Can a HOA do that?

"I personally think this HOA should turn over more of the maintenance to owners." I said that in the previous post and a reader asked "Can a HOA do that?" The answer is "yes" and some have done so.

How can that be? I discovered this several years ago when the economy nearly collapsed. HOAs were hit with delinquencies and some owners walked from their units. This had a major impact on the finances of some HOAs. So what was a board to do? With 30% or higher  delinquency rates it became impossible to maintain some associations. I attended an area wide event and a board member from another HOA asked the panel of experts "What can I do?" It was a financial crisis.

In 2007 and thereafter what some HOAs have done is turn maintenance of limited common elements over to the owners. Not everyone agrees this is a good thing. After all, we can't have dis-repaired decks falling off of the buildings can we? That would be a legitimate concern. But, boards have the power to enforce the rules and to take necessary measures. Some choose not to or do so based on circumstance, which is to say when there is no other option. If a board is diligent and runs the HOA as a business, then there should be no issue.

Of course, such a board may not be popular. But even the best boards find themselves overwhelmed and if there are severe cash flow problems, how to deal with them? In 2008 some HOAs did what was necessary. Our HOA does have limited resources. Some owners do see that cash pile and lust for it. However, I have pointed out to our owners that every, and I do mean "every" dollar in our reserves has already been spent; there is a purpose for every dollar in savings. This association began the re-roofing project in 2005. At that time, a few lucky owners also got new driveways and improved drainage. Today, 10 years later, we have 76 owners waiting for a new roof. It is coming, at the rate of about 4 roofs (32 owners) per year (last year, with monumental effort we did 8 roofs for 64 owners). The same is true for driveways, which are in the process of being improved or replaced. Ditto for garage floors.

However, in recent years, not everyone on the board has seemed pleased. I have detected a resistance, an unwillingness to spend some of that money, even though it has been allocated for specific purposes. There seems to be a real desire on the part of a few to kick the can down the road. For those of us with new roofs it might not be a pressing thing. (I, by the way, am one of the 76 owners who live in a building with an 20 year old roof).  Some habits are difficult to break and some owners simply don't get it; it is useful to remember that all board members are owners and may be inclined to operate for their personal benefit. 30 year planning? Why do that? Why save for reserves? After all "I won't be here in 30 years" is what some say. I guarantee the reader that I won't be here in 30 years. So why do this? Here's my opinion: After every owner gets a new roof, and all of the driveways are done, and garages floors have been re-inspected and some replaced, flooded walks fixed, uneven walks repaired, bridge handrail barriers improved, stream repairs implemented, street repairs and so on, then a board can play intransigent and can sit on their duffs and that cash hoard for a few years. But that's not what I will do if I am here. Never fear, dear reader. I have no intention of occupying a seat on the board for 30 or more years. My decision to be an owner at BLMH is a pragmatic one.

Here at BLMH we have a handful on the board. Tasks are not equally distributed, as you might have noticed in reading the newsletter or attending the HOA meetings. Board members don't want more to do; boards don't want to increase their duties and responsibilities. We all have our lives to live. Believe me, even getting the newsletter out every other month since 2010 has not been easy. In recent years, some board members don't want to write, some apparently don't want to make a written commitment to owners, some have nothing to say, some don't like being told what to do, and there is the excuse "owners don't read it anyway." I've listened to board members complain "few come to the meetings." So how to deal with that? Improved communications, which is one of the duties of the board. A factual newsletter, one that provides the same information to all owners and one that sometimes says things that may not be popular. This is not an easy chore. It's no secret some HOA boards don't want to be accountable. Can I blame them? Let's put that into perspective; be a volunteer, do the heavy lifting and be a target. And some ask why their HOA isn't better run. Duh!

Putting the facts out there is not easy. Some owners prefer it that way. How can I say that? Attend your HOA meeting and notice the questions that are asked by owners. For example, does anyone in the audience ask for the current delinquency figures? If not, why not? Does anyone ask if the HOA has sufficient funds for the projects underway? Some HOAs don't. This HOA began a $1.5 million dollar roofing project and at the time it didn't have the money or an adequate plan to collect those fees as reserves (see the December 2008 Manor Briefs; $153,000 in reserves for roofs!). That's my opinion. After 2008 we didn't read about it in the newsletter nor do I recall a board discussion about financial issues. So how were those decisions made? Meanwhile, some owners felt that sales was the most important thing, that and prices. So keep fees low. I've only been here for about 13 years. So how can we keep fees low, avoid special assessments and take on these projects? I leave it to the reader to provide an answer. Magic? Win the lottery? Let future owners pay for this? You decide. (see the footnote for a link to the association newsletters). In the span of two years (October 2006 to October 2008) our delinquencies went from a little over $5,000 to more than $30,000. It was in the newsletter. But shortly thereafter with a new treasurer, this information was no longer made available via the newsletter, nor was it discussed during HOA meetings. Our first newsletter of 2009 had hearts, coyote pups, a "meet your neighbor" article and so on. But no more information on delinquencies; Kumbaya! Oh, and fees were lowered.Some might point the finger at the boards of 2008 and thereafter, but who led us to this precipice? it takes year to build this type of disaster. Yet, shortly after I assumed a board position I was asked "How could you allow this to happen?" Really? However, when this HOA began that roofing project (2004-2005), what had it done to assure that there were sufficient funds to guarantee that all owners would get a new roof in a timely manner? Ditto for the drainage improvements of that first roof?

Some of our owners are certainly aware of these issues, some attend the HOA meetings and some read the newsletter. Those that don't make a decision to stick their head in the sand. Based on over a decade of my observations, they will be among the first to complain when things go wrong; "How could this happen?" How, indeed!

Spring is coming and we're gearing up for maintenance and projects. The geese are pairing off. Even the squirrels are more squirrely than usual.

Footnote;
Link to BLMH Newsletters on the Web:

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