HOA Board Setback

Our HOA has had great difficulty filling board positions in recent years. We've had boards with unfilled positions. Other examples include boards with members who had difficulty performing their board duties and tasks, boards with members who had no assigned duties and board positions which were vacated after a year or two. Some boards had members which wouldn't or couldn't use email, spreadsheets and so on. We've also had boards with members who avoided creating newsletter articles or reports to owners. HOAs simply do their best with the boards which have been elected or appointed.

When owners wonder why some things don't get done, or the newsletter is the way it is, or whatever, it is because of who is on the board, the unfilled positions and the manner in which duties are distributed and performed.

This may simply be the way it is in HOA volunteer organizations.

The most recent setback? At our annual meeting, we fell back to a board with an unfilled position. Our youngest member has moved on to other duties. There will be fewer people to get the job done.

There will be consequences. This may not be of concern to some owners, who expect whoever is on the board to simply get the job done. Not my problem says the owner. Oh, yes it is.  A few years ago we had a group that was convinced this was an effortless, easy job. Just issues orders to Management and voila' the work is done. They learned the hard way that was not the way it is. Soon they were gone, using any excuse possible.

Why such difficulty in a HOA with 336 owners? I'll save that for another post.

HOA Annual Meeting - The State of the HOA

The annual meeting of Briarcliffe Lakes Manor Homes Condominium Association was held on Thursday September 24. Each board member gave a summary of the state of the HOA from the perspective of their individual responsibilities. The summaries included:

• President's Perspective
• Vice-President's Perspective - Projects, Architecture and Infrastructure
• Maintenance Director's Perspective
• Treasurer's Perspective
• Rules & Regulation Director's Perspective
• Landscaping Director's Perspective
• Welcoming Director's Perspective

There were some surprise announcements. But only approximately 10% of the HOA owners were in attendance in the audience, so most of the owners were not present for the announcements or the perspectives and summaries provided by each of the board of directors. However, the board of directors and management have properly fulfilled their duties. Owners have obligations too, and that includes attending the annual meeting. I suppose that some one might say the the six newsletters are so jam packed with information that there is no need to attend the meeting. However, our HOA business meetings span about 20 hours per year. They are jam-packed with information and believe me, 18 pages of annual newsletters (front and inside) cannot cover these meetings. Some owners have complained about transparency in the past. Coming to meeting would seem to be the best way to be informed. But many decided they were "too busy."

A quorum was reached and the elections held.

The HOA will now have only six board members. The president's position has been vacated.

Commentary:
As I have stated previously, the facilitator to the success of a condominium association is the owners. Owners can also be the greatest impediment. Board members are owners, too. So the quality of the HOA is determined entirely by the owners.

At BLMH it has been a struggle to fill the board positions with working members. We have had place holders from time to time. Because of the low interest by owners, we have had some board members "work for free" contributing hundreds of hours per year. We have also had some board member return year, after year after year. We now have one board member who has been doing this for about 38 years with a brief absence when the owners declined to re-elect her during a particularly rough patch. At the time we were entering the worst recession since the great depression, fees were up, we were in the early phase of a roofing project which would require another ten years to complete and but begun with less than 10% of the necessary funds in savings, we faced a major and early street replacement, etc. The ownership attributed all of these problems to the board. The economy surely didn't help the mood.

It's simply too easy for many owners to pretend this is an apartment complex or a retirement community. Owner involvement ceases with the paying of fees.  That's one reason why we have such low owner attendance at meetings. Boards may also have been their own worst enemies. I also am of the opinion from past experience that more owners would attend if there was something personal in it for them. For example, about 7 years ago a board attempted to bribe owners with free coffee and donuts. Some owners have come with their complaints and their hand outstretched and palm up. A compliant board a few years ago attempted to grant every wish and demand. It is unfortunate, but these hand outs require higher fees. And fees are really in short supply; we will spend every dollar we've collected simply do do the absolute necessities. No kidding! There is no "slush fund" with which to grant the personal wishes of owners, unless a board decides to avoid completing the roofing project, or stop driveway repairs, or let owners clear their own driveways of snow, etc. That would be okay for a few, as long as their driveway was plowed and if they already have a new roof, etc. why, then it is not a problem at all!

