Here’s why HOAs won’t reduce fees, even if amenities remain closed for months

By Deborah Goonan, Independent American Communities

 

For more than 4 decades, the HOA-industry has been selling a lifestyle that includes so-called “private” recreational amenities such as swimming pools, sports facilities, and club houses.

But when COVID-19 was declared a serious threat to public health, in conjunction with stay-at-home orders across the nation, most amenities were closed.

Condo and co-op buildings shut down their fitness facilities, and  leaders of small and large planned communities locked down their swimming pools, playgrounds, and clubhouse gathering rooms.

However, as portions of the country begin to re-open businesses, churches, and social venues, IAC suspects that some — perhaps many — HOAs will choose not to reopen their community amenities.

Here’s why.

HOAs don’t have to reopen amenties

Residents of community associations may be surprised to learn that, even as state and local leaders lift restrictions, privately-governed condominium, cooperative, and homeowners associations are not required to reopen their amenities.

That view was made clear by three HOA attorneys in a recent webinar produced by HOA-industry trade group, Community Associations Institute.

Presenting CAI’s legal stance on the issues: Kate Bushey (OH), David Ramsey (NJ), and Sandra Gottlieb (CA).

The webinar, COVID-19 and the Next Normal — Reopening Common Areas/Amenities, addresses the many challenges HOAs face in reopening their social and recreational venues.

 

 

According to the attorneys, the reopening challenges HOAs face include the following:

 

HOAs not insured against liability related to virus

The majority of HOA general liability insurance policies (and, for that matter, most business policies in the U.S.) don’t cover losses related to virus and bacterial infections. So if a homeowner, tenant, or guest becomes ill with COVID-19, and can prove that they contracted the disease on HOA property, the association could end up paying a hefty legal bill.

Although experts claim it’s not easy to prove precisely where one becomes infected by the coronavirus, HOA members might have to pay for legal defense of their association and board members.

Complying with restrictions is costly

If your HOA decides to reopen its common amenities, until there’s a vaccine for COVID-19, it will have to meet important safety conditions and restrictions. Specifically, HOAs must comply with CDC guidelines for cleaning and sanitation as well as social distancing.

That’s why community association attorneys are recommending the following policies:

  • HOAs should limit the number of residents using their common facilities at any one time.
  • Non-resident guests should be prohibited from using HOA amenities.
  • Opening hours will continue to be limited, to provide time for daily deep cleaning and sanitization of the common areas.
  • HOAs should plan to increase spending on cleaning supplies and related labor costs. They should also plan to provide hand sanitizers in the common areas, to encourage residents to prevent the spread of the virus.
  • HOAs should not provide outdoor seating or towels, and should require members to bring their own chairs, mats, and towels to the swimming pool or the gym.
  • Concession stands should remain closed, and food services for community restaurants are likely to remain restricted to take out only.

 

Larger communities may be able to hire additional life guards or security staff to comply with strict safety standards.

But most HOAs govern relatively small communities operating on low budgets. Many of these small communities cannot afford to hire a full time manager, pool life guards, or security staff.

Some communities might consider relying on homeowner volunteers to keep common areas sanitized and safe. But, according to one HOA attorney, that would require the HOA board to form an official committee, in order to be covered by the association’s Directors and Officers’ liability insurance policy.

 

Is the cost to open common amenities too high?

Adding up the costs of additional cleaning supplies, labor and insurance costs, plus the added potential for legal liability, some HOA boards may decide that it’s too expensive to reopen amenities during the ongoing COVID-19 pandemic.

So HOA amenities might remain closed indefinitely.

Obviously, quite a few homeowners and residents will be very unhappy about paying for amenities they can’t use.

In fact, IAC is already seeing reports of homeowners demanding reduced HOA fees or refunds, because they’re not able to enjoy the common amenities.

 

HOA industry recommend no reduction in fees

Homeowners may assume that, because the common amenities are shut down, they’re entitled to a reduction in condo, co-op, and HOA fees.

