Meritage Annual Meeting and Common HOA Issues

Tonight I went to The Meritage’s annual meeting. It’s been the first home owners meeting that I’ve attended. Of the 48 owners fifteen or so showed up and another ten or so assigned proxies so we had quorum.

Since most of the issues discussed are likely issues faced by many new HOAs and home owners I thought I’d post about what I learned. It shouldn’t be surprising but there is a lot of overlap in first year concerns between the two buildings. From an efficiency point of view it seems inefficient that both buildings’ HOAs and boards are going to struggle learning about rental caps, building security and convincing developers into fixing outstanding issues. A quick search doesn’t reveal a forum for Seattle HOA’s which is unfortunate (of course there is always the Urban Living Forums.)

So what’d we talk about…

Rental Caps

The board is pushing to institute a rental cap and brought out John Coe to present the first draft of a proposed amendment for the introduction of a rental cap.

Some of the things he talked about are:

• He’s a “people, pets, parking” lawyer. Pets are the most difficult issue to deal with of the three.
• We have a new declaration with all the latest law revisions, this is a good thing.
• We have good rental management language, see section 11.14 (for instance leases need to be in writing, etc.)
• He said developers don’t include rental caps in the initial declaration because they want to sell to a broad audience
• However, owners want to limit the number of rental units for three reasons:
  Financing: Fannie Mae, Freddie Mac, have a 30% building cap on non-owner occupied caps and these two types of loans represent 80% of the market. The other 20% of loans (VA) have a rental cap of 50%.
  • Association: High number of rentals can affect the associations ability to borrow
  • Insurance: Number of renters affects master policy cost
• With 48 units he suggests a 10 unit rental cap. There are 6-8 renters. Board can wave the cap on a case by case basis for special reasons.
• Amendment lays out waiting list structure, enforcement language, hearing process for renters
• It’s only a first draft and is very restrictive, for instance requiring 12 month leases
• It’s language that has been used before. He feels it’s enforceable language.
• Washington law puts a high voting requirement, 90%, for changing rental restrictions
• Owners need to decide what circumstances do we want to allow? To stop? They’ll put language together.
• For our reference we can go to the King County Recorder website which has declarations to condo or amendment and you can pull up others
• He recommends we setup a working group made up of both landlords and regular owners to decide on terms, give recommendation to board, board takes to owners and recommends, then get owners to vote

In the abstract I support a rental cap but disagree with some of the restrictions in the first draft.

President’s Report

During the president’s report we learned about some of the things the HOA did throughout the year and things we are considering for the future are. We also discussed a number of other issues:

• The HOA held a community party (I was out of town and moving out of the building at the time.)
• Painted parking stall numbers on the wall so they’re visible. Ones of the floor were wearing off.
• Replaced cleaning crew with a more effective one.
• Talking about replacing another service provider
• Discussed changing the elevator floor. It was initially carpet that got very dirty. The developer replaced with linoleum tiles. The glue for the tiles gave off an awful order forever and some feel it is unsightly. Other options are being considered but stone tile not allowed by Kone, the elevator company, because of weight. Right now the HOA is waiting for an interested resident to lead the charge on exploring options.
• One of the garage doors is constantly breaking and we need to get the developer to step up and make it right.
• There hasn’t been a reserve study. Sounds like Trace is ahead here because the Trace management company did this when they setup our budget.
• Discussion of smoking areas and posting of no smoking signs in common areas.
• We don’t have earthquake insurance. It’d double our insurance cost. The good news is that it’s a new building conforming to the latest code. But we should consider this when they do a budget study for next year.
• The garage has an acid leaking problem just like Trace! This sparked a discussion about getting an inspection done and being proactive about having the developer fix issues.

Security

Like at Trace, the elevator is not locked in the garages. This means if the garage is compromised the building is compromised. The board looked into getting the elevator connected to the same system that we use for our door fob’s and the cost was $8,000. Some residents balked at this amount until a few residents shared a few stories. Let’s just say that shut everyone up.

This same security issue has already come up at Trace several times (fortunately our HOA is forming at the end of April). In general I think its appalling that developers on mid-range buildings are cutting corners on costs around security and opting for the cheapest option forcing the residents to live in an unsecure building until a board forms, the board gets recommendations and then implements a solution. It would be nice if the developer thought about what they would want if they lived in the building.

Bonus link: Elizabeth Rhodes in her Home Forums Extra answered an HOA question recently, Condo board considers hiring members to manage association