Pine Grove Lakes Homeowners Association

Pine Grove Lake ("Upper Lake")
Dam Repair Project & Liability

(December 2017 update - any factual additions or corrections may be reported .)

What is the Pine Grove Lake dam?

The Pine Grove Lake or "Upper Lake" earthen dam was constructed in or about 1935 by the Ramapo Heights Corporation when the lake was still called Mountain Lake.  The dam is also an unpaved right-of-way (paper road) which can be viewed on this town plat map as the portion of Sunset Road along the northwest border of the lake running between the unpaved Torne Road and the paved Laurel Road, in Sloatsburg.  The lake itself is approximately 5.8 acres in size.

Deficiencies and threat to public safety

Since 2001, the Pine Grove Lake dam has been cited with deficiencies by the New York State Department of Environmental Conservation (DEC), which is responsible for enforcing the stateís dam safety regulations.  The DEC and U.S. Army Corps of Engineers ("USACE") have inspected the dam and determined that it is a Class C "High Hazard" dam requiring nearly $1 million in repairs.  Of the 5,845 New York State-regulated dams, only 408 of them have "high hazard" potential. The "High Hazard" classification means that failure will likely cause loss of human life, serious damage to homes, industrial or commerial buildings, public utilities, main highways or railroads, and extensive economic loss.  Specifically, the USACE determined that, in the event of a storm-day failure of the Upper Lake dam, there's a likelihood of severe flooding not only within Pine Grove, but also in Sloatsburg's village center, including the failure of the PGL Lower Lake Dam and the washout of several local homes, roads and the I-87 Thruway.  

Such an event would not be unlike what happened in in 2011 when Hurricane Irene led to the failure of the Echo Lake dam in Arden (just north of Tuxedo), exacerbating the flooding in Tuxedo and Sloatsburg via the Ramapo River.  Bridges were washed out, the village centers and homes were flooded, and the railroad tracks were upended for months (see here, here, here, and here).  Echo Lake was considered a Class A LOW hazard dam, and though it was roughly 4.5 times the size of Pine Grove Lake, it was also 11 miles away, while Pine Grove Lake sits just one mile upstream from Sloatsburg's village center.

The DEC has also determined the condition of the Pine Grove Lake dam to be "unsound."  According to the DEC, the main problem with the Pine Grove Lake dam is that the spillway isn't large enough to withstand a 50% probable maximum precipitation or flood event for this region. The spillway needs to be lengthened and/or the dam needs to have concrete or cement blocks installed on the top, along with riprap on the upstream side, so that if the dam does overtop in a storm, it will remain intact. 

Another issue is that Sloatsburg sits on the Ramapo Fault line, and the dam's integrity could be compromised in the event of a minor earthquake or tremor, according to the Rockland County Sewer District, whose engineers opted to install grinder pumps instead of gravity sewer mains for homeowners near the Upper Lake in 2016 because they were concerned that blasting near the dam, which is required for gravity mains, could lead to its failure.

With projected dam repair costs approaching $1 million, and only $400,713 in PGL's Reserve Fund, which is currently (and improperly) being used for other purposes, that leaves at least $600,000 in unfunded liabilities and a dam that constitutes a continuing threat to the surrounding community.  See Private Dams and Associated Legal Implications.

Who's responsible?

The Upper Lake and the dam are owned by the Association of Property Owners at Pine Grove Lakes ("PGL" or "Association") as part of its common properties, which are required to be maintained under PGL's Declaration (primary governing document) and applicable state law.  PGL is required to assess maintenance charges on homeowners who live in the community, in amounts sufficient to at least maintain its common properties in their original, umimproved forms and to exercise its lien and foreclosure powers toward that end, as necessary.  

Although PGL was notified of the dam deficiencies by the DEC in or about 2001, and the estimated repair costs were only $300,000 to $400,000 at that time, it had no reserve fund or other monies to make the repair. PGL started a Reserve Fund in 2006, however its annual maintenance charges have been insufficient since then -- only a $25 increase during the 10 years between 2007 and 2017, and currently only $500 annually per home -- while the estimated dam repair costs have risen sharply. 

