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Maine Alliance for Road Associations

Title 13-B Corporate Road Association - involuntary paving of gravel road by majority vote?

  • 20 Mar 2019 11:36 PM
    Message # 7237493

    I have read the few threads in this forum that relate to asphalt paving a gravel road and I know that for a Statutory Road Association (SRA) under Title 23, paving is specifically called out as not part of road repair or maintenance in 3101. 

    Question 1 of 2: Does the same paving clause about paving not being part of road repair or maintenance also apply to a Corporation Road Association (CRA) under Title 13-B? Is there a court ruling on paving of a gravel road that applies to all types of road associations?

    Background--warning--Long

    This road association functioned as a SRA from it's formation in the mid-1970's until 2012. In 2012 the developer (elderly) offered to donate a small undeveloped lot, the developers rights, and the rights to the road base in most of the development to the road association. The road assoc. members voted to accept these donations, necessitating the change from a SRA to a CRA which can own land. There was no talk of potential paving the road at the time and the main access road has always been gravel except for a short flat section the developer originally paved to connect to the top of his private driveway.

    Recently there has been a few new owners in the development (some with deep pockets) while at the same time the regular annual road maintenance has not been performed to the extent it was annually in past years. Following two bad winters (this one excluded) and two above average rainfall seasons, the gravel road is in poor condition. This was especially evident after the November freeze was followed by a December thaw at the end of last year.

    The poor gravel road condition prompted a letter from the road assoc. board to all property owners with a proposal to asphalt pave the entire length of the road with a paving estimate attached for more than $100k+. The letter also stated that paving of the road would be voted on at the next annual meeting with a majority vote rule.

    The bylaws of this CRA describe: Road Maintenance--To maintain an existing association of Lot owners for the maintenance and improvement of the roadways in the subdivision. The Bylaws do not mention that paving is specifically excluded like in Title 23, Section 3101. I feel that some members are treating this CRA more like a home owners association than a road association. There is further layer of complication because most, but not all, members are part of the development, so the developer's right and development covenant apply to only some CRA members. Those members have a majority and frequently vote as a block. 

    Question 2 of 2: If a majority of the CRA members vote in the affirmative to asphalt pave the main access road, are those who voted against it really obligated to pay the $5k+ share of the estimated paving cost?

    Thank you for reading this all and any advise you may have.

    Regards,
    Lee

  • 22 Mar 2019 12:17 AM
    Reply # 7239357 on 7237493
    Anonymous member (Administrator)

    Unfortunately I'm not familiar with the laws regarding corporate road associations.  I'm not sure if this is helpful at all, but with regard to statutory road associations, 23 MRSA section 3102 limits an individual owner's annual dues to 1% of the municipal property valuation. 

    Last legislative session there was a bill submitted that would have raised that limit to 2%, but it was based on a misconception.  A judge had ruled that a road association could recover no more than 1% of what was owed to them in back dues by a deadbeat member, which is not what the law says. (Besides, the road association involved was not a statutory road association, so section 3102 didn't even apply to them - yet the judge used it in the ruling.)

    The legislative committee that considered the bill proposed eliminating the limit entirely.  But then they had second thoughts, and the bill died between houses. I wonder if the proposal to pave the road was put forward by someone who thought the bill had passed, removing the limit. 

    Even if section 3102 doesn't apply to corporate road associations, I think it's a reasonable limit.  If nothing else, I would bring it up as a matter of discussion at the annual meeting, arguing that the legislature set that limit because demanding more than that would be an unfair burden on the members. 

    If there are "deep pockets" members whose property is valued so high that they can contribute that much to the paving cost without going over 1% of their municipal valuation, and they agree to pay that much, then let them bear the burden, and limit everyone else's contribution to the 1%.  But I suspect your municipal valuation would make that kind of contribution significantly higher than 1%.  Am I right?  If you point out what percentage it would be for you, and then ask the "deep pockets" how they would like to contribute that percentage of THEIR valuation, maybe they will see your point.


