November 12, 2008
The "Other" Point of View
On a plane flying home a couple of weeks ago, I read an interesting article by the Mayor of Ketchikan, Alaska, which was made famous by all of the media surrounding the "Bridge to Nowhere". The mayor explained that he understood why people might get riled up by the way it was funded, and by the appearance of it seemingly servicing very few people for a whole lot of money. He calmly pointed out a number of good reasons for the bridge, none of which ever made the news media, including the fact that the government, when it decided to build the airport on an island 30 years ago, promised at that time to build a bridge so that people could actually get to it, and they were just finally getting around to keeping their promise. The article was quite reasonable and a good many board President's, manager's and attorneys' could take a lesson on dealing with the media from it (Newsweek 11/2/08 - http://www.newsweek.com/id/165478).
In one of the forum's I monitor, I ran across a post from someone who was having a problem with their board, and a number of the responders commented that it seemed from the number of other posts and from the news media, that all association boards were corrupt, power-hungry and determined to make all of the other homeowners' lives miserable. I'm reading similar comments from owner's being interviewed and by columnists who seem to have just discovered the "drama" of association living.
Like the "Bridge to Nowhere", the truth is that most boards do a decent job, don't embezzle, don't run roughshod over the community and don't turn into petty tyrant's upon election. But that doesn't get Julio Robaino (congressman from Florida) on the 6 o'clock news a couple of times a week. Nor do I ever expect to see a documentary highlighting the life of a board member - boring news isn't "news".
I know I've be on this rant off and on since I started the blog, and maybe its just been that I've been buried in the half-truths of political ads for the past (seems like forever) campaigns, but I want to make sure someone is reminding people that just because you see it on TV, doesn't mean it's anything other than an exception. The numbers just don't back up those that say association boards are bad.
So, because you're never going to read it in your newspapers, or see it on your television, I would like to personally thank and congratulate all of the thousands of board members who have donated their time and energy, put up with the abuse from owners who never bothered reading the documents, answered the midnight phone call because the owner at the other end decided that you should be handling their problem, read boring report after boring financial report, tried to get others to join a committee or run for the board, scrambled to get a newsletter out with something in it, and on and on......... Thank you!!!!! You're not a punchline - you're important to many.
Posted by joewest at 10:12 PM | TrackBack (0)
October 7, 2008
Even Tougher Times Ahead
The nation is finding out what we here in Michigan have known for quite awhile. Things aren't going too well for the economy. Blame is flying everywhere, but when you get right down to it, we're all too blame. We paid too much for housing, we charged for things when we should have paid cash, we elected the people who are making the decisions, we hold too few accountable for their actions until after the fact, we listen to rhetoric rather than demanding facts, and we read e-mails and watch "reality shows" rather than reading newspapers and magazines that actually have information to learn from.
The news about associations over the last six months has gone from bad to worse as foreclosures have taken a large swipe at operating funds, and boards are struggling to keep things running with less to work with. The margin for error in financial decisions has been reduced to zero and some associations that have also been hit by natural disasters are finding that skimping on insurance coverage or raising deductibles can come back to haunt you at the worst possible time. I feel sorry for those associations in Texas that will be faced with trying to borrow funds to make up for insurance shortages, just when the credit markets are essentially closing down.
If there was ever a time for all owners to get involved in their association's activities.....if there was ever a time when board members and professionals needed to step up to the challenge.....if there was ever a time when it was important to be proactive rather than reactive, it is NOW! You may not know where the economy is going, or what might hit you next, but you need to start making contingency plans to deal with a wide spectrum of possibilities.
Take a look at your budget and ask yourself what you would do if you only had 90% of the projected revenue. 80% 70% 60% 50%
What is your financial plan if a natural or man-made disaster hits? How do you cover the un-insured portion or the deductible? Don't just think in terms of hurricanes or floods.... there were over 1,000 fires in condos last year, most damaging multiple units. How is your plan impacted under the revenue reductions above?