At the December 2017 annual meeting, the PGL board stated that they haven't raised maintenance charges over the last 10 years because "it wouldn't have made that much difference anyway" or if they did, "people wouldn't pay."  The fact is, if PGL had increased assessments starting in 2006 in the amount of only $50 per year for 4 years and then $25 for the next 4 years, the annual amount would have risen to only $800 -- still very low relative to other HOAs in the metro NYC area with similar recreational lands -- and PGL would now have over $900,000 in the Reserve Fund.  A much easier pill to swallow than a large special assessment. And PGL, like every other HOA, has lein and foreclosure powers to ensure that its members will pay, as they are required to do.  Because the primary purpose of every HOA is to maintain its common properties.

Fixing dam may cost Sloatsburg neighbors (Journal News 1/22/08)
Click here for 1/22/08 Journal News Article about the dam repair (newspaper clipping or text version).

As of November 2017, the Reserve Fund held only $400,713 with estimated dam repair costs approaching $1 million (according to PGL's official newsletter), leaving an approximate $600,000 unfunded liability for PGL homeowners as of December 2017 And though PGL's Declaration prioritizes the preservation of its unimproved common properties before funding any capital improvements, PGL recently began spending its reserve funds on capital improvements for other common properties, eroding the limited reserve funding available for the dam repair.  

During 2017, PGL spent only $500 on Upper Lake dam compliance. At the same time, it spent nearly $5,000 on parties and social events, which are not permitted expenses under its Declaration (according to PGL's attorney in a 2005 opinion shared by the board with much of the community), and has been doing so for approximately 18 years. While it's not the immediate cause of the dam funding shortfall, it is indicative -- along with the board's failure to raise assessements in 10 years and its allocation of virtually all remaining funds to Lower Lake and beach area improvements -- of the Board's view that PGL's assessment,  lien and foreclosure powers exist for the purpose of running a social club subject to popular opinion and "community polling."  Similarly, during calendar year 2017, while PGL's maintenance collections were at their lowest point in 10 years, not a single lein was filed by the association against any delinquent homeowner, in violation of PGL's governing documents and to the detriment of all PGL homeowners. Folks, it's called governing documents, fiduciary duty and the law, and it's the basis of every homeowner's association. 

Michael Bruno Properties in 2011 After Hurricane Irene Topped the Echo Lake Dam and Cause it to Fail, Flooding Downtown Sloatsburg
Sloatsburg train station commuter lot, and what are now the Michael Bruno properties, after
Hurricane Irene caused the Echo Lake dam in Arden (just north of Tuxedo) to fail in 2011.

History of the Dam Repair Project & Key Documents

In 2003, PGL retained the services of Maser Consulting P.A. (Maser), an engineering firm licensed by the state, to evaluate the concerns expressed by the DEC and to make recommendations about how to bring the Dam into compliance.  Maser conducted a preliminary evaluation of the site for stability and structural rehabilitation and prepared a cost estimate in the amount of $421,000.  As of 2005, both the board and Maser believed that the actual construction costs could have been brought down considerably -- possibly in the range of $200,000 to $300,000 -- and still meet DEC standards.  The design phase of the project was slated to begin in 2006 at a cost of $15,000, with Maser conducting a more in-depth analysis of the Dam and presenting a more realistic estimate of construction costs.  As of 2005, the Board anticipated that the repair work would commence in 2007.

Another issue, according to PGL's president in 2005, is that the spillway has been raised by the Association over the past 30 years to allow water to be stored and then taken for the lower lake during swim season.  In addition to the possibility that lowering the water level might mitigate the repair cost somewhat, there is some concern that the higher water level might exacerbate the risk of dam failure.  But it's  important to note that lowering the water level would likely entail signficant remediation costs in connection with the change in shorelines adjacent to homes around the Upper Lake, as well as the shallow portion of the lake on the private Sunset Road right-of-way (the eastern portion with the homes, which is not part of the dam), which would likely become a swamp.  Additionally, lowering the water level won't not rectify the deficiencies cited by the DEC and the necessary repairs would still need to be made.