HOA Delinquencies - An Unpopular Subject

I've been on a HOA board for a number of years. I've spent years observing this particular HOA and earlier boards. It has not all been pleasant. Some subjects remain universally unpopular. As I have stated previously, the facilitator to the success of a condominium association is the owners. Owners are also be the greatest impediment. Board members are owners, too. So the quality of the HOA is determined by the owners. At BLMH it has been a struggle to fulfill the board positions. It's simply too easy for many owners to pretend this is an apartment complex. The vast majority of owner involvement ceases with the paying of fees. Well, the majority of owners do pay their fees. That's one of the sometimes unpopular Rules. It is common knowledge that snow removal takes money. Maintenance takes money. Street lighting takes money. New roofs, water mains, streets, driveways, walks and garage floors do too. So does landscaping, tree removal and new plantings.

Yet, in our HOA a few owners took the position that some of us should not be required to pay our fees, or more recently, that the HOA should take on the burden of replacing owner's fireplaces. I suppose furnaces and hot water heaters will be the next demand.

Each owner is required to pay their fees. Some owners have complained vehemently over the years about "high fees." These complaints have apparently surfaced from time to time for decades. Over the years, I've observed boards go to great lengths to avoid discussing this with owners present. Oh yes, some board members would make general statements such as "owners need to pay their fees." A few owners have grumbled about this. In our "city within a city" we do have a few who think the majority should pay the way of the few. I attribute this to the fact that some owners are misguided or are socialists and that is their perspective. No one ever takes the position that "we should stop maintaining the property" and so we are all to get new roofs, new driveways, new garage floors, new "views" and so on. My opposition to "free rides" earned me the enmity of several owners here at BLMH. There have been threatening remarks or actions. I'm not the only board member to  be so treated.

Proving the Emperor or Empress Has No Clothes
How does one get people angry? It's easy. For example, several years ago, one of the things I instituted as a board member was a monthly open review and charts of delinquencies. I refused to be gagged. (Board Presidents wield great power; they can suppress board discussion and most do determine what is to be discussed during HOA meetings. Board Presidents do have to contend with other board members who are "volunteers." So the other side is also true; if a board member is not going to do something, there is no power on earth to make them do it. So president's powers do have limits. The entire system only operates well if boards operate as fiduciaries and don't shirk their duties.).

This change in delinquency reporting occurred in part because of simple events. An old board had been overthrown and a new one instituted by the owners many of whom did everything possible to keep me off of the board. They failed. Those owners do remain here to this day. Once on the board, I was able to begin a discussion about "fiduciary duties" and I can say that was a very unpopular one. Nevertheless, delinquencies became an open discussion during HOA meetings. No names or unit numbers were or are discussed during the open meetings. Such open discussions were something both old and new boards avoided. The excuse used was that this was "executive privilege" which is false. Statistics are not "executive privilege." Names and unit numbers are.

So why would previous boards avoid giving owners this information? Here are a few possible reasons:

• Board Personal Agenda
• Board Desire to Appear Competent
• Fear of Owner Reprisal should the statistics suddenly appear "How could this happen?"
• Board Unwillingness to "look bad" to owners. 
• Board Fear of being unpopular
• Boards are elected and some are very political
• Some Board Members expect to be re-elected
• Concerns about Unit Sales. 

The return of a former board member provided a window of opportunity. There was mutual enmity between two "factions" on the board, primarily an old timer with perhaps an axe or two to grind. I admit, I used that to get the new statistics up and running. It came to my attention later that one board member had apparently stated that "Norm is dangerous." To whom? I took the position that was unwarranted and hired an attorney to deal with these issues at personal expense. However, each month (+ or -) the entire board is given a supplemental data sheet and any owners who attend HOA meetings are given a graphic verbal description of what is on that sheet. It is a presentation about delinquencies. It includes the quantity of delinquent owners and the dollar amount gleaned from Management's monthly report. What was new is it also includes charts since 2008, a running total including number of delinquents and total dollar amount owed, number of minor delinquents owing less than $100, bad (uncollectable) debt which is money owed by owners but which they have been able to legally avoid, and the impact on other owners. What impact? The information publicly provided to all owners in attendance at each meeting included the "out of pocket" cost to each owner.

