PRESERVING COMMUNITY VALUES

By Joseph Brimer

One of the most misunderstood goals of community associations is “maintaining property values”. This line is perceived by many as just that, an empty rhetoric used to create and enforce rules. No doubt that rules are a part of it, but the honest intention runs much deeper than that. Like anything else in life, there are risks that threaten the value of associations. From unruly residents to changes in local or state law to even natural disasters, the list could go on forever. But the largest risk facing communities is a board that sacrifices the services or lifestyle of a community for the sake of assessment dollars.

A tangible way to understand the risk is by calculating the value of the community. If you take the average community size in Utah of 311 units, and multiply it by the current county median sales price of $500,000; you get over $155,000,000 in value. Now add in the value of common areas of $5,000,000, that gives you a total community value of $160,000,000. If a board makes a change in services or rules that drives a 1% change in value, that’s over $1,600,000 in value gone. Translation, that’s over $5,100 of your own value, poof, gone! And all for the sake of saving less than $60 a year!

“What’s the lifestyle of my community?” Well, what attracted you there and why did you buy? Common answers you’d get would be the amenities available, the services offered and believe it or not, the rules. All of these boil down to one thing; a consistent resident experience. When a board decides to limit or remove an amenity or service the perceived value of the association plummets. Violations and conflict begin to rise when the one uniting piece (lifestyle) is removed since residents become disinterested and eventually move away. The rest of the community is blindsided by decreased services and below average value while they ask themselves; “what happened to my community”.

Efficiencies should be encouraged throughout community budgets, but cutting services to save a dollar or two should be avoided. Roughly 60-70% of community budgets are made up of hard costs like insurance, reserve contributions, or grounds maintenance that are already lean. Boards who thrash through the remaining areas of the budget begin to trip over dollars to pick up pennies. Or, like the example above, stumble over millions to pick up thousands. With the way the Washington County market is, and the inflation sustained over the last few years, it’s unreasonable to assure assessments can stay the same or decrease while maintaining services. Boards and residents alike need to reset their expectations when it comes to lifestyle services and assessments.