With the demand for complex consulting related to Homeowners Associations on the rise, DLH has made efforts to ensure that a small team of HOA savvy engineers within their already experienced technical staff are available to address the most complicated of Homeowners Association concerns.
Homeowners Associations, commonly referred to as HOAs, first came on the scene in the mid 1800’s but didn’t gain popularity until the 1960’s when the post-World War II housing boom resulted in the construction of major subdivisions outside city limits. While HOAs were initially used to limit the type of person who could buy in a particular development, in 1963 the number of legitimate HOA’s spiked when the Federal Housing Authority (FHA) offered home mortgage insurance only to homes within subdivisions that had a viable HOA. The Fair Housing Act of 1968 eliminated HOA based racial discrimination and in the 1970’s the Homeowners Association became more about the maintenance of common spaces within residential subdivisions and land developments. It didn’t take long for local municipalities to realize they could more easily make their budgetary “Ends Meet” by eliminating the need to assign taxpayer dollars to amenity maintenance services now provided by the HOA.
Enter the Clean Water Act of 1977. With the ratification of the Clean Water Act, all new residential developments were required to provide adequate stormwater runoff control by reducing the post development runoff rate to the pre-development runoff rate. And so the detention basin was born! As we know, basins tend to take up a fair amount of real estate and that (coupled with the fact that those same basins serve multiple dwellings) led municipalities to require that the maintenance associated with the detention basins and other non-dedicated “common” site amenities be controlled by a single entity as opposed to a private lot owner.
Why is any of this important you ask? It is important because during the construction phase of a residential development, the developer sets up the HOA and acts as the majority member, i.e. he owns the most number of lots and controls the most number of votes. Once enough homeowners exist to elect an HOA Board of Directors, the power transitions from the developer to the homeowners. There are laws that govern how and when this occurs which are beyond the scope of this newsletter. The main point here is that HOAs need to understand that at the time of “transition” from a developer controlled HOA to homeowner controlled HOA, there are several areas of responsibility that get lost in the shuffle. Those responsibilities, if not clearly defined and addressed, can result in massive negative financial impacts to the HOA.
Stormwater facility operations and maintenance after initial transition and the evaluation of functioning NPDES sanctioned stormwater facilities at final transition are two of the main pitfalls missed by HOA once transition occurs. In short, the Covenants, Conditions and Restrictions governing how an HOA operates should clearly define who is responsible for the post construction stormwater management operations and maintenance of all stormwater facilities and when in the transition process that entity becomes responsible. Things start to fall apart when neither the developer nor the HOA take responsibility for maintenance of these facilities because each thought it was the other’s responsibility. This is a common occurrence when the HOA takes majority control of the HOA Board. The disregard for required maintenance of stormwater facilities in the latter stages of construction leads to the second pitfall which is ensuring all of the stormwater facilities actually operate as the approved development plans intend PRIOR to final transition (all things developer get handed over to HOA), release of municipal escrow funds and….most importantly, Termination of the developer’s NPDES Permit. In the end, if the termination of the NPDES Permit occurs prior to all stormwater systems functioning as designed, the HOA can find themselves on the hook for the cost to make repairs. That can mean big $$$ in construction costs or fines for not terminating the NPDES Permit in a timely fashion.
DLH routinely works with Developers and Homeowners Associations to make sure each knows their role and responsibilities during all stages of this very complicated process. Look to DLH to help you with the following:
- Civil Engineering Consultation Services for Developers and HOAs to clearly define roles and responsibilities
- Work with Developers to guide them on site improvements may or may not be required to get a site to “Transition Ready”
- Perform inspection of stormwater facilities, Best Management Practices and site infrastructure to ensure the HOA is inheriting a sound development site that meets all regulatory agency requirements
- Act as a liaison between the HOA and the regulatory agencies including the Municipality – we speak their language!
- Develop post transition regulations on how HOAs and associated Architectural Review Boards govern the installation of impervious surface and stormwater facilities that may fall outside Municipal review authority
- Attend HOA Board meetings to help educate residents on why certain expenditures or capital improvements are necessary
- Provide professional engineering services to address site improvements deficiencies that arise after transition has occurred