Special Assessment vs. Specific Assessment.

Started by CharlesW1 • 27 replies • 2827 views

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CharlesW1 (Georgia)
Posts: 826

Posted:

The board had taken your advice and we mailed a ballot to all homeowners. We also discuss these two choices were “if” the association did not receive the approval to do the resurfacing and what would happen as a result.

It is looking as if we will not receive the approvals needed. This is where I could use your help or should the association seek legal help at this point?

I do not understand our options. The CC&R have listed both the Specific and the Special Assessment. One which requires a vote of 2/3 and the other doesn’t.

Am I correctly interpreting the difference between the two? It’s looking as if we won’t even have enough to meet quorum again! So “if” this ballot doesn’t meet quorum and in turn we don’t get an approval, can the board do a second mailed to all homeowners accessing the cost divided by total number of homeowners? (14,900.00 divided by 275 HO = $54.18) ideally!

What ever money we receive, plus kick in the rest from our reserves?

I personally don’t want to not have a pool this year. I’ve only used the pool a few times myself, but I purchased and had my home built in this HOA because it was a pool and tennis community.

Our CC&R has both listed and I would assume could be used, and if not why would they be offered at the boards discretion if they couldn’t be used?

Thanks as always.
Chuck W.

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Charles E. Wafer Jr.

BradP (Kansas)
Posts: 2,640

Posted:

Charles:

I don't know the legality of a specific assessment, but if the homeowners don't want to pay the board has a duty to make the pool operational and I would enact a specific assessment for that cause. You tried to be nice but sometimes that doesn't cut it. There are others on here that can give better advice, but that is what I think.

JoeW1 (New York)
Posts: 728

Posted:

Chuck - whose advise were you acting upon? a specific assessment, as defined by the article 4.4 you attached, is to cover something that does not benefit all owners, only a few. therefore all assessments levied are divisible only by those that use it. a special assessment, as defined by the article 4.5 you attached, is to cover something that benefits everyone. unless the use of the pool requires payment of a fee over and above the monthly maintenance, it is accessible and usable to all owners, whether they choose to use it or not. If the use of the pool is covered in monthly maintenance, the resurfacing would fall under the category of a special assessment. However, if the use of the pool is covered in monthly maintenance, the cost of resurfacing should have been budgeted in the reserves. why was the money for resurfacing the pool not part of the board's reserve budget? It seems it should have been. The board has an obligation to maintain the elements, and ideally should never place the integrity of the association in a position where they rely on 2/3rd's of the community to do the right thing. Oh well.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By BradP on 02/12/2007 5:50 PM

Charles:

I don't know the legality of a specific assessment, but if the homeowners don't want to pay the board has a duty to make the pool operational and I would enact a specific assessment for that cause. You tried to be nice but sometimes that doesn't cut it. There are others on here that can give better advice, but that is what I think.

BradP,

I appreciate your response as always. I too had suggested the same plan to the other board members if the special assessment was a no go. The board will (if legally we can legally do so) access all homeowners the specific assessment in the event that the special assessment isn't approved. The special assessment is currently failing to reach quorum to even determine a yah or a nay.

I feel we should take the quotes we received and divide that amount by (275 residents) and access every homeowner that amount and what ever money we still need then “dip” into the reserves for the remaining amount needed Because homeowners that are delinquent in their assessments probably won’t pay the specific amount, because their privileges to use the pool have been taken away until they are current on their assessments.

Or close it down for the year, and the community will suffer the results of that in years to come.

Either way it’s not going to be good. This sounds like some of the horror stories I use to read about early on.

I guess you live and you learn.

Chuck W.

Charles E. Wafer Jr.

RogerB (Colorado)
Posts: 5,067

Posted:

Charles, I don't know what were the ballot choices and what you said would happen as a result. Therefore, it is difficult to advise on what to do as a follow up. First a ballot should only address one item not a choice of items. The only two options should be a yes or no vote. If two items were given and a choice to select one the ballot split the vote.

If the members were clearly made aware that the pool needed repairs and could not be opened without them and the members turned down all options let them know the pool will not open, unless those wishing to swim are willing to pay the cost in order to make the repairs. And give them a second chance to vote.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By JoeW1 on 02/13/2007 5:26 AM

Chuck - whose advise were you acting upon? a specific assessment, as defined by the article 4.4 you attached, is to cover something that does not benefit all owners, only a few. therefore all assessments levied are divisible only by those that use it. a special assessment, as defined by the article 4.5 you attached, is to cover something that benefits everyone. unless the use of the pool requires payment of a fee over and above the monthly maintenance, it is accessible and usable to all owners, whether they choose to use it or not. If the use of the pool is covered in monthly maintenance, the resurfacing would fall under the category of a special assessment. However, if the use of the pool is covered in monthly maintenance, the cost of resurfacing should have been budgeted in the reserves. why was the money for resurfacing the pool not part of the board's reserve budget? It seems it should have been. The board has an obligation to maintain the elements, and ideally should never place the integrity of the association in a position where they rely on 2/3rd's of the community to do the right thing. Oh well.

