Updated Surplus Numbers

Updated Surplus Numbers
Updated Surplus Numbers: Actual surplus 2018 per audit was $85,163.
Boards 2011-2018 implemented policies and procedures with specific goals:
stabilize owner fees, achieve maintenance objectives and achieve annual budget surpluses.
Any surplus was retained by the association.
The board elected in fall 2018 decided to increase owner fees, even in view of a large potential surplus

Average fees prior to 2019

Average fees prior to 2019
Average fees per owner prior to 2019:
RED indicates the consequences had boards continued the fee policies prior to 2010,
BLUE indicates actual fees. These moderated when better policies and financial controls were put in place by boards

Better budgeting could have resulted in lower fees

Better budgeting could have resulted in lower fees
Better budgeting could have resulted in lower fees:
RED line = actual fees enacted by boards,
BLUE line = alternate, fees, ultimately lower with same association income lower had
boards used better financial controls and focused on long term fee stability

Friday, October 2, 2015

Board Vacancies - The Problem

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As I stated in the previous post, our HOA has had great difficulty filling board positions in recent years.

This may simply be the way it is in HOA volunteer organizations in which some owners pretend they live in an apartment complex while others pretend it is a retirement village.

Here are some observations about boards since I've been living in this HOA. There has been great difficulty getting anyone on the board for more than a term or two. There has been an unequal distribution of tasks. These have been determined by director's title and the historical precedent of picking and choosing jobs. When the list didn't fit a board member's desire, boards sometimes created a position that was palatable to the board member (communications director, webmaster, etc.). Other factors have included skills, tools unavailable (computer, printer, email, etc.), health and willingness to put in the necessary time. Age is certainly a factor, because as weage, we become physically less able. We may also face cognitive decline. These conditions are normal and natural. It would probably be best for the HOA if our board was comprised of individuals younger than 60. That's a generality.

Time requirements is another problem. It has been noted by our most recent president that I've put in between 700 and 500 hours per year "serving" this community. I sometimes cringe when that number is mentioned. The larger problem is the owners who might consider a position on the board. Who in their right mind wants to volunteer 500 hours annually for a HOA? Some owners might think that this is the required amount. It isn't. I've had to do this because 1) This HOA was in serious trouble a few years ago, 2) The unequal distribution of tasks made it necessary and 3) Skill required to get the job done and I do have the requisite skills.

Board turnover after a term or two is also a problem. It takes a while to come up to speed and because most owners don't regularly attend HOA meetings there is little preparation or foreknowledge prior to being elected. So it becomes "on the job" training. With all of the cycles that a larger HOA must go through, some tasks are only done once per year. It may take two or three years to get into the groove, as it were. But board members frequently leave at the end of one or two terms. Some run.

At the opposite side of the spectrum, some board members may seem to set longevity records. But that is the exception.

In fact, for the past 5 years, more and more tasks have been pushed to one or two board members Everything from supporting the enforcement of Rules and Regulations to decisions about fees (delinquencies), cash flow, attending City, COD and Neighborhood meetings, preparing the newsletter, doing reserve study tasks, performing all manner of surveys and so on.

I suspect some boards have enjoyed this as it allowed some members to avoid the enmity of unhappy or delinquent owners. That's what happens when a board is fractured and unpopular duties are performed by one or two. The others will have the opportunity to duck, cover, and blame it all on "Nasty Norm" or whomever. The one or two who are most visible become the target of the dissatisfied owners. Other owners aren't stupid. They hear or observe some of this and it makes it more difficult to enroll board members. We might as well hand out targets for them to paint on their backs and signs to carry which declare "I'm a board member and that makes me a leper and unpopular." There is the example of the individual who attended a club event and was asked who she/he was. When it was discovered she/he was the spouse of a board member, people immediately lost interest and some walked away.

