Thanks to everyone who called me on the phone after receiving my post card, this hasn’t been easy for me.

At the last HOA meeting Mr Russo told us they were going to develop the SW corner of Unit 5. I was happy because I own 8 lots there, I figured I could quiet title against the lien-holder and then make a really good profit even after paying Mr Russo $10,000 for finishing the roads. (Mr Russo now says it will cost $15,000/lot.)

Shortly after sending the lien-holder $10, two quit claim deeds and notice that I planned to quiet title, Mr Russo informed me that he is now the owner of the “Assignment of Special Assessment” for my lots and that I’d have to sue him! I wrote a little bit about this in posts below.

If you Google “Assignment of Special Assessment” you will not see many references, most of them refer to cities selling Special Assessments for street lights, speed bumps, sidewalks. There are articles about banks receiving SAs  from HOAs but other articles say if a bank asks for it, find another bank and I doubt any bank would loan to New Tucson because guidlines banks use are very strict, they look to see how many homeowners/lot-owners have not paid their dues, etc. The prior majority lot owners did not pay their dues.  When I told lawyers about the HOA selling SAs, they immediately thought it was illegal, California has a law against it (see post below) but I wasn’t able to find a case law against it. Seems like it should be against public policy because it would be easy to defraud and steal property.

Just noticed today (after talking with my lawyer’s assistant) that Mr Sullivan bought one of the assignments after the majority lot owners were in receivership. Supposedly the HOA sold the Special Assessments to Western Recovery Services and then WRS sold them to their friends and suckers.

My lawyer is busy writing up an answer to the complaint. I wrote this narrative to explain the situation to them:

Ms Baranow bought her first lots in the New Tucson / Sycamore Vista subdivision sight-unseen on April 9, 1997. She was surprised that there were no streets when she went out to see the lots but liked the area and bought fifty more lots in the subdivision.

In late 1999 she had four lots in Unit 5 surveyed, these lots are subject of this lawsuit. Trico electric drew up plans for bringing electricity to the lots. Ms Baranow also had building plans on a half-acre lot in Unit 7 (filed with County Development Services, November 13, 2000) and was thinking of buying a water tanker truck to deliver water and buying/renting a backhoe to dig trenches for the electric and septic tanks.

Shortly thereafter someone called Ms Baranow and offered to buy her lots, she noticed that someone was buying up all the delinquent tax liens on the majority of other lots in the subdivision. Sometime in 2002 she noticed someone was flipping lots among shell companies, which caused the assessed value to skyrocket from $500 to $12,000 within one year.  (A good example of this flipping is on parcel 305-33-1050 in Unit 8.) When Ms Baranow brought this up at one of the first HOA meetings and offered to sell one of the flippers her lots for $15k each, that person (Mr. Figueroa) got very mad and had to be restrained.

The assessed value on this lot shot up from $500 to $12,000 in one year when no improvements were made.

As time went by, Ms Baranow became suspicious that the majority lot owners were assessing our lots for too much money as if it were a money-making opportunity for them. Some of the lots were assessed $6000 or more and no dirt was turned on those lots, it was taking the developers a long time to put in infrastructure.

In end of 2007, Bob Bambauer, a Vice president for KB Homes, one of the builders in the subdivision came to one of our HOA meetings, after the meeting he met with about 20 of us and told us we were being overcharged and that a major home-builder sued the majority lot owners for a substantial amount of money because they did not honor a contract to sell lots at an agreed price. The case was settled out of court and Mr. Bambauer and his mother were threatened for disclosing information from the lawsuit.

At this point we were all trying to figure out what to do. One of the lot-owners, Mr. Soriano said he was going to file a lawsuit. Ms Baranow wrote a letter to the State Board of Real Estate, she knew the then director of the Board, Ms Elaine Richardson but the SBRE could not do anything. Here’s an email Mr Bambauer suggested I send to the State Board:

We spoke with Jeff Utsch as the President of the Homeowners Association prior to purchasing the lot in 2006. We then found out he was not only the president of the Association but also the owner of the majority of lots.

