QUESTION: The Civil Code limits board approved special assessments to 5% of the budget's gross operating expenses. Does that include operating expenses before the reserve allocation or does it include the reserve allotment?

ANSWER: "Budgeted gross expenses," means all expenses in an association's budget, both operational expenses and reserve contributions. The statute could have have said budgeted operating expenses which would exclude reserves but it didn't. Civil Code §1366(b). Therefore, reserve allocations are included in the 5% calculation.