Years following Omaha annexation, owners consider dissolving HOA

By Deborah Goonan, Independent American Communities

A group of Omaha homeowners in the Walnut Grove neighborhood, originally established in the 1970s, is calling for putting and end to their homeowners association.

The story was recently reported by WOWT.

Not so neighborly dispute over spending dues

By Mike McKnight | Posted: Tue 6:12 PM, Mar 21, 2017 | Updated: Tue 8:26 PM, Mar 21, 2017

OMAHA, Neb. (WOWT) — Several homeowners in southwest Omaha have serious concerns about spending by their neighborhood association. They claim they’re due more answers.

Some of them told Six On Your Side they’ve not seen cancelled checks or receipts.

Declining an on camera interview, the president of the Walnut Grove Homeowners Association Anne Rewolinski called complaints “nitpicking” and said the board has worked to improve property values for 288 homes.

The neighborhood was annexed years ago, but the city won’t maintain a private drive serving five homes so the association spent $800 on snow removal over the last two winters. Emil Radik who lives a few blocks away said, “The people who live here should be taking care of their own property, not us. It’s not our responsibility.”

Read more (Video):

http://www.wowt.com/content/news/Not-So-Neighborly-Dispute-Over-Spending-Dues-416771493.html

 

According to the report, the HOA collects an annual payment of less than $100 per home, apparently to cover maintenance of a private drive serving 5 of the 288 homes, as well as some social events throughout the year.

It is unclear whether the HOA is mandatory or voluntary. The report says that members were told they do not have to pay their assessments if they do not want to. But nonpaying members now have liens placed against their homes.

That is most likely the reason owners are considering terminating the HOA altogether.

 

Does Walnut Grove need its HOA?

WOWT provides very little information about Walnut Grove, and the HOA has no public website. However, according to the report, the community was annexed by the City of Omaha “years ago.”

It turns out that annexation occurred more than 2 decades ago.

Walnut Grove was included in Omaha’s park rehabilitation plan of 1997-2003, shortly after the community was annexed by the City of Omaha in 1996. So the city now takes care of Walnut Grove Park, as well as the streets (except for the private drive), and the sewer system.

See here:

http://www.titlecorenational.com/wp-content/uploads/2015/09/Walnut-Grove-Amendment-to-Covenants-1200-078.pdf

https://semspub.epa.gov/work/07/30023172.pdf

So what real purpose does walnut Grove HOA serve?

Even without an Association, individual homeowners are entitled to enforce CC&Rs in small claims or civil court, a more proper venue that preserves due process rights for individual propery owners. Without common area maintenance duties, the HOA becomes functionally unnecessary.

 

Omaha’s Sanitary Improvement Districts and Annexations

The City of Omaha has been annexing small communities, including areas with HOAs, for at least 2 decades. A bit of research reveals that in Nebraska, housing developers create Sanitary Improvement Districts (SIDs) – taxing districts that cover the cost of building infrastructure such as streets, sewers, utility lines, public parks, and more. The SID is also used to contract for public services such as waste management, fire protection, and police services.

According to the Nebraska Revised Statute 31-727:

A sanitary and improvement district is a political subdivision of the State of Nebraska. Sanitary and improvement districts have been termed quasi-municipal corporations. Taxpayer status is necessary in order to have standing to sue a sanitary and improvement district. Rexroad, Inc. v. S.I.D. No. 66, 222 Neb. 618, 386 N.W.2d 433 (1986).

and land ownership by a SID must transition to a use for public purpose within three years

No sanitary and improvement district may own or hold land in excess of ten acres, unless such land so owned and held by such district is actually used for a public purpose, as provided in this section, within three years of its acquisition. Any sanitary and improvement district which has acquired land in excess of ten acres in area and has not devoted the same to a public purpose, as set forth in this section, within three years of the date of its acquisition, shall devote the same to a use set forth in this section or shall divest itself of such land. When a district divests itself of land pursuant to this section, it shall do so by sale at public auction to the highest bidder after notice of such sale has been given by publication at least three times for three consecutive weeks prior to the date of sale in a legal newspaper of general circulation within the area of the district.

 

When located in a SID, private HOA corporations do not bear the burden of infrastructure and park maintenance duties.

The only function of the HOA is to “maintain property values” by enforcing the covenants and restrictions, and perhaps holding one or two neighborhood social events every year.

That is why it has been relatively straighforward for Omaha to annex nearby communities with HOAs. SIDs are already public units of government that cannot be held indefinitely for the private benefit of land developers.

Omaha Mayor Jean Stothert explains the purpose and benefits of annexation of SIDs – economies of scale that ultimately increase revenue for the City while decreasing taxes for homeowners.

Property Taxes Will Decline in SIDs to be Annexed
(June 20, 2016)

For the third consecutive year, Mayor Jean Stothert will recommend an annexation package, increasing the City’s tax base and population.

Seven SIDs are included, all are residential neighborhoods; one also has commercial development.

Mayor Stothert’s 2016 annexation goals are consistent with the previous years, the City’s ability to provide police and fire protection, eliminate islands that are already surrounded by the city, and the annexation must be revenue positive for the city. The City’s population will increase by approximately 6,052 based on the 2010 Census bring the total estimated population to 449,937.

After annexation, property taxes in all seven SIDs being annexed will decrease. The average reduction is $460.91 per $100,000 evaluation.

Projections show the City will collect over $24 million in additional property tax revenue, more than $162,253 in sales tax, $1.8 million in wheel tax and $4.3 million in street and highway funds over the next ten years.

Read more here:

https://mayors-office.cityofomaha.org/city-news/245-property-taxes-will-decline-in-sids-to-be-annexed

 

The only loose end after annexation is that the HOA continues to exist, even if it becomes inactive, unless homeowners vote to officially dissolve it.

Walnut Grove illustrates why mandatory expiration dates are a necessity for HOAs. Why should an HOA continue to exist in perpetuity, particularly when the association serves no essential function?

The City of Omaha serves as an example of how homeowners in other cities and states might approach disentangling themselves from their HOAs – shift maintenance of infrastructure to tax improvement districts to make necessary improvements or take care of deferred maintenance, with the possibility of annexation to a nearby municipality in the future.

In any case, a similar tax district approach could be used for new housing construction – perhaps without ever putting a real estate developer in control of the district and, most certainly, without the establishment of a mandatory HOA.


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