JoeW1,

I’ll try to explain it to you the best I can, please excuse the long post.

It was decided by the board when we were confronted with this particular situation. Knowing that this resurfacing would severely diminish our reserves account we opted to access every homeowner a portion of the expense to have the pool resurfaced. We knew we wouldn’t receive all the money needed for the resurfacing, but figure what ever money we didn’t receive we will just take from reserves.

We never anticipated using all the funds in the reserve account to pay for this resurfacing project. Taking the entire amount (which will leave us dangerously low, for any other emergency situation that may arise) The pool pumps have also been infected with the black algae as well as the filters, so it won’t be long until those will need to me replaced. Our reserves will not be able to hand any other expenses if the board covers the cost all the expenses with the money in our reserves.

We wrote a letter and mailed it to all homeowners. (Enclosed) Not being all that familiar with what the CC&R said in detail pertaining to a special assessment. I decided to read exactly what it did say and that is when I saw there was a specific assessment. By then the board had already sent it to the PM for his approval. He said it looked fine to him. Being that is his profession, and I’m just a volunteer. I feel as if he should have known the this option, that is what he gets paid the big dollars for, not us! He made a few small correction and we had it mailed to every homeowner.

Ok, so because the pool is made available to all homeowners, but only the few that have amenity privileges would be able to use it then the specific assessment couldn’t be used only a special assessment. Is that what you are saying? When would there ever be a situation where an HOA would even be confronted with this type of assessment? Are streets are public! Front entrances a open to all that live here. Everything in the community affects every person living here. Is there anything that isn’t?

Basically you have said that if only a few use it (which that is the situation here) some can, some can not use the pool because they are not current on their assessments, but the entire community will benefit from the pool being resurfaced.

Thanks. I will try to keep you all up to date as too what happens, hopefully we will get the approval and money needed to begin the resurfacing this summer.

Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By RogerB on 02/13/2007 6:53 AM

Charles, I don't know what were the ballot choices and what you said would happen as a result. Therefore, it is difficult to advise on what to do as a follow up. First a ballot should only address one item not a choice of items. The only two options should be a yes or no vote. If two items were given and a choice to select one the ballot split the vote.

If the members were clearly made aware that the pool needed repairs and could not be opened without them and the members turned down all options let them know the pool will not open, unless those wishing to swim are willing to pay the cost in order to make the repairs. And give them a second chance to vote.

RogerB,

I understand it’s difficult to give me advice as to what should be done now appose to what should have been done.

I have suggested to the other board members that we have a “special meeting” Have an expect speaker to inform the homeowners of the condition of the pool and advice them as to what will happen if the pool isn’t resurfaced.

Inform the entire community that the pool will not be opened this year due to the black algae. The County will not allow us to open unless repaired.

Then as suggested, I would like to mail out a second ballot, and see if some of the money can then be accumulated.

Thanks for you help as always.

Chuck W.

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Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By CharlesW1 on 02/13/2007 8:52 AM

OOPS, sorry about that Roger. Apparently I had attached a blank file. I have enclosed a copy of what we mailed to homeowners as a special assessment ballot.

Thanks again
Chuck W

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Charles E. Wafer Jr.

RogerB (Colorado)
Posts: 5,067

Posted:

Charles, it is fine to have an expert speak at a meeting. Unfortunately, I doubt you will get many people to attend. Make the announcement short, simple, and clear. Do not mince words!

Include a ballot with the amount and due date. Advise on the number of owners whose approval is required for the special assessment to be levied and encourage people to talk with their neighbors to have any chance.

Example:

DO YOU WANT THE SWIMMING POOL TO BE OPEN THIS YEAR?

TO OPEN THE POOL REQUIRES EACH OF YOU TO VOTE YES ON THE ENCLOSED BALLOT FOR A SPECIAL ASSESSMENT IN THE AMOUNT OF $100.

A MEETING WILL BE HELD TO GIVE DETAILS (date, time, location). BRING YOUR BALLOT AND YOUR CHECK BOOK. IF YOU CAN NOT ATTEND MAIL YOUR BALLOT TODAY.

