WA state HOA decides if rebuilding is worth the cost

By Deborah Goonan, Independent American Communities

 

Homeowners in Sudden Valley, a large-scale association-governed community in Bellingham, Washington, have been fighting for several years about whether or not to preserve HOA property.

In fact, an article was previously published on IAC in 2015 , discussing the HOA’s difficulty in getting a new budget approved, and then getting enough homeowners to agree to fund the newly approved budget.

As you will read in the following update published by Cascadia Weekly, the disagreements over The Money continue, more bitter than ever.

Homeowners have been unable muster up a 60% majority to agree to rebuild not only their roads, but also many of their crumbling, barely used recreational amenities. It has become an epic neighborhood battle between older and long-time owners who want to bring back their once enjoyable resort lifestyle vs. the new crop of homeowners who don’t have a lot of free time for leisurely pursuits, and value affordability over unnecessary luxury.

 

Sudden Valley: Bellingham’s farthest neighborhood hangs in the balance

Cascadia Weekly

By Bob Simmons Wednesday, July 5, 2017
“Things fall apart; the centre cannot hold.” —William Butler Yeats

Sudden Valley, the woodsy hillside/lakeside resort that grew to be Whatcom County’s fourth-largest population center, noted for its quiescent beauty and waves of internal conflict, meets a critical point in its history this week.

“The fatal destruction of our community,” Board President Larry Brown says, “has already begun.”

Brown’s warning appeared in an eight-page mailing by a group of Valley residents organized as Sudden Valley Vision 2020. They’re pushing for a “yes” vote in a special election underway this week, among members of the Sudden Valley Community Association. A 60 percent majority “yes” would allow the association to borrow as much as $12 million to repair and rebuild community-owned assets that are giving way to age and neglect.

“Things in Sudden Valley have been dying for many, many years,” Brown writes.

…

The best nugget in the report:

There are proposals to sell off the recreational amenities, including the golf course and marina. Even to dissolve the SVCA altogether, and reorganize as a road maintenance association.

Secessionist talk has been heard for years, Board President Larry Brown says, but restrictive covenants in the SVCA charter make it next to impossible. The community’s structured in some 38 residential divisions, which appear to have little purpose except to make it difficult to dissolve the corporation. Lawyers who’ve looked at the possibilities say any such move would require a 60 percent majority in each of the divisions.

Read entire article:

http://www.cascadiaweekly.com/cw/currents/bellinghams_farthest_neighborhood_hangs_in_the_balance

 

 

At the time this article was written, Sudden Valley membership vote on the issue had 49% in favor of the Special Assessment, and 51% opposed.

That’s 11% below the minimum vote required to move ahead with the ambitious project to include rebuilding and repairing roads, the marina, swimming pools, a basketball court, a tennis court, and cleaning up the Maintenance area.

HOAs often struggle with conflict over repair and renovation of aging infrastructure and amenities

The problem faced by Sudden Valley is not unique. In fact, thousands of mature association-governed common interest communities across the U.S. must come to terms with similar issues.

Of course, not all older HOAs are as large as Sudden Valley. Some have elaborate amenities, some do not.

But smaller communities tend to struggle with rising maintenance costs, even with few luxury perks, simply because there are fewer homeowners to share the cost of repair and renovation.

In HOAs, owners who rarely or never use recreational amenities do not see the value in paying for them.

Keep in mind that, in a homeowners association, votes are assigned one per property owned. So if someone in Sudden Valley owns 3 houses, that owner is entitled to 3 votes on the issue of a special assessment.

 

Municipalities differ from HOAs

By contrast, municipalities faced with aging infrastructure and amenities do not generally require voters to choose which to projects to fund and which projects to scrap altogether. A city or town council will simply cut out non-essential expenses as needed. For example, a town council will often vote to shut down an old public pool or playground that is relatively unused and in disrepair. They may reconsider their decision only if voters loudly object.

If enough voters seem to support a refurbished public pool or a new playground, the city will sometimes set aside part of its budget to make it happen.

Interestingly, although all city homeowners pay for the pool and the playground – whether they, their children, or grandchildren use them or not – almost no one complains about it.

Perhaps that is because these neighborhood perks are open to the public – not exclusive to a single neighborhood – and, with the cost spread out over a larger population, per taxpayer annual cost is nominal.

On the other hand, sooner or later, your local government will make the unpopular decision to increase taxes as necessary to fund essential work such as road repair. People may gripe about it at first, but quickly forget about it once their roads have been improved.

If taxes go up and roads still look like the surface of the moon, chances are high that the next election cycle will result in some new members elected as Mayor or members of City Council.

And, voters in real government elections get but one vote, regardless of homeownership status or the number of properties owned. In other words, the municipal government system has several built-in mechanisms for stability and accountability.

Imagine that!

 

The taboo of HOA dissolution

So it should not come as a surprise that an increasing number of residents of association-governed communities are seriously discussing dissolving their HOAs.

And many would probably do so if real estate developers and local governments had not intentionally made the process next to impossible.

One has to wonder, why do so many local governments enable perpetual dysfunction in aging and obsolete HOAs?

It has been said that homeowners in association-governed communities are double-taxed, to some extent. They pay the same property tax rates as their neighbors in non-HOA homes, yet homeowners in HOAs receive fewer municipal services, many of those provided by their HOA and funded by HOA assessments.

So it would seem that the HOA is a Cash Cow for a municipal government – a boost to the tax base with limited fiscal impact on the government’s operating budget.

But municipal leaders need to reconsider: do these perceived tax revenue benefits truly outweigh the risks and disadvantages of eroding property values in less than desirable HOA neighborhoods?

More importantly, the purpose of government in a Constitutional Republic is to serve the people, and not for the people to serve the government. When a growing majority of homeowners and residents see no redeeming value in their HOA, it is government’s duty to make it feasible for property owners to dissolve their dysfunctional layer of corporate governance – or to allow restrictive covenants (CC&Rs) to expire, gradually eliminating unwanted HOAs by attrition.