Feb. blizzards drained home associations' budgets

Now they face unpopular choice of raising fees or cutting services

March 23, 2010|By Jamie Smith Hopkins | jamie.smith.hopkins@baltsun.com

The Dorsey Hall Condominium Association in Ellicott City overran its snow-removal budget by about $30,000 in back-to-back blizzards last month - the equivalent of $200 extra for each of the 132 households in the neighborhood.

Snow expenses are piling up across the Baltimore area. The February storms that dumped more than 40 inches on the region in the space of a week have strained homeowner and condo associations, draining reserves and leaving many with a tough choice: Cut services or raise residents' fees.

"Something will suffer, that's for sure," said Vivek Mehta, Dorsey Hall association president.

Many associations are collecting dues from fewer homeowners thanks to the foreclosures. And these tight economic times make board members reluctant to raise dues mid-year or to send a one-time extra bill to neighbors and themselves.

One in five Americans lives in association-governed communities, according to estimates by the Community Associations Institute. Many associations are responsible for plowing parking lots and private streets, which makes them a bit like city governments on a small scale - but the Federal Emergency Management Agency says they don't qualify for the federal disaster aid that local and state governments can tap after big storms.

Getting the snow out of the way of traffic, commerce and everyday life was an all-out effort this winter.

The Maryland State Highway Administration spent about $60 million clearing the twin February storms from the roads in "a week-plus of constant work," said Valerie Burnette Edgar with the State Highway Administration.

Employers and commercial building owners had to dig out, too. Columbia-based Corporate Office Properties Trust recently warned investors to expect less impressive first-quarter financial results thanks to the high snow costs.

Once the bills are tallied for homeowner and condo associations, half of those in this area might be forced to ask members to pay more to cover the expense of Baltimore's snowiest winter on record, according to Kyndall Francis, principal and chief executive of Legacy Investment & Management, a Columbia-based firm that has 52 community-association clients in the Baltimore- Washington region.

Maryland has at least 2,400 condo associations. It's unclear how many homeowner associations are here because they aren't required to register with the state, as condo associations are.

"I've been doing this for 15 years, and I've never seen anything like this before," Francis said. "Nobody is in a position to be able to handle this right now. ... There's going to be some people paying snow bills in July."

Dorsey Hall board members are discussing whether to pass the costs on to residents. Its $50,000 snow-removal tab this winter isn't the whole of it - there's also about $10,000 in snow-related damage to fix, Mehta said. That comes to nearly $300 for every household in the community.

If board members don't want to bill themselves and their neighbors, the other option would be to slow the pace of roof replacements and postpone projects, such as playground upgrades, that were slated to start within a couple years.

Mehta isn't certain which is less palatable: a $200 to $300 hit now, or delays later. "Saying 'We're not going to redo the playground because of the snow two years ago,' that doesn't flow well at a local level like ours," he said.

Like Dorsey Hall, many neighborhoods have snow problems beyond the cost of removal. Residential Realty Group in Owings Mills, which manages more than 100 associations, said the February storms damaged condo gutters, ruined shrubbery and cracked tree limbs. Plows left broken curbs and potholes in their wake. It could be many weeks before some communities know the full cost.

"It's a really bad situation," said Louise Hood, president of Residential Realty Group. "The blizzards have strapped everyone. ... There's definitely going to have to be [fee] increases."

Associations "typically operate very close to a budget," said Raymond D. Burke, an attorney at Baltimore law firm Ober Kaler who specializes in condo association law. So there's not much wiggle room to cover nasty surprises.

Francis, with Legacy Investment & Management, said residents would be better off shelling out than skipping necessary maintenance. Otherwise, he said, "It hurts people's investment."

But associations are looking for ways to cut back where they can, if only to delay fee increases until next year, said Mel Herzberger, president of American Community Management in Columbia, which manages 169 communities in the Baltimore-Washington area. Expect to see reduced hours at neighborhood gyms and a shorter pool season, he said.

"Spring planting is pretty much out of the question," Herzberger added.

The 137-townhouse Glen Oaks Homeowners Association in Columbia had saved up to repaint curbs and clear brush later this year. Now, "it may have to be put off," said president Ashley Russell Worth.

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