REPAIRS ARE MANDITORY BEFORE THE POOL CAN BE OPENED AGAIN.
TIME IS OF THE ESSENCE IF THE POOL IS TO BE OPENED THIS YEAR.

JoeW1 (New York)
Posts: 728

Posted:

Chuck - you have confused/misinterpreted what i have said. a specific assessment according to the article you provided is to assess a few for their exclusive use of something that is not accessible to all. your pool, whether it is open or closed, is something that is supposed to be accessible to all. a specific assessment would not apply. only a few use it because they choose to, not because of any special privilege. owners that are not current in their assessments are denied the right to use something, but still obligated to pay monthly as if they were using it. your board has focused too much on tapping into the dramatically reduced reserves as a reason to not go ahead with the resurfacing. what is the board going to forgo next. the board has a fiduciary responsibility to maintain the common elements. in essence you've given the power to the community the option to do away with the pool by their not voting. instead it is the community that needs to provide a special petition to the board to change or do away with something. you've set a precedent and now will look like the bad guys when you do what you were supposed to do in the first place. unless your by-laws prohibit a board expenditure of $14,900.00 without a vote, why wouldn't you just raise the maintenance fee $58.19 per unit until the amount is collected? i honestly think you guys are going to look rather foolish.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By RogerB on 02/13/2007 11:27 AM

Charles, it is fine to have an expert speak at a meeting. Unfortunately, I doubt you will get many people to attend. Make the announcement short, simple, and clear. Do not mince words!

Include a ballot with the amount and due date. Advise on the number of owners whose approval is required for the special assessment to be levied and encourage people to talk with their neighbors to have any chance.

Example:

DO YOU WANT THE SWIMMING POOL TO BE OPEN THIS YEAR?

TO OPEN THE POOL REQUIRES EACH OF YOU TO VOTE YES ON THE ENCLOSED BALLOT FOR A SPECIAL ASSESSMENT IN THE AMOUNT OF $100.

A MEETING WILL BE HELD TO GIVE DETAILS (date, time, location). BRING YOUR BALLOT AND YOUR CHECK BOOK. IF YOU CAN NOT ATTEND MAIL YOUR BALLOT TODAY.

REPAIRS ARE MANDITORY BEFORE THE POOL CAN BE OPENED AGAIN.
TIME IS OF THE ESSENCE IF THE POOL IS TO BE OPENED THIS YEAR.

RogerB,

I appreciate the advice you have always given me, but this time I think I’m asking for help when the damage is already done.

Our board has decided to meet this Friday to discuss our options.

With the advice I have already been given thus far. I feel it would be in our best interest to make certain (that we do in deed have the money in reserves) before committing to the resurfacing project.

After Friday, I will have a much clear view of what we can or can not do. I feel if the money is in the account then we should spend it! That is what the account is for.

It’s the other two board members that wish to not spend any of the money in the reserves. I totally agree with them both, but the money was set aside. The money in reserves is money the homeowners had paid the entire time they have lived here. I feel that it should be spent on something that will benefit the entire community, and having a pool I feel will do just that.

I’m going to recommend spending what money we have in reserves to resurface the pool and Pray that the rest of my time here the community doesn’t have any large expenses to be confronted with.

I’ll keep you all up dated.
Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By JoeW1 on 02/13/2007 1:18 PM

Chuck - you have confused/misinterpreted what i have said. a specific assessment according to the article you provided is to assess a few for their exclusive use of something that is not accessible to all. your pool, whether it is open or closed, is something that is supposed to be accessible to all. a specific assessment would not apply. only a few use it because they choose to, not because of any special privilege. owners that are not current in their assessments are denied the right to use something, but still obligated to pay monthly as if they were using it. your board has focused too much on tapping into the dramatically reduced reserves as a reason to not go ahead with the resurfacing. what is the board going to forgo next. the board has a fiduciary responsibility to maintain the common elements. in essence you've given the power to the community the option to do away with the pool by their not voting. instead it is the community that needs to provide a special petition to the board to change or do away with something. you've set a precedent and now will look like the bad guys when you do what you were supposed to do in the first place. unless your by-laws prohibit a board expenditure of $14,900.00 without a vote, why wouldn't you just raise the maintenance fee $58.19 per unit until the amount is collected? i honestly think you guys are going to look rather foolish.

JoeW1,

Yes you are correct, we will look pretty foolish. We’ll be doing exactly what we said we didn’t have the money to do in the first place.