To this day, some board members remain hesitant to discuss this with owners present and will avoid it. Old habits?

I can state that doing this and presenting this information has not been popular with all board members since instituted for a variety of reasons. Why? For one thing, boards didn't do this for years. Why not? Well, boards are comprised of elected owners and owners have personal agendas.

"Breuder Bill" is Passed to Limit Severance Packages

From the Wheaton Patch:

Rauner Passes 'Breuder Bill' to Limit Severance Packages for Community College Administrators

Severance packages would be limited to only one-year of pay and benefits.

From the Chicago Tribune:

Illinois House passes severance cap for community college presidents

From the Daily Herald:

Rauner ends severance deals like the one COD's Breuder got

Summary:
July 9, 2015: The “Breuder Bill”, HB3593, which limits severance pay at Illinois Community Colleges to no more than 12 months pay passed the House with a 73-34 vote on concurrence with the Senate amendment.

On September 22, 2015 Gov. Rauner signed it into law.

This came "six months after College of DuPage trustees voted to give President Robert Breuder $763,000 to retire in March 2016, three years early. The deal is one of the largest severance packages for a public employee in state history." According to the Chicago Tribune. The Tribune also stated that "The Breuder deal, shrouded in secrecy until the Tribune revealed the details, has caused a firestorm in the western suburbs, where it came to symbolize lavish spending at the state's largest community college. The deal also did little to help Illinois' 48 community colleges as they battle proposed cuts in state funding."

This is not the end. The Tribune also stated "The bill that passed Thursday was the first that lawmakers addressed. A state Senate subcommittee intends to hold a hearing July 20 in Chicago on administrator compensation, following a scathing report from Senate Democrats that accused the state's community college and university presidents of living in a "fantasy world of lavish perks" that included housing allowances, cars, club memberships and generous bonuses."

According to the Daily Herald '"Abuses of taxpayers that arose at the College of DuPage are now being transformed into serious reforms statewide," COD board Chairwoman Kathy Hamilton said in a statement. The COD board, led by a new majority elected in April, voided Breuder's contract just last week.'

HOA Shareholders Meeting

This week will be the annual meeting for our HOA. This shareholders meeting is an important annual event. Our HOA is a not-for-profit corporation with 336 owner-shareholders. Board members are owners who step up and are elected by the other shareholders for terms of one or two years.

During the meeting the owners who attend will be given a "State of the HOA" assessment by the current board members, and after the election tallies are in, they will meet the new board members.

Will we have new board members, members who have never previously been on the board? Or will we have the same old, same old? The youngest member of the board, by age, is not running for reelection. After several terms that is appropriate. It's time to pass the hat to owners who have not done this before. It's appropriate to create the opportunity and nature abhors a vacuum. Working on the board should be an enlightening, educational experience. Something each and every owner should do, and be willing to do. "With knowledge comes wisdom."

Is there anything significant to report to the owners on Thursday? Yes, there is. I am a member of the budget committee. It has been working on the reserve plan. Simply one of a thousand tasks that must be done here by a volunteer body of six or seven. If not, then we drift and there will be consequences. If not, then we'll simply pull out a dart board. Will it be the "feel good" dart board, the "same old focus on O&M" dart board? Or the "just wing it" dart board? HOA boards can pick and choose their approach, and boards do. 

If this annual meeting is true to form, we'll have somewhere between one-third and one-half of the owners in attendance. Most will listen and ask questions. A few will opine about what the board should be doing, or what the board is doing wrongly. In other words, what "someone else" should be doing. Sometimes the opinion expressed is about "What the board should be doing for me." 

What's Important?

In fact, this HOA faces some serious challenges. These are not insurmountable. Nevertheless they are real and there will be consequences for owners.

What kinds of consequences? Owner Fees, for example. The budget for 2016 will be determined in October, less than 30 days after new board members are in place. I would suggest this. In a HOA where very few owners attend monthly meetings, just how prepared do you think the new board members will be to discuss a budget in excess of $1 million?

After the annual meeting, the board, whoever they are, will make the decisions necessary to keep this place running. Maintenance, projects and budgeting/fees will be determined by the board. Will the next five years proceed smoothly? Not necessarily. Boards are comprised of ordinary owners whose only mandate is to 1) Act as a fiduciary, 2) Leave any personal agendas behind, 3) Exercise sound business judgement, 4) Use common sense and 5) Avail themselves to the guidance of competent professionals.

