Financial Crisis FAQ

Right now, the Association does not collect enough income to pay its annual operating expenses, let alone save money for future repairs and replacements.

Think of it like a household budget. If your paycheck is not large enough to cover the regular monthly bills, eventually you cannot pay the electric bill, the water gets shut off, or there isn’t enough money left to buy groceries.

That is essentially where the Association is today. The income coming in is no longer enough to cover the basic costs required to operate and maintain the community.

Annual operating expenses are the normal costs required to run the community each year.

These include things like:
• Insurance
• Landscaping
• Utilities
• Management
• Maintenance
• Routine repairs

These are the basic costs needed to operate the community, similar to a household’s regular bills such as electricity, groceries, and insurance.

They do not include unexpected emergencies or large long-term replacements such as resurfacing the pool, replacing roofs, or rebuilding amenities. Those types of projects are typically planned for separately through savings and reserves.

Many options were explored, but the problem comes down to one issue: our governing documents are old and outdated. They do not include many of the modern financial tools that most associations rely on today to responsibly manage their budgets.

Because those tools do not exist in our current documents, the Association does not have the ability to address this financial shortfall.

The only solution is to update the documents so the community has the same options that most associations already have available.

That is exactly what the proposed amendments do.

The amendments have been drafted and are available for every homeowner to review. Once enough homeowners sign the consent forms, the amendments will take effect and give the Association the tools it needs to solve the current financial crisis and help prevent the same problem from happening again in the future.

Because our governing documents limit annual dues increases to only 5%.

Unfortunately, many of the Association’s major expenses—especially insurance, inflation, and vendor costs—have increased much faster than 5% per year.

Even if the Board raises dues by the maximum allowed each year, the income still cannot keep up with the rising costs.

No.

Under our current documents, special assessments cannot be used to cover operating budget shortfalls. They are only allowed for capital improvements and similar purposes.

In simple terms, that would be like a family collecting extra money but not being allowed to use it to buy groceries or pay the electric bill. The money could fix the car, but it could not pay the bills that keep the household running.

So even if a special assessment were approved, it would not solve the real financial problem the Association is facing.

What good would a special assessment be if homeowners were charged a one-time lump sum to fix amenities like the clubhouse or trails, while the Association still didn’t have enough money to pay the electric bill or the landscapers who maintain the community?

For many years, expenses were low enough that the existing dues covered the costs.

However, over time:
• Dues were not regularly increased to keep up with inflation
• Insurance and vendor costs have risen dramatically in recent years
• The governing documents limit increases to 5%

As a result, the gap between income and expenses slowly closed until the Association reached a point where the budget simply cannot keep up.

This is similar to starting a job that comfortably pays the bills, but over time the cost of living rises much faster than your salary increases. Eventually the math stops working.

The Association has a legal obligation under its governing documents to maintain the community’s common areas and amenities. If the Association no longer has the financial ability to do that, courts will often appoint a receiver to take control of the Association.

A receiver is a court-appointed manager who takes over running the Association instead of the homeowners.

Once appointed, the receiver can ask the court for authority to charge and collect whatever assessments it believes are necessary to:
• Cover all operating expenses
• Fund future maintenance and repairs
• Pay court costs and legal fees
• Pay the receiver’s own hourly rate, which is often hundreds of dollars per hour

Because all of these costs are paid by the homeowners, receivership can become extremely expensive for the community. In many cases, the costs end up being far higher than what the community could have addressed on its own.

All of this can happen without any homeowner vote or input.

In other words, financial decisions about the community would be made by the court and the receiver instead of the homeowners who live here.

Because the current documents are outdated, they do not include many of the financial tools that modern associations use to responsibly manage their budgets.

The proposed amendments add those tools so the community can address the crisis in a controlled and transparent way.

Since many homeowners are already facing financial pressures in their own household budgets, it was important that the amendments solve the current crisis while having the least and softest impact possible on homeowners.

For that reason, the amendments were designed to work together as a set of coordinated changes, creating a comprehensive solution without placing extreme burdens on families who may already be pinching pennies to get by.

For example:

Amendments 1 and 5 create new revenue sources that do not increase costs for the average homeowner.

Amendment 2 allows homeowners and the Association to use more modern, longer-lasting materials for items such as roofs and fences, which can reduce long-term costs.

Amendments 3 and 4 add modern financial mechanisms that allow the Association to responsibly address budget shortfalls when they occur, with transparency and safeguards.

Amendment 6 adds protections to ensure the Association shops large contracts competitively and avoids conflicts of interest, helping ensure the community gets the best value for its money.

Together, these amendments create a balanced plan that solves the current financial problem, helps prevent it from happening again in the future, and protects homeowner control of the Association.

No. The goal of these amendments is actually the opposite — to solve the financial shortfall while keeping the impact on homeowners as small and manageable as possible.

The amendments were designed to give the Association the tools and flexibility it currently lacks to responsibly manage its finances and address the financial shortfall.

Some of the amendments even create revenue sources that do not cost the average homeowner anything, such as fees collected when homes are sold or rented.

The alternative could be extremely costly. If the Association were forced into court-appointed receivership, homeowners would be responsible for paying the legal costs, the receiver’s hourly fees, and whatever assessments the court determines are necessary to operate the community.

It’s simple and quick.

Homeowners just need to sign the consent form for the amendments. It takes less than 60 seconds, and you can choose to consent to one amendment, several amendments, or all of them.

However, consenting to all of the amendments helps the community solve the problem faster and more effectively.

Click the link below to sign your consent form now.

Every signature moves us one step closer to solving the financial crisis and keeping control of the Highlands in the hands of the homeowners rather than the courts.