You had asked “why wouldn't you just raise the maintenance fee $58.19 per unit until the amount is collected?” I’m not following you here. We budgeted for the possibility of a pool resurfacing, pump replacement and the cost to change the sand in the filters, but unfortunately the previous boards didn’t leave this board with any money in the reserves for such emergencies.

So basically we were looking to save what money had been accumulated for future expenses the community is due to have, in the future.

We were going to raise assessment every year. In our doc it states that the board can raise assessment of no more than 10% per year. We planed on putting this money in our reserves account, for any unforeseen expenses.

I appreciate all your help. The board plans on meeting Friday to discuss the exact money amount in our reserves account. We want to make absolutely sure we have enough money to state the job and to not leave the community is a tight bind!

Thanks again
Chuck W.

Charles E. Wafer Jr.

LanceT (Alabama)
Posts: 121

Posted:

Deja Vu? I went through the EXACT same thing. However, my board did it illegally and underhanded. I've had the SAME work done to my pool. I can tell you the costs for replacing the sand in the tank and pump is NOT that expensive. I estimate that work to be around $500 give or take $200.
Now, the resurfacing of the pool. You may have options there. Our board paid about $6K or $8K for that work. I did some research and asked several sources and our issue could have been resolved WITHOUT the complete resurfacing. There are less expensive and evasive ways of fixing the "roughness" of the bottom of a pool or whatever the other issues may be. I would definetely request up to 5 bids from area pool companies. When the bids are gathered make sure the work is DEFINED on what the issue is and what needs resolved. Otherwise you can be "sweet talked" into something expensive you don't need.
If you do have a special assessment the TOTAL cost MUST be divided amongst ALL the homeowners EVENLY. So if you don't use your reserve funds for the project, the board will then have to get a Majority vote through a possible special meeting to ALLOW a special assessment to be passed. THEN the special assessment can be put into place. The board can NOT vote a special assessment it MUST be the ENTIRE membership. However, the board could VOTE for using the reserves money WITHOUT going to the membership for a special assessment. But that puts the HOA's budget at risk if they can't raise more money in the future.
I would suggest the board make sure it gets good bids for the correct job that needs to be done. Don't assume resurfacing will fix the problem. It may be something simpler. Replacing sand in the pump, may not be the problem if your having any. We replaced our sand twice and found out we really had a leak. So do the research and then find the cost of the bill. Charge the members ONLY the cost of the bill. Telling members, we are going to special assess for this project but we are also going to charge X amount to cover who doesn't pay or to cover other costs isn't going to go over very well.

Recovering Ex-President of a HOA

CharlesW1 (Georgia)
Posts: 826

Posted:

LanceT,

I’ve received some very good advice as always. I could only hope it was just a sand exchange, but with the bids we had already got, we have been told it’s recommended to have the pool drained and acid washed, then re-plasting is recommended.

We had done research on-line as well. The average plastering lasts approximately 5-7 years. Our pool was installed in 2001, so it approaching in time. It wasn’t as if it was only a couple years old.

I’ve done a tremendous amount of research online, and receive a lot of advice for HOATalk concerning the Black algae we currently have in the “pits” of the pool.

That is one reason why the pool must be resurface oppose to just an acid wash. What is remaining isn’t thick enough for an acid wash alone. We would be down to the cement.

Are plan was to access the homeowners the cost for repair as a special assessment, but it appears that we won’t even obtain quorum to vote yah or nah.

We planed on raising the assessment just to keep up with inflation, now we will need to assign some of that money to our reserve account.

I understand that the expense was unavoidable, what upsets me the most is that there wasn’t enough money set aside for the in-evadible (pool resurfacing, pump replacement or a sand exchange). None of those mentioned were considered. Our budget is extremely tight as it was, and now this expense is going to hurt!

We are managing at an extremely risky operating statue!

We are having a meeting (Friday) to discuss exactly what to do.

Thank for the insight. I’ll be sure to forward your post to the other board members.

Chuck W.

Charles E. Wafer Jr.

JoeW1 (New York)
Posts: 728

Posted:

CharlesW1 - who's in charge of collecting what you budgeted for? where did the money in the reserves go. You say the board is allowed to pass an assessment up to 10% a year. What's your annual budget? Is $14,900.00 below 10%. If so, you may have the option of raising the maintenance for a one time assessment of $54.18, and hopefully collect it by Spring. It's not right to the owners that the money to do the project was collected already, but I assert the board has an obligation to maintain the elements in it's authority. a quorum of the community has not voted therefore placing the element in jeopardy of further disrepair. what choice does the board have?

