Ye Olde Clubhouse…The Other Money Pit

guest blog by Nila Ridings

You may pass it by every day with merely a glance and no thoughts to the cost of the HOA clubhouse.  Yet, when we take a closer look at its financial drain you’ll probably sit up and take notice. 
 
These party palaces can suck away more money than a 40 foot speed boat with twin engines.  And in the case of Quivira Falls there is rarely a party or a paid rental to be found. Most communities restrict usage to homeowners. That makes sense except when the homeowners rarely rent it.
 
A short time ago, the Quivira Falls board president slyly pulled off a self-dealing maneuver and milked the HOA cash cow for a complete redecorating of the clubhouse.  She claimed to be in the “decorating business” so she slid the job through her company.  No other bids were taken.  There is probably more to the redecorating details, but here’s the list of what I know was done: new window treatments, new hardwood flooring, paint throughout, new bathrooms, new kitchen, new door locks, mold abatement, and custom-framed photographs.  She claimed none of this cost too much because she was keeping “the boys” busy during the winter months.  “The boys” just happened to be employed by the property manager.  None of these redecorating expenses included the price for labor.  Did you ever know of a construction project that didn’t require labor?  And furthermore since the houses are rotten and need repairs and painting, why weren’t these guys laid off like most construction workers and the wages saved until better weather so it could be spent on the townhomes not the clubhouse?
 
According to the May 2014 issue of QF The News, rentals so far this year have totaled $1,000.  Nice even number, but expenses so far are: janitorial supplies $292.30, pest control $76.72, R&M (whatever that is?) $213.13, utilities $2,393.79.  I’m not a CPA, but my calculations total the expenses at $5,075.94-$1,000=($4,075.94) in the hole. Summer is coming in Kansas so the cooling cost on this money-sucker is going to skyrocket to nearly $900 per month.  You may be asking why the utilities are costing so much for a building that by the rentals would indicate it is empty at least 29 days per month.  Well, here’s the answer: the property manager has ONE EMPLOYEE working in that building Monday through Friday.  Thousands of dollars per year are spent on heating and cooling just for one person to sit at a desk and answer the phone, play computer games or whatever, in that building!
 
Before the redecorating “money maker,” the previous HOA president had stucco applied to the exterior and told me the cost was $100,000.  There have always been yearly landscaping expenses and most recently lighting was installed on the entry stairs attached to a deck that extends beyond the doors.  I call this place the Taj Mahal.  
 
It eats money like a slot machine but it’s really too small to be of much benefit.  Most clubhouses are one big room, this one is a small room and another small room with a conference table.  Select homeowners use it for Bunco games.  Others who have tried to use it for meetings regarding the conditions of the community, have been given the excuse of either the furnace doesn’t work in the winter or the air conditioning is broken in the summer.  Always an excuse for keeping the “pariahs” out of the clubhouse their money is being spent on. 
 
Wichita has a condo association where the clubhouse has a bar.  Its been the source of more than one juicy rumor and drunken fight.  But one night it became the place of a flaming disaster.  A board member rented it to someone outside of the COA and the stories are varied but all pretty much conclude with it being quite the drunken scene.  In the wee hours of the morning it ignited into flames and burned to the ground.  The board members blamed the fire on one of their most-hated condo owners.  (You know the guy that was eventually beaten with a crowbar.)  The Fire Marshall testified that the cause was an outlet behind the refrigerator.  Apparently, it was damaged when somehow the refrigerator was pushed back too far into the wall and the plug smashed into the outlet.  His explanation was logical but the bullies on the board still blame their enemy.  And the damage was around one million dollars.
 
I’ve had friends who lived at a lake community in the area.  They have a golf course, stables, and a clubhouse with a restaurant.  Now, there’s another “hook” on the HOA concept.  You must eat so many meals per month at the restaurant or pay anyway.  When HOA life goes sour the last thing people want to do is have a meal with their enemies sitting across the dining room pointing, whispering, and glaring at them.  They were happy to sell and get out of there, but part of the revenue comes from “outsiders” renting the venue for parties and wedding receptions. That reduces the financial sting a bit. 
 
Next time you drive past your clubhouse envision that it is bleeding money because it probably is.  If you are thinking of buying into an HOA…well…I would advise you not to do that, but certainly put the cost of a clubhouse at the top of your list for reasons to run for the exit!

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About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

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