CHRONIC APATHY IN HOA's. Looking at a huge loan..

Hi there, We have a huge project coming up this year. it includes a new roof and other neglected issues left behind by a prior board. ( That is a different issue all together.)

This is the issue. Our Board has approved to replace our roof and redo neglected decking and other matters in communal areas. It's expensive. We are looking at financing about $500K for repairs. Its hard to explain to owners this has to be done, as it hasn't been done and waiting as it has been done has cost us more in the long run. 3 out of 5 prior board members who should of taken care of this when they were serving up and sold their units. This year we have completed obtaining bids, working out kinks and now we are looking at financing.

The last several HOA meetings we have had have been full of owners kicking back and rolling eyes when speaking about the responsibility we have had to clean up what was left for us. 4 years ago the prior board got bids for all the work and never did anything. We have holes in our decks, cracks around the pool, leaking roofs. All they did was kept patching stuff.. now here we are.

How do we get owners to understand what is happening and we we are looking at a 8-10K per unit special assessment? I too feel like listing my home and just moving out too, but that isn't an option.

Our attorney is mandated to be part of this according to all lenders and I believe doing community town halls with his and owners will stops the stupid looks and rolling eyes ( being sarcastic ). Owners complain about the state of our complex, but the reality is. They allowed this to happen buy not asking the board 4 years ago over and over and over why can't stuff be repaired. It's a soap box

Yep, apathy - usually the #1 cause of all that ails HOAs. That and being short-sighted and cheap, which happens to all of us at one time or another. We figure things will last forever and ever, or at least will be long gone before you have no choice but to deal with the problems.

I think doing a town hall with your attorney would be a start, but as George stated, you should also have a reserve study done, if you haven't already done so (and based on what you've said about the previous board, I doubt it). The reserve specialist could come to a special homeowner's meeting and give a presentation about his/her findings, along with a few horror stories about what will happen if people don't deal with this $500K problem immediately. Some will think they'll simply sell but may find the asking price will sink like a stone once the buyer finds out about the real state of the finances.

While planning this meeting, you may want to have a sit-down with your bank to see what the association's options are. A loan will mean your assessments will go up a lot for the next five or 10 years (maybe more) because paying it back comes from assessments and they need to be high enough so that you can take care of reserves (like the previous board should have done), routine monthly expenses AND the loan payments. Even that may not be enough and you may have to consider a special assessment or two (maybe three, depending on the state of your finances.

There is no magic formula to make people understand any of this because people want to believe and do what they wanna do and you can throw up all sorts of facts and figures, write it in crayon and use pop up books and still they will how about "our assessments are too high" or "why I gotta pay when I'll probably be dead when these repairs are necessary?" (that's what the older homeowners will say).

Do your homework and make your case as best you can, accepting that some homeowners simply will not listen or care. A few will threaten to sue, but they'll find out soon enough that won't fix anything. This won't be pretty, and I wish you luck.

There is no scenario where a homeowner gets a $8,000 bill and is happy with it. Conclusion: They will be unhappy.

But the roof still needs replacement, so vote it through and be done with it.

I concur a massive communication and education effort is needed. Town Hall meetings and mass mailings are a great way to do this.

For what it is worth, your HOA is not the first to have to impose a several thousand dollar+ Special Assessment because prior boards ignored infrastructure problems. Inexperienced directors, perhaps coupled a with a property manager who does not understand Reserve Studies, will cave to members' own lack of understanding of budgeting more often than not.

Nicole,
So I find it completely shocking that your board is in the situation. Unlike some of the others on the site wanting a reserve study done I feel you are about 5 of 10 years to late at this point. I can tell you the life expectancy of your roofs. It sounds like zero life left. Minor dues increases over the years would have made this a minor issue.

If have not mentioned reserves at all. You must have a reserve account as Ca. law requires them last I checked. It sounds like you guys have a shoe string budget but I would suggest you get a Drone pilot to take aerial video of your roofs and also the decking issues and make it a short video for HOs. Hard to see what can't be seen with words. You need to remind them that this situation is not going to get better only worse.

You will have problems getting the loans for this major repair so be prepared. Bankers look at HOAs that need money as a scary proposition. The HOA has proved that they did not save enough for the future and that makes lending it money much risker in the future. You can bet your interest rates will be effected.
You can also bet that HOs who can will run from this problem. This will scare lenders off since loan repayment is based on collected dues.

The prior Boards are definitely to blame for your current situation. I bet they were beloved by the HOs because they kept dues low. Now your board who is left with the repair work will be hated for letting this happen to everyone. I really feel sorry for what you are going through. It is going to take every bit of energy you have to get it fixed and I wish you best of luck.

This perfectly sums up the state of affairs in most HOAs. You can present unassailable evidence for something and that won't change their minds if they want to believe something else.

I'd shift the discussion to having a special assessment. I bet that would stop most of the eyerolls. Name names. Take out past budgets that should have provided for more reserves and point directly to the names of those on the board of directors at that time. There could be years and years of that happening. Rip the band-aid off so you can put all of this behind you. You're dealing with the can that has been kicked all the way down the road and there's no road left. There's no reason you should feel like it's up to you to pull a rabbit out of a hat now. It's already tough enough, no need to torture yourself by anguishing over it for months on end.

Put the assessment to fully fund the roof replacement to a membership vote.

Pass = no problem

Fail = no problem, the water will cool tempers, THEN the screams for the assessment to fix the roofs will deafen you