BLMH, being the behemoth it is, has a full time management firm, but not full time on-site managers. Boards over many years have willingly or unwillingly made a variety of decisions to "save money." For example, this has occurred as in-house street design and project management, and numerous project delays, sometimes for no reason other than a lack of funds or board "man or woman power." I know of a former board member who stated that he/she frequently picked up trash on the property. And so on. This approach over decades created not only the streets we have but also the image of the board and the expectations of owners. Some owners think we are incompetents and janitors. Which is so? I leave it to the reader to decide.

Because boards are comprised of volunteers and there is sometimes desperation to fill a position, skill may be an afterthought. A criteria might be "How much or how little damage will she/he do on the board?" After all, all board members vote, and some my be inclined to discuss sensitive issues outside the HOA meetings with owners. But boards need to fill positions, and what was needed first and foremost was bodies. For the politicos, getting a compliant body on the board is a win, as this is someone who can be manipulated to vote in a specific direction.

As for bodies on the dias, in some years, that's about all the owners got on the dias. Boards are so overloaded that it is common that anyone who shows up will have a position.

Being comprised of volunteers, the boards may face an impossible task. Some volunteers have a personal agenda and the easiest way to get that personal want realized may be to get on the board. Some want power and access to money decisions. A few might have an overwhelming interest in damage control and protecting their unit values. A few may also be on the board to keep others off; there are a limited number of positions available and each board member does vote. Others simply want to be popular. After all, these are my "friends" has been the occasional refrain when discussing the situation of owners who are not board members. For that reason, upholding rules can be very difficult. Most owners expect the board to do the dirty work, and some board members have found this to be impossible for them. When this occurs, boards fail to fulfill their duties and more and more increasingly difficult or unpleasant tasks will fall to the one or two who might be willing to do them. I've had a lot of unpopular tasks pushed my way. It reminds me of that old Wheat Chex commercial "Give it to Mikey" said the kids. Some boards are very undermining and some board members relish throwing others "under the bus" as long as it isn't the favorite contractors, etc. The rest of us are road kill! No kidding, it is immaterial if it is to be another board member, an owner, a manager or a less than favorite contractor. At some point we may each become road kill for such a director.

In recent years, the number of personal attacks by owners have increased and I am not the only board member who has been threatened. That is probably the "dirty secret" about BLMH. However, this HOA is not alone in this. Professional managers have informed me of brawls at other HOAs.

Some of this may be inevitable. Real estate professionals may not vet or inform potential owners of their duties and responsibilities as HOA owners. It's all about the sale and the commission. Condos are just like homes, aren't they? Or perhaps they are believed to be apartments which will appreciate over time and provide a nice windfall to the owner. Some owners discover after purchase the reality of fees, what living in such a community involves, the fact that the reserves are not a slush fund for owner exploitation, the HOA isn't a social club or a piggy bank or get rich scheme. The last two hit home in 2008. After the cold shower, some owners are bitter and feel that others betrayed them. The alleged culprits include the government, banks, real estate professionals, boards, etc.

For the most part, bitter owners have no one to lash out at but the management and the board, and some do.

There are consequences. Owner nastiness, board member nastiness, lack of support by other owners (beyond an "attaboy") have all contributed to produce our boards. These are sometimes not fully staffed, or we have the same people coming back year after year after year. The board is getting older, and older and older. Why? It's simple, No one wants to do this job. Everyone demands results. But some one else should uphold the rules, because "these are my friends" or I won't or can't. Some owners don't have the stomach to deal with nasty owners and some owners are unfit to be fiduciaries.

As I have repeatedly stated, owners get the boards they elect and deserve. From time to time a board will appoint someone to a vacancy but that appointment only occurs because owners couldn't bother to elect someone.  Once in a while a champion may appear, but that is rare. Most people prefer to put their skills to work making money, in a hobby, or making a difference in a larger way. HOAs are supposed to be a place of "community" living in which the "community" participates.  But many HOAs are not.

The miscreants are waiting in the wings. That's the way it is in many HOAs today.

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