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Mandatory Amenity Fee - outrageous increase

Started by JohnW11 • 13 replies • 2218 views

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JohnW11 (Florida)
Posts: 6
Posted:
I am looking for the appropriate Florida State Agency to mediate or provide expertise regarding a dispute between the Association and the Declarant / Owner of the Amenities. The Amenities Owner has announced a 337% increase (from $150 to $656) for 2009 and a more substantial increase in 2010. The Association members find this increase unacceptable. I have attached a DRAFT of a document describing the issue. Below is a brief description:

Our Association has a mandatory Amenity Fee in our CC&Rs, which is payable to the Declarant / Amenity Owner. Failure to pay the fee can result in a lien against a homeowner's property. The Amenities are specifically defined in the CC&Rs.

The Declarant held a meeting on November 26, 2008 to present the expenses of the Amenities. The Association strongly feels that most of the expenses presented DO NOT relate directly to the Amenities defined in the CC&Rs and, therefore, should not be part of a mandatory Amenity Fee. We feel the expenses presented relate more directly to "for profit" operations (such as two restaurants and a Golf course) that are also owned by the Cub Owner.

Negotiations with the Declarant/Club Owner have failed. Where can we get assistance without litigation?

JohnW11 (Florida)
Posts: 6
Posted:
DRAFT of more detail attached
📎 Attachments (1):
📎1122301365371.doc(48 KB)
MaryA1 (Arizona)
Posts: 7,043
Posted:
John,

Very interesting situation. IMO, only the expenses associated with the amenities defined in the CCRs should be paid by the members. These expenses should be separated from those generated to operate the other amenities not shown in the CCRs. ADR (alternative dispute resolution) may be a route to take to resolve this matter. Also, you may want to take a look at FL statutes to see if there is an article addressing disputes. Some assn docs also require ADR. Regarding the assessment increase, I would also check out the FL statutes to find out if there is an article addressing assessment increases. AZ law states an increase of 20% or more must be voted on by the members.
JohnK3 (Pennsylvania)
Posts: 967
Posted:
John,

You refer to Declarant/(New) Club Owner.

Question:

Have your properties' managements been turned over to independent HOAs or is "Declarant" still in charge?
DonnaS (Tennessee)
Posts: 5,671
Posted:

John,

One problem to owning in an association such as yours is that you are going to pay dearly for the shared amenities when they are owned by an outside party--developer or now, the "Club Owner" This happens often after a sale of clubs and golf courses. Reading the attachment makes me unable to give you advice other than you will need legal help. The Florida ombbudsman may not be the route to use, altho it normally would be. Because this is in your deed restrictions that you are obligated to have this participation in costs to the amenities that are owned by a person other than the association.
JohnW11 (Florida)
Posts: 6
Posted:
John -

The Declarant is still in charge and has "veto" rights on any CC&R Amendment. The Declarant also has the right ti unilaterally amend the CC&Rs. The Declarant has been asked if he will change the CC&Rs to place a cap on the Amenity Fee or eliminate the mandatory fee completely. The anwer was "that isn't going to happen".
GlenL (Ohio)
Posts: 5,491
Posted:
John this is one of those cases where I imagine the developer was keeping the costs artificially low in order to sell units and the new fees probably more closely resemble the actual costs plus allow for a profit for the provider. A big gotcha but unless there is a specific limit to the fee increases in your CC&R's, probably entirely legal. Short of a lawsuit you will most likely have to wait until turnover to sever the ties between the Association and the amenities if it is possible at all.
Studies show that 5 out of 4 people have problems with fractions
JohnW11 (Florida)
Posts: 6
Posted:
Mary -
Thank you for your input.
We agree that the expenses directly related to the Amenities as defined in the CC&Rs need to be separated for the purpose of determining the Amenity Fee. The disagreement is mainly based on what constitutes Amenity expenses.
We have reviewed Florida Statutes. Statute 720.311 addresses dispute resolution between a homeowner and the Association, but that is not our situation. We cannot find anything in the CC&Rs, By- laws, or Articles of Incorporation that addresses disputes between the Association members and the Declarant or Amenities Owner.
We also reviewed Florida Statutes (at least Section 720) to try to find any “cap” on the increase of a mandatory Fee. We could find none. This may seem unbelievable, but our CCR&S state: “The Amenity Maintenance Fee may be increased at the sole discretion of the Declarant, its successors and assigns.” I am certain that statement can be challenged and would be declared void, but that does not resolve our immediate issue and a challenge would be expensive and time consuming.
Another Florida Statute, 720.3086, requires the developer to disclose revenues and expenses related to a mandatory amenity fee within 60 days of the close of the Fiscal Year. This information has been disclosed for 2007 and is the basis for our contention that many of the expenses are not related to the Amenities as defined in the CC&Rs. The statute does not state our recourse if we feel the expenses disclosed are not warranted.

