Troubled Colorado Springs condo complex in ‘world of hurt’ financially
The Gazette
By Bill Vogrin
20 February 2015

For years, the Sierra Pointe Condominiums complex has been "Exhibit A" of the need for professional management and an informed homeowners association board.

Built in 1974, the 282-unit complex on 13 acres near Austin Bluffs Parkway and Academy Boulevard has long been plagued by controversy.

Sierra Pointe first surfaced in Side Streets in 2007 when an abusive property manager was harassing owners. Then an audit discovered the manager had deposited $13,000 in HOA dues in his private account, which he eventually repaid.

Subsequent columns told of battling HOA boards and a property management company that quit rather than deal with an abusive HOA president.

So it was no surprise when residents recently started contacting me, claiming the complex was drowning in debt and in danger of going bankrupt.

Potholes mar the roads through the Sierra Pointe Condominiums, seen Feb. 19, 2015. The 282-unit complex built in 1974 on 13 acres has been troubled in recent years and now is in financial distress. Bill Vogrin / The Gazette

Longtime owner Patsy Cyphers, a former board member, was among those sounding the alarm.

"Sierra Pointe is in a world of hurt," Patsy said. "Many residents are up in arms. Roads, roofs, carports, balconies - they are in dire need of repair. Nothing has been maintained.

"Then the HOA board wanted to raise $2 million through a special assessment on owners. My share would have been $7,250. That's on top of my monthly dues. When the special assessment got voted down, the HOA board raised dues 30 percent."

Heather Smith, who manages Sierra Pointe for Warren Management Group, confirmed things have been bad. In fact, she said, the complex's finances are a disaster. Its problems are so well-known she couldn't even find a local auditor willing to assess the damage. She had to hire a Denver firm.

Record-keeping made it nearly impossible to trace income and spending. The final report was ugly.

"We took over the property in October 2013," Smith said. "At the time, the unpaid invoices from vendors were upwards of $300,000. We had vendors who were waiting months on past-due payments."

Even worse, unpaid HOA dues stood at $280,000. Such a high percentage of owners were behind on their dues that Sierra Pointe condos no longer qualified for Federal Housing Administration loans, crippling owners' ability to sell to first-time homebuyers.

Perhaps most startling was the balance in Sierra Pointe's reserve fund, which should have been around $3 million, Smith said.

"They entered 2015 with just above $18,000 in reserve," she said.

Years of neglect have created an expensive backlog of maintenance needs at The Sierra Pointe Condominiums, seen Feb. 19, 2015. The 282-unit complex built in 1974 on 13 acres has been troubled in recent years and now is in financial distress. Bill Vogrin / The Gazette

It's so bad, the HOA board struggled recently to find $9,000 to demolish a carport in danger of falling over, possibly crushing a car or resident.

But Smith said there is hope. Together, she and a new HOA board have shaped a 10-year plan to rebuild its finances. Raising dues 30 percent was a painful part of the solution.

"Monthly dues jumped $40 to $50 a month for owners," Smith said. Monthly dues now range from $194 to $315, depending on each unit's square footage. And utilities climbed 3 percent. That means some owners are paying $515 a month in dues and utilities.

She said the board knows owners are suffering, but there was no choice. The complex saw its insurance premiums jump 45 percent in two years because its carrier assessed the risks and found exactly what Patsy said: nothing has been maintained.

Smith said it will take discipline by the HOA board and owners to turn it around. The needs are great. Five buildings are in urgent need of roofs, which cost from $60,000 to $180,000, depending on size. Roads in the complex need $100,000 in resurfacing. Several carports need to be replaced at $45,000 apiece. Retaining walls are collapsing. The list goes on.

"We're happy with our progress," Smith said. "I do think there's hope for Sierra Pointe."

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