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Subject: NC Planned Community Act
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Author Messages
CatherineS3
(North Carolina)

Posts:26


12/04/2018 1:46 PM  
We have 5 sub-associations that lie outside the gated community. Based on the passage below from the NC Planned Community Act are these properties obligated to pay for security services that the Master Association is not providing, i.e. physical security at each entrance, security gates, and cameras. Our Articles of Inc.state that "....the Corporation shall insure the equal right of all member associations and the owners of property represented by each member association to the use of all amenities and property of the Corporation and shall levy dues and assessments against each ember association in proportion to the number of residential lots or condominium units represented by each member association....".

"Chapter 47F-3-115. Assessments for common expenses,(c) (2) Any common expense or portion thereof benefiting fewer than all of the lots shall be assessed exclusively against the lots benefitted,...."
RoyalP
(South Carolina)

Posts:203


12/04/2018 2:34 PM  
If the 'outside' sub associations have access to amenities within the gated community then they (the outside subs) must pay for their access to said amenities whether they actually use said amenities or not.

This would include the expenses of maintaining the gates.


If, however, the outside subs receive no benefits from amenities located within the gated community then they (the outside subs) need NOT fund said amenities (including the gates).


Just like your quoted Chapter states.
BillH10
(Texas)

Posts:294


12/04/2018 3:59 PM  
Catherine

While I normally agree with Royal's (or whatever his flavor of the month name is for December) pithy comments, in this case I do not.

I do not believe the 'out-club' sub-associations derive any value from the primary gated area security systems and processes other than a somewhat intangible benefit of having their common ownership property somewhat protected from ruffians. They certainly do not derive the 24/7 security benefits as do those living in the 'in-club' association areas, especially if there is on property security monitoring and patrols. The gated area security is actually a mild hindrance to use of the common area amenities for which they are paying.

I would suggest the 'out-club' folks should pay a pro-rata share for the external security gates, cameras, etc. if and only if the common area amenities do not have their own security sub-systems. If the pool has locked gates, and the clubhouse requires card key access, then the 'out-club' should not pay for any portion of the primary security gates, CCTV, etc., only their pro-rata share of the total expense of the common area amenities to which they have access. Actual utilization is, of course, not a factor.

At most, I would hold the 'out-club' folks should only be assessed a portion of the expense of the gated area security expense; to be calculated on the basis of the ratio of the common area amenity land square footage to the total secured 'in-club' land square footage.

With 5 sub-associations, this sounds like a sizeable enterprise. When is all said and done, the math could result in paying $0.95 a month as opposed to $1.05 per month. Hardly worth the time and effort, especially if changes are required to the Bylaws or CC&Rs.
KerryL1
(California)

Posts:5950


12/04/2018 4:25 PM  
Since the out-club members' homes are not at all protected by these gates, they should not pay the same amount as the master assoc.

It sounds as though the out-club members have access to all the amenities inside the gates and the gates, etc., DO protect those common areas, so the out club should pay the same as the master for those.

The question is: how much SHOULD the out club pay given the gage, etc. do not benefit home & their homes outside the gates? They aren't receiving equal benefits.

We had a similar situation with our three "special benefit areas." A sq. ft. variable wasn't appropriate, our CC&Rs were unclear, and verbiage in our CA DRE (now BRE) Budgets had errors in them. We received a written letter from our HOA attorney, who concluded that we needed to find a "equitable" solution. He recommended a budget analyst whom we hired.

The latter got letters from our various vendors about the amount of time they spent in the SBAs. But this method won't wok in the OP's HOA. Still, I'm certain there's a way to make the fees equitable and my guess is they'll save the out club members a lot more than 10 cents a month. In our case, one group of owners had been paying about $15/mo. too much (in a high dues high rise condo).

On way is to start is to calculate the number of hours the amenities inside the gates are closed. Remember to factor in the reserve replacement costs for the gates and their motors.--- and the months $$ to run them when the amenities can't be used. These number all be learned by experts. I'll look up his credentials if anyone's interested.
CatherineS3
(North Carolina)

Posts:26


12/04/2018 5:11 PM  
Bill: our pool complex has security cameras, card-access-only gate, and during summer season a uniformed guard to check residency. I do agree that the cost to maintain a security program at the pool should be shared by all residents. In addition to the security program at the pool complex, the community has 24 hour uniformed guard service, CCTV setup, front and rear gates, and telephone call system, all of which comprise the largest part of the security budget and program and which is of no benefit to the outside properties. If a gated guarded community is considered a desirable security amenity and our Articles state all owners have an equal right to the use of all amenities, then shouldn't it be the obligation of the Corporation to acknowledge this by either providing an equal or comparable security benefit/amenity for the outside properties or by reducing their dues? This would also be in compliance with Chapter 47F cited earlier.
RoyalP
(South Carolina)

Posts:203


12/04/2018 7:04 PM  
Posted By BillH10 on 12/04/2018 3:59 PM
Catherine

While I normally agree with Royal's (or whatever his flavor of the month name is for December) pithy comments, in this case I do not.

