Group calls for 20-cent assessment rate cut

Proposal doubles amount offered by CA directors

Columbia

October 22, 2003|By Laura Cadiz | Laura Cadiz,SUN STAFF

The Columbia Association board of directors' proposal to drop the 73-cent assessment rate by a dime for 2005 isn't enough to satisfy the association's most vocal critics.

The Alliance for a Better Columbia (ABC), a citizens' watchdog group that has lobbied the homeowners association to lower the annual charge or offer rebates after east Columbia experienced a sharp increase in property values, wants the rate to drop by at least twice what the Columbia Association is proposing.

ABC says that a rate of 53 cents per $100 of valuation would leave the association with a surplus of about $1 million for 2005. The group believes that amount is more than enough, maintaining that the homeowners association should not have a surplus. The board is aiming for a $4.5 million surplus in 2005.

"They haven't even met us halfway," said Joel Pearlman, a spokesman for ABC.

At the board's work sessions on the 2005 and 2006 budgets last weekend, board member Phil Marcus of Kings Contrivance proposed lowering the rate to 53 cents. But board Chairman Miles Coffman said that rate would significantly increase the association's debt and called it "irresponsible and harmful to the organization."

The association has a long-term debt of about $78 million, and dropping the assessment rate to 53 cents would result in the organization being $92 million in the red by 2013, according to association staff members.

If the rate were set at 63 cents, association staff members estimate the organization would have a $29.3 million debt by 2013.

The board is scheduled to pass the 2005 budget in February.

Under the current assessment rate - 73 cents per $100 of valuation assessed on 50 percent of the fair market value - a home assessed at $188,000 would require an assessment payment of $686. At the 63-cent rate, the charge would be $592; the 53-cent rate would call for a $498 payment.

Columbia residents have been pressuring the association to find a solution to the rising assessment bills that hit east Columbians after home values increased an average of 33.4 percent. The state reassessed property there last year.

The reassessments are expected to yield about $2.7 million in additional revenue, contributing to the association's expected $5.3 million surplus for the homeowners association for next year.

At the board's weekend budget session, association staff members presented a ruling from the Internal Revenue Service that stated the association could offer all property owners rebates or credits against assessment charges in years when there is a surplus higher than budgeted. Such a move would not jeopardize the association's nonprofit status, according to the IRS.

The ruling allows for the board to rebate $2.6 million of the surplus in the 2003 budget, if the board deems that appropriate.

Del. Shane E. Pendergrass, a Howard County Democrat, said the proposed 63-cent rate is "something that is measurable. It's not exactly what I would do, but on the other hand it is meaningful."

Pendergrass is working on legislation that would allow the Columbia Association to put a 10 percent ceiling on the change in assessment. The ceiling would be retroactive, allowing east Columbians to receive a rebate from their recent increase in property values.

However, the association's lawyers have determined that phasing in the change in assessment or putting a limit on the charge is not legally permissible because it would violate the association's covenants.

But Pendergrass said: "I'm very comfortable that what we're doing is defensible."

Changing the association's covenants would require unanimous approval from property owners, but Pendergrass is also drafting a measure that would allow the association to amend its covenants with a lower requirement.

She has considered proposing that the covenants be changed with the approval of 51 percent of Columbia property owners. But at a meeting at which ABC was host Saturday, Pendergrass said residents wanted the requirement to be 51 percent of the people voting.

"That's what I'm looking to do at the moment because of the comments I heard at the meeting," she said.

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