guest blog by Deborah Goonan
There may be a tendency on the Neighbors At War website to concentrate on warning people in Homeowners Associations. But that may be too narrow a scope.
Don’t limit our audience to HOA owners. Include tenants, who make up more than 30% of HOA residents in many communities. Include home and condo buyers, particularly those who are looking for a home and true quality of life.
Savvy real estate investors who really want the HOA model and know how to work the system: We can leave them out of the equation.
But an important audience of people who SHOULD be paying attention to the big picture are the owners of non-HOA properties. You see, all taxpayers are eventually going to foot the bill for the next approaching crisis in housing, as aging, failing HOAs with insufficient funds to maintain the infrastructure turn to traditional government to solve their problems. When HOAs cannot be maintained, blight and crime increase. Property tax bases decrease along with property values.
Evan McKenzie has explained this well in Beyond Privatopia. Local governments will have to pick up at least some responsibility – and cost – of repairing crumbling roads, correcting poor drainage that leads to flooding, increased police protection for crime-infested areas, increased strain on the courts related to crime and HOA-related lawsuits, etc.
I will give you a real life example. My former HOA in Florida had a developer-owned water & sewer utility which was recently sold to the local municipality and County under an inter-local agreement.
According to the pre-purchase County-funded Engineer evaluation, the water/sewer system was in shambles, the sewer system out of compliance with FDEP since 2010, the water system with a history of sporadic water quality violations and boil water advisories. Two out of four wells were unusable, and two wells were barely enough to meet demand. The entire system needs to be rebuilt – potable and sewer treatment system, lift stations, wells, etc. The system lacks redundancy – meaning there is NO back up if a major component fails. So redundancy must be built in to bring the system up to current code. This will cost in excess of $11 million. There are about 1500 homes and a handful of commercial customers (who threaten to connect to a different utility provider). After the purchase last fall, owners received a 47% rate hike. More increases will follow. So far, it has only been HOA owners affected.
But the local news recently reported that the city who purchased the utility is “broke” and they blame the high cost of acquiring the water utility from the HOA! They are reporting there will be tax increases for City residents! So you see, the people in this municipality are going to have to pay for the former HOA developer’s deferred maintenance of a water/sewer system that is not even used by non-HOA residents.
I recently read that Fairfax County VA is seriously considering taking over maintenance of “larger” storm water ponds in HOAs. Why? Because the HOAs cannot afford to maintain them, and downstream flooding is resulting due to lack of maintenance. Who will pay for this? Fairfax County homeowners, even if they do not live in an HOA.
So, should the Neighbors at War message be aimed only at those who own homes in Homeowners Associations? My answer would be “NO!” It’s a problem for all American homeowners. You will eventually be taxed for the misdeeds of the out-of-control Homeowners Association Industry.