However, it will be entirely up to the board to use their common sense and business judgement when steering this behemoth of a HOA through the annual mine fields. Is it easy? Absolutely not. Previous boards have stumbled to build reserves, have stumbled to maintain the HOA, have stumbled to act as fiduciaries and have stumbled to uphold the Bylaws and Rules & Regulations. 

Yes, it is a minefield and far more treacherous than the potholes we had on Lakecliffe. Those were preventable. But boards made a series of decisions commencing about 2000 and there were consequences 10 years later.

My point is this. Every board is significant and important to the well being of the HOA. Each board makes short- and long- term decisions. There will be consequences to each decision. If boards make poor decisions there will be financial consequences. Streets may disintegrate. A few years ago we had a small group of owners who argued this place could be well maintained with an army of handymen with lawnmowers. Really? Really! So to owners I say, choose wisely.  Some HOA owners appear to be willing to let others make the decisions and the mistakes, and then complain about it.

It is true that we can do everything right and things may go wrong. That is the exception to the rule in my opinion. Good decisions and good choices have good results. Reserve studies are tools to be studied and discussed. But boards are reluctant to do that. As with all tools, they can be used, misused or abused. Have you ever seen anyone using a screwdriver as a hammer? I have. So too with finances and planning. Sometimes board members will take the position "we don't have enough"and then boards will raise fees. Sometimes the position will be "we have enough" and boards may spend frivolously or unwisely. It takes study and some financial wisdom to figure this out. It also takes consistency. We live in a dynamic, changing world. Simply because we made a decision last year has little bearing upon current reality and current outcomes. That is why frequent and recurring surveys of all things HOA are a necessity.

It is necessary to have stamina and consistency. Being a board member is not something for the hip shooter. But we can all learn from the experience, if we are willing to learn.

What Must We Do?

The greatest single impediment to success is the owners. What do I mean by this? I'm addressing a lack of involvement. When only a handful attends monthly meetings, when less than 50% attends annual meetings or votes, that is a serious problem, IMHO. This is my single greatest concern for this HOA. In such a vacuum any group with a personal agenda can take control of the HOA. It happened before and it will happen again. What I can't predict is precisely when this will occur.

I do think that a few will answer the call of duty and will perform as fiduciaries.  In fact, I am of the opinion that more than a few will show up at some point in the future. When will that be? Most likely the trigger will include the completion of the roofing project, the completion of Lakecliffe Blvd and the HOA has achieved oh, $2 million in the bank in reserves. At that point, the call of that money will be overwhelming to a few. "Save it and they will come to spend it."

It is a fact that politicians love to spend. Every HOA has its politicians and BLMH is no exception. We also have a few who covet the savings of this HOA.

Who are they? They will come out of the woodwork at some point in the future. They did before. Human beings come in all shapes and sizes. There are those who do good and then there are those who are up to no good. Welcome to reality.

What Will I Do? 

There are limits to what I can or will do for this HOA. Board members are owners who volunteer. We're supposedly no different than any other owners. So where are the other 329?

It is a fact that none of us have to live here. That includes me. Among other things, I am a long term planner.  I have a plan in progress. I won't live here until I die. After my death, my unit won't foreclose. My past due fees won't be inflicted upon the other owners, as another "bad debt" that they will have to pay via their monthly fees.

Living in a HOA, even one as well managed and as lovely as BLMH is voluntary. If an owner can't tolerate rules, boundaries or fees, then they really should live somewhere else. Renting is cheap. No responsibility and no benefits either. Just pay each month and when things go bad, complain to the landlord. No one has to worry about the hot water heater, the fireplace or the furnace. Hot water and heat comes with the rent. For some, that is the best option in living.

HOAs aren't apartments and they don't have landlords. Owners have the responsibility to maintain their units, pay their fees and plan their independent futures. If they are unwilling to do this, then they should leave and live elsewhere.

Boards aren't comprised of politicians. We can't make owners happy; there simply isn't enough money to do that.

