HOA Assessments and Private Roads

The owners are playing one of the favorite association games - "chicken" - betting that they will no longer be living there when the roads finally have to be done, or that they can postpone the repaving long enough to move when the actual work starts getting near. Its tough to get around that. The best you can do is put together a real good sales pitch, along with a subtle warning.

The sales pitch should contain all of the homework you've done to date, along with a push for logic in that the current owners are simply contibuting their fair share to take care of their wear and tear on the roads, just as future owners will have to do; that by collecting it in small amounts, it prevents large chunkds of money from being yanked out of their wallets on short notice; that collecting a little more now will allow you to do some preventive maintenance on the roads, thereby postponing the time when the large amount would be needed.

The subtle warning is a note that you would put in all resale packages, warning potential purchasers that the reserves are not sufficient for the repair of the roads which will mandate a special assessment on all current owners when the work is scheduled. Sort of puts a crimp in the home sales.

It's always a tough sale, but it sounds like you are doing what you're supposed to be doing, so just remember, you weren't elected to keep the assessments low, but to spend the money wisely.

Joe

Jennie:
You now find yourself in a situation which most all communities come to, no matter if it's 2 yrs. after 'developer turnover' or 10 yrs. after. Yes, 'we' do need to create forms, budgets, reserve studies, and most of all, learn what the official docs state. That is your number one priority, because without knowing these inside and out, you will have no authority to do anything. The docs are your authority.

Having said that, this may be the basis for 'counciling' the residents in the community's responsibility to maintain the common areas and capital expense items which the docs state must be maintained (usually listed in the Declaration). Some of those listed might be: landscaping on common areas, snow removal, maintenance of roadways, retention basin, sidewalks, driveways, gutters, etc. Funding the big ticket items with the Capital Reserve Fund comes from a percentage of the normal assessment fees received from all unit owners, and if in the case of a shortfall when repair is needed, then a 'special assessment' must be placed on all.

It sounds like you have been very thorough and conscientious in your willingness to create projections, etc.; however, you may want to seek a professional to do a reserve study and communicate the 'professional numbers' to the residents. It is more difficult to argue with a professional study. I understand where residents are coming from in that they feel that in 20 yrs. when a road needs to be redone they may not be there; however, they need to understand that ongoing maintenance will cost money to prevent an even bigger expense down the 'road'...(pun!!!). Just like in our own homes, we change the heater filter, we clean out the lint traps, and on and on, to minimize and prolong an expensive repair or replacement.

It is important to note that for 10 years no one took responsibility on behalf of the entire community in ensuring that the community maintained its property values (including capital reserve items), and now here you are, the bearer of bad news saying the fee must be raised to 'cover all the things which the documents state must be maintained, but that no one else cared about....'

You could also put the onus on the developer at this point. And, indeed, developers are notorious for lowballing the assessment fee just to entice buyers. Once a 'real and honest budget' is created most all communities find they have to raise the assessment fee. Sad to say, this is normal. And, if the residents have any common sense, they will admit that costs go up in 13 years!!!....

One other important point: refer to your state's 'Planned Community Act' or Condo Act to find out what the developer's responsibility is for association turnover to residents. You will have to be sure to learn what the conditions were 13 yrs. ago or whenever turnover took place. It should list exactly those things he was to provide, and it may be that he was to have a study done. Also, the state law may dictate he was to have a Capital Reserve Fund set up for you, with funds collected from assessment prior to turnover. Don't know if you could recoup any of this at this late date, but it may be worth a try.

I compliment you on your fortitude and effort to work through this on behalf of your community, and wish you good things. I hope your community will learn to appreciate you!!!