"NEW" Rentals Amendment Proposal (PASSES!)

Post date: Feb 17, 2016 10:15:59 PM

UPDATE (May 12, 2016): Rental Amendment PASSES, by a super majority (76%) vote of the homeowners. The Rental Amendment Certification was submitted to our attorney for review and in having it recorded with Pima County. The Rental Amendment became effective on the date of recording with Pima County, which was on May 4, 2016. Therefore, any units sold after May 4, 2016, are subject to the requirements of the Amendment (below). Please remember that ALL current homeowners are grandfathered in and are not subject to the rental restrictions. Only those purchasing units after May 4, 2016 will be prohibited from renting. This Amendment shall be disclosed to all potential home buyers. As soon as a stamped recorded copy of the Amendment is received from Pima County, it will be distributed to all current owners.

UPDATE (April 8, 2016): As you are aware, ballots were mailed at the beginning of March 2016 to every homeowner to vote on this very important issue. Every owner was asked to give careful consideration to voting FOR this amendment as it's intention is to increase property values for everyone. With the developer able to build 28 more townhouses, which could all become rentals, it could turn Kinney Village into more of an apartment complex. This would be detrimental to all property values.

The original ballot deadline was April 11, 2016; however, the on April 7, 2016, the Board approved an extension of the polls until May 11, 2016. This is to ensure that all homeowners are provided an opportunity to gather information and weigh in by voting.

CERTIFICATE OF AMENDMENT TO DECLARATION

RENTALS

FOR KINNEY VILLAGE HOMEOWNERS' ASSOCIATION, INC.

This Certificate of Amendment to Declaration, Rentals for Kinney Village Homeowners' Association, Inc. ("Rentals Amendment") is made and executed as of this day of __ 2016 by Kinney Village Homeowners' Association, Inc.

BACKGROUND

A. The Declaration of Covenants, Conditions, and Restrictions for Kinney Village Homeowners' Association: Inc., was recorded in Docket 12583, Page 469, Official Records of Pima County, Arizona ("Declaration"). The Declaration subjects certain real property located in Pima County, Arizona consisting of various houses and related common areas depicted on the Plat to the covenants, conditions, restrictions, liens, and easements as more fully set forth in the Declaration and the other Project Documents.

This Amendment applies to Lots 1through 112 as shown on the Plat recorded in Book 59 of Maps and Plats at Page 93, in the office of the County Recorder of Pima County, Arizona: and

B. Pursuant to Article XII, Section 12.2.1 of the Declaration, the Declaration may be amended with the written consent of the Owners (including Declarant and Developer) of not less than seventy-five percent (75%) of the Lots within the Properties.

C. Capitalized terms used but not defined in this Rentals Amendment will be ascribed the meanings specified in the Declaration, or Arizona law.

RENTALS AMENDMENT

Pursuant to the Declaration, the Members amend the Declaration as follows:

A new Article XI I, Section 12. 9 is added as follows:

Section 12. 9

Rental Limitations

A. General Limitations. Owners shall not lease or rent their Lots unless the Owner obtains prior approval of the Board in writing for an exemption as a special case involving hardship or other extenuating circumstances. Nor shall any Owner enter into any timeshare or other transaction that has the effect of a leasehold or rental transaction. The Board and/or any court construing this provision are encouraged to consider that the general intention of this Section is to limit occupancy to Owners. The Board and any court construing this section shall disregard the form of any transaction

B. Existing Owners Grandfathered. Notwithstanding the above, all Owners of Lots as of the date this Amendment is recorded ("Grandfathered Lots") are exempt from this limitation until the current Owner sells, conveys or in any way transfers the Lot. Such change in ownership of a Grandfathered Lot will automatically terminate its Grandfathered Lot status, and all successor owners of the Lot shall thereafter be subject to the limitations set forth above in this Section. For the purposes of this Section, a conveyance from an Owner to the Owner's Living Trust, or a similar estate planning transaction, shall not be deemed a change in ownership sufficient to terminate Grandfathered Lot status. A roster of the current Owner of each Lot as of the date this, Rentals Amendment is recorded shall be made a part of the permanent records of the Association.

