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RogerB2
(Pennsylvania)

Posts:4

06/26/2008 5:47 PM
I live in a relatively young developement in Pennsylvania. The developement is approx. half complete with all of the construction being conducted by the developer. When my wife and I purchased the home the realtor ( an employee of the developer ) told us the annual home owners fee would be approx. $100 per year. Sounds low right. That's because all of the streets are maintained by the local municipality and there is limited community property. Basically the Association is responsible for four(4) bills. Landscaping and lawn maintenance for the common areas (approx $7500 per year), Sewage pump station operation & maintenace (approx $25,000 per year), electricity for street lights (appprox $5000 per year), and insurance (approx. $1500 year). All these expenses divided amongst the home owners comes to about $108 per year. We have three members on the board the developer, an employee of the developer, and only just recently a home owner. Under this regime it was decided we need a mangement company to handle our four expenses. The fee for this management company more than doubles our associaition fees. We have tried to meet with the dictator, I mean developer, to allow us to manage ourselves, but to no avail. We have homeowners experienced in running an association. Does anyone have any advice on how to give the decision making to those who should be making the decisions, the homeowners?

EllenS1
(Florida)

Posts:317

06/26/2008 5:54 PM
RogerB2, If the developer has the largest percentage of votes looks like you will have to wait until more units are sold and homeowners are in the majority. It's the same old...let the buyer beware.

MicheleD
(Kentucky)

Posts:1427

06/26/2008 6:01 PM
He gets to be the dictator because it's his football field. When it becomes your football field (after the turnover), then you get to be the dictator. There is more to managing a development than simply "paying four bills." You don't mention how large your development is. Ours is upwards of 300+. We have "self-managed" for many years and this year have decided to bite the bullet and get a management company. Why? Because we are "volunteers," and the time it takes to run the day-to-day (the billing, the collections, the CC&R enforcement) runs WAY over any reasonable "volunteer" time any of us felt like committing ourselves to for the rest of our lives. Best of luck to you guys. When he gives you the keys to the locker room, boot out the management company and go it alone. All I can say is, be careful for what you wish!

DonnaS
(Tennessee)

Posts:2282

06/26/2008 6:45 PM
Roger, Yup, it's his way or the highway. Until you get a turnover from him, he has all of the authority to change or not change whatever he wants. He should be paying for his share of the undeveloped lots but if you read your documents very carefully, there will be many paragraphs relating to the developers responsibility and authority. It's his to do with what he wants so just hope that he gets built out and does your turnover.

KirkW1
(Texas)

Posts:600

06/26/2008 7:28 PM
In this area, typical percentages are 80% filled. And after that the developer retains the right to veto any action of the association that he feels lessens his interests as long as he owns property for sale in the association. The primary reason for a management company is enforcement of the CC&Rs. And in a development such as yours, the management company often does represent the largest item on the budget. The more lots you have the better pricing you will get on a per lot basis. Now for the real kicker, some mortgages have a rider attached that state that the home owner can not take action to eliminate the property management or HOA without first obtaining permission from the bank. (But I am sure many have no clue what they sign at closing.)

JohnO6
(Georgia)

Posts:52

06/27/2008 6:04 AM
While all the previous respondants are correct about the developer's right to do this until whatever percentage of sales will allow HOA turnover, simple numberic calcuations point to a mgmt co fee that sounds excessive. If the annual expenses and monthly dues numbers you provided actually result in a balance budget, then you have approximately 30 homes with total annual expenses (not including mgmt co) of approximately $39,000. If the addtion of a mgmt company "more than doubles" the monthly dues, then their fees must be > $39k which equates to approximately $108 + per home per month. I've never seen mgmt fees that high

JohnO6
(Georgia)