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By JoeW1 on 02/14/2007 7:01 AM

CharlesW1 - who's in charge of collecting what you budgeted for? where did the money in the reserves go. You say the board is allowed to pass an assessment up to 10% a year. What's your annual budget? Is $14,900.00 below 10%. If so, you may have the option of raising the maintenance for a one time assessment of $54.18, and hopefully collect it by Spring. It's not right to the owners that the money to do the project was collected already, but I assert the board has an obligation to maintain the elements in it's authority. a quorum of the community has not voted therefore placing the element in jeopardy of further disrepair. what choice does the board have?

JoeW1

Our MC is responsible to collect the assessments, which are adjusted by the expenses of the community per year!

“If” I’m interpreting the budget correctly, I don’t see anything concerning the reserves except for the interest, which tell me, we must have a reserves account, because the budget shows the interest that is expected to be collected. I may not be reading our budget correctly, but it doesn’t look as if there as ever been money set aside for any sort of emergency.

I’ll bring the copy I have with me to the meeting we are having this Friday for clarification. I don’t how to read a majority of what I looking at when it comes to the budget.

Unfortunately it’s just a lot of very large numbers and very few little ones

Thanks for all your help.
Chuck W

Charles E. Wafer Jr.

RogerB (Colorado)
Posts: 5,067

Posted:

Charles, if you don't understand the financial reports perhaps it is time for your Board to require reports they can understand. This is a common problem for Board members. That is why we developed proprietary financial reports are clear and comprehensive. Plus money handling procedures remove possibilities for theft. I believe it is the responsibility of HOA Board members to review and understand monthly financial reports which include at a minimum the Balance Sheet, Income Statement, Cash Flow, and Accounts Receivable.

Also, require the annual budget to include operating account and reserve account line items and totals. We create these for each HOA we manage, but only after reviewing a 20 year reserve plan. These procedures can prevent problems like the one you are now experiencing.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

Chuck:
I sympathize with your plight in trying to 'save the pool' by levying a special assessment or a specific assessment to all unit owners for funding to restore it. A special or specific assessment, in my mind, is a fee over and above the monthly maintenance fee to offset a specific expense.

You mentioned that the pool is not used by all unit owners, so it would seem that the pool is not really benefiting all or is important as a necessity to all. In this case, even though you yourself would miss the pool and that is why you bought there, you have to gauge the overall expenses that a pool entails.
If you are now talking about resurfacing the pool at a cost of $15,000, and you state every five years you will need to fund this again--is this pool an ongoing expense the majority of your community does not want or need?
You need to look at this long term, and not see the resurfacing to be done now as a quick fix. You state you will still need additional funds for the black algae problem before the pool can open this summer.
Don't know as I myself would want to dish out funds for something that is a constant money pit, especially if I don't really use it.
It would seem that the Board/Property Mgr. has not adequately done a reserve study and included the pool's maintenance as part of it.
I wish you luck in your dilemma.
PaulM

WilliamT (Arizona)
Posts: 489

Posted:

Something to consider in trying to sell the assessment to the community is this:

Whether or not an individual homeowner uses the pool, it is an asset of the community; and potential homebuyers with children and other swimmers in the family may be willing to buy into the community if there is a pool, and could help to enhance the property value of the individual homes or units.

Without a pool, many potential home buyers may be turned away. When there are fewer buyers, the market price of the units will be lower.

So the owners should be looking at this as protecting their investment in their own property.

JoeW1 (New York)
Posts: 728

Posted:

PaulM - The only reason Charles' pool doesn't benefit everyone is because as with any amenity, not everyone chooses to use it, emphasis on CHOOSE. That choice does not relinquish an owner from paying to maintain the common element or amenity in this case. In Charles' case, the articles he provided evidence that if anything the vote would be for a special assessment. However, I believe the board erred in putting the power to get rid of the pool in the hands of the people, rather than their request to get rid of it. If the community desires to get rid of the pool, then the COMMUNITY, not the board, nees to send a special petition to the president to hold a special meeting to vote on getting rid of the pool. Otherwise, the Board is obligated to maintain the element.