I do not believe the 'out-club' sub-associations derive any value from the primary gated area security systems and processes other than a somewhat intangible benefit of having their common ownership property somewhat protected from ruffians. They certainly do not derive the 24/7 security benefits as do those living in the 'in-club' association areas, especially if there is on property security monitoring and patrols. The gated area security is actually a mild hindrance to use of the common area amenities for which they are paying.

I would suggest the 'out-club' folks should pay a pro-rata share for the external security gates, cameras, etc. if and only if the common area amenities do not have their own security sub-systems. If the pool has locked gates, and the clubhouse requires card key access, then the 'out-club' should not pay for any portion of the primary security gates, CCTV, etc., only their pro-rata share of the total expense of the common area amenities to which they have access. Actual utilization is, of course, not a factor.

At most, I would hold the 'out-club' folks should only be assessed a portion of the expense of the gated area security expense; to be calculated on the basis of the ratio of the common area amenity land square footage to the total secured 'in-club' land square footage.

With 5 sub-associations, this sounds like a sizeable enterprise. When is all said and done, the math could result in paying $0.95 a month as opposed to $1.05 per month. Hardly worth the time and effort, especially if changes are required to the Bylaws or CC&Rs.





CatherineS3
(North Carolina)

Posts:26


12/05/2018 7:13 AM  
Thank you for your replies. This subject resurrects itself every few years and it would be nice to put it to bed once and for all. Your replies, however, gave me some new perspectives to pass along to the disenchanted outsiders.
BillH10
(Texas)

Posts:294


12/05/2018 7:58 AM  
Catherine, yes and that is my point.

The outsiders are deriving zero to minimal benefit from the primary security gates, systems, and processes. Kerry suggests there is some value derived as those systems do protect common are assets such as the pool. I agree with him conceptually but that benefit cost is exceedingly small compared to the total cost of the primary security systems and processes, hence the tongue in cheek example in my original post.

Who is complaining about this, the outsiders who believe they are paying too much or the insiders who feel the outsiders should pay more?

Your board may wish consider calculating this to the Nth degree, considering all operational, reserve, and other costs as Kerry suggests, develop a reasonable cost allocation method, and demonstrate to one and all once and for all what the allocated expenses are/would be.
CatherineS3
(North Carolina)

Posts:26


12/05/2018 1:37 PM  
Regardless of who is doing the complaining the replies to my posting confirm that an unfair situation exists and the replies have also brought to my attention other aspects to consider, such as security at the pool complex, as well as potential solutions to the matter. This information is exactly what I was looking for as I gather data and research before going to an attorney.

The solution, however, would depend upon what is written in our Articles of Incorporation. For example our Articles, as cited in my original post, seem to me to be somewhat contradictory in that they state all property owners are entitled to an equal right to the use of all the amenities and then it goes on to say dues are to be assessed against each owner being equal to a fractional share of the total dues levied, the numerator of which is the number of residential lots or condominium units represented by each member association and the denominator of which is the number of residential lots or condominium units represented by all member associations. Nowhere in any of our documents does it give the corporation the right to adjust the dues according to benefits received.
If I am correct about the contradiction in the Articles, I'm guessing that the dues structure would have to be amended first.

Personally, amending the Articles would be the easiest part....implementing who derives what and when and how much from the security program will be extremely complicated.

KerryL1
(California)

Posts:5950


12/05/2018 6:19 PM  
Yes, it is complicated, Catherine. And our board had been quibbling about the topic for about 7 years. Our HOA attorney's opinion is 6 pages. As noted, he recommended we seek the services of a budget specialist. The attorneys observed that our original documents had errors re: assessment splits.

We asked if we may move parts of some assessment items from one special benefit area to another if there were errors in the original documents (we basically have 3 SBAs). His short-answer reply is yes: "...as an issue of fairness, and based on equitable legal principles, we consider that the Board should endeavor to correct any patently wrong attribution of expenses to a special benefit area when this has been discovered, and which cannot be reasonably disputed."

We paid $3,500 to a Certified Commercial Investment Member (CCIM) of which they're are 9,500 in the world. He reviewed all contract budget items that affected the issue of which we have many as we are twin towers. He had them write how much time they spend on particular SBAs. He calculated the amount of electricity consumed by our elevators re: one SBA, etc.

We changed the assessments and will amend our CC&Rs to reflect this, but don't need to right away.

Oh, I do think, Bill that the outsiders are paying too much and not just a little. Th thing is, there'll need to be calculation of how much time the uniformed 24/7 use protected the common areas in the inner circle and how much time protecting the homes inside the area. Do the officers also rove pathways? o outsiders use these paths?

And again, if the amenities inside are closed several hours a day, that needs to be factored in too as the outsiders won't use the gates then. Right?

Whether it's worth the expense of an attorney and a specialist depends in part on how many homes are outsiders and how may are inside.

While the $15/mo pr unit here may not seem like much, the inequity had been occurring for 15 years--it adds up.


KellyM3
(North Carolina)

Posts:1324


12/06/2018 1:20 PM  
The homes not served by gated security should not be charged for security services. It's likely not feasible to expand the security gate/access infrastructure.
JohnC46
(South Carolina)

Posts:7865


12/06/2018 1:45 PM  
Kelly

Are not your amenities behind the security gates? One could make the case you all should be paying something as the gate protect your amenities.

Also what is your monthly gate charge per home?

Thanks
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