Defunct HOA sparks debate over utility responsibilities

POST FALLS — Post Falls City Council approved writing off utility fees for several properties Tuesday, while warning that similar cases involving failing HOAs are likely to become a growing challenge for the city.

Finance and Support Services Director Jason Faulkner, who presented to council, said the circumstances around these properties were unique. 

“It’s probably been over 10 years since I’ve been in front of council asking for a utility write-off,” Faulkner said. “We are usually pretty good about collecting, liening and doing other things to collect, and these are just three that are very odd.”     

Two of the three properties involved in the discussion are owned by homeowner associations that are now defunct and unable to pay utility costs for the care of neighborhood communal areas. The same HOA owns both properties, and both have an outstanding balance.

“I’ve waited a while for them to reestablish and it’s not happened,” said Faulkner. 

He said he would continue to attempt to have the outstanding fees paid, although it was unlikely they would be. 

The other property was privately owned by a deceased resident with no estate. However, the fees were able to be collected after the property was sold, leaving no outstanding balance.  

The motion passed unanimously, although Faulkner and City Council raised concerns over the rising trend of HOAs no longer wishing to run their neighborhood utilities. 

“There are a lot of HOAs that want the city to take over irrigations,” he said. “I don’t know how many more of these we will have, but this is one that’s hung out for a while.”

Councilwoman Samantha Steigleder echoed Faulkner’s worries, saying that she felt that council should write off the two HOA property fees and revisit the topic in the future. 

“It seems like it's hanging in the wings, like we are going to be talking about this more,” she said.

Field Herrington, the city legal services director, said the city legal team is trying to resolve the issue.  

“We are aware of it, we are looking for solutions,” he said. “It is a larger undertaking and larger discussion that we’ll have to have at a future date.” 

Mayor Randy Westlund said he had spoken to the Association of Idaho Cities about the issue. He said he proposed a “legislative tool” that would allow cities to assume an HOA's obligations in exchange for a tax on the parcels of land within them. 

“It would effectively take what the HOA is doing and then put it as a tax and then be able to do it from a city’s perspective,” he said. 

He acknowledged that the solution may be more expensive than having an HOA, but it would give cities in Idaho an avenue to deal with HOAs that fail or are unable to cover costs. 

Westlund also agreed that Tuesday night’s meeting would not be the last time the council discussed the issue. 

“I am hopeful that we’ll get some sort of solution because I think we will have ongoing issues with failing HOAs. It’s not going away,” he said.