HOA / Metro District Consolidation Success Stories

In 2012, homeowners voted to support the HOA board's proposal to enter into cooperative arrangements with the Riverdale Dunes Metropolitan District No 1 (the Metro District). Aside from the significant financial savings that would be generated from the transaction (approx. $53,000/year), homeowners supported the arrangements for several other important reasons including (1) significant additional risk protection provided over the neighborhood’s swimming pool, park and other recreational facilities, (2) elimination of financial risks related to collecting HOA dues (over 22% of HOA dues were uncollectible) and (3) opportunities to apply for public grant funding for new projects.

Subsequent to 2012, the homeowner-run Metro District board has held property taxes constant on a per-homeowner basis—despite rising home values—while continuing to generate significant free cash flow. (Total property tax revenue increased over time due to the buildout of additional townhomes in the community.) The cash savings has been used to significantly upgrade park facilities and landscaping throughout the neighborhood. In 2017, the District built a $750,000 sports park on the west end of the neighborhood. The park has a full-size basketball court, pavilion, soccer goals and a lighted path around the perimeter of the park.

The chart below shows total property taxes and HOA dues paid by homeowners over a 6-year period. Notice that the estimated income tax savings generated by homeowners has increased significantly while the total out-of-pocket cost in HOA dues and property taxes has either held steady or decreased over time. Combined with annual additional free cash flows of over $53,000, the homeowners in Dunes Park have been able to fund significant neighborhood improvement projects without raising homeowner out-of-pocket costs.

History continues to demonstrate that smart financial management and cooperation between the HOA and Metro District boards has had a significant, positive impact on the quality of life of Dunes Park residents!

For several years, the Harvest Meadows HOA operated a lean budget based on dues revenue totaling approximately $61,000/year. In 2013, with the HOA’s capital reserve significantly under funded (at approximately $2,000) and rising park maintenance costs, the HOA Board started evaluating whether to raise HOA dues.

In February 2014, the HOA board hired Wolfersberger, LLC to manage the HOA and assist the neighborhood in developing collaborative agreements between the HOA and the High Point Metropolitan District (the "Metro District"). Until 2014, the Metro District board was solely controlled by the neighborhood's developer. Consequently, three homeowners (two of whom were HOA board members) joined the Metro District board and, with their new partnership with Wolfersberger, LLC, the HOA board and Metro District board began developing cooperative agreements to reduce the cost of providing neighborhood services and increase cash flows to fund park improvement projects - without increasing the revenue collected from homeowners. Less than 12 months later, the Harvest Meadows neighborhood was generating an additional $42,000 of free cash flow (without reducing services) and the average cost burden placed on homeowners dropped by an average of 7%.

The chart below shows total property taxes and HOA dues paid by homeowners over the past 3 years. Notice that the estimated income tax savings generated by homeowners increased significantly beginning in 2015 causing the average estimated out-of-pocket cost per homeowner to decrease 7% over time. Combined with annual additional free cash flows of over $42,000, the Harvest Meadows neighborhood was off to a good start investing in projects and programs to improve the quality of life of its residents.

With a more generous social budget, the HOA Board sponsored the first ever movie night for residents in the Harvest Meadows Park in September 2015. In subsequent years, the District has regularly sponsored movie nights and neighborhood barbecues in the park every summer for the Harvest Meadows residents.

In subsequent years, the District has funded the construction of a pavilion in the park, expanded the playground equipment and installed a sports court. As of 2022, the cost to homeowners to fund neighbrohood operations and capital projects has remined the same or less than what homeowners paid to both the HOA dna district in 2014.

Belle Creek is one of the early pioneers that started the HOA / Metro District cooperation model. In 2008, Belle Creek was one of the first neighborhoods in Colorado to fund its HOA operations through property taxes paid to its Metro District (i.e. Belle Creek Metropolitan District). Although the operations of both the HOA and the Metro District remained separate, the neighborhood was able to reduce the average annual out-of-pocket cost per homeowner by 14% without reducing the level or quality of services provided to homeowners.

As a result of this arrangement, the HOA and Metro District have provided approximately $263,000 in cost savings to homeowners and $194,600 in additional cash flow to the HOA and Metro District over the past 7 years. Consequently, the neighborhood continues sponsor an enviable list of social events throughout each year that is popular among the residents. Interestingly, per our annual homeowner surveys, Belle Creek ranks highest each year (by a wide margin) across all of our neighborhood clients with the most homeowners who know 10 or more neighbors on a first name basis.

The chart below shows total property taxes and HOA dues paid by homeowners over the past 6 years. Notice that in 2009 the estimated income tax savings generated by homeowners increased significantly while the total cost of HOA dues and property taxes decreased approximately 5%. Unlike other clients who typically hold property tax revenue steady year-over-year, Belle Creek has gradually raised property tax revenue to fund the maintenance and operation of its indoor (fully staffed) recreation center. Fortunately, the collaborative agreements between the HOA and the Metro District have caused the average out-of-pocket cost per homeowner to remain lower than what is was in 2008 and prior years.

