|
|
|
|
|
|
| IHG Insurance (National Insurance Provider) |
| Providing Community Association Insurance for over 25 years: D&O Liability, Crime Products, Umbrella Coverage and Property Manager's Errors & Omissions Liability. |
|
|
|
|
|
|
| You are not authorized to post a reply. |
|
|
| Author |
Messages |
|
BillW2
(Virginia)
Posts:1
 |
| 02/28/2008 12:55 PM |
|
I live in a 305 lot lakeside development opened in 1998. The developer turned over the HOA to homeowner control in 2004. Since then the development has completely sold out. Currently we have 50 homes built, of which about 25 are full-time occupied. Of the undeveloped property I would estimate that approximately 60% is held for speculation.
Our problem is this. The developer provided some amenities including a park, a boat launch, and a small picnic pavilion, but did not include any space for a large group gathering or a large meeting, such as for the HOA quarterly open Board meetings. To meet this need, we would like to build a relatively small clubhouse on existing common area, but are struggling with how to finance it.
The HOA has done a Reserve Study, and has a growing Reserve Fund bolstered by planned annual contributions. But Reserve Fund monies cannot be used to support facilities beyond those addressed in the Reserve Study.
Our current HOA budget has no "slack." Moreover, by our Covenants, our annual assessment can be raised by more than 10% annually only with an affirmative vote of a majority of property owners. So, while adding an amount to cover downpayment and mortgage payment via annual assessment increases is conceivable, it may not be practical in light of the number of non-resident owners, and particularly those who are holding land only for speculation.
In this light, we are wondering what other creative "bootstrapping" approaches have been used to used to finance amenity improvement beyond those provided by the developer? |
|
|
|
|
BrianB
(California)
Posts:1748
|
| 02/28/2008 1:12 PM |
|
You can borrow money from a lender (check your bylaws to make sure)
You can ask for donations, and do the whole fund raising thing
You can check your by laws about "special assessments", and see if you can do that.
You can sell naming rights or access rights to companies: how would you feel about the Kwik-E Mart Clubhouse at your lake? Or the Bank of America Meeting Hall?
You can raise the assessments by 9.9% each year, and delay the building of the unit until after you have the money.
|
|
|
|
|
SusanW1
(Michigan)
Posts:2316
|
| 02/28/2008 1:14 PM |
|
Why do you need a clubhouse, other than for your HOA meetings (which could be held at a local hall or church basement)
I'd want a bunch of reasons why the need to finance such a building, if I lived there. And you have not given any, except one.
|
|
|
|
|
CarolF
(Florida)
Posts:34
|
| 02/29/2008 4:08 AM |
|
| One year our HOA rented the cafeteria of the local middle school. If the facility does not have a sound system, make sure you make provisions for getting a portable one. |
|
|
|
|
PaulM
(Pennsylvania)
Posts:1347
|
| 02/29/2008 5:41 AM |
|
BillW2: You live in a 305 lot lakeside development; you have currently 50 homes built with only half occupied fulltime = 25 member units. Is this the correct number you are presently working with?
You presently have assets (a park, a boat launch, and a small picnic pavilion) which, hopefully, are included in the Capital Reserve Fund for their upkeep and maintenance--again, for only 25 fulltime member units. How can you
justify the need for a building to "house a large group gathering or a large meeting, such as for the HOA quarterly open Board meetings"? You are correct in that your present reserve funds CANNOT be used for a new capital asset which was not part of the original development. It would have to be an added amenity asset voted on by a percentage of members necessary to add an amendment to the existing documents. Your bylaws will dictate what that percentage is.
You state you have "a growing Reserve Fund bolstered by planned annual contributions" which is what is required. But...its only early in your "maintenance years" for the amenities you already have which are available for only a small number of fulltime people. Amenities require
funding, whether 25 people use them or 100 people use them.
An amenity which is "nice to have" plays out differently when you address all that will come into play. Does the need/desire justify the funds needed?
You need to determine how stable your association is. How many Board members do you have? Are the fulltime residents all active residents in association matters? Does the Board have a financial plan for the next 5-20 years ensuring capital asset maintenance funding will be available? What is your present financial condition--are all members current with paid dues/fees? Where do the fulltime residents stand on this proposed amenity? These are serious questions to be answered. You must determine if it is feasible financially to consider such an undertaking--and, most importantly, is it practical, necessary and desired by all members of the community?
|
|
|
|
|
GeraldT4
Posts:934
|
| 02/29/2008 5:58 AM |
|
BillW2 - 305 lots less 50 built is 255 undeveloped lots. 60% of 255 is 153 held for speculation (apprx.). 40% of 255 is 102. What is going on with the 102? A majority of the property owners would be 153 in total.
Consider implementing through the proper methods a one-time working capital contribution payable to the HOA for each unit close. Consider raising the maintenance 10% to develop a master plan for the construction of a clubhouse/meeting hall. Fund for the clubhouse over time.
Right now you don't have the amenity of a clubhouse so technically it's not an "amenity improvement", it's a capital improvement.
Good to see you grasp the concept of a Reserve Study and that a capital improvement will need to be factored into the study to adjust the Reserve amount needed to fund for anything new. |
|
|
|
|
|
| You are not authorized to post a reply. |
|
|
General Legal Notice: The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com. Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship. Readers should not act upon this information without seeking professional counsel. HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional. HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice: (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)
|
|