Developer Dictatorship

I live in a relatively young developement in Pennsylvania. The developement is approx. half complete with all of the construction being conducted by the developer. When my wife and I purchased the home the realtor ( an employee of the developer ) told us the annual home owners fee would be approx. $100 per year. Sounds low right. That's because all of the streets are maintained by the local municipality and there is limited community property. Basically the Association is responsible for four(4) bills. Landscaping and lawn maintenance for the common areas (approx $7500 per year), Sewage pump station operation & maintenace (approx $25,000 per year), electricity for street lights (appprox $5000 per year), and insurance (approx. $1500 year). All these expenses divided amongst the home owners comes to about $108 per year. We have three members on the board the developer, an employee of the developer, and only just recently a home owner. Under this regime it was decided we need a mangement company to handle our four expenses. The fee for this management company more than doubles our associaition fees. We have tried to meet with the dictator, I mean developer, to allow us to manage ourselves, but to no avail. We have homeowners experienced in running an association. Does anyone have any advice on how to give the decision making to those who should be making the decisions, the homeowners?

He gets to be the dictator because it's his football field.

When it becomes your football field (after the turnover), then you get to be the dictator.

There is more to managing a development than simply "paying four bills."

You don't mention how large your development is. Ours is upwards of 300+. We have "self-managed" for many years and this year have decided to bite the bullet and get a management company.

Why? Because we are "volunteers," and the time it takes to run the day-to-day (the billing, the collections, the CC&R enforcement) runs WAY over any reasonable "volunteer" time any of us felt like committing ourselves to for the rest of our lives.

Best of luck to you guys. When he gives you the keys to the locker room, boot out the management company and go it alone. All I can say is, be careful for what you wish!

In this area, typical percentages are 80% filled. And after that the developer retains the right to veto any action of the association that he feels lessens his interests as long as he owns property for sale in the association.

The primary reason for a management company is enforcement of the CC&Rs. And in a development such as yours, the management company often does represent the largest item on the budget. The more lots you have the better pricing you will get on a per lot basis.

Now for the real kicker, some mortgages have a rider attached that state that the home owner can not take action to eliminate the property management or HOA without first obtaining permission from the bank. (But I am sure many have no clue what they sign at closing.)

Meant "numeric" not "numberic". sorry

You know, I read through this again and the more I read it, the more I feel like we are not getting accurate information somewhere, or that the OP does not have access to accurate information.

Take this statement: "We have homeowners experienced in running an association. Does anyone have any advice on how to give the decision making to those who should be making the decisions, the homeowners? "

If they have homeowners "experienced in running an association," then wouldn't those homeowners also know that they would need to read their governing documents thoroughly to determine exactly when the turnover point is and what the developer can and can't do prior to that point?

I mean, just a simple read-through of the governing documents pretty much sums up the fact that it's the developer's ball game. They are generally written to benefit the developer to begin with.

But aside from that, if the money situation is as stated then the fees are already barely paying the bills, which means they would need to be raised ANYWAY, regardless of whether a management company were brought into the picture.

My guess is that the fees were needing to be raised a decent amount to begin with.

Lawn care is most certainly going to go up, what with gas prices escalating, and I can't imagine the others not increasing somewhat. So it's very likely that "near double" increase of the assessments come from a combination of things and is not simply comprised of property management fees alone.

But I digress. The point is that the only way to find out how to "give the decision making" to those who you feel should be making the decisions is to read your governing documents to determine exactly when and how the turnover should occur.

Until then, the developer has all the right to make the decisions, since he has the voting power to pretty much do whatever he wants.

Homeowners experienced in running an association would already know this.

By the way, has this group of homeowners tried to organize and meet with the developer to present a proposal for self-management?

Our HOA did that. We had about 7 people who were interested in an early turnover, so we got together, met with the developer and presented him with a plan and negotiated a process by which we did just that. We approached him in the spirit of a partnership and not in the spirit of "us" against "them," and we made sure to highlight the benefit to him in doing so. We did leave intact his ability to approve construction plans for new homes, but we were able to obtain any other ARC approvals.

Anyway, again, good luck to you. Just keep in mind, there's more to running an HOA than paying four bills. . .

I don't see anyone making sarcastic posts or demeaning Roger.

I think we've all tried to help him.

We can't do anything concrete to his position,though, until he reads his documents and shares with us what they say. He asked for advice on how to become the decision makers, the guidance for that would be in those documents.

In fact, while your post is "helpful," it pretty much just reiterates what everyone else has told him.

In other words, we have all said the same thing, and others have offered even more info and suggestions.

I would be interested to know who big the development is and how far from completion they are.

Roger,

Believe me, your day will come! As someone else said, "be careful what you wish for" -- the rest of that quote goes "you may get it!"

Developers are noted for setting the assessment fee at a low rate. Afterall, their main goal is to attract buyers. It's not uncommon for the first board after turnover to have to raise those fees to meet the expenses. The developer is able to keep his operating costs lower because, in many instances, he has other projects going on where he is using a landscaper and perhaps a management co. Also the insurance for your assn may be on a blanket policy he maintains to cover all his developments. These are some of the things we found out when I was elected to the first board of my former assn. Our first order of business was to raise the fees!