Posts:52

06/27/2008 6:04 AM
Meant "numeric" not "numberic". sorry

GeraldT4

Posts:873

06/27/2008 6:12 AM
RogerB2 - Decision making to the owners happens over time as construction of units is completed and certs. of occupancy are issued. The process is called transition elections of owners. How did the one home owner get on the board? Was there an election that took place where the owners voted? Look for a clause in your governing documents, perhaps article of incorporation, that states the developer can not contemplate or implement anything that will increase the maintenance of the owners. If so, the decision of a management company, no matter how wise or unwise, is to be decided upon by the owners. As for the $25,000 pump station operation & maintenance, and $5,000 street lighting: In New Jersey there is a law (LAW)called the Municipal Services Reimbursement Act N.J.S.A. 40:67-23.2 to -23.8. For more detail go to http://www.njlawblog.com/2006/07/articles/community-associations/is-your-association-receiving-the-benefits-of-the-municipal-services-act/ It requires the municipality to perform the municipal service, or reimburse the association for the municipality's cost to provide the municipal service. The municipalities cost is less expensive than what it would cost an association so reimbursement would not be 100%. Now here comes the rationale. As a resident in the municipality you are already paying taxes to the borough, just like everyone else for sewar, water, street lighting, snow removal from streets, recycling, etc. You are being double taxed without reimbursement from the municipality. That is not only unfair, but in NJ it is illegal. If your roads are not dedicated for private use of the association, meaning if they do not exclude municipal residents from using them, I fail to see why the association should incur a street lighting expense on the association budget. Seems to me the municipality should pick up the expense. Who provides snow removal services from the roadways in your association?

MicheleD
(Kentucky)

Posts:1427

06/27/2008 6:28 AM
You know, I read through this again and the more I read it, the more I feel like we are not getting accurate information somewhere, or that the OP does not have access to accurate information. Take this statement: "We have homeowners experienced in running an association. Does anyone have any advice on how to give the decision making to those who should be making the decisions, the homeowners? " If they have homeowners "experienced in running an association," then wouldn't those homeowners also know that they would need to read their governing documents thoroughly to determine exactly when the turnover point is and what the developer can and can't do prior to that point? I mean, just a simple read-through of the governing documents pretty much sums up the fact that it's the developer's ball game. They are generally written to benefit the developer to begin with. But aside from that, if the money situation is as stated then the fees are already barely paying the bills, which means they would need to be raised ANYWAY, regardless of whether a management company were brought into the picture. My guess is that the fees were needing to be raised a decent amount to begin with. Lawn care is most certainly going to go up, what with gas prices escalating, and I can't imagine the others not increasing somewhat. So it's very likely that "near double" increase of the assessments come from a combination of things and is not simply comprised of property management fees alone. But I digress. The point is that the only way to find out how to "give the decision making" to those who you feel should be making the decisions is to read your governing documents to determine exactly when and how the turnover should occur. Until then, the developer has all the right to make the decisions, since he has the voting power to pretty much do whatever he wants. Homeowners experienced in running an association would already know this. By the way, has this group of homeowners tried to organize and meet with the developer to present a proposal for self-management? Our HOA did that. We had about 7 people who were interested in an early turnover, so we got together, met with the developer and presented him with a plan and negotiated a process by which we did just that. We approached him in the spirit of a partnership and not in the spirit of "us" against "them," and we made sure to highlight the benefit to him in doing so. We did leave intact his ability to approve construction plans for new homes, but we were able to obtain any other ARC approvals. Anyway, again, good luck to you. Just keep in mind, there's more to running an HOA than paying four bills. . .

BradP
(Kansas)

Posts:1742

06/27/2008 6:36 AM
I think instead of making saracastic posts and demeaning Roger we should try to help him. This is how I see it: Developers often keep dues low as an attraction to sell. By the calculations you gave the expenses ($108 a home) were more than the dues ($100 a home). At some point something has to give. Perhaps the developer didn't want to deal with managing the association so he turned it over to an MC to do for him, well within his rights. Since he still probably has a majority of votes he can do pretty much what he wants with dues. To the problem at hand, I see three directions: 1. Move...probably not what you want to do though. 2. Research your docs and find out the cut off point where the developer ceases to be the emporer of your association. At that point you can forward with a plan to self manage and lower dues or find another MC. 3. Schedule a meeting with the developer. Point our your concerns in a thoughtful manner. Also, present him with your plan on how the homeowners want to run the association. You never know, he may agree and allow you to lower dues again. What is his incentive? Lower dues means more marketable homes.

MicheleD
(Kentucky)

Posts:1427

06/27/2008 6:47 AM
I don't see anyone making sarcastic posts or demeaning Roger. I think we've all tried to help him. We can't do anything concrete to his position,though, until he reads his documents and shares with us what they say. He asked for advice on how to become the decision makers, the guidance for that would be in those documents. In fact, while your post is "helpful," it pretty much just reiterates what everyone else has told him. In other words, we have all said the same thing, and others have offered even more info and suggestions. I would be interested to know who big the development is and how far from completion they are.