DonnaS (Tennessee)
Posts: 5,671
Posted:

JohnW,
I know the 720 Statutes fairly well and there is nothing in them that addresses your situation other than 3086,(financial disclosure by Developer) But that certainly cannot help to control the new fees. Seek legal help.

A short story, kind of similar. A very expensive Palm City Golf community (private) passed a rule that all members of the association would be required to pay $50,000 in an equity fee for the course. Despite the fact that almost 1/4 of the owners did not play golf, they were assessed the fee. It went to court and those who did not play and never would or could, were granted a lower equity fee but they still had to pay.

Your course is owned by a private party and they can do this. Is it right? No but they hold all of the cards. Does the Developer own the course? I could not figure that out from your attachment but I assume that he does.
JohnW11 (Florida)
Posts: 6
Posted:
DonnaS,

The developer sold the golf course, club house (including 2 restaurants), and all the amenities defined in the CC&Rs (Pool, cabana, tennis courts, meeting rooms, exercise room, etc) to a 3rd party, now the “Club” owner.

The restaurants, golf pro shop, and administrative offices are NOT defined as amenities in the CC&Rs, yet the expenses disclosed by the developer for 2007 (and applicable to expenses in 2008 and 2009) are clearly being included in and recovered by the Amenity fees proposed for 2009.

MicheleD (Kentucky)
Posts: 4,491
Posted:
O my wow.

This looks to be such a mess to shuffle through.

Do you at least get free meals in the 2 restaurants??
MaryA1 (Arizona)
Posts: 7,043
Posted:
John,

Even if the 2 restaurants are not specifically mentioned in the CCRs, that fact that they are housed in the clubhouse might be why the owner is including them as an amenity. That in itself is a sticky wicket and could be construed in different ways. I know golf courses are often private and separate from the HOA, but an HOA not owning their amenities is really new to me. It may be wise to retain an attorney to wade through this mess.
JohnW11 (Florida)
Posts: 6
Posted:
DonnaS or anyone acquainted with Florida Statutes (Section 720) and bureaucracy:

I really hate the thought of expensive litigation and there is no guarantee, after significant expense, that we will win. We could go to arbitration, but our initial investigation indicates that arbitration would not be binding.

Do you think approaching the issue as non-compliance with Florida Statute 720.3086 might help? Our contention is that the expenses of the amenities for 2007 disclosed by the developer are blatantly and purposely inflated.

If we attack the issue based on noncompliance instead of an excessive fee, do you think the right State Agency will listen and respond?

DonnaS (Tennessee)
Posts: 5,671
Posted:

John,

First of all, because this is truely a legal question, I would seek counsil. But yes, IMHO, the disclosure is the only angle that I see from what you have posted. As I said above, buying into your type of community opens you up to expenses that you may not have had a total understanding. And the fact that turnover did not happen yet, the Developer still has an upper hand in how he spends and writes decisions.

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