As planned communities across the country enter their third or fourth decade in service, there’s a growing need among homeowners associations to finance major building and facilities improvements to maintain the safety, desirability and resale value of the homes in their communities.
A common problem
The traditional practice of financing major capital projects with large special assessments is often very unpopular with homeowners. Even essential projects that are favored by many community residents may be strongly opposed by some homeowners if a large special assessment is required. Managers of homeowners associations and their boards of directors often face a difficult dilemma – impose a special assessment and upset homeowners or neglect a major capital need.
Alternatively, financing major capital projects with bank loans can be prohibitively expensive for homeowners associations, due to the high interest rates and the relatively short repayment terms required by most banks.
Now however, just like large private corporations and most state and local governments, homeowners associations are realizing they too can use long-term bonds to finance large capital improvement projects.