Financing HOA Project

Started by OliviaL • 7 replies • 600 views

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OliviaL (Arkansas)
Posts: 2

Posted:

I’m on the Board of a small rural HOA. We do not have any clubhouses, pools or common areas to maintain. We virtually have no expenses. This HOA's Board has never had to do or plan for anything. However, we have the opportunity to invest in infrastructure to improve our internet. The project’s cost will be about $75,000-85,000 (half at the beginning & balance towards the end), and a Special Assessment will need to be imposed. My question is: how have some of you financed/ structured the financing of such a project? I expect many owners will pay their SA immediately and some will not. I was thinking of a Line of Credit, perhaps? IDK. We are still early in the game and just looking for thoughts, ideas or insight.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

cell companies are upgrading bandwidth as fast as possible to offer you home internet at blazing fast speeds. at the same time spacex wants to have its internet satellites online south usa by 2020.

everything your buying now could be useless if everyone switches to cheaper cell or satellite service.

PaulJ6
Posts: 990

Posted:

That's such a small amount that a local bank might be open for it, and would possibly want you to keep the line of credit open for a while.

Maybe the vendor that does the work would finance the project (e.g., not require payment for a while, but charge interest until the work is fully paid for)?

JohnT38 (South Carolina)
Posts: 1,631

Posted:

How many households will be paying for this? Do your governing docs allow you to add an amenity without approval from the residents? Once the infrastructure is in place who's responsibility is it to maintain this?

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

what exactly are you planning on purchasing?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

What you do you mean by "Invest"? First I would want to find out what the majority of owners think about the project. It may not be something everyone wants or needs. This would be akin to a GROUP purchase of services. Is it an expense already part of your dues? If not, then that puts a few other angles to consider. May need to incorporate it into your documentation on what the HOA funds cover.

There is also the consideration of the actual installation construction. Meaning there could be some digging involved. Something that may not be that clear cut. Our cable company hires sub-contractors to do the actual burying of cable lines. Which they left the cables line the streets for months before burying them. Nothing we could do. Plus some people may not want their yards dug up.

Raising the funds will need approval first to have a special assessment once project is agreed to. Have to agree to the project first then assess. The assessment would be split among ALL owners. Those who don't pay can be subject to liens. Have to factor in that as a collection expense.

So need to do a lot more work than talking to internet sales people. There are rules changes, assessments, construction, and overall opinion of the membership. It's not a board decision.

Former HOA President

GenoS (Florida)
Posts: 4,276

Posted:

Satellite TV is on its way out. AT&T is looking to dump DirecTV. Point is, technology changes so fast what looks good today turns into something you're stuck with a decade or two down the road.

This idea sounds like a really bad idea at best and a scam at worst. "Investment", right.

OliviaL (Arkansas)
Posts: 2

Posted:

Thank you for the suggestions!

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