The Buckley Ranch subdivision was built out between 2005 and 2016. The subdivision was severely affected by the 2008 recession, which considerably slowed the build out of this 270-home neighborhood. Two of the three builders that constructed homes over this 11-year period declared bankruptcy. Although the entire subdivision was a covenant-controlled neighborhood subject to one set of covenants, each builder created a separate HOA servicing the homes constructed by each builder. By 2016, the Buckley Ranch subdivision was serviced by three separate HOA entities and one metropolitan district. In 2016, homeowners assumed control of the metro district and the builder turned over control to the homeowners the last of the three HOAs. Covenant enforcement, maintenance of the parks and open spaces, maintenance of the entrance monument signs and maintenance of the nearly 9,000 feet of perimeter fencing was divided among these four entities.

In 2019, the metro district hired Wolfersberger, LLC to provide accounting and management services for the metro district and to submit a plan to consolidate the operations and services provided by the three HOAs into the metro district. 67% of all homeowners voted to consolidate services, amend the covenants and dissolve the three corporate HOA entities. By consolidating and simplifying the organizational structure, the cost burden placed on the homeowners (in the form of HOA dues and property taxes) was reduced by approximately $52,000/year starting in 2021.

Also, just as important, the metro district was financially restructured to allow for a flat annual tax burden on homeowners regardless of changes in the assessed values of homes each year. Since 2020, the amount of property taxes homeowners pay to the district each year has remained constant. In addition, the metro district managed to quickly build up a healthy capital reserve fund by contributing nearly $445,000 to the fund between 2019 and 2022.

In 2013, the North Range Village HOA and the Foxton Village HOA hired Wolfersberger, LLC to develop and execute a complex cooperative arrangement between two HOA neighborhoods and one metropolitan district. The 28-home neighborhood serviced by the Foxton Village HOA and the 257-home neighborhood serviced by the North Range Village HOA are both also serviced by the North Range Village Metropolitan District (the "Metro District"). The plan required that both neighborhoods continue to be operationally and financially autonomous from each other yet equally participate in all of the financial benefits created through collaborative agreements with the Metro District.

In addition, Wolfersberger, LLC developed and assisted both HOA Boards with executing a successful homeowner outreach and education campaign to garner the support of voters within the district to formally approve the plan. In November 2015, 78% of voters within the Metro District approved Ballot Issue 5A, which allowed both HOA Boards to move forward with the plan of entering into collaborative agreements with the Metro District.

Thanks to the unusual level of cooperation provided by two HOA boards and the Metro District board, the boards were able to generate significant savings for homeowners in both neighborhoods and increase free cash flows from operations by over 25% per year.

The chart below shows total property taxes and HOA dues paid by homeowners over the past 3 years. Notice that the average out-of-pocket cost per homeowner decreased an average of 7% in 2016 compared to 2015 while annual free cash flow increased by over $47,000.

How was such a feat accomplished across two separate HOAs? Education and cooperation.

EDUCATION - Wolfersberger, LLC developed and executed a effective homeowner education outreach program across both neighborhoods. The education program involved a combination of live homeowner information meetings, newsletters, advertising and door-to-door campaigning. Over 70% of all homeowners were contacted directly through the door-to-door campaign or the live information meetings. In addition, the board members on both HOAs and the Metro District were proactive in educating themselves and homeowners on the opportunities available to the neighborhood.

COOPERATION - The homeowners on both HOA boards and the Metro District board demonstrated a strong commitment to working together in developing cooperative arrangements that benefited the homeowners in both neighborhoods and moved all organizations closer to achieveing their long-term operational and financial goals.

Between 2002 and 2016, the Potomac Farms HOA provided all public services to the 406-home neighborhood located in Commerce City. The HOA maintained the neighborhood park, the landscaping across approximately 7.9 acres of public open spaces, and approximately 7,000 feet of public fence lines. The HOA also provided the covenant enforcement services for the covenant-controlled neighborhood and sponsored certain neighborhood-wide social events such as garage sales and neighborhood block parties.

In April 2016, the homeowners hired Wolfersberger, LLC to manage the HOA and assist homeowners with assuming control of the Potomac Farms Metropolitan District (the "Metro District"). Until May 2016, the Metro District board was solely controlled by the neighborhood's developer. Three homeowners were elected to the Metro District board in May 2016, and the Metro District board hired Wolfersberger, LLC in August 2016 to manage the Metro District. In the latter half of 2016, the HOA board and Metro District board began developing cooperative agreements to reduce the cost of providing neighborhood services and increase cash flows to fund various neighborhood public improvement projects - without increasing the revenue collected from homeowners.

Beginning in 2017, all neighborhood services were consolidated and provided through the Metro District. The HOA stopped assessing $340/year in dues and the Metro District increased property tax assessments on homeowners by an average of $204/year per house. Thus, the net savings to homeowners was approximately $136/year per household.

Other successes that occurred after homeowners took control of their Metro District and hired Wolfersberger, LLC include the following:

• The Metro District successfully defended itself in district and appeals court against plaintiffs claiming the Metro District owed $1 million under a developer advance agreement
• Refinanced approximately $5.1 million in high-interest bond debt to a lower interest rate and reduced the average amount of property taxes paid by homeowners to the Metro District by 23%
• Beginning in 2022, homeowners will pay a flat tax to the Metro District - regardless of the change in assessed values of homes, homeowners will pay the same amount in property taxes to the Metro District each year