Property owners recently received the property tax assessment notices from the Washington County Assessors Office and those within Garden South should have noticed a nearly 50% reduction in the market and assessed values. The County Assessor has discounted the values to reflect the depressed market values caused by the uncertainties and extra costs that property owners are expected to incur as a result of the landslide. I noticed that the owners of Building M may want to formally appeal the value of their units next year to further reduce the amount of taxes charged as the Assessor has not recognized the condemnation action in the current values. You can learn more about the appeal process by pressing HERE.
The good news is that we will all pay less property taxes this year. The bad news is that is property values in Gardens South are WAY down, even more than the market in general making it very difficult for owners to sell, especially if they have a mortgage. There are about 14 owners out of the 111 that are seriously delinquent in the payment of their HOA fees and this is affecting the ability for the HOA to meet its monthly obligations. Unlike the federal gov't which can issue debt or print more money, a HOA is a small government that must spend no more than it receives. The total of non-payers and late payers has created about a $5,000 per month short fall in operating revenues. The Board voted to temporarily use for operations some of the funds that would otherwise be deposited into our savings account for future repairs and maintenance until such time as the monies owed to the association can be collected which now total nearly $40,000 in receivables. The HOA Board will have no other choice but to raise fees or cut services in order to protect the interests of all property owners.
The HOA is granted legal authority to file and foreclose a lien against any property that is delinquent. Even those in the two condemned buildings M and L are required to pay HOA fees because it is viewed as a monthly tax or assessment that is used to pay the obligations for the common ownership of property. Those who dismiss their mortgage obligation by foreclosure are still are liable for the HOA fees and a personal judgment is often sought even after a foreclosure is filed.
There is another problem that may arise as a result of the recent property devaluations by the County Assessor : In order to form a Special Assessment District and sell bonds to finance the costs to permanently stop the landslide, investor lenders look for at least a five to one ratio of debt to assessed value. The total assessed values (which is less than the market value) for Gardens South Condos and the commercial properties (Dairy Queen, Knights Inn Hotel, Claim Jumper, Pier 49 Pizza, etc.) was approximately $10,000,000 last year. This year the total valuation has dropped to about $5,500,000 which may make it more challenging to obtain financing. Of course, once the landslide is stabilized and property damage is repaired, values should rebound (and taxes increase) as a result of renewed market confidence.