BradP
(Kansas)

Posts:1742

06/27/2008 6:53 AM
Michele: Please go back and read your previous post, is it laced with sarcasm....

MaryA1
(Arizona)

Posts:1453

06/27/2008 7:10 AM
Roger, Believe me, your day will come! As someone else said, "be careful what you wish for" -- the rest of that quote goes "you may get it!" Developers are noted for setting the assessment fee at a low rate. Afterall, their main goal is to attract buyers. It's not uncommon for the first board after turnover to have to raise those fees to meet the expenses. The developer is able to keep his operating costs lower because, in many instances, he has other projects going on where he is using a landscaper and perhaps a management co. Also the insurance for your assn may be on a blanket policy he maintains to cover all his developments. These are some of the things we found out when I was elected to the first board of my former assn. Our first order of business was to raise the fees! While the developer is in control, he has the authority to pretty much do as he wishes; afterall he really is the assn! The fact that he has appointed a homeowner to the board doesn't mean much. That person is only one of 3 and definitely in the minority. As others have suggested, read over your docs; become thoroughly acquainted with all the rules. When the developer announces the turnover you will be in good shape to run for a position on the board. Only then will you really know what it takes to manage an assn. -- whether self-managed or not. Depending upon the size of the assn, it may not be that big a deal. My former assn consisted of only 49 homes; I was the treasurer. Frankly, I could have run the place by myself! But, regardless of the size, the biggest problem is getting members to step up to the plate. And even more important than that is to find members who are willing to give the time required to do the job effectively and efficiently. Some will agree readily to run for a position on the board but not all of them will be willing to put in the time and effort required to do a good job. Self-management is not only determined by the size of the assn but by the willingness of the board members to do their jobs. For now, I would suggest to just hang in there and do your homework!

GeraldT4

Posts:873

06/27/2008 7:11 AM
MicheleD - Roger's budget is apprx. $16,500. Each paying apprx. 108 means the assoc. is apprx. 153 homes.

MaryA1
(Arizona)

Posts:1453

06/27/2008 7:32 AM
Posted By GeraldT4 on 06/27/2008 7:11 AM MicheleD - Roger's budget is apprx. $16,500. Each paying apprx. 108 means the assoc. is apprx. 153 homes. Gerald, Are you using "new math" to come up with these figures? From Roger's message, here are the figures: Landscaping $7,500 Sewage plant 25,000 Street lights 5,000 Insurance 1,500 Total yearly budget = $39,000 + 108/yr assessment = approx 361 members Hopefully Roger will give us more info. But it appears to me the s/d will be a pretty good size and I doubt self-management will be an option.

GeraldT4

Posts:873

06/27/2008 8:34 AM
Posted By MaryA1 on 06/27/2008 7:32 AM Posted By GeraldT4 on 06/27/2008 7:11 AM MicheleD - Roger's budget is apprx. $16,500. Each paying apprx. 108 means the assoc. is apprx. 153 homes. Gerald, Are you using "new math" to come up with these figures? From Roger's message, here are the figures: Landscaping $7,500 Sewage plant 25,000 Street lights 5,000 Insurance 1,500 Total yearly budget = $39,000 + 108/yr assessment = approx 361 members Hopefully Roger will give us more info. But it appears to me the s/d will be a pretty good size and I doubt self-management will be an option. Mary, Your posts are most definitely sarcastic, and you are insulting. No I'm not using new math, as a matter of fact my math was correct, just that I based it upon $16,500, rather than $39,000 which was an inaccurate base on my part. My bad.

MaryA1
(Arizona)

Posts:1453

06/27/2008 8:49 AM
Gerald, I guess I should have included a :-) after my remark about "new math". I certainly didn't mean to come across as being sarcastic. Please accept my apology. Just wondered where you got your figures.

MicheleD
(Kentucky)

Posts:1427

06/27/2008 11:38 AM
Posted By BradP on 06/27/2008 6:53 AM Michele: Please go back and read your previous post, is it laced with sarcasm.... I beg to differ. There is no sarcasm there at all. You are reading into it something that isn't there. It's a common problem on text-only communications.