In a well run HOA, every dollar collected from owners via fees has been earmarked for a specific task which is consistent with the structure and purpose of the HOA. So it is at BLMH. There is no money to flush or throw around indiscriminately to make a few owners "happy." If there was, then I assert that the fees are too high. HOAs are not supposed to have a "slush fund" taken from the pockets of owners and squirreled away to deal with special interests. Yes, owners who want to be coddled are "special interests." This isn't COD, or the State of Illinois, or Chicago, for that matter. Each and every professional this HOA retains is a contractor (yes, they are contractors via legitimate businesses. They aren't "employees" of BLMH). Owners won't be paying their retirement; any such funding is the sole responsibility of the firms which have these employees.

Why Don't We Have 100 Percent Attendance?

We have a few offsite owners. For anyone living in Florida or Thailand, it would be an imposition for them to attend. It would also reduce their profit as airline tickets, motel, etc. would be a business deduction but would also lower the bottom line. 

For any of the others, I really can't say why they don't attend. It is true that some of our owners think they live in an apartment complex, or a retirement community. Some of these truly believe that the management company owns this complex. Some also believe the board is a group of paid professionals. 

It is easier for some owners to make believe than to determine what is real and act responsibly and accordingly. 

HOA Elections

It's that time of the year when HOA elections at BLMH occur. Our HOA has 336 owners. But we have some difficulty filling seven board positions. However, we recently had a full board of seven.

In a few days we'll have our annual meeting and owners will elect several board positions. Our president, after several years has decided this is to be his last term on the board. We have several incumbents who I understand are running for another term.

Will other owners be sufficiently motivated and concerned to step up to fill a board position? I certainly hope so. I've been asked me opinion of the lack of owner involvement and I has consistently stated that it is the issue of greatest concern to me at this Home Owners Association. Governance is an important component of a HOA. It it is lacking, then it really isn't a "Home Owners" association is it?

When asked why they don't participate many owners will say they are "too busy." Some see the board as an authoritarian body whose primary task is the unpleasant one of enforcing rules. Rules such as paying one's fees. In the past a few have taken the position that paying monthly fees should be strictly voluntary and so too for any other rules that are not convenient. Everyone seems to agree that the HOA should be maintained, but there is some disagreement about who should pay what. A few years ago, it seemed a board took the position "pay if you can." That was unworkable of course because money is necessary to pay everyone from the City of Wheaton water department, to our snow plowing service to the landscaper.

There are differences of opinion about what constitutes the proper maintaining of the property.  As a fiduciary, it is a board member's duty to uphold the bylaws and the rules, and maintain the property within reason and impartially.

Impartiality is one of the tripping points for owners. Everyone agrees we should be treated fairly and equally. In other words no special favors, everyone is to uphold the rules and pay their fees. However, these are generalities. When the rules apply to each of us is when they become unpopular.

This confusion about board duties and responsibilities led to some serious disagreements a few years ago and two board turnovers. This confusion lingers even today. Some would prefer that the HOA take on the maintenance of their units. Beginning with fire places, and as long as we are at it, why not the furnace, air conditioner and hot water heater, too?

These are "manor style homes." Forty-four of them on a property of about 40 acres with 15 acres of turf, hundreds of trees, three streams and waterfalls, perhaps a half-mile of walks and so on. Operating and maintaining the common element aspects requires ALL of the fees. There is no money remaining to assume the responsibilities of individual owners.

However, some owners want to live in a home like environment with private walking paths, etc. but would prefer the costs of an apartment. Some see the bank balance for the HOA and are of the opinion this is a lot of money. Yes, it is. However, this HOA has taken ten years and nearly $2 million dollars for a roofing project. That's about $200,000 per year and it took far longer than ten years to accumulate this. The project is not yet complete and may require another 2 or 3 years.

Street and water mains are another infrastructure area which has required large sums of money. Taking care of about 100 dead and dying trees has also been expensive.

The street project will continue with work on cul-de-sacs for another few years.

All of these projects and other day to day maintenance will take every dollar that our owners contribute to the HOA via their fees. Most do this without complaint or incident.

Not all are happy. But then, making people happy is not one of the duties and responsibilities of a HOA board. Will the coming election be a popularity contest? We'll see. This election will be important, as are all elections at BLMH. I've been in a race against time since 2007. There remains much to do to build an organization.