Agenda - Planning Commission - 04/06/2017

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facilities are or how they operate —especially decades later. The owners may not realize that a lake is part of a regional flood and stormwater control facility. To them, a lake is a lake, not a reservoir, and when the lake silts up from years of neglect and loses capacity to hold back floodwaters, downstream communi- ties may be damaged. A levee can be riddled by critters that weaken it, but if the problem is not recognized, or if the funds to strengthen or rebuild the levee are not available, a critical piece of infrastructure may fail. Owners are not engineers, and they can't draw on the services of city engineering staff or tax dollars to help them fix a facility for which the municipality has no responsibility. In local government, decision makers consider the long-term interests of their city or county when they set revenue goals. They plan for a far horizon. With community asso- ciations, the interest of the individual owner rarely extends beyond five to seven years —a near horizon. Owners determine how much to assess themselves for such things as main- tenance reserves based on their individual interests, which are usually short-term. There is no third -party oversight, so long-term main- tenance obligations rarely receive the funding to sustain the subdivision. If all we were concerned about were paint, roofs, asphalt, or landscaping, that could be handled. But developments man- aged by associations have grown in size. They are in floodptains, abandoned quarries, and landslide -prone hillsides, and endowed with levees, damns, debris fences, lakes intended as holding ponds, weirs, and other disaster mitigation facilities. And there has been too little attention given to whether the proposed association will have the financial capability and expertise to manage these critical facili- ties for decades. Usually, it won't. The planner is presented with a profes- sional package created by a developer which anticipates most questions the planner might ask. Too often, the problem is that no one present then is asking all of the right ques- tions. A developer is the ultimate short -timer. Its horizon is maybe three to four years, depending on the size of the project and its ability to sell out. No one representing the ultimate user —the community association —is present when critical decisions are made. COMMUNITY ASSOCIATIONS AND PERFORMANCE GUARANTEES Traditionally, cities and counties have relied on performance guarantees to minimize the risk associated with delegating infrastructure development and maintenance to subdivision developers. But conventional approaches to performance guaranteeing may be of limited utility for ensuring long-term infrastructure maintenance by community associations. Performance guarantees are "legal and financial tools used to increase permittees' compliance with regulations" (Feiden and Burby 2002). They are often used by cities and counties in the subdivision development process to ensure developer compliance detention pond serving a residential subdivision in Greendale, Wisconsin. with agreed -upon infrastructure develop- ment responsibilities and in order to avoid complex and expensive litigation. There are two general categories of performance guar- antees: financial and non -financial. Financial performance guarantees require that funds necessary to complete agreed to development (including infrastructure) are obligated before construction or permitting. This is a useful tool to avoid half -finished "zombie" subdivi- sions in the event that the developer defaults. Non -financial performance guarantees do not rely on the availability of funds, but seek to ensure continuity of operations and adequate attention to the municipal permitting process. Requiring the formation of a community asso- ciation or the use of special assessments are common non -financial performance guaran- tees. However, there are significant risks and downsides of this approach. According to Feiden and Burby, HOAcov- enants can grant the government the right to perform required infrastructure maintenance and later charge the association for the work performed (z0o2). The local municipality con- trols an escrow account on behalf of the asso- ciation, or has the authority to place liens on properties to ensure eventual reimbursement of maintenance costs. However, this is no guarantee that criti- cal infrastructure such as levees or stormwater storage will be maintained effectively. In the event that a common -interest development fails, there is neither a means to locally man- age infrastructure (as there will be no HOA), nor the possibility of the municipality to recoup costs for necessary maintenance. This impact can be mitigated if there is a maintenance guarantee (a financial performance guarantee that ensures adequate maintenance of infra- structure over a required time period) in place with the developer. But if there is still no HOA in place upon conclusion of the maintenance guarantee, the municipality will still be on the hook for maintenance costs. In the event that a community associa- tion is formed, there are still significant bar- riers to guaranteeing adequate infrastructure maintenance. New improvements or mainte- nance work may be opposed by residents who were not properly informed about the respon- sibilities of the association. Further, residen- tial turnover can have a detrimental impact on the overall stability of an association, and newer residents may be less wilting to contrib- ute toward shared maintenance. ZONINGPRACTICE 3.17 AMERICAN PLANNING ASSOCIATION I page 4