Many state laws and governing documents prevent associations from using capital repair and replacement reserves for any purpose other than the ones intended. In other words, they are not a contingency reserve. But do your documents allow the association to borrow from them? This may help spread a short-term loss recovery over a longer, more affordable period.
Spend time with your contractors and professionals. Talk to them about squeezing every penny you can out of the contracts. They won't want to lose the business and there may be some services that you can delay, forget or reduce in the short term.
Don't skimp on the number of communications with the owners or in the amount of information provided. This is a time when you really need to put the "community" in community association. Cut paper quality, deliver them by hand and by e-mail, but it's more important than ever, to keep them well-informed about what's happening to the association.
Don't be so negative that you create a self-fulfilling prophecy. One of the more frequent comments I've seen in the news from associations in financial trouble is an owner saying "Well, everyone else isn't paying, and the services are dropping, so I'm not going to pay either". The message should always be about what you ARE doing, not what you aren't doing.
Owners - board members are just owners with added responsibilities. They are facing the same issues at home as you are. Now is not the time to be petty or nagging, but to pitch in and help.
I remember watching the New Orleans flood on TV, with all of the people at the dome yelling about the government not being there to help them. There was a questiona at the time as to whether it was a racial issue. I thought - maybe - but I also thought it was an "urban-rural" issue. During the Mississippi floods a few years earlier, when so many towns along the river were threatened or flooded, you'd see all of the citizens, regardless of race, throwing sandbags and trying to protect their town - none asking where the government was - just pitching in.
To the owners of homes in community associations, this isn't the time to crab about what the board is or isn't doing - it's the time to roll up your sleeves and help.
Posted by joewest at 10:14 AM | TrackBack (0)
August 21, 2008
The Hypocrisy of Legislatures
The California legislature has passed another law because "the state receives complaints that associations do not fulfill their obligations to homeowners or abuse their power, but state government currently does not have any oversight power and a homeowner´s only recourse in disputes is to sue their homeowners association." Let's see, a freely elected body which doesn't always fulfill their obligations and a citizen's only recourse is to sue --- sound like anyone they might recognize -- themselves maybe? The only difference between the legislators and an HOA board - the legislators get paid.
Homeowners living in an association seem to expect perfection in the people they elect to represent them at the neighbor level, but I seriously doubt whether they hold those same expectations of other they elect to public office. Nor does any state legislature make it easier for citizens to overturn their legislation or hold them accountable for their actions other than through the ballot box or courts.
When the costs of these additional requirements are passed along to the owners in community associations, it is the boards that take they heat because the costs are passes through the regular assessments, not in additional taxes, which legislators run from, so they get another free pass.
A suggestion to all associations that have to deal with these active legislatures - create a line item in your budget for state mandated costs (hidden taxes), and don't forget to include that category all of the costs for services that other taxpayers receive, but which your association has to pay, such as garbage pickup, or road repairs. The reason legislators continue to adopt more and more legislation governing associations is that there is no organized opposition from owners, only from the professionals, who are quickly buried under claims that they are only in it for the money and don't have the owners interests (which is the usual method of painting everyone with the same broad brush). In any event make sure the owners know that the assessment increase isn't entirely due to association-related costs.
Going back to the eplanation given by the California legislature for the most recent acts, boards might want to start documenting homeowners' failures to abide by the documents thay agreed to and the abuse of boards by owners. The people doing the arguing for the owner's never present any data to support their claims of rampant abuse, just a few examples, so why not counter with actual facts.
Posted by joewest at 11:13 AM | TrackBack (0)
July 29, 2008
Be Careful What You Wish For
States continue to pass legislation designed to "fix" the problems with condo's and HOA's. Whether they fix or compound the problems, only time will tell, but one thing is for sure, the people living in associations will pay more because of the laws.
The majority of legislation proposed every year is usually a response to a problem with a few associations, boards or management companies. Since the people pushing it are loud and adamant, many of their proposals are adopted - some in their original form - some altered through the process. I any event, they are often punitive, and most are dealing with some form of oversight of associations. Oversight and regulation costs money, so associations are taxed by the state to cover the costs (in the case of Florida, they are overtaxed which allows the state to take the excess for other purposes, screwing the condo owners twice). Virginia just taxed all associations to set up an oversight board and ombudsman. California has an association election law that is almost impossible to follow and probably doubled the costs of annual meetings there.
