San Rafael condo owners hit with $145,000 special assessment
"Members of the 36-unit Pinnacle Condominium Association in San Rafael have approved a special assessment that will result in each condo owner having to pay $145,000 to fund a $5.22 million exterior repair project. “That is a major special assessment for a building this size,” said Marjorie Murray, president of the Center for California Homeowner Association Law in Oakland, a clearinghouse for consumer education and referral services for the estimated 9 million California homeowners who now live in a common interest development."
This is a long and detailed article about a terrible situation in an old development, built in 1980, that now needs new siding and roof decks. The assessment received 18 "yes" votes. The problem here is that no condo development, no HOA, should ever find itself in the situation of needing a massive special assessment to fund repairs for major building components that have just worn out over time. Boards are supposed to make sure that monthly assessments over decades include enough of a contribution to reserve funds that, when the time comes for a new roof or siding or decks, it is affordable without a six-figure special assessment. As Marjorie Murray, president of the Center for California Homeowner Association Law, put it, “Homeowner associations are required by law to do reserve studies every three years to determine how much they should be saving for capital items like roofs and building infrastructure,” Murray said. “The idea is that boards should plan ahead and save in reserves so that special assessments aren’t necessary.”
And there are reserves, to the tune of $800,000. That won't fund a $5 million repair, but Marjorie also questions why the association has decided to use only $300,000 of their reserves.
There are other questions raised in the article, such as whether this repair plan is the only way to go, and whether the association should get more opinions and try to reduce the cost. But it still comes down to the fact that the reserves are too low to pay for repairs to an old building, and the unwillingness of today's owners to reserve enough money now to pay for future repairs that will benefit future owners. Attorney Tyler Berding has been talking about this problem forever. I have been saying for years that condominium housing demands more from the financial and social resources of owners than many, even most, of them are prepared to deliver. Here you have Exhibit A. In order for this form of housing to function in the long term, and to avoid catastrophic special assessments that drive people into debt or out of their homes, there needs to be government financial oversight of all condominium associations. Stricter reserve study requirements, agency oversight, and mandatory public disclosure of reserve funding levels need to be considered.