Many owners of property in association-governed communities have a fundamental misunderstanding of the concept of “common interest.”
By Deborah Goonan, Independent American Communities
Today’s feature article about special assessments features mudslide-plagued Launani Valley in Mililani, Hawaii. The community of more than 800 homes was originally established in 1992-1993. As the reader can see in the photos taken by Civil Beat, several homes were built in cul-de-sacs, with back yards at the foot of steep hillsides which tower well above their rooftops.
And, unfortunately, these hillsides have proven to be unstable over the years. Several months ago, during periods of heavy rain, dangerous mudslides threatened 8 homes in Launani Valley. It was the third such incident in the community.
Much of the land surrounding private home parcels is owned by the Association, including two rather steep slopes in close proximity to homes.
After the mudslides, the Association was compelled to take action to stop future erosion, in order to ensure the safety of residents. The board consulted with geotechnical engineers, and decided on a $3.2 million plan to stabilize the hillsides.
According to homeowners interviewed by a reporter for Civil Beat, the HOA considered the possibility of borrowing money to spread out the cost over several years. That would have resulted in small monthly assessment increases. But, unable to obtain a two-thirds vote of membership to approve the loan, the board was forced to impose a special assessment of $3,902 per home.
Now some homeowners complain that it’s ‘not fair’ that everyone in Launani Valley should have to pay for repair of dangerous hillsides that threaten only eight homes.
Why Hundreds Of Mililani Residents Must Pay Thousands Of Dollars To Save A Few Homes
About eight homes in the Launani Valley community are threatened, but owners of more than 800 homes will have to cough up $3.2 million to save them.
September 20, 2018
The hillsides in question are part of a 149-acre parcel of land owned by the community association that surrounds Launani Valley’s six neighborhoods, according to property records.
The association is responsible for the maintenance of all property in Launani Valley, according to its articles of incorporation. Likewise, any homeowner in the valley is also a member of the association, according to the bylaws.
The $3.2 million would go toward placing a mesh system over the hillsides to hold back potential rockfalls or landslides. The geotechnical report also recommends that rods with a minimum length of 15 feet be drilled into the hill to hold the mesh in place.
What some homeowners fail to understand is that Launani Valley is a common interest development, where all members of the community association share in the expense of maintenance, repair, and replacement of common property.
And in many association-governed communities, common property includes not only swimming pools, beach clubs, and tiki bars, but also less glamorous or less useful things such as street signs, storm water ponds, conservation areas, or non-buildable land such as hillsides.
It stands to reason that, if all members are expected to pay to maintain a community pool or park, then they should also pay to correct dangerous erosion of hillsides.
It doesn’t matter where your home is located in Launani Valley, since you’re a member of the community association, you’re obligated to pay for any and all repairs to common property.
There’s nothing unfair about it.
Think of it this way.
If the City of Honolulu repairs potholes on ten percent of its roads, or cleans up a mudslide from a public park, it uses tax dollars from all city residents. The City does not send a special tax bill only to owners on streets that are repaired, or homes with a view of the park. If a water and sewer utility replaces broken or worn out pipes, all ratepayers bear the cost, not just the customers that are served by those particular water and sewer mains.
In an association-governed, common interest community, the concept is no different. It’s just that the costs are often divided among a smaller group of people responsible for paying the bills.
It’s simple math: $3.2 million dollars is divided by roughly 800 homes — that adds up to almost $4,000 per home.
However, for many homeowners, it’s difficult to come up with $3,900 on short notice.
That’s why some homeowners are upset that the loan was not approved. Some say that the board did not need to obtain a two-thirds vote of the entire membership to borrow money.
But, according to the pages of Launani Valley’s governing documents, highlighted in the slide show below, it appears the HOA board attempted to follow the somewhat vague and confusing covenants and bylaws.
Whether or not the board met all of the conditions spelled out in the governing documents is a matter for real estate and contract law attorneys to sort out.
As for whether or not homebuyers were properly warned of the possibility of landslides, or whether a developer or local government should ultimately take responsibility for placing homes in harm’s way, those issues will be difficult, if not impossible, to resolve in a community that is now more than 25 years old.
But Launani Valley is not alone.
More than 220,000 common interest communities were established prior to 2000, according to trade group Community Associations Institute.
As these communities mature, many will face similar deterioration of, or storm damage to, common property. Likewise, special assessments, long-term debt, or a combination of the two, will be necessary to meet financial obligations of many of these aging association-governed communities.
And homeowner members cannot pick and choose which common property repairs they will pay for, based upon whether or not they are directly affected.