  • 25 Mar 2019 12:58 AM
    Reply # 7242751 on 7237493

    Thank you for your response and summary of the 2018 Maine legislative session in regard to road associations. And while the road association letter discussing the proposed paving project did not mention the 1% dues limitation, it did mention potentially financing the paving project over a 5 year period to make it affordable for all members. Financing the paving would also reduce the annual payment below 1% of all members property values.

    A potential short sighted issue is that once the road is paved, you can never go back, whatever future repair/repaving is necessary as the paved road ages must be done. The pavement may not need much maintenance for the first 5 years (while it is also being paid for), but after 5 years? 10 years? the asphalt will develop cracks and is going to need maintenance and repair. 

    This is really setting up discussion at the annual meeting and potential division between several groups within the road association;1) Those who built small (non-winterized) summer cottages in the 1970's and are only there for part of the summer, 2) full year round residents, and 3) non-primary residents with winterized houses. The last few annual meeting have been contentious for various reasons, such that some members have just stopped attending.

    A little more than half the property owners have paved their own driveways, so a majority of those members will likely vote in favor of the project. However, there is a big difference between paving a short, narrow and relatively flat driveway, and the main access road which has 3 steep slopes (80 ft elevation change) and multiple curves in just 0.6 miles. The shoulders of the road will almost definitely require more maintenance because the new paved (impermeable) road will increase run-off and shoulder erosion.

    Are there any road associations in Maine that have paved their main access road instead of maintaining a gravel road?

    Curious if and by how much it reduced annual road maintenance costs and if paving reduced snow removal costs, which is one of the claims the letter also makes. 

  • 26 Mar 2019 1:44 AM
    Reply # 7245330 on 7237493
    Anonymous member (Administrator)

    You are certainly wise to consider the future costs of maintaining pavement.  Our road was partially paved by a developer who wanted to be able to get a better price for his lots by having them on a paved road.  He got it done as cheaply as possible, without proper underlayment, grading, or crowning.  It's banked the wrong way on the corners, and it doesn't shed water properly.  Although the paving is only about ten years old, it's already badly cracked, much worse than the portion of road that leads to it, which was paved earlier.  We are now looking at a major expense to overhaul it one section at a time, and have been stashing money in a separate account with the hope of being able to do the first section in another year or two.  We've discussed just tearing it up and making it back into a good gravel road, but some of the residents on that section object.  On the other hand, with your road being as steep as you describe, paving at least the steep parts could be a good way to stop erosion.  I wonder if Josh Platt from Maine Environmental Solutions would be willing to give you some general information on that without actually coming out and doing a full assessment of the road.

    I don't know what effect paving might have on the cost of snow removal.

  • 28 Mar 2019 12:38 PM
    Reply # 7249528 on 7237493
    Deleted user

    Sorry I can't directly answer your questions but our road association went through a very similar dilemma I'd like to share in case our experience helps you at all.  

    Our road association operates under three different ruling bodies: 1) all but two properties are bound by Road Maintenance agreements set up by the developer 2) statutory road association established to "pull in" the additional two properties 3) incorporated under 13-b. But basically, our documents and by-laws defer to the laws of the statutory road association. Per the advise of our lawyer we determined that act of paving our road as governed by our 13-b status could legally be done. However, funding it is what becomes difficult.

    Our situation deemed the following facts: Under 13-b we would not be limited to the 1%. However, all contributions must be considered voluntary. We would have little to no legal standing to try and collect payments from non payers and could not file notice of claims against them. Any person (member or stranger) could contribution as little or as much as they wanted to the project, meaning we could fund raise if so desired (bake sale anyone? haha).

