Metropolitan districts have been a form of local government in Colorado for over 50 years. Over the years, the Colorado legislature has tweaked and modified the laws pertaining to metropolitan districts in an effort to provide a self-governance model that allows Colorado citizens to operate their own communities and neighborhoods in an efficient and openly democratic manner. However, for many homeowners, metropolitan districts remain a mystery.
As thousands of homeowners and the Colorado legislature continue to struggle dealing with the numerous seemingly inherent problems of homeowner associations (HOAs), there are several neighborhoods where HOAs have successfully consolidated into or collaborate with their neighborhood metropolitan district.
Not every covenant-controlled neighborhood can or should consolidate or collaborate with their neighborhood metropolitan district. For example, HOAs comprised solely of multi-family units may not be able to operate as a metropolitan district. Also, a metropolitan district operating model will not likely be desirable for private, gated communities. (Metropolitan districts can only manage public land and assets.) However, that being said, the financial and operational benefits metropolitan districts offer over HOAs can be significant. Homeowner tax breaks, grant monies for capital projects and regular state subsidies of operating budgets are just a few of the benefits that can accrue to a metro district. One of the many benefits metropolitan districts offer covenant-controlled neighborhoods is the opportunity to virtually eliminate the collection battle that exists between HOAs and homeowners.
The primary goal of Colorado homeowner associations (HOAs) is to protect and improve the quality of life and home values within covenant-controlled neighborhoods. However, the biggest obstacle to achieving that goal for most HOAs is collections.
The never-ending ups and downs of homeowners' personal finances creates a continual, significant financial burden on HOAs in the form of collection costs and bad debt write-offs. Medical problems, job loss, addictions, divorce, secondary education, military service and credit card debt are just a few of the many issues that continually impact homeowners' personal finances. (On top of that, how often do you see people stretch their finances dangerously thin to purchase the maximum amount of house possible?) HOAs are continually exposed to these unpredictable credit risks as they continue to collect assessments from homeowners to fund neighborhood operations.
Money spent on collections is money that could have been spent on park equipment, new trees, pool repairs or community social events. In other words, money spent on collections is money that could have been spent improving the quality of life within your neighborhood.
Covenant enforcement, maintenance of recreational facilities and landscaping, long-term financial planning and community building social events are just a few quality-of-life issues that board members and property managers can focus on when the significant distraction of collections is eliminated.
Many homeowners believe the majority of covenant violations in their HOA-operated neighborhoods are attributable to renter-occupied properties. This may be true in some cases. However, for the majority of HOA-operated neighborhoods, homeowners that owe significant past-due balances to the HOA generally comprise the majority of homes with the most severe covenant violations. When you think about it, this makes a lot of sense. Homeowners who are in collections with an HOA's attorney are usually more worried about wage garnishment and home foreclosure than they are about painting the faded trim on their house, replacing a dead tree or repairing a damaged garage door. When homeowner accounts are turned over to the attorneys for collection, such homes become much more likely to incur (and fail to address) subsequent covenant violation fines from the HOA.
In many cases, we have noted homeowner attitudes towards covenant compliance diminishes significantly when their accounts are turned over to attorneys for collection. As the unpleasant collection process between delinquent homeowners and HOA attorneys drags on, the homeowners in many cases become less inclined to perform maintenance of their home exteriors and yards.
