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By Elizabeth Dietzmann
Industry experts agree that, on the whole, subdivision homeowners’ associations or property owner’s associations lack the knowledge, continuity, structure, and desire to successfully operate either individual or clustered advanced onsite wastewater systems. Wastewater systems will frequently be installed as cost effectively as possible and only maintained by the developer until all lots are sold. At that time, operation of the wastewater system becomes the responsibility of the homeowners’ association or individual lot owners. The average homeowners’ association has no idea about the technology it’s inheriting and probably doesn’t have any knowledge about the permit requirements. Many homeowners’ associations only meet annually and there are almost always newly elected members. This leads to a lack of continuity in leadership, and even if board members are willing to take the unpopular positions of dunning their neighbors for unpaid sewer bills or demanding STEP tank inspections, they will probably get voted off the board at the next annual meeting. Even if the homeowners’ association board aggressively insists that members pay their sewer bills, they don’t usually have any affordable legal recourse if someone refuses to pay. Most of the deed restrictions I have seen are fairly vague about enforcement issues, and few homeowners’ associations can afford to file liens or begin collection action in local court. Another problem is a lack of desire. Everyone cares about the streets, common areas, and subdivision signs, but no one really cares if the proper sampling is being done if wastewater systems are being inspected on a regular schedule. As long as the toilets flush (I am told by engineers that much of the technology used allows the toilets to continue to flush whether the treatment portion of the wastewater system is working or not), wastewater is invisible. Until a regulatory agency comes along and forces the issue, the majority of small subdivision wastewater systems exist in a state of limbo. By the time someone notices, it is often after years of benign neglect.
But whatever we in the business might think of them as a wastewater management tool, homeowners’ associations are still the easiest, cheapest way for many developers to hand off management of the subdivision wastewater system. Homeowners’ associations are not going away. Developers will continue to delegate the management of the wastewater system to the homeowners’ association. And in their unadulterated form they are still an appalling management choice for wastewater systems.
There is hope for the future: There are some existing models in Kansas and Massachusetts which I am convinced can be adapted for the management of either individual onsite systems or clustered systems in subdivisions, as long as local regulators are willing to be proactive.
Clearly, the effort and energy that local health departments are forced to spend on enforcement once subdivision systems show up on the regulatory radar as hot spots could be better spent on the front end of the project by getting the developer to agree to some voluntary management guidelines.
With the assistance of the county government, a rural water district in Kansas, which was trying to deal with some wellhead protection issues involving a new subdivision with individual on-site systems, negotiated a solution with the developer involving deed restrictions and voluntary compliance with local health department regulations. In this particular situation, the county commission had the power to prohibit construction of the subdivision, which it stated it would exercise unless the developer addressed the wellhead protection concerns of the water district. So the developer was extremely motivated to work something out with the water district on the wellhead protection issues and the local health department was also ready, willing, and able to assist with the solution. Those factors were critical under this scenario. You have to have a health department who would rather spend time on prevention than enforcement. More about that later.
The final agreement, which was included in both the deed restrictions of each lot and the plat of the subdivision, was primarily designed to ensure that the water district’s wells would be protected. However, inadvertently, the final agreement included some very forward thinking terms in the subdivision plat and deed restrictions that could easily be adapted to allow a homeowners’ association to manage the individual onsite systems located within its boundaries. The developer was required to install a specific type of advanced treatment system on all lots, subject to approval by the water district. All systems had to be installed by qualified technicians, who were subject to county health department approval. Each system had to be covered by a three-year, pre-paid maintenance agreement, continuously renewed, which had to be filed with both the water district and the county health department. If a homeowner failed to renew the agreement, then the homeowners’ association was required to do so on that homeowner’s behalf and assess the cost of the maintenance agreement plus an administrative penalty fee against the homeowner. If the fee was not paid within 30 days, the homeowners’ association was required to file a lien against the homeowner’s property. The maintenance providers were required to file annual certificates with the water district and the county health department certifying that the system had been tested and was functioning properly. Any repairs to the system noted in the report had to be made by the homeowner within 15 days of the date of the report or the homeowners’ association was required to make the repairs and collect fees in the same manner as the costs of the maintenance agreements.
This is impressive. Without even knowing about the EPA’s five models of management, the regulators, the water district and the developer devised a voluntary plan that ended up making the homeowners’ association look much like a “true” utility. It would be easy to tweak a few items and create a voluntary agreement for any new subdivision homeowners’ association so that it adopts the accepted technical, managerial, and financial principles necessary to manage individual onsite systems effectively. To start with, the term “qualified contractor” was not defined in the original document and the health department would have to be involved in that process. The deed restrictions should have additional enforcement powers granted to the health department if a system requires repairs and a homeowner refuses to repair it. In order to streamline enforcement actions, there should be water shut-off agreements included in the deed restrictions so that the water can be shut off by the homeowners’ association if the homeowner refuses to pay for a maintenance agreement. The responsibility for inspections and deeded easement access should be assigned both to the maintenance provider and the health department. The deed restrictions should allow some technical oversight by the health department of the type of technology installed by each homeowner.