LanceT (Alabama)
Posts: 121

Posted:

I don't think "internet research" is what is needed here. You really need to get LOCAL people or atleast close to the area to come look at the pool. This is a "HANDS ON" issue. With "internet research" you tend to ONLY look up your point of view and find information supporting that and it should be expert opinions with solid facts.
My HOA was on an extremely tight budget when I did similar repairs. We had to replace an entire retaining wall in addition to fixing leaks, changing pumps, filters and sand, and other maintenance issues. Our budget had $2k in saving/reserves, our dues were $50 a month (107 homeowners), and about $5k of bills to pay a month. You can clearly see that trying to add a $10K project wasn't going to be easy with NO special assessment.
$8k of the pool project was an "emergency repair" that had to be done. The original wall was old railroad ties that had buckled out into the pool area. Kids were climbing on the insect infested wall and it was collapsing. Our insurance would NOT cover this but the project had to be done. I had the wall replaced with Concrete blocks and a new fence installed to replace the bad one.
I bet your wondering how did you do that without a special assessment or raising dues? It wasn't easy but it required support of the community. I spent month's emphasising the facts the wall was collapsing to EVERY member I saw. I made it so that EVERYONE saw the importance of this repair regardless if they wanted to bury the pool or not. It got to the point where if anyone saw me they would demand to know the progress of the project (if any) and what was planned to be done about it. Every time I would explain our budget issues, the rules of possible special assessment, the cost of the project, and ANYTHING that involved hurdles in the project. Little by little, People weren't so hesistant about wanting a special assessment. They even demanded it!
Another tool I used, was gathering old debts. If anyone had a lien or in the window of being liened, I was on it. This also took support from the community. I made sure everyone was on board with really enforcing the non-payers into paying up. At one point, I even foreclosed on a house. Ironically, the lawyer forgot to give us the check until AFTER I had the pool project done! It was only about $2,300 and it was all back dues so no profit there.
I also setup a payment plan with the contractor who did the pool work. I paid him $2K a month until paid up. The contractor was really good so I also hired him for other jobs or recommended him to residents for PRIVATE work. This got the contractor more work and he would work out better deals with us. However, he was NOT an exclusive contractor and had to bid with ALL the other contractors. We had a 3 bid rule that I stuck to.
So I think you may have options available that you haven't thought of. It does take money to gather old debts so be prepared. Look into maybe changing the landscaping around the pool. It may be too many trees or not enough causing your algae problem. Find out if patch repairs can be done. I am not sure these repairs need done every 5 years. Is your pool used that much? How about changing from chlorine chemicals to the newer "natural" cleaners? Remember to add onto the bill the water bill to fill up the pool. Either do your assessment straight for the pool repair cost or to build up the reserve fund. Don't do both at the same time, because that will just cause more chaos. (The mindset :We have x dollars now, why don't we use the money for x project instead of putting it into reserves? will ruin you). Stay off the internet research. Look for new startup pool companies who are looking to make deals to establish their business.

Recovering Ex-President of a HOA

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By RogerB on 02/14/2007 7:44 AM

Charles, if you don't understand the financial reports perhaps it is time for your Board to require reports they can understand. This is a common problem for Board members. That is why we developed proprietary financial reports are clear and comprehensive. Plus money handling procedures remove possibilities for theft. I believe it is the responsibility of HOA Board members to review and understand monthly financial reports which include at a minimum the Balance Sheet, Income Statement, Cash Flow, and Accounts Receivable.

Also, require the annual budget to include operating account and reserve account line items and totals. We create these for each HOA we manage, but only after reviewing a 20 year reserve plan. These procedures can prevent problems like the one you are now experiencing.

RogerB,

Yes, you are probably correct, I’m sure I’m not the only one who doesn’t understand the budget. I feel once I’m explained what the figures are and why they so large it makes that much more sense to me.

Maybe it would be good to have a community meeting just to discuss how to comprehend what is written and why.

I can tell by the advice you continue to post on this discussion forum, that you educate the properties to manage very well.

I will certainly forward your post to the other board members today. Thanks once again.

Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

PaulM,

I completely agree with your statement when you said, “A special or specific assessment, in my mind, is a fee over and above the monthly maintenance fee to offset a specific expense.” That is the truth, but “if” a reserves account was properly maintained and expenses such as this were anticipated, the community would not be subjected to a specific or special assessment. They would have already paid for such situations. It all stems back to having a properly maintain reserve account for any and all emergency expense such as this.

I appreciate your opinion, but when you said “the pool is not used by all unit owners, so it would seem that the pool is not really benefiting all or is important as a necessity to all. In this case, even though you yourself would miss the pool and that is why you bought there, you have to gauge the overall expenses that a pool entails”

Again Paul, you are correct, repairing this pool will not directly affect every person living in this community today or even tomorrow, but when they attempt to sell their home, that is when it will matter to them. Your know that, come on!

