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.