike dues without requiring a vote of the association membership. While the custom of Boards over the last 50 years has been to rely on the CPI to increase dues, one notable exception was the creation of the reserve fund.

But the Covenants provide an alternative guideline, which allows the Board to increase dues in accord with cumulative rising property values. According to figures presented at the Board meeting, New Mark dues have risen between 509% to 651% since the community’s inception in 1967. That compares to an increase in property values ranging from 1,746% to 2,802%.

Some of the pressure on the budget was relieved by approval on April 6 by NMC’s insurance to cover the CCOC-mandated refund to townhome owners for stormwater management fees over the past five years. That saves the community a maximum of $43,362 that it had anticipated it would have to spend and plugs a “giant hole in our budget,” John said.