Columbia Association’s budget for fiscal years 2017 and 2018, passed on Feb. 25, 2016, increased the annual charge cap from 2.5 percent to 3.5 percent.

Here’s an explanation of what the annual charge is and what the cap increase  means:

Q: What is the annual charge and why do I have to pay it?

Columbia Association (CA) is a community-controlled, private, non-profit community services corporation that was created to provide services and amenities for the benefit of Columbia. The annual charge has been the responsibility of residents and businesses since Columbia was established. If your property is protected by CA covenants, then your deed requires you to pay an annual charge.

If you’re wondering what you get from your annual charge, you can start by looking outside — to the more than 3,600 acres of open space and more than 94 miles of pathways, to the lakes, ponds, tot lots and athletic courts, and to the free concerts, movies and other cultural programming provided throughout the year. This is all part of providing the quality of life that has seen Columbia frequently ranked among the top places to live in America, including sixth in 2014.

The income provided by the annual charge, while significant, covers only slightly more than half of the cost of the services provided by Columbia Association. Therefore, some of the most popular activities, such as Package Plan or facility memberships, require the payment of dues and fees. Since CA resident members pay both membership dues and the annual charge, their dues are significantly lower than those paid by non-residents. For example, CA resident families normally pay approximately 50 percent less for a membership in the Package Plan or for the outdoor pools than nonresident members.

This approach creates a strong community balance. Those who use CA facilities and programs support the greatest portion of those costs, while the expense of maintaining and operating universal amenities are shared by all residents. A recent survey showed that CA services are well-used and enjoyed by the community — 94 percent have used at least one of the amenities including the open space, and 72 percent have become members or used the sports and fitness facilities, camps, before and after school care or the Art Center on a pay-as-you-go basis.

Q: How much is the annual charge and how is it assessed?

CA’s annual charge has two components: a property assessment provided by the State Department of Assessments and Taxation and a rate set by the CA Board. The rate, unchanged since 2004, is 68 cents for every $100 of 50 percent of your state-assessed property valuation (almost 10 percent below the maximum of 75 cents).

What that means is that if if your home is assessed by the state at $400,000, CA’s annual charge would be incurred on $200,000 in assessed value for a total of $1,360.

Q: What is this annual charge cap, then?

Sometimes property values can rise rapidly, and when that happens so can state property tax bills and CA annual charge assessments. That’s why the state and CA have caps in place.

In previous years, especially 2002 through 2006, the state increased property assessments in Columbia significantly — in some cases by 45 to 50 percent. State law requires that year-to-year charges based on property assessments can increase by no more than 10 percent. CA has for years further reduced that cap to 2.5 percent. It takes quite a few years to catch up to a 45 percent increase when you can only increase 2.5 percent per year! The assessed value cannot increase by more than the cap unless there are significant improvements made to the property and/or the ownership of the property changes during a given year.

Under CA’s current annual charge cap, a home that went up in value from $400,000 to $440,000 — a 10 percent increase — would be assessed for CA’s annual charge at $205,000 instead of $220,000. That means the annual charge payment would be $1,394 that year instead of $1,496.

Q: How does this change under an increased cap?

A cap of 3.5 percent is still much less than the state maximum of 10 percent. A home that went up in value from $400,000 to $440,000 would be assessed for CA’s annual charge at $207,000 instead of $220,000 for a total of $1,407.60 that year instead of $1,496.

The annual charge rate of 68 cents per $100 of assessed value is staying the same.

This cap increase will bring in an estimated $260,000 in additional annual charge revenue. CA believes that the average residential annual charge will increase by approximately $6.07 as a result of the cap increase. The actual increase will vary based on the factors that affect assessment values, which are provided to CA by the Maryland State Department of Assessments and Taxation.

The cap had never been increased by CA before. It had only been reduced since its inception and had been 2.5 percent since 2009. It went from 10 percent to 5 percent in 2006, down to 4 percent in 2007, and to 3 percent in 2008.

Q: Why was this annual charge cap increase proposed?

CA’s Board of Directors proposed the cap increase to help pay for planned capital improvements to the amenities and facilities enjoyed by Columbia’s residents and guests. Many of these features were built early on in Columbia to help attract people to our wonderful community. Now some of them need improvements and renovations over the coming years to help Columbia remain a community of choice.