What happens when Developers break promises?

By Deborah Goonan

In Pennsylvania, Silver Spring Township supervisors recently voted to approve development of a new HOA, a subdivision that will be called Woodbridge, to be built by Charter Homes and Neighborhoods.

What makes this development approval remarkable is the fact that Charter has proven to be untrustworthy in the past. Homeowners from Charter’s previously constructed Walden subdivision attended the last supervisors’ meeting, and voiced their complaints about the fact that a community center, clubhouse, and pool for their community were never completed, as promised at the time lots were sold. Charter now only plans to build a small pool, but owners believe even that will be inadequate to serve over 1400 residents. Forget about the community center and the club house. Not happening.

Several of Silver Spring County’s supervisors also express their doubts about the developer, one of them even acknowledging they have “learned not to trust” the promises made by Charter. They have heard numerous complaints from property onwers in Charter subdivisions.

So, why did County Supervisors approve phase I of Woodbridge? For the added property tax revenue of 43 new properties (ultimately over 120 homes to be built), no doubt. Local governments are often hungry for tax revenue, especially if they don’t have to invest any tax dollars up front.

Homeowners are also unhappy about the fact that the developer still has control of Walden. But developer control is all part of the plan for the HOA industry. It allows developers to shield themselves from liability for defective construction and breach of contract under the corporate shield of the Association, by controlling its Board of Directors. It allows developers to insert several affiliates on the HOA Board that will often remain after official turnover to homeowners, mainly because there aren’t enough homeowners willing to volunteer to serve on their Board. And since the HOA Board approves contracts for maintenance and management of the community, a developer-controlled or influenced Board is more likely to approve contracts with affiliated enterprises. That creates additional revenue streams for developers and their investors.

So…the township gains tax revenues that they presume will exceed the cost of services they will provide to the HOA. And Developers are able to reduce their liability and increase their overall revenue with HOAs. What do consumers – ie. homeowners – gain from the HOA?

Broken promises? Additional costs for services that will never be delivered? Dictatorial control over their lives by a corporate HOA Board?

Food for thought: Local government is supposed to serve the needs of its constituents, and that includes all taxpayers, not just developers.

Why is 80% of all new construction nationwide created as HOA-burdened property, with developers and real estate investors in control, instead of ‘we the people?’ Because, up until now, not enough voting taxpapyers have loudly objected. Because Developers have deep pockets for funding political campaigns.

The news is spreading. HOAs are not the utopian communities and great investments that homeowners have been led to believe. Where are the non-HOA alternatives in new construction?

Source article here:

Housing Developer in Silver Spring Township is berated for ‘breaking promises’

http://www.pennlive.com/midstate/index.ssf/2015/05/housing_developer_in_silver_sp.html


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