You simply can’t expect every builder or a homeowner to be knowledgeable about the myriad types of onsite wastewater systems or to know what will work best in the area. The health department should be willing to work with the homeowners’ association to track all the maintenance records and repairs and maintain a map of the subdivision with all the wastewater systems located and identified. It would be a simple matter to utilize one of the many Web-based databases for tracking operations and maintenance and maintenance agreements. Health departments have to maintain enforcement files on failing systems, so why not do this? The health department should attend the homeowners’ association meetings and work with the homeowners’ association to produce a list of noncompliant systems or provide repair updates. The homeowners’ association should meet at least quarterly as well. The beauty of this overall approach is that it does not require huge legislative changes at the state level. Individual onsite systems are probably going to fall under the local health departments anyway, so who better to work with developers on the front end of a project and establish sound management guidelines?
To me, this sounded revolutionary; I have never seen deed restrictions with language purporting to govern the installation and ongoing management of individual subdivision onsite systems. The whole concept revolves around the participation of the county government and the local health department. I understand that local health departments are underpaid, understaffed and overwhelmed. But if they will take this opportunity to prevent subdivision wastewater systems from failing in the first place, that will be far less costly in the long run than enforcement. The goal would be to get the developer to coordinate with the local health department and to voluntarily agree to require design, installation, and operations standards for the systems that can be followed by the homeowners’ association long after the developer has moved on to his next project. This is not that far-fetched an idea. More and more county governments are concerned about wastewater, and the deed restrictions could require that the homeowners themselves pay an annual fee for oversight of the health department. They will have to pay for road maintenance and upkeep of the common areas, so there is no reason why they shouldn’t pay for the local health department to help oversee their wastewater systems. This can also be a marketing advantage to the developer. He can advertise his new subdivision as having county health department oversight so that all wastewater systems will be kept repaired.
Now let’s take this one step further. What if we used this idea to manage clustered systems? What if we gave a homeowners’ association the tools to manage its clustered wastewater system properly? Assuming that some other group like a water district or local sewer authority was not available, there is absolutely no reason that the developer couldn’t unilaterally and voluntarily impose the necessary management structure on the homeowners’ association by setting it out in the plat and deed restrictions. In fact, this is exactly what Massachusetts mandates in 310 CMR 15.000, also known as Title 5. Under Title 5, users of shared systems are required to sign a Grant of Title 5 Covenant and Easement. (A simple Web search for Title 5 will bring up the downloadable templates.) Each developer and each subsequent homeowner agrees to incur specific obligations regarding the construction, inspection, maintenance, upgrade, and expansion of the shared system and further agrees to a perpetual deeded easement in favor of the local health department and the state DEP. The developer/homeowner agrees to have the shared system inspected annually by an approved inspector and pumped no less than every three years. The inspection reports must be filed with the local health department and DEP within 30 days of inspection. The developer/homeowner agrees some form of financial security will be maintained on the shared system: insurance naming the regulatory authorities as insurers, or escrow accounts, or surety bonds. This financial security guarantees that the system will be repaired in the event that it does not meet Title 5 standards. The developer/homeowner agrees that the shared system will be constructed so that he may be denied access to the system in the event he fails to pay his proportionate share of the construction, inspection, maintenance, upgrade, and expansion of the shared system. Finally, enhanced lien authority is granted to the regulators in the event that the users fail to pay their share of the assessed costs.
Title 5 does a nice job of setting out the basic guidelines for management of a clustered system, and this approach could certainly be voluntarily adopted by developers, local health departments and state-level regulators. Most states have some sort of provision that allows state-level environmental agencies to delegate some powers to county health departments under special circumstances so that a sweeping legislative agenda would not have to be implemented. The health department should work with the developer to establish rate formulas for the homeowners’ association so that operations and maintenance and capital replacement accounts are funded by the collection of realistic rates.
Those rates should include an amount of money that could be used to fund the health department oversight and the implementation of a maintenance and operations database. The deed restrictions should include enforcement powers so that the homeowners’ association can collect user fees more easily by shutting off water for nonpayment of wastewater charges.
The health department should assist the homeowners’ association with rate revisions as time goes by. In fact, the health department should have a permanent seat on the homeowners’ association board so that there is some continuity. Actually, a health department could develop standard language to offer to developers for use in their deed restrictions and the health department could have group meetings for the homeowners’ associations that were operating their systems according to these standards. I can’t imagine that the regulators wouldn’t be happy to have a homeowners’ association with enhanced management powers that was coordinating management with the local health department.
This wouldn’t cost the developer anything and it might make it easier for him to get his permit approved. The same arguments set forth above hold for the enhanced marketability of lots in subdivisions with this superior form of wastewater system management. The concept can be taken one step further and even used to assist homeowners’ associations with systems that are not operating properly. At that point, the homeowners are under the gun from an enforcement action and could vote to amend the subdivision restrictions to adopt this type of management system.
So clearly we can enhance homeowners’ associations to successfully manage any type of subdivision wastewater systems. Imagine a homeowners’ association with detailed management guidelines to follow, a rate structure to enforce and support and oversight by the local health department.
I know that this solution doesn’t fit neatly into one of the EPA’s five models. But it is a practical solution, and it would be very easy to implement if county governments and local health departments will step up to the plate instead of wringing their collective hands and claiming they have no way to deal with subdivisions. It is so tempting to look at old problems in old ways.
This is a fresh and simple solution that should definitely be considered by local governments and responsible developers. OW
ELIZABETH DIETZMANN is an attorney in Rolla, MO. She can be contacted at edietzmann@earthlink.net.
OW
- March/April 2006
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