Growth in Gated Communities. Amenities are not Free.
I think we can all agree that almost everybody living in gated communities are usually wanting “more and more” in the way of amenities, and likewise, neighborhood boards believe growth is necessary in order to maintain community strength and values. Members want “more and more” and boards love to build. Often both groups do not understand the long-term ramifications of this phenomenon. Many gated communities have one financial characteristic in common, qualified employees are becoming harder to find and it will cost considerably more money to retain them in the future. There is definitely a long-term problem brewing in the Bluffton and Hilton Head Island areas in trying to solve low-cost housing for employees. It takes good and dedicated employees to help with the running of top-notch active neighborhoods.
Generally, in most gated communities, the most important financial statistic is the overall cost of employees and their total compensation needs. In the communities that I have reviewed, the cost of employees to maintain services is 50% or more of total community costs and increasing. The second factor and question that needs to be asked is how much support, including employees, will be demanded to adequately bring on that particular amenity. The third question to be asked is what is the financial impact on the POA or Community Fee. Most members are acutely aware of inflationary increases in these fees, and while they want more amenities they sometimes do not understand what impact it will have on their pocketbook.
My point is, new or improved amenities are not free from an investment standpoint. Although they can add member fulfillment and attraction, there is a cost to adding community improvements through maintenance, and an employee cost to have them serviced. There is definitely a direct impact on member costs which has to be factored in when considering long-term community plans and goals.
Let us run an example. I will use the community of Moss Creek, a private gated golf community just off Hilton Head Island, to explain better. Let’s agree that a $4 million investment in Moss Creek is agreed upon and it may take 15 employees to maintain it and the total compensation for those employees is $60,000 per person per year, or $900,000 total per year. There are 1,040 homesites in Moss Creek, and spreading that cost over the population represents a POA adder of $865 per lot owner. It is obviously not quite that simple but you get the “gist” of what I am sharing. You will have a certain amount of financial pain owed by each member for each investment.
There are positive attributes to improving and adding amenities, but there are pros and cons to every scenario. It is a good idea to have a balanced approach when weighing the benefits to the costs. Pickleball has become an extremely popular sport and many communities have installed pickleball courts. This has been proving to have a great cost benefit. The amenity met the needs of the community and they are being used daily.
I am all for more and improved amenities, but I am also concerned about runaway costs. There has to be a healthy balance and an understanding between the board and members about future growth and what it will cost everyone involved.
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