The budget season for 2026 is here, and Washington State community associations (HOAs and Condos) are facing unprecedented financial pressures. From Seattle to Blaine, boards must be prepared to enact significant assessment increases, driven by surging regional costs and the state’s changing legal landscape.
If you are a unit owner in the Pacific Northwest, expect your monthly assessments to rise. If you are a board member, here is a breakdown of the two major forces mandating higher budgets for 2026.
1. The Fiduciary Mandate: Surging Operating Costs
Boards have a fundamental fiduciary duty to set assessments based on reality—not the fear of homeowner complaints. Expenses across the Puget Sound region and beyond are simply rising faster than many associations have accounted for, particularly in three key areas:
A. Unrelenting Insurance Premium Hikes
This is the largest financial threat to PNW associations. Insurance costs are soaring due to:
Regional Climate Risk: Increased perception of risk, including wildfire potential (in rural areas) and rising sea/river levels on the coast, is pushing rates up dramatically regardless of where the association is located or specific risks.
Rebuilding Costs: Inflation in construction materials and specialized labor (e.g., for complex building envelope repairs) means replacement costs are much higher. This drives up the cost of the property insurance policy itself.
Market Hardening: Insurance carriers are withdrawing or tightening their coverage, leading to fewer options and higher premiums for the policies HOAs are legally required to carry. Expect double-digit increases to be the norm.
B. Maintenance, Labor, and Management Inflation
The tight labor market in Washington State, particularly in the Pacific Northwest, is directly impacting association expenses:
Vendor and Contract Costs: Landscaping, elevator maintenance, janitorial, and pool services are all significantly more expensive due to rising wages and fuel costs.
Utility Increases: Budgeting for flat utility costs is no longer feasible. Seattle City Light and other major providers like Puget Sound Energy (PSE) and Tacoma Power have approved rate increases (e.g., 4%–9%+) for 2026 across electric, water, and sewer services to fund aging infrastructure upgrades and new clean energy requirements.
Professional Management Fees: Like any professional service in a high-cost region, management fees reflect the increased cost of doing business and employing staff in Washington.
2. The Legal Mandate: WUCIOA Overrides CC&R Limits
For decades, many older Washington associations relied on restrictive language in their CC&Rs that capped annual assessment increases (e.g., “dues shall not increase by more than 5%”). That is no longer the law of the land.
The Washington Uniform Common Interest Ownership Act (WUCIOA), specifically RCW 64.90.525, grants boards the authority to propose the budget required to meet the association’s financial needs—even if that increase exceeds the cap written in the old CC&Rs.
The Power Shift: Under WUCIOA, a proposed budget (including the dues increase) is automatically ratified unless a majority of the entire membership votes to reject it at a budget meeting.
The Transition: While WUCIOA fully governs all new communities, the state legislature is in the process of forcing all older HOAs and Condos to comply with WUCIOA’s most critical provisions, including the budget process, by January 1, 2028. This gives boards the clear legal footing to override any restrictive, underfunded assessment caps.
The Bottom Line for Boards
- Boards must increase dues to realistically cover rising operating costs and increase contributions to reserves. Failing to adopt a financially sound budget:
- Violates your fiduciary duty to the community.
- Forces the association to defer critical maintenance (a major risk in the PNW’s damp climate).
- Puts the association in jeopardy of failing Fannie Mae/Freddie Mac reserve requirements, which prevents unit owners from obtaining conventional loans.
- The cost of inaction—special assessments, compromised building safety, and devalued homes—is far greater than the cost of a necessary, realistic assessment increase in 2026.
