Special Assessment Issue

Hello everyone, I have a Texas question here. My POA board is trying to pass a special assessment for a needed repair project in the tune of $3mil, The board does not have the authority to pass a “special assessment” without a majority vote, per the restrictions. They now want to call it a service fee under Texas 204.101(9) “impose and receive payments, fees, or charges for the use, rental, or operation of the common area and for services provided to property owners”.
Does Sec. 204.010(9) apply in this scenario? Are they able to assess a onetime fee and call it a “service” or “for use”. This will be a $5000 assessment per owner. Thanks

Oh, sorry, missed the term "repair project" in your post when I responded.

Much of my response, while accurate, is not germane.

What do your documents say about regarding the ability of the Board to impose a Special Assessment for the maintenance or repair of Common Elements?

If you can, please share the exact language.

A portion of my response which was relevant is the part about some Texas POA documents empowering the Board to impose a Special Assessment without owner approval in some situations.

Thank you Bill, I attached the language from the restrictions. Again, this is a large repair that must be made to community property. I don't think Sec. 204.010 applies because the language in the restriction address "maintenance fee's" and "special assessment's", and specifically sec. 204.010(9) because this is not a fee for services or use.

The way I read it is the BOD can do a Special Assessment once a year for about anything they want to do it for. It specifically says for Repair but also including Capital Improvement thus giving the BOD a lot of wiggle room to do a Special Assessment. If I am reading it properly, the Special Assessment cannot be more then the present yearly assessment.

Thank you everyone, the board has been openly discussing the issue for years but the estimates for the work has just come in.

Shelia, the board is allowed to take out a loan for the project, but an increase of annual dues would have to voted on by all members. That is an option but with 600 members it may take awhile to pass majority.

John, you are right that any "special assessment" cannot exceed the maintenance charge. But it clearly states that "Any such special assessment must be approved by a majority of all association members."

What you underlined in red indicates that both provisions require majority approval of the owners.
Are you saying that there's another provision that says they can do stuff without a majority vote of the owners?

Thanks NSP, I;m glad you can see the underlining on the attachment (wasn't sure if it showed up).

What I am saying is the board wants to impose a "very large" fee using the language under the Texas property code Sec. 204.010(9) "impose and receive payments, fees, or charges for the use, rental, or operation of the common area and for services provided to property owners;" to bypass the whole "special assessment" process.

From the TX Statute -

Sec. 204.010. POWERS OF PROPERTY OWNERS' ASSOCIATION. (a) Unless otherwise provided by the restrictions or the association's articles of incorporation or bylaws, the property owners' association, acting through its board of directors or trustees, may: (9) impose and receive payments, fees, or charges for the use, rental, or operation of the common area and for services provided to property owners;

I think you have a number of arguments against the proposed usage, including:

1. "Unless otherwise provided" means that the provision doesn't apply if there is already a provision in your bylaws that addresses the situation. And clearly, what you provided previously demonstrates that the issue is already addressed in your bylaws.

2. If 204.010(9) was applied as apparently intended, then it would override all requirements of majority owner vote approval -- which could not have been the intent of the statute. A court would be unlikely to allow such an interpretation.

3. The standard argument that 2.04.010(9) seems to be intended to apply to traditional fee for usage services. A court would not be likely to read (9) so broadly, especially where other subsections of 2.04.010 and other sections of the full statute address your particular issue with greater specificity.

4. Even if a court was receptive to the idea that 204.010(9) applies, there is nothing in 204.010 to support the idea that the decision can be made without member approval. All that 204.010 does is define the breadth of the actions that the Board can do - There is nothing in 204.010 that says those powers cannot be restricted in any way by a vote of the owners.

From https://texashistory.unt.edu/ark:/67531/metapth176635/m2/1/high_res_d/0117is.PDF

LO 96-123. Request form The Honorable Don Henderson, Chair,
Jurisprudence Committee, Texas State Senate, P.O. Box 12068,
Austin, Texas 78711-2068, concerning whether, under Property Code
§204.010(9), a property owners’ association may assess additional
fees or raise existing fees for services the association performs,
without following "established procedures" for assessing or raising
the fees. (ID# 38818)
Summary. Property Code §204.010(a)(9) authorizes the board of a
property owners’ association that is subject to chapter 204 to impose,
without membership approval, payments, fees, or charges for the use,
rental, or operation of the common area and for services provided
to property owners unless property restrictions or the association’s
articles of incorporation or bylaws provide otherwise. Subsection
(a)(9) encompasses the authority to set additional payments, fees, or
charges and to raise existing payments, fees, or charges.

Note "without membership approval"

Note also "unless ... bylaws provide otherwise"

Thank you Guys,

NPS, I agree with your interpretation of Sec. 204.010, and because the covenants specifically address the language it is not applicable. I also read the Attorney General's decision that you posted, and it starts off with the intent that it is for covenant that does not have a mechanism in it for fee's.

Bill, I also agree with you interpretation. Many members in my community are senior and on limited budgets so they are against any type of extra assessment. With 600 residents it is a tall task to get them onboard.

This is real challenge for your community because your older residents haven't paid enough dues, over the years, to support the maintenance of their neighborhood OR your HOA has willingly passed budgets that starve the organization. Using that amenity, paired with underfunding, is parasitic to the budget.

This really isn't a "special assessment" IF your residents have rejected dues increases. This is the bill coming due and they happen to have outlived the amenity.

Your community, having known this large project was coming due over multiple years, chose a special assessment over budget modifications. There is no controversy or confusion here.

Larry,
I have not seen anyone ask the obvious question yet unless I missed it. You said the assessment is slated to be $5000 each homeowner and later you mentioned 600 owners. That means this assessment is going to try and raise 3 million dollars for the repair. Please give us some information on what the major repair is going for. That is a lot of money to get at one time. The prior boards should be ashamed of their selves for not bringing this to a head long ago.

The homeowners also need to be aware that neglecting these repairs won't make them go away. It may come to a point where home purchases and refinances will be declined. Then everyone gets screwed.