The PGL Board has been exploring the possibility of outside funding from the state, town, and village since 2001. It has been determined, again and again, that such funding is not available because the Upper Lake is private property and it's the responsibility of PGL to maintain it. Nor does PGL have access to a bank loan, since it has no collateral--the common properties can't be used as collateral because they're not transferable--and the interest could nearly double the cost of the repair. 

If there was a likelihood of imminent failure (which is sometimes difficult to know before it actually happens, as in the case of the Echo Lake Dam in Arden), it's possible that some government authority could step in to protect public safety, but there would still be no way for PGL to escape ultimate financial or legal liability. And it's likely that the NYS DEC would assess substantial fines against PGL, as they've done against other dam owners, in addition to holding PGL responsible for the cost of the repairs.  

And in the event that the Upper Lake is impaired or diminished because of PGL's failure to maintain it, as required by its governing documents, there would almost certainly be lawsuits by PGL homeowners.

For more information, see the following documents relating to the Dam Repair Project, which were obtained from the PGL Board, the U.S. Army Corps of Engineers and NYS DEC.

 U.S. Army Corps of Engineers Dam-Break Flood Analysis
Maser Engineering Report & Cost Estimate
NY Dam Safety Law
DEC Dam Design Guidelines
Schick Case Strand Case

Reserve Funding History

As of 2005, the Association had no reserve fund or other money to pay for the repair. Concerned members suggested, for future planning purposes, that PGL start a reserve fund, like other homeowners associations. A reserve fund is a special type of savings account that is used to fund the maintenance and repair of an associationís common properties. This is done by evaluating the life of each asset, in years, and dividing it into the cost to replace the asset when its useful life is over. It is not meant to pay current year operating expenses: it is meant to fund longterm maintenance obligations (i.e., the Pine Grove Lake Dam repair, the Mirror Lake spillway repair, the well pump replacement, the basketball court and the playground) as those assets are "used up." However, PGL's Declaration mandates the preservation of its unimproved common properties, like the lakes, yet makes optional the funding of capital improvements, like the basketball court and playground. Clear priority is given in the Declaration to the funding of the unimproved common properties. And no other expenses are permitted, except for administrative expenses (legal, taxes, insurance, etc.) in connection with those things.

The primary purpose of any homeowners association, ours being no exception, is to maintain the associationís common properties. This is why we pay annual maintenance charges (see our Declaration). Maintenance of our common properties is also important from a practical standpoint since, as the condition of our common areas deteriorates, so do our property values. In many states, reserve funding is mandated by law. Even where it is not mandated, it is an accepted planning standard for homeowners associations because it is fair to all owners and maintains association assets systematically and responsibly.

PGLís Declaration states that maintenance charges must be assessed in an equitable manner. Reserve funding is the only way to ensure that they are. By spreading out the cost of repairs and replacements over the useful lives of our assets, the homeowners who benefit from those assets are paying for their wear and tear, instead of the homeowners who happen to be living here when itís time to make the repair. The use of special assessments, loans or tax districts to pay for repairs and replacements penalizes relatively new homeowners who have to pay for them, since former owners were able to use those assets without contributing anything. In addition, large  special assessments can be burdensome to homeowners and difficult to collect. Borrowing, whether through a loan or tax district, can actually double the cost of the repair, depending on the interest rate and loan term. 

Prospective buyers also consider the issue of reserves in deciding whether to buy in a homeowners association. When there is no money set aside to fund major common property repairs, special assessments are a near certainty. Wise buyers steer clear of such ill-prepared homeowners associations. Lenders may also consider reserves when making loans, since the ability of the association to maintain its assets directly impacts a lender's collateral. If buyers and lenders go away, home prices fall.

As noted above, PGL established a Reserve Fund in 2006, in recognition of the requirements of its Declaration. However, as of December 2017, it remains grossly underfunded relative to the projected dam repair liability (as well as any other unknown liabilites that might arise in future years).  

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Pine Grove Lake, Sloatsburg, NY