What will be accomplished? Probably not as much as the people pushing the legislation think. Idiots will still move into and serve on association boards because the owners will elect them without much thought. So there will always be associations with problems - this will just provide another way of dealing with it. Manager licensing will get rid of a few small companies, but won't stop the periodic embezzlement or people getting licensed who just aren't that good at managing, And the costs of licensing and regulation will be passed along to - who else - the owners.
I'm not anti-legislation. I just think this piecmeal approach will end up costing everybody more and won't go very far in solving association problems. I'll do another blog about what I think may be a better option, down the road a piece.
Posted by joewest at 9:26 PM | TrackBack (0)
June 18, 2008
10 Laws of Community Associations
Like science, community associations also have certain immutable "natural" laws that exist outside of state or federal legislation. You are welcome to your opinion on any of them
1. Community associations are going to continue to be the major component of new development
Unless the American populace makes a complete 180 on taxes, developments that allow local governments to collect full taxes and not pay out for full services will be the norm rather than the exception. By requiring associations be formed, in return for greater density (profits), local governments can use the excess income to offset rising costs, so they won't have to lay off friends and family. Until the majority of us come around to the thinking that increasing local taxes is a good thing, you can expect mostly HOA's and condo's.
2. State legislatures don't have a clue as to how to do anything with HOA's and condo's
They will therefore continue to "tweak" laws, in response to interest groups; resulting in more confusion for association boards and owners, as well as greater costs and liability.
3. State legislatures will not seriously offend the major interest groups - home builders, real estate agents, mortgage bankers, or developer attorneys.
The best way to help ensure the possible success of an association is to make sure its developed and built well, that full disclosure takes place, and that the developer is held to a high standard as the first board of directors of the association - all of which the largest and most powerful interest groups have no real desire to see.
4. In every association there is a hero and an a**hole
You may not know who the hero is yet, but just about everyone knows the other. The key to a successful association is to find the hero(es)and defuse the jerks
5. Given the choice, the majority of owners would rather not fund reserves
In Florida, they don't buy green bananas and the state legislature gave condo's the ability to "opt out" of fully funding reserves, which is why you're seeing so many in such dire financial straits today. Let's face it, the majority of owners don't think they'll still be living in the same home 10 years from now, so see no reason to fund reserves.
6. Documents are not carved in stone for eternity.
Documents are originally written by an attorney working for the developer and designed to assist the developer. See number 3. Change them to fit the owners and the times when you can
7. It's not the association's fault
The association is a legal entity and has no inherent personality - the people who live in it and the people they elect to run it make it great, or make it miserable, or somewhere in between
8. It's the pole, stupid!!
Community associations do not remove your constitutional rights. First, the constitution doesn't grant unrestricted rights, no matter how they are worded. You still can't yell "Fire" in a crowded theater; libel and defamation can make freedom of speech costly; and you can't plant a flag pole in property either that you don't own or that you've agreed to the controls the CCR's place on them. You still can put your flags and signs inside your home and be just as patriotic or political as the next guy.
9. Given the choice, the average association board will ask legal questions of its manager, neighbors, an internet forum, relatives, people driving by or a ouija board, before paying the attorney to give them the correct answer. Once they have the latter, 50% will ignore it.
Human nature in groups
10. As long as people are electing people to govern people - there are going to be arguments, letters, fines, court cases, arbitration, mediation, hard feelings, politics, favoritism, screwups, etc.
Democracy is messy - it goes with the territory. Nobody likes to be told what to do, or disagreed with. The difference between your association and the local, state and federal governments telling you what to do - is that you agreed to let the association do it (and don't blame the association if you didn't read or get the documents)- the other governments were already here when you got here.
