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Posted By DonF2 on 05/01/2021 5:40 AM
I am the president of the Fall Creek Villas HOA in Tonganoxie, Kansas. I was appointed by the Declarant along with the other four board members. Our HOA when completed will be about 95 homes. It is a +55 commmunity. The Declarant is a developer who purchased the land from a bankrupt developer about 8 years ago and he will have the last 15 homes completed this next year. He has asked me to either have the HOA to start paying a rental fee for the clubhouse or have the HOA purchase the clubhouse from him. He seldom attends board meetings and prefers a hands off approach. He has 51% of the voting rights of the board but seldom votes on any issues. He says he would like for the board to agree to pay a rental fee without him forcing that decision on the HOA. I have discussed it with a few of the board members and they, of course, don't want to have the HOA pay to rent the clubhouse because it would increase their dues. If the HOA paid $1000 per month for the clubhouse we would (95 homes) have to increase dues $10 from $60 to $70 per month. The clubhouse is used for various meetings and resident scheduled parties etc. It also has a basement that has exercise equipment that can be used by the residents. All members have a key. It also acts as a storm shelter for those members who do not have a basement. The dues typically cover the cost of mowing, fertilizing, snowing removal, and general maintenance.
I am stuck between the other board members and the declarant. What should I do?
What an interesting question. Here's where I see the issues:
* The Declarant still holds 51% of the vote so is still in control. But your community will have about 95 homes, of which 15 remain to be built (or about 16%). In many HOAs that's past the time in which control should have been transitioned to the homeowners. What do your bylaws say about developer transition?
* What does your budget look like, especially with respect to the clubhouse? Is it adequate? Are you contributing toward the reserve fund for future repair and replacement? What about reserve funding for other common areas? Without knowing any of the details, it's impossible to say whether or not what the Declarant is asking for is reasonable. I will say, though, that budgeting toward some "magic" assessment number is a prescription for financial pain down the road.
* It's not unusual for HOAs with a clubhouse to charge a usage fee to homeowners who use the facilities, in addition to the clubhouse's share of the assessment dollars that go to routine upkeep (utilities, insurance and the like). Whether this is appropriate for your community depends on the nature of the usage. It's also not unusual for an HOA with a good-sized clubhouse to direct a good chunk of the assessment dollars toward this one item.
What the Developer is asking for dollar-wise may be completely reasonable, although it may be misleading to refer to it as "rental" if the HOA owns the thing.
Bottom line is you have to pay the bills, both for routine operating costs and for funding the reserves for the big ticket items down the line (roof and window replacement, etc.). Figure out what everything costs for all of these things and then set your assessments accordingly.