After all, because we’re stuck at home and driving less, auto insurance companies are refunding a portion of premiums to their insureds.

With common amenities shut down, utility bills are lower, the need for cleaning and maintenance services are minimal. So why not pass on the savings to homeowners?

It seems like common sense, right?

Well, in this case, HOA-industry trade group attorneys are advising that HOA board policies reflect that of local government vs. a small business dedicated to serving its consumers.

Think about it this way.

Is your city, town, or county council reducing your property taxes or local earned income taxes, just because they had to shut down public parks, golf courses, and swimming pools due to the pandemic?

Nope. Probably not.

We all know that government is much more likely to raise taxes than reduce them. That’s especially true in the current economic environment, where the federal government has just issued $1,200 tax refunds (“stimulus checks”) to millions of Americans.

Why would local or state governments, or their hyperlocal counterparts, HOAs, pass up the opportunity to keep their revenue stream flowing?

As documented here on this website, HOAs are especially notorious for charging high fees for minimal or nonexistent service. And HOAs expects owners to pay their fees (and fines) in full and on time, No Matter What.

The HOA industry sees stimulus checks as an additional revenue stream that property owners should use to keep the community association afloat during the nation’s self-imposed economic crisis.

 

Is this the time for a major community renovation?

For example, one homeowner recently informed IAC that their HOA intends to embark on an expensive renovation to their community center.

That’s right.

At the height of economic uncertainty during the COVID-19 pandemic, the Potomac Green HOA, a Virginia Del Webb community within a 30-minute drive to Washington, DC, is planning a $740,000 community center “rejuvenation.”

Instead of hitting the pause button on the costly project, the HOA board is reportedly moving ahead with their design plan. Members recently received a letter asking for comment on color choices for wall and floor coverings.

Except for color choices, the HOA board appears to consider its plans a done deal.

Additionally, because of social distancing restrictions, homeowners cannot view paint, wallpaper, and floor covering samples in person. HOA members are limited to previewing the design choices online.

Yep. Homeowners will be viewing color swatches and flooring samples on a computer screen, because the community center remains closed.

Obviously, a virtual preview won’t provide an accurate representation of color, texture, and quality of materials proposed by the HOA board.

Homeowners wonder, why does Potomac Green HOA see the extended closure of common amenities as the perfect opportunity to funnel more money from homeowners to their fund their pet project?

 

On the other end of the spectrum, what about HOA-governed communities that decide to keep their amenities closed for good?

 

What if common amenities never re-open?

The truth is, many aging HOA-governed communities are saddled with amenities that are long past their prime. This was true long, long before the CDC began recommending shutting down social gathering venues.

It may be true that seasonal residents in resort communities regularly enjoy the pool, gym, golf, waterfront activities, and more. But more humble amenities are rarely used in HOA-governed residential communities.

For example, as discussed here on IAC, golf course closures have become a common occurrence across the nation, with detrimental effects to many communities.

And a growing number of community lakes have been drained permanently after homeowners decided they were’t able or willing to spend a fortune rebuilding their decades’-old dams.

In a post-COVID economic environment, cash-strapped community members are likely to stop pouring money into their swimming pools, fitness centers, movie viewing rooms, and club houses.

Shutting down common amenities for good may be the only way owners can obtain relief from ever-increasing HOA, condo, and co-op fees.

In turn, communities may experience neighborhood and co-owner disputes over what to do with unused common land or interior spaces governed by the Association.

Whatever an HOA decides to do about reopening its common amenities, many homeowners are bound to be unhappy with the “next normal.” ♦♦

 

References:

Homeowners want HOA dues refunds for amenities they can’t use
Amy Davis, Reporter/Consumer Expert KPRC, Click2Houston
Published: April 29, 2020, 8:18 am

Your car insurance company could give you credit, refunds due to COVID-19
Author: KARE Staff
Published: 6:27 PM CDT April 28, 2020
Updated: 9:19 AM CDT May 3, 2020