Cobblestone Curb Appeal Is a Big Gain With Little Pain

In Mike Habich’s world, assessment is a four-letter word. First as chairman of the finance committee and now as treasurer of the seven-member board at Birchwood at Spring Lake, a 733-unit homeowners' association (HOA) in Middle Island, Long Island, Habich has spent the past dozen years working to avoid assessments and minimize jumps in monthly common charges. That philosophy was put to the test recently when the board set out to tackle a major capital project. 

Birchwood at Spring Lake is a self-contained world that requires extensive upkeep. Its 733 homes are a mix of single-family houses, condominiums, and townhouses. There are six  swimming pools, a 9-hole golf course, two gyms, four tennis courts, two clubhouses, two indoor racquetball courts, and a network of private roads, even a sewage-treatment plant. To gain access to the 150-acre property, you pass under an arch, along a quarter-mile blacktop road to a security checkpoint. That quarter-mile entry road plus another quarter-mile past the security gate was an eyesore that became the major capital project. 

“It was embarrassing,” says Habich of the entryway, which was paved when the complex opened in 1990. “There were patches in the pavement every 100 feet. We decided to beautify the entrance and give it some curb appeal.” 

“It wasn’t just the appearance,” adds board president Frances Gentleman. “It desperately needed attention.” 

So Habich, a retired insurance broker, got to work with Gentleman and their fellow board members and management to arrive at a rough cost of $800,000. How to pay for it? The board last levied an assessment in 2006, and common charges remain flat or rise by just 1 to 2 percent per year. Built into the $4.6 million annual budget is a fund for capital projects that usually runs about $500,000. The road project would swamp the capital projects budget. So, barring an assessment or a hike in common charges, the board needed money from a different source. 

Management began investigating a line of credit and recommended three potential lenders: two local banks and the Alliance Association Bank in Las Vegas, which specializes in loans to co-ops, condos, and HOAs. The board settled on a $1 million, seven-year line of credit from Alliance. 

The paving job took about a year – including installation of cobblestone curbs alongside the roadway – and the board drew down a little more than $800,000 from the line of credit. When the work was complete, the board closed down the line of credit. It began paying off the principal and interest on January 1 of this year and will pay it off over the course of seven years – paid for with a line item in the annual budget, but no assessment. 

“I don’t know any way we could have done this other than a line of credit,” says Habich. “I’m not a big believer in assessments – because you never know what’s going to come tomorrow. I hear about communities that have an assessment every year. I don’t think that’s the way to go.” 

There’s no rest for the weary. The board is now getting ready to tackle a major upgrade to the sewage treatment plant, a job that will cost roughly half a million dollars. “In an HOA,” Habich says with a laugh, “you never get a breather.” 

PRINCIPAL PLAYERS – LENDER: Alliance Association Bank. PROPERTY MANAGER: Precision Management.