(approved by City Council in 2018), Fedler says there aren’t many units currently under an HOA where rising costs have been an issue. But it’s something Longmont is keeping its eye on. The City of Boulder, however, has long heard about the issue of rising HOA costs for homeowners, not just in its affordable program but in market rate units as well. According to a 2019 survey of registered HOAs in the city, the average monthly HOA fees are $308 per month, up significantly from $177 in 2012, the last time the City looked at HOA costs. In addition, the average cost of special assessments — additional costs that can’t be covered by the HOA reserve fund — was about $3,000 per unit, per year. Rising costs are particularly concerning to Boulder’s affordable homeowners, considering 95% of them live under an HOA. In a separate 2019 survey of affordable homeowners, 65% said that HOA fees were more than expected, with an average cost of $241 per month. The survey also showed this led to dissatisfaction with homes, especially among the half of respondents who also had a lump sum special assessment in the time they’ve owned their home. “Rising HOA fees are across the board (and across the country) as more HOAs are reckoning with deferred maintenance and low HOA fees set by developers to make the initial purchase more attractive,” says Jay Sugnet, senior planner at the City of Boulder’s Housing and Human Services department. The City does review HOA structure and documents when approving permanently affordable units “to make sure that we think it’s going to be successful,” Sugnet says. And the cost of an HOA is factored into qualifying limits for potential affordable homeowners. But, developers are responsible for setting up HOAs with governing documents that determine board structure, fee schedules, basic rules and regulations throughout a complex or neighborhood, and the rights and responsibilities of homeowners. In purchasing a home, the homeowner is essentially signing a contract with the association, one that the City is not involved in. And it’s up to the owner, whether in the affordable program or not, to do their own due diligence
regarding the financial solvency of an association before they buy. In some HOAs, owners pay a flat fee regardless of square footage. Others allocate monthly payments and even special assessments based on size. Regardless, in general, market rate and affordable owners pay the same amount for shared infrastructure — roofs, stairs, sidewalks — or amenities — pool, gym, community room— depending on the association. “Developers oftentimes use a standard set of documents,” says Loura Sanchez, a lawyer and the incoming 2022 Rocky Mountain chapter president
market-rate owners, inclusionary housing units are deed restricted, limiting how much value a home can appreciate. In Boulder, it’s no more than 3% a year. This can cause competing interests when it comes to managing an HOA. “There are people who own market rate units in our community that really do want to continue to improve the buildings, and they are willing to spend $500 a month on an HOA, and that’s something that some of the affordable homeowners can’t stomach, can’t afford,” says Kyle Wolf, an affordable homeowner in Iris Hollow
of the Community Associations Institute (CAI). “And there isn’t a lot of thought that goes into, does it work in this community? Does it work for this particular marketplace?” With about 1,000 members in Colorado, CAI is a trade organization open to everyone involved in community associations, from board members and homeowners to other professionals that serve the community, like property managers, attorneys, landscape companies and pool operators. She says costs may seem high, especially within HOAs that hire professional management companies, but ultimately homeowners are “going to reap the benefits” of paying HOA dues and maintaining shared property. “I think that’s one thing that people forget about associations — one of the primary purposes is to preserve, protect and enhance property values,” Sanchez says. “And that means operating your association fully. And that cost is recouped in the fact that your property values stay strong.” While this may be the goal for
and previous board president of that community’s HOA. “At some point we have to reach a cap where you find the perfect balance between what affordable homeowners can afford and what market-unit homeowners want to pay [so that they’re] getting what they want out of the property,” Wolf says. According to a state database, Boulder has just over 300 HOAs, but that might not be totally accurate according to Brenda Ritenour, neighborhood liaison for the City of Boulder. The state keeps a list of registered HOAs, but while registration is required by state law, it doesn’t have any way to ensure HOAs comply. “In Colorado, there’s actually no regulatory oversight of HOAs or community association managers,” says Geoffrey Salant, HOA Information Officer with Colorado’s Division of Real Estate. According to his office, 45% of Coloradans live in housing governed by an HOA. In 2020, there were approximately 7,500 registered HOAs,
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and another 2,600 whose registrations expired in the same year, totaling more than 10,000 in the state. “A common misconception about HOAs is that they’re somehow quasigovernmental. They’re not. They’re nonprofit corporations, they’re private corporations,” Salant says. “I think that because you’re dealing with a home, the vast majority of people believe that there’s some sort of regulatory oversight or some sort of safeguard.” HOAs in the state are governed by the Colorado Common Interest Ownership Act, which allows associations to enforce their covenants, collect dues and take out loans, as well as laying out some budget and transparency guidelines. It also requires HOAs to register with the state, providing its size, revenue and location, but providing names of board members and their contact information isn’t required, Salant says. And while his office collects all this information and provides basic information about the rights and responsibilities of homeowners through resource materials and educational forums, it isn’t a central repository of HOA governing documents, nor does it have any regulatory power over HOAs. “What we don’t do, which is really important, is that we do not act as a regulatory program. We do not mediate or arbitrate. We can’t give legal advice. I cannot act as an advocate,” Salant says.“We cannot assess fines or penalties, and we do not enforce an HOA’s failure to register.” When disputes do arise between homeowners and HOAs, there is very little the state or local jurisdictions can do to help. Under a previous state program, certification was required for community association managers and it provided a more robust complaint process, Salant, who worked as an investigator for the program, says. That program ended in 2019, however, after Gov. Jared Polis vetoed a bill to renew it. CAI has a certification program, “as a way to have some type of accountability or oversight of how people show up in the community association realm, particularly in those States that don’t have any regulation like Colorado now,” Sanchez says. Currently, about 350 of CAI members in Colorado have these certifications and designations. see HOA Page 12 11