Letter: Troublesome tax in Homestead
Homestead residents are being asked to implement a 1-percent real estate transfer assessment payable to the Homestead homeowners association. There are several reasons why they should refuse this request.
First, the Homestead board has not clearly shown the need for the $7.2 million (minimum) it projects this will raise over the next 18 years. While an in-depth engineering study of Homestead’s physical structure does show more than $6.5 million in maintenance and capital improvements will be required over the next 18 years, these needs could be met with minimal increases in dues.
Currently Homestead has more than $1,140,000 in cash reserves and is adding to it $25,000 per month. This level of funding combined with projected repairs will create a deficit of about $208,000 by about 2012. I do commend the board for planning ahead to deal with this situation.
However, a $10 per month increase in dues starting in 2009 would place another $97,200 per year in the reserve budget leaving a surplus in 2013 of about $278,000. Between 2013 and 2026, all estimated capital expenditures would be covered and there would be about $1.5 million left in the reserve fund.
If the transfer assessment were approved, the board would have over an additional $5 million at its disposal (based on its own revenue estimates). Nonprofits cannot hoard millions of dollars by law, so the board would either have to spend the money or lower overall assessments. One board member has publicly called this a “slush fund” (his actual words).
Particularly troublesome is the manner this has been presented to the homeowners. There is no option to vote “no” and put the matter to rest. It has been presented as a consent-only option.
While this change should require 66 percent of the owners’ approval, the board can leave this matter open for years if it chooses to until they chase down enough consents. This can and will cloud negotiations for the sale of property in Homestead until it is resolved one way other. This is a tactic lawyers often recommend in such situations to help a board assure passage of what may not be an overwhelmingly popular proposal. Reportedly the board also has considered legal proceedings to institute the assessment should the homeowners refuse to consent.
Also of note and very troubling is that I, along with two other owners, have requested permission to post a flier on the community bulletin board in the clubhouse noting why Homestead owners might want to oppose this matter. President Bobby Ladd has stated to me in writing that the board will have to consult its attorney and discuss this matter at its next meeting to determine if I can be allowed to do so. It seems free speech has taken a back seat to the creation of a slush fund in Homestead.
Not only must Homestead residents withhold their consent to this assessment (which, by the way, would not be tax deductible as municipal transfer taxes are) but they should demand the board reverse its open-ended approach to this and set a deadline that if enough consents are not received the matter will be withdrawn for discussion.
There is a meeting tonight at 7 p.m. at the Homestead Clubhouse. Please attend if you are a Homestead owner.
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