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Subject: CHRONIC APATHY IN HOA's. Looking at a huge loan..
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NicoleO5
(California)

Posts:26


04/12/2019 7:36 PM  
Hi there, We have a huge project coming up this year. it includes a new roof and other neglected issues left behind by a prior board. ( That is a different issue all together.)

This is the issue. Our Board has approved to replace our roof and redo neglected decking and other matters in communal areas. It's expensive. We are looking at financing about $500K for repairs. Its hard to explain to owners this has to be done, as it hasn't been done and waiting as it has been done has cost us more in the long run. 3 out of 5 prior board members who should of taken care of this when they were serving up and sold their units. This year we have completed obtaining bids, working out kinks and now we are looking at financing.

The last several HOA meetings we have had have been full of owners kicking back and rolling eyes when speaking about the responsibility we have had to clean up what was left for us. 4 years ago the prior board got bids for all the work and never did anything. We have holes in our decks, cracks around the pool, leaking roofs. All they did was kept patching stuff.. now here we are.

How do we get owners to understand what is happening and we we are looking at a 8-10K per unit special assessment? I too feel like listing my home and just moving out too, but that isn't an option.

Our attorney is mandated to be part of this according to all lenders and I believe doing community town halls with his and owners will stops the stupid looks and rolling eyes ( being sarcastic ). Owners complain about the state of our complex, but the reality is. They allowed this to happen buy not asking the board 4 years ago over and over and over why can't stuff be repaired. It's a soap box
GeorgeS21
(Florida)

Posts:1285


04/12/2019 8:47 PM  
So, you didn’t have a funded reserve based on a reserve study from a professional?
SheliaH
(Indiana)

Posts:2700


04/12/2019 9:36 PM  
Yep, apathy - usually the #1 cause of all that ails HOAs. That and being short-sighted and cheap, which happens to all of us at one time or another. We figure things will last forever and ever, or at least will be long gone before you have no choice but to deal with the problems.

I think doing a town hall with your attorney would be a start, but as George stated, you should also have a reserve study done, if you haven't already done so (and based on what you've said about the previous board, I doubt it). The reserve specialist could come to a special homeowner's meeting and give a presentation about his/her findings, along with a few horror stories about what will happen if people don't deal with this $500K problem immediately. Some will think they'll simply sell but may find the asking price will sink like a stone once the buyer finds out about the real state of the finances.

While planning this meeting, you may want to have a sit-down with your bank to see what the association's options are. A loan will mean your assessments will go up a lot for the next five or 10 years (maybe more) because paying it back comes from assessments and they need to be high enough so that you can take care of reserves (like the previous board should have done), routine monthly expenses AND the loan payments. Even that may not be enough and you may have to consider a special assessment or two (maybe three, depending on the state of your finances.

There is no magic formula to make people understand any of this because people want to believe and do what they wanna do and you can throw up all sorts of facts and figures, write it in crayon and use pop up books and still they will how about "our assessments are too high" or "why I gotta pay when I'll probably be dead when these repairs are necessary?" (that's what the older homeowners will say).

Do your homework and make your case as best you can, accepting that some homeowners simply will not listen or care. A few will threaten to sue, but they'll find out soon enough that won't fix anything. This won't be pretty, and I wish you luck.


MelissaP1
(Alabama)

Posts:8599


04/13/2019 5:27 AM  
If it isn't obvious things are broken and need fixing, then not going to get over the apathy very well. First thing when people want to complain and change things, is to go point out the neglected conditions. So as weird as it may sound. May want to just start with a "*itch fest" of items. Just get people to walk around and listen to what they don't like about the place. Since you all have a plan in mind just slowly unveil it... Like "Oh you think it's time to get someone out here to address the roofs...etc..". Well look at that... We are forming a plan/solution right now for that. However, this is how all that works. It's going to take a special assessment etc...

So basically start from scratch here again and spoon feed the process one spoon at a time. You may find during the process what people really want/need or other viable options. Don't try to force your new board opinions down one's throat even if correct. Let the people tell you what they want and then act....

Former HOA President
SteveM9
(Massachusetts)

Posts:3362


04/13/2019 6:35 AM  
There is no scenario where a homeowner gets a $8,000 bill and is happy with it. Conclusion: They will be unhappy.

But the roof still needs replacement, so vote it through and be done with it.
JaredC
(Texas)

Posts:214


04/13/2019 7:49 AM  
Shelia is dead on right. People don't care no matter how many facts you show them. Do your best so that you feel righteous putting caution tape around decks that have holes. It really sucks that peoples' roofs are going to leak but hey at least you can tell them it's their fault because they didn't vote for the special assessment.

We're dealing with this exact issue at my HOA. People are ignorant and stupid. We've gathered all the facts in the world but the people refuse to even listen to them. It's very frustrating. I have literally showed pictures where holes were eaten into air ducts servicing peoples' homes. The only people that care are those directly affected. It's an amazing thing to experience.
AugustinD


Posts:1932


04/13/2019 7:59 AM  
I concur a massive communication and education effort is needed. Town Hall meetings and mass mailings are a great way to do this.