C. Board's Authority to Implement. The Board may enact rules and regulations to implement this Section.

D. Applicability. This Amendment shall not apply to any purchaser who has signed a fully executed purchase contract before the date this Amendment is recorded.

E. Disclosure. Owners are required to disclose this Amendment to all purchasers.

Frequently Asked Questions

1) Why is this Amendment being proposed at this time?

At the 2015 Annual Meeting, this Rental Amendment proposal was presented by Dan O’Connell (Current Developer and owner of the 28 unimproved Lots in Phase II). Dan has stated:

“Based upon my experience, the Amendment is definitely needed. At some percentage of rentals, lenders with government related programs (FHA, Fannie, Freddie, etc.) will not lend in the subdivision. This cuts out a high percentage of potential buyers, thereby decreasing demand which leads to lower sales prices.

Tenants do not take care of houses like an owner does. The house tends to become in need of repairs, which most landlords do not want to make. Owners, on the other hand, take care of their properties, including making improvements. A high percentage of rentals reduces the values of the homes in the subdivision.

The proposed Amendment is particularly attractive to existing homeowners because they are exempt from the rental restriction. If existing owners want to sell their home, they cannot sell to an investor who wants to use the home as a rental; however, investors tend to pay substantially less for a house compared to a buyer who is purchasing the house as his or her own residence, so a sale to the latter is preferred anyway.

Lastly, renters tend to ignore the rules and regulations in place to make a subdivision a better place to live, to the detriment of all who live there, especially the board members and officers who have responsibility for enforcement.

I would urge every homeowner to vote for the Amendment.”

As a reminder, Mr. O’Connell, as the developer, is exempt from paying HOA dues and has been since he purchased the twenty-eight (28) Lots. Currently, Mr. O’Connell has the right to build seven (7) buildings, containing twenty-eight (28) townhomes, and rent them all out as apartments, without being legally required to pay any HOA dues until he actually sells and transfers ownership. Obviously the HOA cannot afford for that to happen.

With the support of Mr. O’Connell, NOW is the time to pursue this Amendment to protect our property values and prevent investors from lowering sale prices, and to prevent Kinney Village from becoming rental apartments. This Amendment will permit Mr. O’Connell to sell units at a higher price than what he could receive from investors.

Unless we pass this now, the twenty-eight (28) lots may become all rentals, owned by investors, and if Mr. O’Connell maintains ownership, with the additional loss of HOA revenue. Without the additional HOA dues, the Association would have to resort to collecting special assessments from every homeowner. None of us wants that.

2) What percentage of homeowners must approve this Amendment in order for it to pass?

Seventy Five percent (75%) of the entire membership must vote in favor of the amendment for passage. That amounts to eighty-four (84) affirmative votes. With the Developer’s twenty-eight (28) votes; the Association would require fifty-six (56) affirmative votes from current homeowners.

3) How does this Rental Amendment affect current units being rented?

It doesn’t. The Rental Amendment grandfathers in all current owners and will not affect units being rented now.

4) If I am not renting out my unit now, will I stay be able to in the future?

YES; All current owners are grandfathered in so the Amendment does not affect your ability to rent your unit at any time.

5) If someone inherits my home will it prevent them from renting it out?

NO; As stated in the proposed Amendment, a conveyance from an Owner to the Owner's Living Trust, or a similar estate planning transaction, shall not be deemed a change in ownership sufficient to terminate Grandfathered Lot status.

6) How will this Amendment affect the value of my property?

Your property value will actually increase because rental units have historically lowered property values. With the current high percentage of rental units, and the possibility of twenty-eight (28) additional units being rented in the near future, it is a very good possibility that your property values will never increase unless this Amendment passes. Over time, as a higher percentage of homes are owner-occupied, the value of the homes increases relative to communities that have a high number of rental homes.

7) How will this Amendment affect my future banking and financial transactions?

As it stands right now, any further increase in rental units will make it difficult to obtain refinancing of mortgages on homes in Kinney Village. One of the criteria that financial institutions examine before approving loans/refinance mortgages is the number of rental units within a community. The passage of this Amendment will eventually reduce the number of rentals, thereby making it easier to obtain loans and refinancing.