City as Developer

Started by ML4 • 3 replies • 1157 views

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ML4 (Kansas)
Posts: 2

Posted:

Our local municipality is the owner/developer of our neighborhood and due to slow land sales they want to require us to pay additional construction related cost. The neighborhood was initially planned with 420+ lots, and in an attempt to recover some money the city sold roughly 120 lots to a separate developer and removed those lots from the neighborhood. There are currently 60 homes in the neighborhood and our dues are $260.00 per year. The city wants to start to transition the neighborhood assets and any debt associated to them to the HOA. Some future assets are yet to be constructed and the current ones carry about a $750,000.00 municipal bond with them. We are already paying roughly $20,000.00 in specials assessments and lot purchase price of between $17,500 to $24,000. As a board member I am becoming increasingly nervous about entering into any type of transition plan which may include all of this outstanding debt. The neighborhood is in Kansas and I haven't been able to find any applicable statutes or discussions on this type of topic. Thanks.

GeraldT4
Posts: 1,022

Posted:

You state you are a board member so there must be a homeowner's association (HOA), correct? I would suggest the HOA Board get an attorney to represent it during any discussions with the municipality. Have you read the Public Offering Statement (POS) that each owner should have a copy of? In it would be the Master Deed, Covenants Rules, and Regulations (known as the CC&R's) Articles of Incorporation, By-laws, and perhaps proposed budgets? A copy of the POS (if one exists) should be on file with your county registrar, or clerk's office.

The following is a synopsis of your situation.

320 + lots
120 lots sold by municipality to developer generated $1,200,000 - $2,880,000 in revenue.
60 out of 320 + are closed
$260 maintenance $15,600 per year
Final maintenance will be $260.00 x 320 + = $83,200 +
Special assessments $20,000 divided by 60 homes = $333.33

1)How many lots are "+ lots"
2)Were all 420 lots originally part of the POS and land being offered in the Master Deed?

ML4 (Kansas)
Posts: 2

Posted:

I have checked for the POS and I have been able to locate it with the county, in fact I can't find anyone who knows what it is when I call it by that name. We do have an HOA which was set up by the city, the city just amended the covenants to reflect the sale of the lots, and as an HOA we are trying to restructure the Bylaws. I am getting some resistance to hiring an attorney for the negotiations, a portion of the board met with an attorney and became very confused. Your synopsis is correct, the city sold the lots for 1.2 mill. There will be 323 lots should the development reach its capacity. As for the original lots the city had the area surveyed and plotted for the development and the original "legal description" of the neighborhood did include the lots.

GeraldT4
Posts: 1,022

Posted:

ML4 - If the legal description of the development included all 420 lots will a new legal description be written and recorded, and a new survey be performed to reflect a lesser number of lots? For example will the 120 lots the municipality sold to the developer still be included in a new survey of the development? If so that would in my opinion be something to be very cautious about because the municipality benefited from the sale of lots to the developer on the one hand but may be relieved from some obligation of municipal services (trash pickup, street lighting expense)to those 120 lots because they would belong to the HOA. You have by-laws and covenants, and a legal description. I'm sure you have a deed to your home so that's pretty much what the POS would include, just more formally bound with more detail. As for resistance from other board members to hire an attorney they are being penny wise and pound foolish. This requires an attorney to represent the association. All you can do is state how you feel about hiring an attorney and hope the others agree. Any association matter can't be a one man show.

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