For what it is worth, your HOA is not the first to have to impose a several thousand dollar+ Special Assessment because prior boards ignored infrastructure problems. Inexperienced directors, perhaps coupled a with a property manager who does not understand Reserve Studies, will cave to members' own lack of understanding of budgeting more often than not.
GeorgeS21
(Florida)

Posts:1285


04/13/2019 8:03 AM  
To Sheila's idea of having a reserve specialist speak to the community ... we did this at another neighborhood about 5 years ago. Worked well - except there is always the idiot in the group who wants to cause trouble - one guy just ranted and increasingly sounded ignorant compared to the reserve specialist who was calm and candid.

There are many articles related to constructing and using a reserve study-reserve fund online ... find several of them and share directly with the community - more information may be overload, but it will help substantiate that money is needed now and that it was underfunded all those years prior - so, perhaps as your community repairs with special assessments, they will also start the process right for the next cycle.

If you do have folks who argue the points, calmly take them on one point at a time - I usually try and have docs that show, in advance, what the questions are going to be with written answers, then use those docs (charts on a screen) to answer the questions ... repeat and repeat.
MarkM19
(Texas)

Posts:419


04/13/2019 9:09 AM  
Nicole,
So I find it completely shocking that your board is in the situation. Unlike some of the others on the site wanting a reserve study done I feel you are about 5 of 10 years to late at this point. I can tell you the life expectancy of your roofs. It sounds like zero life left. Minor dues increases over the years would have made this a minor issue.

If have not mentioned reserves at all. You must have a reserve account as Ca. law requires them last I checked. It sounds like you guys have a shoe string budget but I would suggest you get a Drone pilot to take aerial video of your roofs and also the decking issues and make it a short video for HOs. Hard to see what can't be seen with words. You need to remind them that this situation is not going to get better only worse.

You will have problems getting the loans for this major repair so be prepared. Bankers look at HOAs that need money as a scary proposition. The HOA has proved that they did not save enough for the future and that makes lending it money much risker in the future. You can bet your interest rates will be effected.
You can also bet that HOs who can will run from this problem. This will scare lenders off since loan repayment is based on collected dues.

The prior Boards are definitely to blame for your current situation. I bet they were beloved by the HOs because they kept dues low. Now your board who is left with the repair work will be hated for letting this happen to everyone. I really feel sorry for what you are going through. It is going to take every bit of energy you have to get it fixed and I wish you best of luck.
JaredC
(Texas)

Posts:214


04/13/2019 10:01 AM  
To sort of add to Mark's point HOA loans can be difficult. That said our community was able to get one about 2 years ago and I'll give you those numbers: Annunal Maintenance Income $90k, Total Income $130k, Loan Amount $80k and 5 year balloon payment @ 6%. So it can be done.

We've also done the reserve study thing but no one cared. All the same it is a great tool and by getting one done it demonstrates a significant amount of due diligence and responsibility on behalf of the board. It also gives the board good direction regardless if the homeowners don't care.

BTW, when I was president we had to raise our maintenance fees, over time from $140 per month to now $325. If we had not done that we would be bankrupt and everyone would have lost their home value. Nevertheless I was the bad guy and the scape goat. In fact I'm quite certain that I am one of the four horsemen of the apocalypse. Again Mark is right. The people who don't exercise fiscial responsibility get credit for keeping maintenance fees low "while everything was just fine".

The advice here is solid. Communicate, communicate, communicate & reserve study. Best of luck!
GenoS
(Florida)

Posts:3233


04/13/2019 10:55 AM  
Posted By SheliaH on 04/12/2019 9:36 PM
There is no magic formula to make people understand any of this because people want to believe and do what they wanna do and you can throw up all sorts of facts and figures, write it in crayon and use pop up books and still they will how about "our assessments are too high" or "why I gotta pay when I'll probably be dead when these repairs are necessary?" (that's what the older homeowners will say).

Do your homework and make your case as best you can, accepting that some homeowners simply will not listen or care.

This perfectly sums up the state of affairs in most HOAs. You can present unassailable evidence for something and that won't change their minds if they want to believe something else.
MarkM19
(Texas)

Posts:419


04/13/2019 11:04 AM  
Geno,
That is why I think the video evidence is so important. If you can convince a few of the non believers of the problem that may spread the word and it will not be Board against the HOA. It is still going to be a tuff sell.
GenoS
(Florida)

Posts:3233


04/13/2019 11:04 AM  
I'd shift the discussion to having a special assessment. I bet that would stop most of the eyerolls. Name names. Take out past budgets that should have provided for more reserves and point directly to the names of those on the board of directors at that time. There could be years and years of that happening. Rip the band-aid off so you can put all of this behind you. You're dealing with the can that has been kicked all the way down the road and there's no road left. There's no reason you should feel like it's up to you to pull a rabbit out of a hat now. It's already tough enough, no need to torture yourself by anguishing over it for months on end.
KerryL1
(California)

Posts:6632


04/13/2019 2:50 PM  
Say, Nicole, does your HOA have no funds in reserves at all to pay a portion of these repairs/replacements?

CA requires a reserve study every three years (I think) though there's no requirement to fund reserves. What does your last reserves study say?

Is this one roof over a common area or over homes, or?

RoyalP


Posts:0


04/14/2019 11:14 AM  
Put the assessment to fully fund the roof replacement to a membership vote.

Pass = no problem

Fail = no problem, the water will cool tempers, THEN the screams for the assessment to fix the roofs will deafen you

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Forums > Homeowner Association > HOA Discussions > CHRONIC APATHY IN HOA's. Looking at a huge loan..



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