Private communities often come with burdensome costs

HOAs, condo associations pay extra for private infrastructure, amenities

By Deborah Goonan, Independent American Communities

About 4 or 5 decades ago, many local governments began approving new development of planned communities and condominiums. Many of these housing developments include private infrastructure and recreational amenities.

But most buyers and homeowners do not realize the primary incentive for creating private communities: Your local government is able to shift substantial construction and ongoing maintenance costs to owners in private housing communities, offloading the financial burden to private homeowners.

It’s a deep, dark secret that is rarely disclosed to homebuyers in association-governed common interest communities.

 

How it all began

Before the force feeding of HOAs and Condo Associations, if a local town or city wanted to grow its economy and expand its tax base, a portion of tax dollars would be used to develop land by building new roads extending storm sewer and utility lines, so that home builders could then sell individual lots and build homes for sale or apartments for rent.

But when cities became cashed strapped in the 1970s and 1980s, many came to rely heavily on private land developers to invest in real estate development. Private developers agreed to build roads, channel storm water, work with utility providers or build private utilities, and, in some cases, build a variety of recreational amenities to entice homebuyers. The cost of building a community from scratch was then added to the purchase price of each detached home, townhouse, or condominium. In this way, existing taxpayers did not have to fund new development of residential real estate.

At the time, local politicians claimed that shifting construction costs to the ultimate end users (individual home buyers) would prevent excessive property tax increases. However, ask just about any homeowner in America if their property tax liability has remained stable. In most regions of the country, taxes have increased faster than the rate of inflation, even in locations with flat or decreasing home values.

Developers of many of the earlier planned communities deeded roads and storm water infrastructure to a city shortly after completion of construction. Public tax dollars were allocated to these services, just as in communities without private owners associations.

But local governments soon discovered they could increase net tax revenue by cost-shifting more and more ongoing maintenance to homeowners in each respective private community. By the mid 1990s, in many of the fastest growing metropolitan areas, developers would be required  – or strongly encouraged – to establish mandatory homeowners or condominium associations to pay for ongoing maintenance of new communities spread out over hundreds of acres or several square miles.

By the 1990s, gated communities, golf course communities, and master planned resort and retirement communities became even more prevalent. That created thousands more communities private roads, many of them large scale communities of 1000 or more homes.

This may explain why home buyers will find that older single family HOAs (prior to 1980) may be voluntary, or, if mandatory, will have relatively low annual assessments. But virtually every “modern” HOA or condominium complex of two or more structures is governed by a mandatory association, with substantially higher monthly, quarterly, or annual assessments. In some cases, a homeowner belongs to two or more associations that are “nested” with smaller associations under the umbrella of a “master” association.

Cha-ching!

It is no wonder recent business and real estate news publications are reporting that owning property in an association-governed common interest community is becoming more expensive and less affordable.

But along with ongoing regular assessments, also known as “dues” or “maintenance fees,” homeowners are faced with additional fees and costs associated with “private” ownership of common property within the boundaries of their associations.

The articles below serve as typical examples of the added costs and liabilities of living in a private housing community.

 

 

 

For families in rural counties, private roads are quite common. But, as this community has discovered, their HOA has been unable to save anywhere near enough money to properly repair their road, which was washed out when the nearby creek flooded. But the County has made it clear – to repair their private road, these homeowners are on their own.

Families’ access road still washed out from September flooding

BEDFORD CO., Va. (WDBJ) — The headaches of the heavy rains and massive flooding over the summer are long gone for most people.

Samantha Robie

But some Bedford County families are still living with a headache to this day: a road washed out, and it still hasn’t been fixed.

When these neighbors chose to live on a private road, they thought they knew the responsibility they were taking on. But as they found out, life is full of surprises.

The area waterways can be absolutely beautiful, but sometimes the power lying within can be underestimated.

Read more (VIDEO):
http://www.whsv.com/content/news/409584615.html

 

This report highlights the stark contrast between publicly and privately owned dams. Many private communities struggle to repair their private dams. Some may have to sacrifice their lake in order to get the city to repair public access roads.

Mirror Lake Drive washout inconveniences VanStory Hills

Fayetteville plans to restore two city-owned dams, such as in VanStory Hills, but not pay to restore other private dams, under new policy

By Andrew Barksdale
Staff writer

After Hurricane Matthew washed away part of Mirror Lake Drive, VanStory Hills and its elementary school lost a popular route through the Fayetteville neighborhood.

The closure since last fall has inconvenienced VanStory Hills residents headed to the Harris Teeter, Max Abbott Middle School or downtown who must take a longer alternate route.
Traffic now backs up on school mornings on Northview Drive at Morganton Road. To help manage the congestion, the Police Department has begun deploying a civilian traffic investigator at the intersection.

Read more:

http://www.fayobserver.com/news/20170430/mirror-lake-drive-washout-inconveniences-vanstory-hills

 

These two lake communities in North Carolina need to finance hundreds of thousands, perhaps more than $1 million, for dam repairs. One HOA is asking the city to collect HOA assessments on its behalf, so it can obtain a bank loan. But the city is also considering charging a stormwater fee to all taxpayers. 

Flooding solutions

By Joy Hampton Senior Staff Writer

The Transcript/Dec. 9, 2016

Erosion has eaten away the bank of Lake Misty, a retention pond in Summit Lakes housing addition Thursday.

Norman homeowner Charles Browning isn’t concerned that his house will flood if the dam bursts on the small lake in his neighborhood. What Browning fears is flooding downstream and how the failure of the neighborhood dam could affect other Norman residents.

He and his neighbors are also concerned about potential liability. Their 19-member property owners association is looking at how to fund an estimated $70,000 in repairs to the dam.

“Long ago, when that was a field, the water was soaked up,” Browning said. “Now that those are hard surfaces, the water is running into drainage ditches and into the watershed.”

Browning’s story, and the story of Cedar Lakes Estates where he lives, is not unique. Across Norman, locally owned dams are failing.

The dam in the Summit Lakes neighborhood has been deemed a high-hazard dam by the Oklahoma Water Resources Board. The estimated price tag? $700,000.

City leaders are negotiating with these two neighborhoods to resolve critical issues before these dams burst. Other similar negotiations could follow, and talks with The Vineyard are currently in the early stages.

Read more:

http://www.normantranscript.com/news/government/flooding-solutions/article_d66487f6-bcac-5a96-9be4-8d198b769267.html

 

Some municipalities even charge a private fire hydrant fee. Owners claim they are being doubly taxed for fire protection. 

Condo owners want hydrant fee eliminated
Claim charge discriminates

By Angeljean Chiaramida Staff Writer 9 hrs ago

SALISBURY — About 100 local condominium owners packed a meeting Monday night to get the selectmen/water commissioners to rescind a fee for private hydrants in complexes.

The show of force at the selectmen meeting was spearheaded by Bill Greilich, chairman of the board of Atlantic Breeze II condominium association.

Atlantic Breeze II is one of several condominium associations fighting private hydrant fees. Greilich sent an email to owners in the complexes, urging them to “mobilize” and attend the meeting to plead their case.

The controversy over charging an annual fee for each hydrant on private roads is not new.

The fee has existed for about a decade, according to Town Manager Neil Harrington. But the topic came to a head recently after selectmen — acting as the town’s water and sewer commissioners — raised water rates last year, including the fee for private hydrants.

Read more:
http://www.newburyportnews.com/news/local_news/condo-owners-want-hydrant-fee-eliminated/article_a6426ebc-0376-5e96-ae16-abb579fb20b7.html


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s