MicheleD
(Kentucky)

Posts:1427

06/27/2008 11:48 AM
I guess when some people read text "enclosed in quotation marks," they automatically assume that is "air finger quotes," that imply "sarcasm." But sometimes they are used to simply quote exactly what another person said, or to imply using a cliche or common slang. There's not one post on this thread that I have interpreted by anyone (including me, and I oughtta know my own intent), as sarcasm! Well, with the exception maybe of the OP using the accidentally on-purpose slip-up when referring to the "developer" as the "dictator." I might have been "tongue-in-cheek" when stating it's his ball field so he can do whatever he wants, but that's not sarcasm. That's pretty much just colorful language or simply casual banter. I know. Imagine we're all sitting around the bar eating peanuts and knocking back a few while we discuss this. . . . it's all about context. . . and visualization. . . grabs a fistful of peanuts and orders another tall one

BradP
(Kansas)

Posts:1742

06/27/2008 11:49 AM
No problem, you and I interpret things differently.

BradP
(Kansas)

Posts:1742

06/27/2008 12:00 PM
Posted By MicheleD on 06/27/2008 11:48 AM I guess when some people read text "enclosed in quotation marks," they automatically assume that is "air finger quotes," that imply "sarcasm." But sometimes they are used to simply quote exactly what another person said, or to imply using a cliche or common slang. There's not one post on this thread that I have interpreted by anyone (including me, and I oughtta know my own intent), as sarcasm! Well, with the exception maybe of the OP using the accidentally on-purpose slip-up when referring to the "developer" as the "dictator." I might have been "tongue-in-cheek" when stating it's his ball field so he can do whatever he wants, but that's not sarcasm. That's pretty much just colorful language or simply casual banter. I know. Imagine we're all sitting around the bar eating peanuts and knocking back a few while we discuss this. . . . it's all about context. . . and visualization. . . grabs a fistful of peanuts and orders another tall one If they have homeowners "experienced in running an association," then wouldn't those homeowners also know that they would need to read their governing documents thoroughly to determine exactly when the turnover point is and what the developer can and can't do prior to that point?

MicheleD
(Kentucky)

Posts:1427

06/27/2008 12:45 PM
THAT'S what you think is sarcasm? Sorry, can't help you there. It was his words in quote. And it was followed by a simple question. If someone has experience in something, wouldn't they also know what documents to refer to in order to know what to do? In other words, wouldn't they be familiar with the HOA "Manual"? (which, for most of us, is our governing documents)? pffft. You're right. We do see things differently. But again, chalk it up to lack of non-verbal communication cues in text-only communications. . . I say poe-tay-toe, you say sar-cazm. {-- that might be a little sarcastic. If I rolled my eyes at the same time. Which I didn't do. So it's not.) wink

DJ1
(Ontario)

Posts:422

06/27/2008 12:49 PM
Hey Board members have something in common with non-members...beer and peanuts. Michele is right that text is often misread and a difficult form of communication to sometimes get ones point understood. Just look at me and Donna, heh heh.

DJ1
(Ontario)

Posts:422

06/27/2008 12:54 PM
OP said 'We have tried to meet with the dictator, I mean developer, to allow us to manage ourselves, but to no avail. We have homeowners experienced in running an association.' Maybe the two groups are different? The 'we' that tried to meet vs the 'homeowners experienced...'?

RogerB2
(Pennsylvania)

Posts:4

06/27/2008 7:40 PM
John thanks for the reply, I think you may have misinterprated some of my numbers. Our bills account for $108 per YEAR with the management company's fee accounting for another $120 per YEAR. We will be petty big when all is said and done. Probably 600 homes. Any idea what a typical management company's fee is. Ours says they are charging $10 per MONTH per home.

RogerB2
(Pennsylvania)

Posts:4

06/27/2008 7:53 PM
Michele, those residents who have experience in the operations of an HOA did not have to deal with the interference of a developer. None of us have ever gone through a transfer. we understand prices of things go up and understand operation costs will go up. The hard pill to swallow is that we have a developer who wants to run the whole show. We have tried collectively to negotiate with him. All it got us was a minority on the Board. I think what I'm trying to ask is has anyone ever tried to fight the tangled web of legal mumbo jumbo in the governing document, that as you say is "written to benefit the builder", and won.

