|Local HOAs hit hard in recession|
Article Courtesy of The News-Journal
By BOB KOSLOW
Published December 6, 2010
The luxury Palmas de Mallorca condominium in Daytona Beach Shores was nearly shut down and evacuated in 2008 when the homeowner's association did not have $3,000 to fix a water pump that feeds the fire suppression sprinklers.
The money was not available because more than half of the building's 12 units were empty and owners were not paying their assessments, said Jeff Blocker, whose BMI Management in New Smyrna Beach managed the building before the mortgage holder foreclosed and a private owner bought it.
monthly payments or reduced services. That can sometimes trigger additional foreclosures by other financially strapped homeowners.
"I have sat in board meetings where members say they don't want to place a lien on a property because they say the owners are so nice," Blocker said. "But when I tell them that they would have to pay more, it becomes a them-versus-me attitude and they change their mind."
Assessments are critical. They fund common-area landscaping, building maintenance, trash pickup, utilities, swimming pools and playgrounds, elevators and in some cases, the roads. The services maintain property values while providing for the safety, health and welfare of the residents.
"From my perspective with 36 associations in Volusia and Flagler counties, I would say collections are down maybe 15 to 30 percent, depending on the property," said Ann Concannon, a district manager with Sentry Management, the largest association management firm in Florida.
As a result of revenue shortfalls, according to the CAI survey, 38 percent of associations postponed planned capital improvements, 35 percent cut back on landscaping services and 31 percent reduced contributions to reserve accounts, which attorneys and association managers strongly oppose. Also, 23 percent borrowed from reserve accounts, 16 percent imposed special assessments and 12 percent used residents for minor services.
Area association managers reported having used all those measures and others.
World of Homes hired an in-house debt collector rather then sending the case to a more expensive attorney. It also negotiated lower landscaping costs.
Many associations have had to account for bad debt expectations for the first time in their annual budgets and make mid-year budget amendments.
Associations in West Volusia and Palm Coast seem to be having more difficulties than East Volusia associations because more workers lost jobs in those areas. East Volusia has more retirees and second-home owners who are generally better financed, Concannon said.
Steve Tyler, founder of Tyler Property Management in Holly Hill that manages 21 associations, has noticed condo vacancies as high as 50 percent and homeowner association vacancies as high as 20 percent because of foreclosures.
"I'm seeing problems more in subdivisions and condos that had high sales volumes between 2003 and 2006 when we had investors flock to the area," Tyler said. "Prices and values fell and now there are a lot of foreclosures and people walking away because they can't sell it for what they paid."