The reason we were talking to him was due to the Homeowners Association also being the developer of the roads.  We were told by Mr Utsch that the Association was going to build all of the roads as well as the water and sewer lines and then the HOA would assess us for the cost of the improvements.  At the time he said the assessment was $27,000 per lot and that he could not guarantee the final costs.  As we sit here today in March 2008, they still have not told us the final costs but have hinted that the assessment will be in excess of $40,000.

First we would like the Department of Real Estate to determine if it is legal for a Homeowners Association to build roads and utilities, and assess the lot owners an unlimited amount of money.  The HOA/Developers apparently changed the CCRs to allow them to develop the roads and charge us whatever they say it cost to build.

They have taken about 5 years to develop 190 or so lots in Unit 2.  This is absurd.  They are paying themselves (or one of their companies) to plan engineer and construction manage. These costs are the being charged to us.

Second, The trespassed onto our lots and graded our lots without our permission.  They cleared all of our saguaros and ocotillos as well as other cacti and plants from our private property without our permission. They also lowered the lots in some cases and ruined our views.  We would like to know if that is legal for them to destroy plants and views on private property without our permission?

They have threatened to foreclose on our lots if we do not immediately pay the assessments once they figure out how much they will charge.  In some cases that could be $500,000 to $1,000,000 to some of the lot owners.  All without permission from us.

From what we understand a Homeowners Association is formed to protect property values by enforcing architectural standards, landscape pallets, keep trash cans and broken down vehicles off of driveways etc.  It appears here that the Homeowners Association has taken funds from the bank loans and used it to develop lots and pay other companies HOA funds to manage construction and pay themselves.  This sounds like they are co-mingling HOA funds to benefit themselves.

We have tried in vain to get information on the costs of the improvements and the legality of this scam from Lewis Management Resources Steve and have been told the management company does not have any records for the construction costs.  They only assess the lot owners what Jeff Utsch tells them to assess.  So basically the management company is only a billing service.  This does not seem correct either.

We need you help as the State Department of Real Estate.  It is our understanding that you are here to protect small lot owners from these kind of people that are only interested in lining their own pockets by
taking form the small guy.

Please help us.  We are also in contact with the Attorney General’s office and have not gotten very far.

A few months later we found out that the majority lot owners were being foreclosed by the National Bank of Arizona, the biggest loss in their history, $35-million.

At the bank foreclosure, Ms Baranow met Mr & Ms Morris, their Family Trust invested $1-million in New Tucson, they bought several of the Assignments of Special Assessments from the HOA, they said it was a loss. Their son was friends of Mr. Figueroa’s son that’s how they became involved. Mr Figueroa and nearly everyone else involved with the previous majority lot owners is being sued for financial fraud by a man who lost $1-million. (See also this post below about the lawsuit. New Tucson is mentioned on pages 28 & 55.)

At the end of 2008, NT Properties bought 1338 lots out of foreclosure from National Bank of Arizona.

At the 2009 annual meeting Russo said the engineering  for the dirt lots in Units 7, 9, 10N & 10S was “garbage.” At the 2010 annual HOA meeting, April 29, Mr Russo said, “best case scenario is that home building [in Unit 5] could start in six months.” Next meeting, 28 April 2011, we were told, “there would not be any moving forward with [Unit 5] development in 2011 but possibly in 2012.” Russo also said, “some money was recovered” [he said it was $250,000] in a settlement with Arcadis, who made the “garbage” plans that so many lot owners paid for with their $6000 assessments. 2012 meeting we were told SW corner of Unit 5 will be developed and an assessment of $10k would be imposed for the streets. In January 2013, Ms Baranow called Pima County Development Services to ask about building plans in Unit 5. The person reviewing the plans said no permit would be issued for at least six-months to a year, there are also problems with the electric, which has been underground for over six years.

Ms Baranow was told by another lot owner that the liens (contracts) in Unit 5 would expire in August 2012. In October 2011 Ms Baranow asked Mr Russo, “who owns the liens on my lots?” In January 2013, Ms Baranow sent the lienholder of the lots in Unit 5 a letter and $10 asking for a quitclaim deed or a quiet title action would be filed. Shortly thereafter, Mr Russo said he was the owner of the Assignment of Assessment and that I should sue him.

Was sad to see how many people have given up on their lots, this is a list of delinquent taxes from the Daily Territorial, 13 February 2013. (Unit 6, which is one-acre lots is not part of the development.)