Park Towers is one of Dallas’ original high-rises built in 1964 and located at Fairmount and the Katy Trail. It’s been no secret that I like their floor plans but hate the exterior of mismatched enclosed balcony “sheds” (that have finally been painted a uniform color). When I was looking to buy in 2012, I kept hoping the right unit would pop on the market. Today I can say, “thank God it didn’t.”
Word comes to CandysDirt.com from residents and Realtors that last Thursday, after barely finishing $3.7 million in special assessments (about $40,000 per unit) to take care of long, long, looooooong neglected infrastructure, that Park Towers now just raised their HOA dues a staggering 38 percent.
The HOA meeting was standing room only as the board approved the increase to cover a $247,000 shortfall from the $3.7 million spent on capital improvements. Many residents made the case for another special assessment to cover the shortfall and a more modest increase to the monthly dues. They were cheered by others in the meeting but the board wouldn’t budge. With resident monthly dues going up $500-ish a month, it’s not hard to understand their wrath.
This episode is yet another example of poor communication between residents and their HOA boards and management companies. Residents were reportedly unaware of the impending increase. They were just told the budget would be discussed at the meeting and encouraged residents to attend.
As one resident put it, “Shazam!” The increase just materialized without warning. And let’s face it: the last thing a resident expects to hear after a $3.7 million special assessment is that the “party” is just getting started.
In addition to funding the shortfall on work already completed, this new increase will reportedly be used to repair even more neglect resulting from years (decades?) of ignoring building infrastructure AND to finally start contributing to a capital savings account (something the building had stopped years ago).
This is a painful lesson for all owners in aging high-rises putting their trust in board members without the proper management skills. It should also be (yet another) wake-up call to disinterested owners. You can’t cheat death, taxes, or the plumber … and whatever the HOA board decides, you’re stuck with.
My Brush with Park Towers
Unit 12B recently went under contract. Coincidentally, in June 2012, I looked at this then foreclosed unit. It was listed at $187,000 and in need of a complete renovation (which it seems to have gotten). According to my 2012 notes, the HOAs for this 1,570 square foot unit were $995. Today they are listed as $1,533!
You see, I knew about the capital savings being near zero. As part of my interviewing the building to purchase, I was told by the then manager that the HOA had artificially lowered dues by halting the capital expenditure contribution component of the dues. The result was an HOA holiday that knocked about $200 per month off all units’ dues during a time when serious age-related issues were coming to light. It was this secession of payments to the capital fund that certainly added to the size of the $3.7 million special assessment approved soon after (only the moved or the deceased benefited from the lowered dues). With little in the bank, it was like living paycheck-to-paycheck while playing Russian roulette.
How High are Dues?
Let’s compare Park Towers dues with the Ritz, where a 1,466-square-foot unit pays HOA dues of $1,319. Granted, the Ritz unit is slightly smaller and doesn’t include utilities, but it does include the full hotel management package with spa access, Dean Fearing on call, valet and all the white gloving you’d expect. Oh, and it’s the effing-RITZ, a much more valuable brand. This equates to a rate of 90¢ per square foot for the Ritz unit versus 97¢ for Park Towers 12B. (I make the comparison specific to 12B because I know its history and, because unlike other high-rises, Park Towers’ dues increase the higher the unit is in the building.)
For another example, a larger 1,777-square-foot unit at One Arts Plaza lists their HOA dues at $1,102 (no utilities). Even Dallas’ first high-rise, 3525 Turtle Creek, known for exorbitant HOA dues, now has HOA rates about 10¢ less per square foot than Park Towers (and includes utilities).
How Will This Impact Buyers and Sellers?
This is the second time in recent months I’ve heard news that made me feel I’d dodged a bullet!
In light of this, were I a buyer, I’d stomp on the gas as I passed Park Towers for several reasons. The dues increase may price those on a fixed budget out of the building. This is especially true for those needing a mortgage (aka, younger buyers with longer runways and longer-term thinking).
As a buyer, I’d also run away because the very recent history is an erratic series of events … pausing capital contributions, initiating a huge special assessment and now a “surprise” 38 percent dues increase. The building appears to have historically not acted in its own best interests by saving residents pennies while the dollars mounted up. It’s capricious decision-making that would make me wonder, “What’s next?” Broken trust is often more serious than the money (although a $500/month dues increase and a $40K special assessment within three years is certainly major league folding money).
It may also call into question the value owners get for their money. I mean at least when you pay Ritz-level HOAs, you get room service and the Rattlesnake Bar. One PT resident tells CandysDirt.com that even services as trivial as package delivery to residents’ doors have been suspended.
Be an Involved Homeowner
This is why transparency and proactive communication are absolutely non-negotiable for HOA boards. In any HOA, a certain level of financial handcuffs should also be enacted where contributions can’t be halted nor needed maintenance postponed for any reason. If residents start seeing unending secret closed-door “executive sessions”, be worried. If you see the same faces on the board year after year, be worried. If the nominating committee comprises board members, be worried about elected officials picking their own replacements. (These issues happen in many buildings.)
When Boards sneak around, make decisions that ultimately hurt the building (and owners investments), there need to be enough people paying attention and even more willing to listen and act. All too often in these “Gay 90s” buildings, many are too busy waiting for God to care.
Looking for a high-rise or other multi-family dwelling? Do your homework, REALLY!
Remember: Do you have an HOA story to tell? A little high-rise history? Realtors, want to feature a listing in need of renovation or one that’s complete with flying colors? How about hosting a Candy’s Dirt Staff Meeting? Shoot Jon an email. Marriage proposals accepted (they’re legal)! firstname.lastname@example.org