Monday, June 28, 2010

Why Assessments are Going Up

Willowbrook’s annual assessment was determined by a vote of homeowners at the Annual Meeting, held this year on May 11.

At this year’s Annual Meeting, the homeowners in attendance voted by a large majority to raise assessments $50 a year to help pay for replacing the neighborhood’s fence along Leslie Road. This is a major expense that the neighborhood expects to incur in about 5 years.

The agenda of this year’s Annual Meeting, including the matters of assessments and fence replacement, was distributed to the doorstep of every home in Willowbrook two weeks prior to the meeting. This was done to ensure that every homeowner had the opportunity to voice their opinion and vote on these issues.

Here is a recap of the discussion that led to the vote to raise the assessment:

Willowbrook’s fence along Leslie Road is owned and maintained by the homeowners association on behalf of the neighborhood. The fence was built about 20 years ago and has an estimated life expectancy of 20-25 years. A contractor who repaired and replaced parts of the fence last year said that the fence was good for a few more years, but that it will become increasingly expensive to maintain as the wood splits and warps. Even with maintenance and regular painting, it will become increasingly unsightly with age.

At this point it appears likely that the fence will need replacing in about five years.

Fence replacement will be a major expense. There has been widespread agreement at the last three Annual Meetings to start raising the assessments now to build up a fence replacement fund. This spreads out the impact of that expense over many years. This is a common practice among homeowners associations facing major capital projects.

How much will it cost to replace the fence?

Replacing the fence with an identical wood fence would cost about $90,000 in 2009 dollars. However the current Homeowners Board recommends that the fence be replaced by a concrete block wall, not another wood fence. A concrete block wall would cost more initially, but would last longer and require less maintenance. Other benefits of a block wall are that it would cut down on traffic noise from an increasingly busy Leslie Road, and it would project an enhanced image of the neighborhood.

The cost to replace the fence with a concrete block wall is about $125,000 in 2009 dollars. An example of a concrete block wall can be seen on Leslie Road by the Meadow Springs golf course.

The $125,000 estimate assumes that the 2000’ of the fence that fronts Leslie Road directly will be replaced by a concrete block wall. The estimate assumes that the remaining 800’ of fence, which does not lie directly on Leslie but instead borders a triangular enclave of private property located where Leslie Road jogs, will be replaced by another wood fence to save upfront costs. This “interior” wood fence could later be replaced by a concrete block wall fence when it reached the end of its lifespan in 20-25 years.

The final decision on whether to replace the fence with a concrete block wall or another wood fence does not have to be made until the time of the actual replacement. However, to prepare for either case, we are building a replacement fund now.

How was the amount of the assessment raise determined?

Assume an expense of $125,000 due in five years. As was pointed out at the Annual Meeting, $15,000 has already been collected toward fence replacement because assessments were raised $25 three years ago to start accumulating a fence replacement fund. That leaves $110,000 to be raised.

Assume an average of 210 homes paying assessments during those five years (this includes homes likely to be built in the future). $110,000 ÷ 5 years ÷ 210 homes = $105 per home per year. Since the current $150 assessment already includes $25 for fence replacement, it would be necessary to raise the assessment by $80 ($105 - $25) per year to raise $125,000 in five years. However, after some debate at the Annual Meeting, it was decided to raise assessments by only $50 (making the total assessment $200 per year) for the following reasons:

Perhaps the fence will last longer than expected before needing replacement
The $125,000 is just an estimate.
$50 is less of a jump up in cost over the previous year’s assessment

Subsequent to the Annual Meeting, it was learned that KID easements in the neighborhood’s common areas may affect how much of the fence can be replaced by block wall and how much must be replaced by another wood fence. This is being investigated. If KID easements preclude any concrete block wall, then the new annual assessment of $200 is just about right to raise the $90,000 needed in five years to replace the fence with another wooden fence.

The Homeowners Board is investigating setting up a separate account to hold the portion of the assessments collected for fence replacement. This would help the association better track progress on the fence replacement fund.

If you have any questions or suggestions about fence replacement or the assessment, email the neighborhood association at address given at the top of this website.