Communities with HOA are “popping” up all over, in our area. Brand new homes (never lived in) some with amenities and some without. The majority of them are similar in price. The competitive competition is out there.

You bring up some valid points, I’m sure, but I would also say that the majority of homeowners could care less about the thousands of dollars, a year, spent of flowers to decorate the front entrances. I would confidently say that “if” those flowers were not planted one season, we would hear about it, so for you use that as an example wasn’t a very good one. IMHO. I don’t use the pool by choice not because I can’t. The majority of other resident are in the same boat. It’s not that they can’t, it’s that they choose too not use the pool, they could, if they paid their assessments and had the desire too.

The fact is that a repair of this magnitude will cost significantly more money in the future, (if we so choose to not open), as everything does. Inflation is inevitable; all you can do is prepare for it.

I do appreciate you advice and opinions. I don’t want to come across as unappreciative, by any means. Thank you once again
Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By WilliamT on 02/14/2007 12:17 PM

Something to consider in trying to sell the assessment to the community is this:

Whether or not an individual homeowner uses the pool, it is an asset of the community; and potential homebuyers with children and other swimmers in the family may be willing to buy into the community if there is a pool, and could help to enhance the property value of the individual homes or units.

Without a pool, many potential home buyers may be turned away. When there are fewer buyers, the market price of the units will be lower.

So the owners should be looking at this as protecting their investment in their own property.

WilliamT.

Exactly couldn’t have said it any better myself, that is what we need to convey to the entire community. I’ll be sure to forward your post to the other board members, and if you don’t mind I may even try to properly fit it into March’s newsletter, some how.

Oh, BTW, I would prefer to educate the HO instead of "selling" them on the idea

Thank you as always
Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By JoeW1 on 02/14/2007 1:18 PM

PaulM - The only reason Charles' pool doesn't benefit everyone is because as with any amenity, not everyone chooses to use it, emphasis on CHOOSE. That choice does not relinquish an owner from paying to maintain the common element or amenity in this case. In Charles' case, the articles he provided evidence that if anything the vote would be for a special assessment. However, I believe the board erred in putting the power to get rid of the pool in the hands of the people, rather than their request to get rid of it. If the community desires to get rid of the pool, then the COMMUNITY, not the board, nees to send a special petition to the president to hold a special meeting to vote on getting rid of the pool. Otherwise, the Board is obligated to maintain the element.

JoeW1,

Thank you for the clarification. You said that correctly for sure!

Chuck W.

Charles E. Wafer Jr.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

JoeW:
I totally agree with you in that Charles' pool doesn't benefit everyone because with any amenity not everyone chooses to use it. That is the choice of each resident. However, one would wonder why buy into a community with a pool if you don't intend to use it--just pay for it.

I guess its the choice of wording--you feel the board erred in putting the power to get rid of the pool in the hands of the people (by voting for the special assessment)
rather than their request to get rid of it. The community needs to come together to decide what amenities they want to pay for and maintain long-term.

To refer to Charles and William's statement that a pool brings in more dollars when you sell your home. Its the law of supply and demand. To some, to have a pool in a community is not an asset, but rather, a detriment-- for the very reasons Charles has stated.
Thanks for the input.
PaulM

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By LanceT on 02/14/2007 3:33 PM

