After one resident asked for openness, a Clayton homeowners’ association is changing the way it reports its finances.
A revised budget available to members of the Riverwood Athletic Club Community Association now shows all of the HOA’s revenue and expenses, not just a fraction of them.
Many of the line items included in the revised budget were absent previously, when the HOA’s management company collected fees directly from residents.
Now, all dollars will flow through the HOA before going to the management company, the Fred Smith Company. The HOA will collect fees and other revenue, then send them to the Fred Smith Company for expenses.
The HOA on April 22 sent out a letter and budget outlining the reporting changes. Todd Ward, the resident who took the HOA to court over its reporting, welcomed the changes.
“This is an excellent step in the right direction,” Ward said.
“It is definitely something that a lot of folks will be able to look at and say, ‘Now I understand the budget a lot better,’” he added.
But while the new reporting process is more transparent, it might come at a cost.
Because all dollars will flow through the HOA, the group will have to spend money on bank fees, attorney hours for past-due collections and accounting services. The Fred Smith Company has paid, and will continue to pay, many of the same costs.
HOA President Reid Smith said one benefit of the old reporting process was no duplication of fees and services. He said those extra costs could lead to HOA fee increases in the future.
Reid Smith’s father, Fred Smith, developed Riverwood, and the Fred Smith Company manages the neighborhood through an agreement with the HOA. The HOA’s governing board is made up of members appointed by Riverwood on the Neuse LLC, also owned by Fred Smith.
The Smith family has prided itself on providing lots of amenities in its subdivisions for a low cost. One way the family has done that is by keeping everything in house – the previous reporting process being an example of that.
But Reid Smith said the only thing that is changing is the reporting process. The level of services will stay the same.
“The Smith family is very proud of Riverwood and stands behind every day of work we have put into the community for the residents here,” he said.
“We fully stand behind the intent and the way we are running and have always run Riverwood Athletic Club,” he added. “It is one of the best communities east of Raleigh to live in.”
Riverwood is one of several Fred Smith communities in the Triangle. Others include LionsGate in Clayton, Mingo Creek in Knightdale, Tralee in Wilson’s Mills and Hedingham in Raleigh. A “Bronze” member of the Riverwood Athletic Club pays $58 a month and has access to golf clubs in other neighborhoods, outdoor pools, one indoor pool, four gyms and a playground.
A request for records
Ward, the Riverwood resident, first asked to see the HOA’s financial records last fall. When he was unhappy with what the group gave him, he asked a judge to require the release of more records.
In January, Judge Robert Floyd dismissed Ward’s request for additional documents, finding that the HOA had handed over everything it had. But Floyd did say the HOA had a duty to show what money the Fred Smith Company received each year to manage the neighborhood.
The HOA’s former agreement with the Fred Smith Company allowed the company to collect fees for its residents. However, the subdivision’s bylaws said the HOA board couldn’t delegate certain duties, including the collecting of homeowner dues.
After the judge dismissed Ward’s claim, Fred Smith said in an interview that he had hired attorneys to review the reporting process. That review resulted in the changes the HOA board approved in April at Fred Smith’s request.
Reid Smith said the HOA spent thousands of dollars on attorneys to address Ward’s claims and to review the reporting process.
“Those legal fees could have gone for social events or community improvements, but they had to go to fight these erroneous claims,” he said.
Ward said his goal was fact-finding, and he’s thanked the Smiths for providing the information.
“You give credit where credit is due,” Ward said. “I give them credit.”
Dunn: 919-553-7234, Ext. 104
Specific assessments for club upgrades: $31,590.*
Capital contribution: $9,000.
Administrative charge income: $14,087.*
Violation income: $3,388.
Late fees: $4,275.*
Town of Clayton utility reimbursement: $31,555.*
Interest income: $100.
Declarant fee (Fred Smith’s Riverwood on the Neuse contribution): $162,149.*
Amenity upgrades: $31,590.*
Administrative expense: $2,600.
Community repairs: $7,437.
Professional fees: $900.
Liability insurance: $2,824.
Social events: $5,250.
Post office lease: $13,500.*
Bad debt: $11,529.*
Management services: $64,462.*
Other fees: $47,475.*
* Line items not included in previous HOA budgets
The Riverwood Athletic Club Community Association Board of Directors is scheduled to meet at 7 p.m. May 6 at Riverwood Middle School.