PFLUGERVILLE, Texas (KXAN) — When Pflugerville resident Casey Fewell moved into the Carmel neighborhood in May 2018, she and fellow homeowners paid $75 each quarter to their homeowners association to help cover the services and amenities provided.

Then in December, Carmel’s HOA board approved raising that cost to $180 each quarter. It was approved during a board meeting that residents could virtually attend but not speak at.

After several residents reached out to KXAN about the legality of this action, KXAN looked into both HOA and homeowners’ rights when it comes to financial obligations.

J. Patrick Sutton, an Austin-based real estate attorney, said Texas law gives HOA leaders jurisdiction in implementing fee increases, so long as the costs can be justified by the uses.

When homeowners sign the deed to their homes, they agree to the property’s restrictive covenants — a set of obligations for how land within their residential development will be used and financial assessments homeowners are responsible for.

When it comes to any increases in assessments, Sutton said HOA boards have ample discretion to decide on fee increases or other financial obligations they deem are reasonable for the costs incurred to maintain the residential community. While notice of an HOA board meeting is required alongside an agenda of items to be discussed, the board isn’t required to take public comment under state law, Sutton said.

“The first part of the inquiry is what do the restrictive covenants provide, and do they limit assessments?” he said. “The second question is a more difficult one, which is, when is an increase in assessments so unreasonable that it should not be enforced?”

Under Texas law, residential community developers are authorized to run HOAs as they are actively being developed. As Central Texas continues to see exponential population growth and heightened housing demand, it’s not unusual for residential communities to be actively under development for upwards of 15 to 20 years, Sutton said.

John Lloyd, the developer behind Carmel, said this fee increase was the first since the community was established, which corporate documents report was in March 2017. In the years since, the community has grown to nearly 1,300 homes in size.

He agreed the fee increase could have been more incremental in hindsight and said he’s connecting with Preferred Association Management Company, the company hired to run the HOA, on reevaluating those fees.

As for the reasoning behind the fees, PAMco owner Doug Plas told KXAN the cause is twofold due to increased costs in landscaping services and water irrigation.

In 2021, financial statements highlight landscape maintenance costs were twice the amount initially projected; water for irrigation-related services was roughly five times the cost initially budgeted.

“Budgets are a tool. Budgets are created by analyzing historic data and trends,” Plas said in an email. “Sometimes you hit the mark. Sometimes you miss the mark. Carmel Master Community is a project still in development. Those historical numbers do not exist. They continue to change as the community increases in size.”

As part of the development’s agreement with the city, Lloyd said he’s responsible for three dedicated parklands to meet the City of Pflugerville’s requirements for open space. That third parcel is expected to be submitted for approval to the city in March, Lloyd said. Once approved, he said he wants to turn the HOA over to the residents to run.

“Who wants to maintain power over an HOA?” he said, adding he would rather residents take over the day-to-day obligations. However, he added he didn’t want to turn that ownership over until that final piece of parkland has been confirmed by the city.

When prospective homeowners are looking at homes under HOA leadership, Sutton strongly urged customers to consult with a property lawyer prior to signing any deeds. Currently, he is arguing a case going through the Texas court system to protect homeowners from unreasonable fee increases or assessments instituted by HOAs that contradict the collections they agreed to.

Sutton has 20 cases pending across the state asking one central question: How much can a restrictive covenant change and still be enforced onto someone who bought their home under different circumstances?

“It’s sort of about fundamental fairness,” he said. “That it’s not fair to subject people to a different deal than the one they purchased under.”