BruceF1
(Connecticut)

Posts:499

06/28/2008 9:26 AM
RogerB2, The sad fact is that until you have reached the point where state law and your governing documents give the homeowners majority control of the board (meaning that, until then, the developer has majority control) there's not a whole lot you can do. If you can determine that the developer is actually violating the governing documents or state law, then you might have a case, but you would have to hire a lawyer to pursue that for you. If you can prove that the developer is violating state law, then you might be able to appeal to an ombudsman (if your state has such a thing) or to the state's attorney general. I'd say the the way to start is to read and understand your governing documents thorougly, and then do the same with you state laws governing homeowners associations. Many states' laws are available on the internet, and you can try googling for them, or go to the "library" tab above, then on the next page click on the large logo, and when you get to the Community Association Network home page, click on "State Info" on the left and look for yor state and see if you can find the relevant state laws that way.

MaryA1
(Arizona)

Posts:1453

06/28/2008 9:52 AM
Roger, With 600 homes I doubt you will want to self-manage, unless you get some board members who are willing to devote as much time to running the board as it would take to pretty much hold down a full-time job. Of course that also depends upon the type of amenities you have too. I'm sure the developer wants to hire a mgmt co because the assn is getting too large for his company to handle the work and he feels its time for the assn to start paying to manage itself. On the other hand, I'm surprised he would want to double the assessments. In most instances the developer will keep the assessments as low as possible even knowing he will have to make up whatever shortfalls might occur. His main goal is to attract buyers. With the economy in the state it's in he would be wise to stick to that rule. BTW, paying those 4 bills is only part of managing the assn. Another big part is recording the assessment payments, and enforcing the CCRs. Regarding the developer and his CCRs. As Michele says, they are written primarily for the developer. In that, most often certain controls are inserted to make certain the developer does not have to abide by certain provisions that might infringe on his 'vested interest'! It's pretty much an unwritten rule that the developer can do as he wishes while in control; in fact HE really is the board. The fact that he put a homeowner on the board is really meaningless. If your only beef with the developer is that you think the members should have a hand in running "their" assn; remember, it isn't the member's assn until the developer transitions it to them! Unless they've got something shady going on, IMO, most developers want to transition as soon as possible if only to get out from under the resp. of maintaining the assn.

BruceF1
(Connecticut)

Posts:499

06/28/2008 10:58 AM
Posted By MaryA1 on 06/28/2008 9:52 AM Roger, With 600 homes I doubt you will want to self-manage, unless you get some board members who are willing to devote as much time to running the board as it would take to pretty much hold down a full-time job. Of course that also depends upon the type of amenities you have too. I'm sure the developer wants to hire a mgmt co because the assn is getting too large for his company to handle the work and he feels its time for the assn to start paying to manage itself. On the other hand, I'm surprised he would want to double the assessments. In most instances the developer will keep the assessments as low as possible even knowing he will have to make up whatever shortfalls might occur. His main goal is to attract buyers. With the economy in the state it's in he would be wise to stick to that rule. BTW, paying those 4 bills is only part of managing the assn. Another big part is recording the assessment payments, and enforcing the CCRs. Regarding the developer and his CCRs. As Michele says, they are written primarily for the developer. In that, most often certain controls are inserted to make certain the developer does not have to abide by certain provisions that might infringe on his 'vested interest'! It's pretty much an unwritten rule that the developer can do as he wishes while in control; in fact HE really is the board. The fact that he put a homeowner on the board is really meaningless. If your only beef with the developer is that you think the members should have a hand in running "their" assn; remember, it isn't the member's assn until the developer transitions it to them! Unless they've got something shady going on, IMO, most developers want to transition as soon as possible if only to get out from under the resp. of maintaining the assn. Mary, In general, I don't disagree with anything you said. But, at least in Connecticut, our state law governing community associations has certain protections built in for the homeowner. The developer can't subsidize the HOA to keep dues artificially low. Also, there are certain provisions the developer can't put into the Declaration (CCRs) and there are certain provisions he must put into the Declaration. Also, once the Declaration is filed, he can't even amend it (except to add units or to bring the provisions into compliance with the law) himself. It requires a large percentage of the homeowners to amend it, even while he is in control.

DJ1
(Ontario)

Posts:422

06/28/2008 11:04 AM
Don't suppose the management company is in any way connected to the Developer? ie. The funds paid the management company will somehow benefit the developer. We had a clubhouse here which I understood each home purchaser contributed to by having the cost 'embedded' in the cost of the home...only I also understood the trades the developer contracted to build the homes had to 'donate' their services to construct said clubhouse. So developer provides an amenity with the cost paid by homeowners while really only having to pay for the cost of materials..assuming he didn't also make them donate that too.

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