Special Assessments

I live in a development that is governed by a nonprofit Iowa corporation to manage a common sanitary sewer. There really is no HOA but a board of directors to manage the operation and maintenance of the sanitary sewer. Our docs consist of the Articles of Incorporation, a document titled Bylaws and a document titled Rules and Regulations. There are no enforceable covenants as per Iowa law the covenants expired years ago due to no renewal of those. Iowa has a 21 year time limit to renew.

I received a letter from the secretary of the nonprofit board that a special meeting has been called to "transact business or adopt resolutions presented to members including but not limited to a special assessment being charged all members equally in respect to current expenses to fix the West End Lift Station as well as the immediate future expenses to unclog and/or repair blocked and/or broken sewer line(s)".

I am seeking some opinions from you posters about the special circumstances in my development. There are approximately 27 lots with homes on them. The rest are vacant lots. I'm not sure how many vacant lots there are but I am guessing at least 50 - 75. I suspect that the vacant lot owners also received the letter. I am skeptical that these lot owners would be obligated to pay for any special assessment for repairs/maintenance to the sanitary sewer. My skepticism comes from the fact that the development is not tied to any covenants thus deed restrictions are no longer valid. If the lot owners are not connected to the system are they obligated to pay?

Any thoughts and opinions would be appreciated. Thanks.

Oops forgot to mention that some of the vacant lot owners have been paying membership dues. Some have paid for years. The only benefit they receive for the dues is a couple of ponds that people can fish and swim in. Members also can hook up to the sewer (when and if they hook up) at a rate considered in good standing. Owners not paying member dues or paying for awhile then stopping are considered "not in good standing." That means they can't vote, use the ponds, and must pay 3 times the rate of members in good standing to hook into the sewer.

The bottom line is we have to have a sewer as this is my only residence that I live in year round. Some owners have homes but they are vacation homes. Could have an expensive outcome for me personally. Yikes!!!

The homeowners are paying dues for the sewer services of this non-profit entity, correct? If so, do you receive 'financials' etc from the non-profit (i.e. is there a good deal of transparency)?

In managing a capital intensive infrastructure, an entity like this would almost surely have a capital reserve line item in their budget which presumably has accrued for years. At the meeting, I'd be asking about this for sure. (Is there a reserve? How much is in it? Has it been used before? For what? When? Are we using it now for the Lift Station and sewer lines? If not, why not?)

The homeowners are paying dues for the sewer services of this non-profit entity, correct? If so, do you receive 'financials' etc from the non-profit (i.e. is there a good deal of transparency)?

In managing a capital intensive infrastructure, an entity like this would almost surely have a capital reserve line item in their budget which presumably has accrued for years. At the meeting, I'd be asking about this for sure. (Is there a reserve? How much is in it? Has it been used before? For what? When? Are we using it now for the Lift Station and sewer lines? If not, why not?)

That is a question you need to ask of a local attorney versed in contract law.

I would suggest that you seek a legal opinion prior to the meeting so you have an answer and can raise concerns at the meeting.