Today, it’s rare to find a new single family community that is not part of the Common Ownership Interest Act. Even a monument sign and landscaping at the entrance requires an association and thus a board of directors and a budget. The list of expenses that are included in the dues fall into two categories. The first is the maintenance and upkeep for the primary itself. Maintenance costs are based upon competitive bids while reserves established for replacement is based upon an engineer’s estimate for the life expectancy of the item. Like any home, a community requires upkeep if it is going to maintain its values.
However, once an association and, thus, a board of directors is created, there are a lot of ‘soft’ costs. Those costs include insurance, management fees, legal/professional fees, taxes and licensee renewals, audit and tax prep, bank fees, and contingency funds. In some instances, the more active the board of directors, the greater some of these costs will accrue. For example, if the board elects to fine property owners who are not obeying the covenants, codes and restrictions, legal fees may increase. Professional management fees vary, depending upon the property management company that is hired and the number of units in the association. Fees will most likely be from $15 to $25 per month for each unit. The larger associations have the lowest cost per property owner.
Because of these costs, there is a small but growing trend within the development community to eliminating HOA’s and having only nominal covenant, codes and restrictions. Without an HOA, however, there is no vehicle for enforcement so buyers have to assume that their neighbors, or future neighbors, are going to maintain the value of their homes. MOA zoning enforcement will only enforce municipal code and not CCR’s. Some buyers specifically ask if there is an HOA because they have been part of an overly restrictive community in the past. I’ve had to reconsider the value of HOA’s these past few months. For large lot communities with only a handful of lots, I’m not sure it’s worth the hassle and cost. However, for condo developments and subdivisions with more than a handful of lots, it continues to be a necessity, especially as single family lots become smaller. I remember the 1980’s with attached zero lot line homes where after a few years each side was painted a different color and the maintenance for driveways, porches, roofs was obviously different between the units. That’s not anything that should be repeated as Anchorage becomes more urban with higher density. HOA’s are an excellent way to sustain and protect property values as long as reasonable discretion is used by its governing board.