Owners also seek options to private water and sewer utility.
By Deborah Goonan, Independent American Communities
For more than two years, Spring Creek Association in Elko, Nevada, has been looking for the magic cure for its crumbling infrastructure. In addition to a variety of recreational amenities, the sprawling association has more than 5,400 lots, 150 miles of privately maintained roads, and an expensive but inadequate private water and sewer utility.
Homeowners and several boards have considered incorporation as a municipality, as well as various combinations of special taxing and improvement districts. But, as previously posted here on IAC, the HOA was disappointed that a governance study conducted on behalf of the community did not find any pot of gold at the end of a rainbow.
According to a 2017 Governance Feasibility Analysis by Hansford Economic Consulting, none of the governance options under consideration appear to create a cost savings. But Hansford started with the assumption that HOA would remain in existence, rather than being dissolved entirely. No wonder there were no cost savings expected!
Ultimately the HOA decided to keep the status quo. That essentially amounts to doing nothing to resolve Spring Creek Association’s looming insolvency.
Earlier this month, Elko Daily reports that a few dozen HOA members showed up for an annual meeting organized by Jesse Bahr, president and general manager of Spring Creek Association. And quite a few homeowners appear unwilling to pay higher assessments or taxes in order to address road repairs, even if that means continuing with temporary repairs. Bahr says that poor storm water drainage has contributed to deterioration of roads.
Bahr noted that the HOA is also considering a “possible co-op” to fund future capital improvements. No further details were offered.
Roads, water and revenue: Spring Creek Association discusses plans for upcoming year
TONI R. MILANO email@example.com Jun 19, 2018
SPRING CREEK –Spring Creek Association property owners participated in a barbecue at the annual meeting June 16 that included a review of goals and priorities for the homeowners association.
More than 50 homeowners attended the annual meeting to learn more about key points, activities and strategic plans for the HOA, including updates on road maintenance, water and revenue, presented by Jessie Bahr, president and general manager.
Spring Creek has about 150 miles of roads, 50 more than Elko, and something that is unique for a homeowners association, Bahr said.
About 50 percent of assessment fees go to roads, including for snow removal and maintenance. In the past year, the association has been trying to manage that spending wisely by monitoring routine maintenance work, Bahr said.
“We’ve got a good database, and as we do road work throughout the association, we chart every pot hole to see if it’s in the same place and if the maintenance is failing,” Bahr said.
Part of the problem is that the roads, which could last for about 20 years, are pushing 30 years, said at-large director Tom Hannum, who worked with Summit Engineering’s pavement preservation plan that recently assessed the quality of the roads.
For more details about Spring Creek Association’s exploration of HOA alternatives, see post of September 7, 2017
THE ARCHITECTURAL COMMITTEE OF THE HOA IS ENFORCING RECENTLY REVISED RULES AND REGULATIONS. MEANWHILE, THE BOARD RECENTLY AUTHORIZED FURTHER STUDY OF MUNICIPAL AND TAX DISTRICT ALTERNATIVES.
by Deborah Goonan, Independent American Communities
For more than a year, Spring Creek Association has been exploring HOA alternatives that would shift maintenance and public services to a municipal government or tax district. Back in April of 2017, the Incorporation Committee received a report from Hansford Consulting, and then conducted a workshop with board members to discuss 5 options. In June, the Association conducted a meeting to discuss the consultant’s study.
A news release proclaimed that homeowners and board members were leaning toward keeping the HOA status quo.
At the time, I posted analysis of the Hansford Consulting study. Specifically, I observed that all 5 options studied by the consultant were based on the assumption that the HOA would remain intact. Only one of the options considered – becoming an unincorporated town – would convert the HOA to a Voluntary membership organization, but the HOA would still have limited power to enforce deed restrictions. (See Apples and Oranges HOA alternatives comparison).
The Hansford study seems to lead board members to the conclusion that keeping the HOA “as is” would be the most economical option. All other options would result in property owners paying a government entity plus the HOA.
I opined that the study could have considered the option of dissolving the HOA entirely. After all, deed restrictions and the HOA date back to 1971, and Spring Creek is a much different place than it was 47 years ago. And, according to recent statements made by a board member (see below), most owners would prefer to see the HOA disappear.
As long as public services are provided, and costs covered through either a municipality or special district, mandatory membership in the HOA would no longer be necessary. And a voluntary HOA need not be obligated to enforce covenants – indeed, their power to do so would be very limited. Even without an HOA and a Committee of Architecture, Spring Creek homeowners could individually opt to enforce existing restrictions in the appropriate court, rather than providing an HOA with unilateral power to decide if and when it would seek to enforce rules and regulations.
In the meantime, two new reports have surfaced. In April, Spring Creek Association Committee of Architecture released its 11-page Revised Rules and Regulations, and then promptly announced in Elko Daily its intent to crack down on violators.
And then, just a few days ago, Elko Daily reported that since several new members have been elected to the board in recent months, the HOA has decided to continue discussion on HOA alternatives, despite the conclusions of the Hansford consultant.
The board continues to seek a way to shift cost burdens away from the HOA, and hopes to discover some alternative tax or grant revenue sources.
One possible alternative, not previously considered, would to create a contract city. (See Lakewood, CA for an example.) That alternative could provide better economies of scale through regional or country service contracts, or competitive pricing from private contractors, without the need to keep staff on the payroll.
The board also wants to look more deeply at the General Improvement District (GID) option. Perhaps the board might even consider a combination of both governance models, with different services assigned to the municipality vs. the GID, to achieve the optimal cost structure.
But the key question is this: will Spring Creek Association homeowners consider letting go of the HOA entirely? It seems that some owners fear what might happen if the HOA were to be dissolved, even though humanity has existed for hundreds, if not thousands of years with a developer or a group of neighbors to enforce sometimes onerous restrictive covenants.
And when will homeowners recognize that while current HOA fees appear to be lower than alternative governance models studied to date, the value of HOA dollars is low as long as roads, water supply, and recreational facilities remain in poor condition?
The future cost of a special assessment or HOA loans could easily exceed taxes payable to a municipality or improvement district.
The exploration continues.