Should taxpayers bail out HOAs?

By Deborah Goonan, Independent American Communities


Should a city government help pay for a failing HOA to take care of deferred maintenance and repairs?

Here’s a perfect example of why all taxpayers should pay attention to housing policies that strongly favor or mandate that new housing development  must be created as an Association-Governed Residential Community (requiring a mandatory homeowners’ or condo association).

For those of you who are still under the assumption that only the wealthy buy into planned communities and  amenity-rich condominiums, think again.

The vast majority of HOAs and condo associations are targeted to middle-income or low-income households. The buzz word in the industry is “affordable housing,” and some of these HOAs set price controls on the sale price of each unit, much like rent-controlled apartments in big, expensive cities.

The problem

In Aspen, Colorado, real estate prices are so outrageous that ordinary workers cannot afford to own (or even rent) without some sort of mandated price controls. So, in the past 15-30 years, the city has encouraged construction of affordable housing by private developers, taking advantage of various federal and state tax credits, rent subsidies, and price control programs to keep sale prices (and rents) relatively affordable for residents with lower wages.

The problem is, in order to keep these housing units “affordable,” more often than not, assessments have been kept artificially low because the developer and successor Association Boards have failed to require a portion of  payments to fund the reserve account. A reserve account is money set aside in savings for eventual big-ticket repairs and replacements needed when the housing reaches 15, 20, or 30 years old.

Unfortunately, home and condo owners in Associations – especially those with artificial price controls – have no incentive to maintain the condition of their properties.


So now the city of Aspen is considering a $10,000 per HOA unit giveaway, to shore up unfunded reserves. Guess who would pay for that?

Yep, all taxpayers, whether they happen to live in or own HOA property or not!

Listen to the podcast and read the transcript for details:

City wants $16 Million for HOAs

Now you may be saying to yourself, “Hey, wait a minute! I own a home that is not part of a homeowners’ or condo association. I have to plan for long-term repairs to my own personal home. I already pay taxes to the local city or county for maintenance and repair of infrastructure such as roads. Why should I also pay for unfunded long-term repairs for others who live in communities that are supposed to be collectively funded by its members?”

And why should each and every HOA unit in the city of Aspen get the same $10,000, regardless of need?

Well, the alternative of the City of Aspen not creating a bail out plan, it is argued, is that owners are unable to afford repairs, so entire HOA and condominium communities will decay, leading to  blight and crime. That would reduce property values and have spillover effects on adjacent neighborhoods. Eventually, brand new housing might have to be built, and that would be far more expensive than shoring up sinking ships.

But, how would such a giveaway encourage more responsible saving in the future?

And does anyone truly believe this would be a “one-time bailout?”



1 thought on “Should taxpayers bail out HOAs?

  1. It rewards irresponsibility.

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