Residents in McKinney’s Craig Ranch Community Association are taking exception to an additional fee charged when they sell their home, and one realtor said it even gave her clients pause when finalizing their sale.
Realtor Louann Smith, who worked with a Craig Ranch resident, said her clients were surprised by the fee even though the disclosure was there when they bought the house and signed the documents.
“They almost didn’t close,” she said of her clients who sold their $600,000 home in May. “They were shocked.”
The Community Enhancement Fee, which is uncommon, according to area realtors, obliges homeowners to pay .25% of the first $300,000 of purchase price and .5% on any amount thereafter at closing. So, for a $600,000 home, the seller would pay an additional $2,250 to the Craig Ranch Community Association (CRCA).
While the enhancement fee is discussed in documents signed by homeowners, many say they are still unaware of the fee and complain that it is unfair as home values in the neighborhood, which includes about 1,363 acres of residential space, continue to rise.
“The enhancement fee in Craig Ranch is totally separate from the normal transfer fees that HOAs charge when you sell your home,” said area realtor Mike Danielson with Keller Williams. “They end up being quite pricey in Craig Ranch with that additional cost. Mainly because it is dependent on the sale price of the home. It is definitely out of the norm of most HOAs in the area.”
In addition to the enhancement fee, some sub-communities within Craig Ranch have other transfer fees. For example, in one of the sub-communities, this includes a $156 working capital fee and a $175 transfer fee, according to Danielson.
In a recent post on the Nextdoor app, long-time Craig Ranch resident Dean Woodard wrote about the fee, “Craig Ranch HOA Charges for selling your home.”
He urged people to “pressure your members on the HOA board to change it.”
“They have the power,” he said in the post that garnered 19,300 views and hundreds of comments.
As home values rise, tensions do too
David Craig, the developer who founded Craig Ranch in 2004, created the community enhancement funding program during the period of the community’s original business development plan and establishment of governing documents, according to John Palmer, vice president of the Craig Ranch Community Association.
The 2,200-acre, mixed-use development spans from Custer Road to Stacy Road and north to Silverado Trail. The community also includes about 38 acres of medical space, 181 acres of office space and 141 acres of retail space.
“The CRCA Community Enhancement Fee was established at the inception of Craig Ranch to provide certain funds to keep our community differentiated, well-capitalized and relevant over time,” Palmer said. “It is a discretionary enhancement fund that is designed to address present and future capital improvements and community programs that are weighty and considered outside of traditional operating expenses supported by dues.”
Since Woodard moved to the neighborhood about 9 years ago, many of the homes have doubled in value, he said. This has caused the fee to garner more attention and complaints, especially as those who would have to pay the steep fee say they would not benefit from the future enhancements.
There are 30 active listings in Craig Ranch, and 47 sold comparable properties in the last 90 days with an average of 35 days on the market, according to Danielson. Current active listings in the neighborhood range from $379,000 to $2.9 million, while the sold listings range from $350,000 to $1 million.
“It’s becoming more apparent because the value of houses have gone up and now people are talking about it more,” Woodard said.
Last year, the majority of CRCA enhancement funds came from sales of commercial and multifamily closings, Palmer said.
Even with steeper fees being paid to the CRCA, Woodard, among other residents, said they have noticed a decline in services, such as grass mowing, fertilizing and dog waste pickup at the waste stations.
“Where is that money going? We don’t have pools and beautiful landscaping … it’s definitely puzzling,” said Ann Haverfield in a comment on Woodard’s Nextdoor post. “Someone is profiting from these homes being sold.”
‘Lack of transparency’ causes confusion
Palmer said the enhancement fund policy is “clearly outlined” with the CRCA governing documents upon purchase of a residential or commercial property in Craig Ranch, but Woodard thinks that might not be enough.
“It’s a sleeper of a rule that people don’t really understand,” Woodard said. “When you go to closing, like when I bought my house here, you get these documents the day you’re closing so you have really no opportunity to read these documents in advance. All they tell you is, ‘These are standard HOA documents, it’s nothing to worry about,’ so you sign for it because they tell you it’s standard language; it’s OK.”
Area realtor Laura Morin commented on Woodard’s Nextdoor post noting that she encourages the seller to request the bylaws and other documents prior to listing.
“This allows us to know what those fees are and better negotiate any offers that come in,” she said. “In most cases, the HOA rules/regulations/ bylaws get requested after we go under contract and negotiations are already done.”
Woodard said he is not against having a fee, but thinks it should be at a flat rate, especially as the value of homes continues to rise.
“To me, it’s the lack of transparency with this,” Woodard said. “It’s on the document, but it’s not talked about.”
What does the fee do?
According to Craig Ranch’s governing documents, the Community Enhancement Fee — which applies to all residential, commercial, office, and multifamily asset classes — is placed in a separate account and used to provide “funding for activities and such other purposes as the Board deems beneficial to the general good and welfare of Craig Ranch.”
This can include the preservation and maintenance of natural areas, and programs, services and activities which serve to promote a sense of community within the neighborhood such as recreational leagues, cultural programs, educational programs, festival and holiday celebrations and activities, common area upgrades, signage revitalization and park improvements that are not a part of general operating budgets funded by annual property owner dues.
“One example of how CRCA community enhancement funds are directed include $2,500,000 spent on The Compass, a new two-building community recreation center that sits on roughly 9 acres of donated land,” Palmer said. “Funds for its construction costs and annual operating costs were capitalized without property owner dues or a special assessment.”
According to the Craig Ranch governing documents, the current rate of the Community Enhancement Fee is “subject to amendment by the Board from time to time,” and the “Board shall have the sole discretion to determine the amount of and method of calculating the Community Enhancement Fee,” however the fee cannot exceed .5% of the property’s gross selling price.
“The enhancement fee is very beneficial to the community as a whole,” Palmer said. “The original founders at Craig Ranch thought it appropriate and necessary to maintain or increase property owner values over time and, therefore, compete with other growth-oriented communities located within the trade area.”
