The Double Whammy
on being left out in the cold

          When a group of Sun City homeowners are singled out for extraordinary attention, that’s really special, but not in the way you are used to thinking. This group of homeowners did nothing wrong, well almost nothing. Looking at it one way, their apparent mistake or wrong was to purchase what had been a Vacation Villa, one of Del Webb’s more inviting marketing tools. This group of 32 duplex homeowners are now living in what is commonly referred to as the Clubhouse Neighborhood, a neighborhood that was created in 2004 when the homes were repurchased by multiple owners after Pulte had ceased their lease back arrangement with the original 1998 purchaser of those units.

          Little notice was paid to this issue until it became readily apparent in 2007 that the cost of owning a former Vacation Villa was going to be more expensive than the cost of owning a comparable Villa in a different Neighborhood. How much more expensive?  For now, at least, that would be $500 a year more expensive. How can that be? What, you wonder, is so special about the Clubhouse Neighborhood Villas? What, indeed, to require such homeowners who live there to pay so much more than all other Villa owners, paying $2,000/yr. in 2008 in special Villa assessments, as opposed to $1,500/yr. paid by all other 130 Villa Neighborhood owners?

          The Board’s recent budget decision for 2008 to drop Villa Neighborhood assessments from $2,000 back to what they had been, $1,500, was no doubt greeted with cheer and welcome relief for all, except, of course, for those living in the Clubhouse Neighborhood. Unlike their fellow 130 Villa owners, their annual assessments did not drop by $500. Did they do something wrong to be singled out for this kind of special attention?

          In reality, though, they did nothing wrong, unless you happen to believe that purchasing an underfunded duplex unit was the wrong move for those 2004 purchasers to make. But how would anyone know those particular duplex units were underfunded, let alone that they would be singled out as being underfunded for 2008?

As it later turned out, ALL Villa units were severely underfunded, as we learned when Favil West addressed this issue this past spring with the Developer. Those negotiations resulted in a staggering $281,000 in cash and hardscape for the Villa Neighborhoods and Pinnacle, suggesting an admitted underfunding of more than 100% compared to what the Developer had transferred to the Association. Whether that previously agreed upon amount is the “final” amount owing is yet to be determined.

While those 2007 negotiations should have taken care of the Clubhouse Neighborhood in the same manner that the other Neighborhoods were resolved, that did not happen. That something was amiss was clearly evident since the Clubhouse Neighborhood got the short end of the reserve stick. Either the Developer was less attentive to their fiduciary duty to equitably meet reserve needs or our negotiating team was less successful than one had hoped. Either way, the Developer-West Agreement failed to meet the reserve needs of those 32 homeowners. For unknown reasons, our Clubhouse Villa owners were left out in the cold to suffer from the omissions of others.

And, who should pay for this apparent oversight? According to our Finance Committee and the Board, the property owners should pay and make up the underfunding failure of other decision makers. That’s not an unusual position for our current Board members to take since that happens to be the same position they took on the Association’s overall shortfall in reserves funding.

In listening to the Board’s 2008 budget vote on Villa assessments, and in particular to their vote not to lower assessments for the owners of Clubhouse Villas, one could not have been more struck by the Board’s virtual unanimity. I say virtual unanimity since there was a lone Board dissenter, who apparently recognized there was a problem in what the Board was about to do. It was not that our lone Board dissenter knew something the others did not. It was merely that the other Board members chose to "address" the problem by forcing the Clubhouse Villa homeowners to absorb the additional costs along with the mistakes or omissions others.

 
Ron Johnson, 3 December 2007