Subdivision management groups say regulation would improve industry business practices

zkyle@idahostatesman.comJune 27, 2014 

homeowners association,

Drew Dunn struggled to resolve an issue with the homeowners association in the Danbury Fair subdivision over his vintage Oldsmobile 88, which was parked in front of his house. After the situation ended in his favor, Dunn said he’s had no conflicts — even after swapping his Olds for a 1961 Dodge D100 that’s in less pristine condition.

KATHERINE JONES — kjones@idahostatesman.com Buy Photo

  • WHAT YOU SHOULD EXPECT

    Homeowners should be suspicious of an association or management company if either is unwilling to disclose the following:

    • The HOA budget.

    • A breakdown of coded or vague budget items, such as "community expense."

    • Names and contact information of board members.

    • Responses to complaints or inquiries.

    In addition, homeowners should be concerned if board members:

    • Also work for the management company overseeing the HOA.

    • Hire friends or family members for contract work with the HOA.

Say what you will about the restored 1973 Olds 88 that Drew Dunn used to park in the driveway of his house in Meridian's Danbury Fair subdivision. The dark blue "land yacht," which slurped gas and cornered like a battleship, was a totem to American-made style and excess.

But Dunn never dreamed anyone could call his Olds, with its black vinyl top and 455-cubic inch engine, a "junk car." Yet that's how it was described in a series of letters he received from his homeowners association about a decade ago. The letters said Dunn was breaking association covenants, conditions and restrictions (CC&Rs) by parking the car and its custom cover on the street.

"Every time they sent a letter, I sent one back explaining the issue," Dunn said. "It did not stop until the association hired a professional service."

Idaho is home to more than 2,000 homeowners associations, according to Meridian-based MGM Association Management, a company that manages 80 HOAs in the state.

Associations collect dues from homeowners to pay for shared subdivision properties such as parks and common areas, pools, clubhouses and streetlights. Homeowners typically pay between $100 and $400 annually in dues, MGM's Scott Setterlund said.

Associations also enforce CC&Rs that can set limits on grass height, street parking, house colors, materials used in fences, times garbage cans can be out for collecting and dozens of other regulations. The rules are in place to keep property values from slipping. They also seem nitpicky to homeowners who feel as if Big Brother is watching, poised to fine them for minor infractions, Setterlund said.

"It's a natural point of conflict," he said. "How many dandelions can be in your yard before it's a violation? How tall can the RV be before it's out of compliance? If it is, the HOA board has to interpret that and take some action on it."

WEEDING OUT BAD APPLES

Homeowners associations caught the attention of the Idaho Legislature, which passed a law during the 2014 session attempting to cut down on frivolous HOA-issued fines.

Sen. Jim Rice, R-Caldwell, sponsored the bill, which requires associations to give homeowners a written notice of a violation 30 days before issuing a fine. The bill's statement of purpose said "capricious" fines were frequently levied "despite homeowner attempts to comply with the covenants."

Rice said he carried the bill after receiving a complaint from a Caldwell woman who had been fined at least twice for having a brown lawn - despite efforts to revive the grass - last summer.

MGM owner Mike Madsen said the new requirements, which take effect July 1, are good business practices but meddle with companies that already work with homeowners.

"This law will affect MGM by slowing down the process of enforcement," Madsen said. "Some of our clients will need to adjust their meeting schedules to accommodate the 30-day requirement."

Ryan Martin, operations manager at Boardwalk Association Management, said the law misfires in that it doesn't address the need for standards in the association and management industry. The state currently has no requirements or regulations for HOAs and management companies, opening the door for mismanaging money or questionable practices such as board members hiring relatives to provide services.

IS LICENSING AN OPTION?

HOA managers and Meridian city employees have formed an advisory committee to form a set of industry standards. They have met once to discuss becoming a formal committee that could lobby the Legislature to require licensure.

"We feel the need for some oversight in our industry," said Jean Cariaga, a member of the advisory board and co-owner of Development Services Inc.

Cariaga said industry standards set by the advisory panel could prevent abuses such as employees from management companies sitting on HOA boards or associations refusing to disclose their financial statements.

Setting standards could remove some of the bad actors from the industry and give credibility to responsible and ethical associations and management companies, she said, though she isn't yet convinced that requiring licenses is the answer.

Martin said the state should require HOA board members and management companies to take training courses and receive operating licenses, like real estate agents do.

INTERPRETING THE RULES

The Idaho Statesman received 60 responses to an online survey asking readers whether they had positive or negative experiences with their homeowners associations or with management companies that are hired to oversee books and restrictive covenant enforcement.

Most of the respondents fell into two camps: People unhappy that their neighbors continued to violate rules about things such as landscaping, pets, parking and garbage cans; and people unhappy that their neighbors cared so much about such things.

Volunteers who live in the subdivisions serve on HOA boards. Sandra Laws, a board member for Sleepy Hollow in Northwest Boise, said the subdivision hired Austin Property Management so that board members could stay out of their neighbors' business.

"Our management company is our enforcer," Laws said in her survey response. " ... This makes it easier for those of us on the board who have to live next door to people being complained about."

Part of the problem is that homeowners don't know the rules, said Heather Potter, president of the Stony Meadows Homeowners Association in Nampa. Better explanations from the association and better engagement on the part of homeowners can reduce problems, she said.

"To simply hand a new homeowner or tenant a 150-page guide of CC&Rs and say, 'Just read it when you have time,' isn't really providing guidance," Potter said.

Setterlund said MGM is commonly hired by associations in subdivisions where homeowners complain that a board member has been "overzealous" about enforcement.

"Some of the board members think this is their career," he said.

Dunn said the conflict over his Olds 88 resolved quietly when the new management company found the car to be in compliance with Danbury rules. He sold the Olds several years later and now keeps a teal 1961 Dodge pickup in the same parking spot.

He said his association and management company do their jobs, and he gets his money's worth out of his $75 annual dues.

"Somebody on the HOA board was probably just doing his job, perhaps a little extra zealously," Dunn said. "I was more amused than upset."

Zach Kyle: 377-6464, @IDS_zachkyle

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