COVID-19 Impact on the SOA?

As governmental and health agency “talk” continues about extending the COVID-19 “Stay at Home” policy, what effect could this have on the Somersett Owners Association’s (SOA) income? This as the result of job loss by residents, or senior citizens who rely on 401K savings? Has the Association made any contingency plans in this event? What relief can the Board extend to residents who may fall into this category?

To make up any SOA income shortfalls  –  What 2020 projects can be cancelled? What SOA operations could be curtailed? Are reserves available for operating expense use in this event? Good questions that hopefully will not need addressing in the final analysis, but should be planned for.

However, to address these and other COVID-19 HOA issues, a California Community Association Law Firm, Adams/Sterling, has published several newsletters, which, for the interested, can be accessed via the following links:

More COVID-19 Questions –  March 18
Coronavirus Virtual Meetings.docx  –  March 19
HOA Operations are Essential  –  March 21

What impact will the COVID-19 pandemic have on job losses nationwide? A blog post on the Economic Policy Institute (EPI) website provides estimates on a state by state basis in the following publication:

EPI Posting on Coronavirus Job Losses

Note per their website: “ EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans”.

SU does not make any claims as to the accuracy of EPI’s postings.

5 thoughts on “COVID-19 Impact on the SOA?

  1. Even though I no longer am a member of the Somersett master association nor the Sierra Canyon sub-association, I have received emails from former “colleagues” about facility closings, e.g. TCTC and The Lodge.

    Of course, board members can vote to close facilities (and they wisely have) as it is their responsibility to operate them.

    HOWEVER, a board does not own any facility. Rather the individual association members do and as such they are entitled to a refund for each day they could not have access to what they own.

    The refund would be for the portion of their monthly dues that goes towards the operating expenses for the facility calculated on a daily basis times the number of days it could not be used. Money normally going into facility reserves should not be refunded.

    This calculation would be made at the end of the budget year, if not sooner after the facility has reopened.

    This is not as far fetched as it might seem at first glance. Harvard and The Ohio State University, among other higher education schools, have told students and their families that they will get back some portion of room and board fees for the weeks not spent on campus.

    When an association finds itself in catastrophic circumstances (Covid-19 caused or otherwise), the monthly assessment still needs to be paid by its members. However, instead of being paid to the association it could be paid into an escrow account (that the lawyer for the association and the board would set up) until things are back to normal. That would enable/ensure collection of assessment money on the regular monthly basis and save association members from having to come up with a lump sum payment “down the road.”

    Some things to think about.

    PS Reserve money is not available for operating expenses. Reserve money is for the maintenance, repair, replacement, or restoration of each major component of the common-interest community that the association is obligated to maintain, repair, replace, or restore. The Reserve Account is not a cookie jar that the board can access any time it wants for anything it wants. NRS 116.31152(3)(d)

    1. It means that Joe is a former member of the Somersett community but still has ties to it.

      Jim Haar

  2. Thank you, Joe.. for some very important thoughts, and some potential actions, by the Board, that could be very helpful to homeowners

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