plague adult communities
|By JIM WASSERMAN (AP)
Published October 16, 2004
ROSEVILLE - Jim Viele moved to Sun City Roseville in 1997 expecting to think more about golf than landscaping, drip irrigation systems and lawsuits.
But as head of his homeowners association, Viele is mired in a lawsuit with Del Webb, the nation's premier builder of privately run adult communities. The association claims the developer saddled the 5,400 residents with defective water systems that caused trees and turf to die and the golf course to become soggy.
So, Viele and other residents in this decade-old community east of Sacramento, fearing huge increases in their $120 monthly dues or a big drain on cash reserves, sued Del Webb to fix it or pay the bill.
As developers build more planned communities, they are also turning them -- and their multimillion-dollar annual budgets -- over to residents and volunteers to run once the developers sell out. Often, development experts said, residents from California to Arizona to Florida learn they've inherited financial time bombs.
Cracks develop in clubhouses, tennis courts and roads. On the championship golf course that once lured buyers, grass either dies or turns soggy because of defective irrigation systems. Often, residents find the problems are due to construction defects and that the developer didn't leave enough money in the reserve funds to pay to fix them. Either the associations have to raise dues or collect one-time special assessments, often raising living costs beyond buyers' original expectations.
With so many of these communities being built each year, often to house the pool of aging baby boomers entering retirement, situations such as the one in Roseville could become commonplace across the country, experts said. As they do, some of the nation's largest builders are finding themselves the targets of lawsuits from unhappy buyers.
One of those is Stuart Diamond in Delray Beach, Fla. He leads the homeowners association at Villa Borghese, which is suing the community's developer, Ansca Homes, after they inherited a $280,000 deficit and a defective irrigation system.
''I didn't expect to be involved in a quagmire,'' Diamond said of the association's $1.2 million lawsuit against the developer, which has also been sued by the Ponte Vecchio West Homeowners Association in nearby Boynton Beach for the same reason.
Causes of problems
Industry watchers said problems stem from competitive pressures and the lack of government oversight. Some builders, they say, set monthly or yearly assessments as low as possible to attract buyers while they sell the community. After the developers sell out, the low assessments that enticed buyers aren't high enough to run the place or repair swimming pools or streets when they crack.
Such ''lowballing'' of fees does occur, acknowledged Donna Reichle, a spokeswoman for the Washington-based National Association of Home Builders. But she said costs can rise after a builder sets the assessments and reserve funds.
''When the assessments are initially set, they reflect the price of labor and materials at that time,'' she said. However, the cost of building materials could ''increase at a rate higher than at the time of the reserve study.''
There are no statistics on how often these problems occur. But experts in association finances say they're one element in a larger phenomenon in which one-third of the nation's 260,000 associations don't have enough money for their long-range upkeep.
At Sun City Roseville, where golf cart lanes line wide boulevards and
retirees from Minnesota and South Dakota host golf tournaments and card games,
Viele said Del Webb left the association with enough money when it departed
the community in 2004. But the community’s lawsuit alleges a flip side of
the lowballing issue -- leaving behind defective infrastructure that could
overwhelm even adequate funds with repair bills.
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