    While most of our members were in favor and willing to pay their portion, their majority would be meaningless as an effort to collect against those opposed since there is basically nothing we could do to collect under 13-b. The problem with 13-b (the way ours is set up) is the only grounds for collection is small claims court, and since our by-laws defer to the statute regarding maintenance (that says you can't pave) our argument would not hold up in court.

    We probably have about 90% on board. Some of our "deep pocket members" are evening willing to pay for those who can't. Problem is, some of the ones on board are only "yeses" if no one is opposed, meaning they want everyone to pay their own portion and not have some members pay the extra, or worse have the extra divided out among the payers. We decided not to proceed unless we had 100% support for these reasons, as well as not wanting stir up relations and have to fight against non-payers as we are fortunate to be a pretty close, happy, community and always vote unanimously on other issues. We chose not to ruin that by paving.

    Furthermore, we have huge concerns regarding future maintenance. What we don't know, is under the terms of the statutory road association can we assess fees to maintain that pavement? We believe we can't, which will really mess us up and create a slew of problems later on. Our intent to pave is with the goal of getting the town to accept our road as public so future maintenance wouldn't be an issue, however if the town's people vote against now we're stuck with a paved road we can't maintain.

    Now, in our case each member owns their portion of the road up to the center line. This fact motivated a group of members who happen to live in the middle of the length of the road all in favor of paving to pursue paving their sections on their own without the road association's involvement. This raised many more questions and concerns about how to maintain the gravel around the pavement and who maintains the pavement? Ultimately, this idea was also dropped.  

    We also explored the financing option with little success. For starters, half our members didn't want to be involved in such a group loan, and others wanted to get their own personal load to pay their portion. Leaving less members involved in a group loan that would ultimately mean some members pay more (interest on loan) than others. While we found willing lenders, we believed there could become serious implications in the event properties sold. We would have no legal grounds to continue to collect payments from new owners the way the banks wanted to set up the loans. The burden of the debit would be solely placed on the officers personally, of which no one wants responsibility for. I am very interested in knowing how the lenders you looked at proposed underwriting your loan? Ideally, we would want the bank to use a part of every member's home as collateral so in a sale the debit would be transferred, but this requires every member and their current mortgage holder's signature, and is far too complicated for the bank to willingly do.

    The compromise we agreed on instead of paving was to increase our fees slightly, and lay down reclaim our road in sections each year. We have found this to be very affordable and enforceable under the law. So far, our reclaimed sections are holding up real nice, it's minimizing dust and potholes and is great in the mud season.     

  • 29 Mar 2019 9:31 AM
    Reply # 7250610 on 7237493
    Anonymous member (Administrator)

    Board of Directors Member - Thank you for your detailed answer!  You have brought to the table much valuable experience that I believe others can now take into consideration when deciding what to do for their roads.

  • 29 Mar 2019 8:54 PM
    Reply # 7251928 on 7237493

    Thank you all for your detailed responses. I have contacted Josh P. about getting a road maintenance plan estimate to present to the road association annual meeting in June. The road needs one whether the road is paved or not.

    I can not answer your question about the bank and group financing the road paving. You bring up several good points. The letter proposing to pave the road in January was presented as the discovery phase to obtain member input and positive/negative initial feeling about the proposal to pave the road. Financing was mentioned in the letter, but no details on if a bank was approached were provided. If the paving moves forward in the next 3-4 months leading up to the annual meeting I will provide an update here.

    One comment on the idea about getting the local town to take over the road maintenance after a road is paved. Most towns have a Road ordinance with paved road specification including: road width (18 ft), shoulder width (3 ft, each side), pavement thickness (~2.5 inches), maximum slope over xx distance, radius of curves, intersections with stop signs and other specifications. The road in this road association is primarily 16 ft wide, so it would be almost impossible to meet the town's road ordinance standards. It would not be possible to even get to the phase where a vote at the annual town meeting to accept the road or getting x,xxx number of residences signatures to accept the road. In addition if successful, the road would then change from private to public, which could be a non-starter for some property owners. Thanks again.

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