While the developer is in control, he has the authority to pretty much do as he wishes; afterall he really is the assn! The fact that he has appointed a homeowner to the board doesn't mean much. That person is only one of 3 and definitely in the minority.

As others have suggested, read over your docs; become thoroughly acquainted with all the rules. When the developer announces the turnover you will be in good shape to run for a position on the board. Only then will you really know what it takes to manage an assn. -- whether self-managed or not. Depending upon the size of the assn, it may not be that big a deal. My former assn consisted of only 49 homes; I was the treasurer. Frankly, I could have run the place by myself!

But, regardless of the size, the biggest problem is getting members to step up to the plate. And even more important than that is to find members who are willing to give the time required to do the job effectively and efficiently. Some will agree readily to run for a position on the board but not all of them will be willing to put in the time and effort required to do a good job. Self-management is not only determined by the size of the assn but by the willingness of the board members to do their jobs.

For now, I would suggest to just hang in there and do your homework!

Gerald,

Are you using "new math" to come up with these figures? From Roger's message, here are the figures:

Landscaping $7,500
Sewage plant 25,000
Street lights 5,000
Insurance 1,500

Total yearly budget = $39,000 + 108/yr assessment = approx 361 members

Hopefully Roger will give us more info. But it appears to me the s/d will be a pretty good size and I doubt self-management will be an option.

Gerald,

I guess I should have included a :-) after my remark about "new math". I certainly didn't mean to come across as being sarcastic. Please accept my apology. Just wondered where you got your figures.

I guess when some people read text "enclosed in quotation marks," they automatically assume that is "air finger quotes," that imply "sarcasm."

But sometimes they are used to simply quote exactly what another person said, or to imply using a cliche or common slang.

There's not one post on this thread that I have interpreted by anyone (including me, and I oughtta know my own intent), as sarcasm!

Well, with the exception maybe of the OP using the accidentally on-purpose slip-up when referring to the "developer" as the "dictator."

I might have been "tongue-in-cheek" when stating it's his ball field so he can do whatever he wants, but that's not sarcasm. That's pretty much just colorful language or simply casual banter.

I know. Imagine we're all sitting around the bar eating peanuts and knocking back a few while we discuss this.

. . . it's all about context. . . and visualization. . .

**grabs a fistful of peanuts and orders another tall one**

If they have homeowners "experienced in running an association," then wouldn't those homeowners also know that they would need to read their governing documents thoroughly to determine exactly when the turnover point is and what the developer can and can't do prior to that point?

Hey Board members have something in common with non-members...beer and peanuts.

Michele is right that text is often misread and a difficult form of communication to sometimes get ones point understood. Just look at me and Donna, heh heh.

John thanks for the reply, I think you may have misinterprated some of my numbers. Our bills account for $108 per YEAR with the management company's fee accounting for another $120 per YEAR. We will be petty big when all is said and done. Probably 600 homes.

Any idea what a typical management company's fee is. Ours says they are charging $10 per MONTH per home.

RogerB2,

The sad fact is that until you have reached the point where state law and your governing documents give the homeowners majority control of the board (meaning that, until then, the developer has majority control) there's not a whole lot you can do.

If you can determine that the developer is actually violating the governing documents or state law, then you might have a case, but you would have to hire a lawyer to pursue that for you. If you can prove that the developer is violating state law, then you might be able to appeal to an ombudsman (if your state has such a thing) or to the state's attorney general.

I'd say the the way to start is to read and understand your governing documents thorougly, and then do the same with you state laws governing homeowners associations. Many states' laws are available on the internet, and you can try googling for them, or go to the "library" tab above, then on the next page click on the large logo, and when you get to the Community Association Network home page, click on "State Info" on the left and look for yor state and see if you can find the relevant state laws that way.

Mary,

In general, I don't disagree with anything you said. But, at least in Connecticut, our state law governing community associations has certain protections built in for the homeowner. The developer can't subsidize the HOA to keep dues artificially low. Also, there are certain provisions the developer can't put into the Declaration (CCRs) and there are certain provisions he must put into the Declaration. Also, once the Declaration is filed, he can't even amend it (except to add units or to bring the provisions into compliance with the law) himself. It requires a large percentage of the homeowners to amend it, even while he is in control.

We are professionally managed. I couldn't remember exactly what we paid for management services, so I just looked up our contract. Our cost for management services is around $200 per unit per year, so RogerB2's figure of around $100 per year sounds good to me.

However, $200 per year is about 7.5% of our budget. In Roger's case, it is about half of his budget. However, the bulk of the work, I think, is in collecting assessments and maintaining homeowner records, and that bears little relation to the number of bills to be paid or the size of the budget (which depends mainly on the cost of the services to be provided).

So, considering that, $100 per year per unit seems fine to me.

It's all relative.