I don't think "internet research" is what is needed here. You really need to get LOCAL people or atleast close to the area to come look at the pool. This is a "HANDS ON" issue. With "internet research" you tend to ONLY look up your point of view and find information supporting that and it should be expert opinions with solid facts.
My HOA was on an extremely tight budget when I did similar repairs. We had to replace an entire retaining wall in addition to fixing leaks, changing pumps, filters and sand, and other maintenance issues. Our budget had $2k in saving/reserves, our dues were $50 a month (107 homeowners), and about $5k of bills to pay a month. You can clearly see that trying to add a $10K project wasn't going to be easy with NO special assessment.
$8k of the pool project was an "emergency repair" that had to be done. The original wall was old railroad ties that had buckled out into the pool area. Kids were climbing on the insect infested wall and it was collapsing. Our insurance would NOT cover this but the project had to be done. I had the wall replaced with Concrete blocks and a new fence installed to replace the bad one.
I bet your wondering how did you do that without a special assessment or raising dues? It wasn't easy but it required support of the community. I spent month's emphasising the facts the wall was collapsing to EVERY member I saw. I made it so that EVERYONE saw the importance of this repair regardless if they wanted to bury the pool or not. It got to the point where if anyone saw me they would demand to know the progress of the project (if any) and what was planned to be done about it. Every time I would explain our budget issues, the rules of possible special assessment, the cost of the project, and ANYTHING that involved hurdles in the project. Little by little, People weren't so hesistant about wanting a special assessment. They even demanded it!
Another tool I used, was gathering old debts. If anyone had a lien or in the window of being liened, I was on it. This also took support from the community. I made sure everyone was on board with really enforcing the non-payers into paying up. At one point, I even foreclosed on a house. Ironically, the lawyer forgot to give us the check until AFTER I had the pool project done! It was only about $2,300 and it was all back dues so no profit there.
I also setup a payment plan with the contractor who did the pool work. I paid him $2K a month until paid up. The contractor was really good so I also hired him for other jobs or recommended him to residents for PRIVATE work. This got the contractor more work and he would work out better deals with us. However, he was NOT an exclusive contractor and had to bid with ALL the other contractors. We had a 3 bid rule that I stuck to.
So I think you may have options available that you haven't thought of. It does take money to gather old debts so be prepared. Look into maybe changing the landscaping around the pool. It may be too many trees or not enough causing your algae problem. Find out if patch repairs can be done. I am not sure these repairs need done every 5 years. Is your pool used that much? How about changing from chlorine chemicals to the newer "natural" cleaners? Remember to add onto the bill the water bill to fill up the pool. Either do your assessment straight for the pool repair cost or to build up the reserve fund. Don't do both at the same time, because that will just cause more chaos. (The mindset :We have x dollars now, why don't we use the money for x project instead of putting it into reserves? will ruin you). Stay off the internet research. Look for new startup pool companies who are looking to make deals to establish their business.

LanceT,

I hear what you are saying. The board and I had spoken with and received many of bids to the resurfacing. We also looked into the reason why the pool had developed black algae in the first place. I was simply educating and confirming what I had heard with other opinions. I had turned to the internet for confirmation to what I had been previously told.

As you know (or may not remember) I’m home on disability. I spend the majority of my day doing chores around the house and education myself about HOA’s, dos and don’ts.

It’s sounds as if you had managed to get through your hard times, with a lot of hard work and determination.

You have brought to my attention some very good suggestion. I will be sure to discuss them all with the other board members, tomorrow evening at our meeting!

I liked the idea of a payment plan. This may be something, which the resurfacing company would be willing to do for us. I know it would definitely help, with our financial situation.

This board is currently pursuing all delinquent homeowners, by charging the HO late fees. If need be turning their account over to collection attorney and filing liens and pursue with law suits,for their neglect when not paying their assessments in a timely manner.

I have told the other board members. “It takes money to make money” We have focused the association’s money to collect on these delinquent accounts. It’s a long a difficult battle, but one that needs to be done sooner appose to later. As we are finding out this year!

Thanks as always
Chuck W.

Charles E. Wafer Jr.

CharlesW1 (Georgia)
Posts: 826

Posted:

Posted By PaulM on 02/15/2007 6:30 AM

JoeW:
I totally agree with you in that Charles' pool doesn't benefit everyone because with any amenity not everyone chooses to use it. That is the choice of each resident. However, one would wonder why buy into a community with a pool if you don't intend to use it--just pay for it.

I guess its the choice of wording--you feel the board erred in putting the power to get rid of the pool in the hands of the people (by voting for the special assessment)
rather than their request to get rid of it. The community needs to come together to decide what amenities they want to pay for and maintain long-term.

To refer to Charles and William's statement that a pool brings in more dollars when you sell your home. Its the law of supply and demand. To some, to have a pool in a community is not an asset, but rather, a detriment-- for the very reasons Charles has stated.
Thanks for the input.
PaulM

PaulM,

I would have to ask that same question to others within this community. I know the reasons why I choose not to swim in the pool, but continue to pay for it. I know my wife likes to swim in the pool. We occasionally have friends over that are guests when using our pool. I also know that all the money I contribute (year after year) to having and maintaining this pool, will pay off when I sell my home to potential home buyers.

I and the other board members felt as if we should as board members ask for help from the community, being it is their pool too! I wasn’t intentionally given them the power to decide if they would like the pool or not. I was making it very clear to all homeowners that the pool will not open “if” the community doesn’t pull its resources together to make the much needed repairs.

I and the other board members felt we are doing what we would like done if we were just members of this association and not board members. I believe that it is every board members intention to “do to others as you would want done to you”

True?!

Appreciate your comments,

Chuck W.

Charles E. Wafer Jr.

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