Fiscal Impacts to SAMLARC: Overview

SAMLARC’s specific and primary purpose is to provide community services and facilities for the benefit of homeowners within the community and preserve the value, desirability, and attractiveness of all properties within SAMLARC. Over the course of 2018 and 2019, several regulatory and industry changes impacted Homeowners Associations throughout the state. These impacts include California minimum wage increases, Defensible Space standards enforced by the Orange County Fire Authority, water rate increases from Santa Margarita Water District, and landscape industry strain. The Board of Directors is committed to preserving SAMLARC’s quality of life, safety, and values; however, these challenges impacted SAMLARC’s 2019 Budget and will continue to impact the SAMLARC Budget in the coming years. This article the first in a series exploring the effects of these impacts on the Association.


Minimum Wage

California’s minimum wage schedule was enacted in 2016 and will carry through 2022. By that time, the minimum wage will be $15 per hour – a full 50% increase from the starting wage of $10.50. This impacts not only minimum wage workers in retail and manual labor forces, but also the vendors with whom Homeowners Associations contract. These professional service providers are forced to increase their contract rates to counter the effects of minimum wage and associated wage compression in order to comply with expected service levels, and the costs are passed on to clients such as SAMLARC.


Defensible Space Standards

The Orange County Fire Authority (OCFA) is enforcing more stringent Defensible Space guidelines in Associations adjacent to wilderness areas. In late 2018, OCFA notified SAMLARC of seven (7) zones required to comply with these requirements. SAMLARC is on schedule to complete work in all of the zones by late 2019. While the unanticipated cost of the work was able to be absorbed in the 2019 Budget, it is anticipated that OCFA will continue its inspection efforts in 2020 and beyond, at considerable cost. SAMLARC has developed a Perimeter Defensible Space Master Plan to proactively address perimeter areas that may be required to comply with the standards, and working with representatives from master-planned communities to clarify and formalize the standards and approval processes.

SMWD

Santa Margarita Water District (SMWD) anticipates that a rate increase will be implemented in January 2020. The increase is attributed to a combination of factors, including higher water costs from the Metropolitan Water District of Southern California, investment in developing local supply, SMWD Capital Projects, and general inflation. I