Posted by joewest at 10:50 AM | TrackBack (0)
May 29, 2008
How Do You Defend Associations
People often ask me why the CAN news feeds are so full of bad news about associations. The answer's quite simple - we get our news from other news feeds and by definition, "news" is something out of the ordinary - so, in reality, bad news about associations is something "out of the ordinary". People who work with or follow associations know that most of them plug along, day in - day out, without doing anything "newsworthy". However, you know as well as I do, that what's in the news can shape opinion of those who really don't know much about a subject. We also know that the news media, has come to consider associations as the "big, bad, bully" and the homeowner arguing with it, the "poor, downtrodden, underdog". Not accurate, but also not likely to change soon.
Again, if you follow news stories about associations, you will see that on the internet, there is often room for comments after the article. There's a whole group of people out there, led by some of the nastiest "advocates" that immediately jump on the article and damn all associations, and the people who serve on their boards, and their managers and their attorneys, as something evil to be avoided at all costs. I've often considered responding to these people, but then I remember that they're involved in a jihad, and rational thought just gets in the way. I also ran across a web site that helped me understand them a little more, and reminded me why it's probably a waste of time engaging them . The site is HOA True Believers and can be found at: http://www.hoatruebeliever.com
If you watch today's politicians running for office, the mantra is "Stay on message!" No matter what the question, make sure you get your message across. So when asked by someone about associations (whether they're in the media or just thinking about moving in, try these:
"People choose to move into associations"
"Yes, most new homes are in associations, but that's a decision made by the local government to generate additional tax revenues without increasing their costs or raising everyone's taxes"
"These are rules everyone who moved in agreed to abide by, and the owners can change them by a democratic vote"
"The association is run by residents elected by their neighbors"
"In any demcratically elected group, there are going to be people who agree with the leaders elected and people who disagree"
"It's about the pole, not the flag, the POLE!" (Often followed by: "Who are you - Fox News?")
"You know, some people like having rules - they like knowing that their neighbor is not going to turn their home into a truck repair shop - wo why shouldn't they have the right to expect that others who chose to live their have the same expectations - the rules were there when they moved in"
"What would you call a person who agreed to follow the rules when they moved in, then changed their mind when it didn't suit them - a liar"
Associations ARE a housing choice - don't be put on the defensive just because you chose to live in one.
Did you notice that "No comment" is not one of the choices.
Posted by joewest at 7:43 PM | TrackBack (0)
May 19, 2008
Time to Fire Up the Committees and Get People Involved
Two issues are showing up in the news - the first being the foreclosure crisis and its impact on association finances; and the second is the continuing intervention of state legislatures with respect to energy conservation issues. I believe that both issues will touch just about every association in the country before too long - so this is a reminder that is usually better to be proactive, and put together well-formed plans, rather than be reactive and try to put something together on the fly.
These issues are also in the news enough that residents are already aware of them, but they may not be aware of how they are going to impact them through the association. If they are paying their assessments, they may assume everyone else is and you really don't want to spring a surprise on them with a large increase in the regular assessment, or with a special assessment, to make up for others not paying.
So, why not try and form two committees (if you don't already have them). One to deal with the revenue issues and one the energy issues.
The committee looking at assessments and potential financial problems could review the current collection policy to make sure that it is up-to-date and being implemented effectively. If you've got collection issues, they can review possible solutions, including using a third-party collection firm, an attorney or even doing it themselves, but only after checking the documents and state and federal laws. The committee could work with the board to help identify potential cost-saving areas in the budget, that may not have been looked at real closely before. A few extra eyes and hands can really help with this. The side benefit of using a committee to help with this is it increases the number of owners who have a good awareness of the issues and the efforts to deal with them.
A number of states have already passed laws (and more are proposing) prohibiting associations from banning clothes lines or solar panels. Other forms of energy conservation will not be far behind. Forming an energy conservation committee can help you identify areas where the assocaition can conserve energy (and water) as well as investigate ways that individual owners can also conserve energy. In addition to clothes lines and solar panels, they can look at both common area and owner xeriscaping (natural environment), changing lights to flourescent or other energy-saving type, changing out sprinkling systems to automated, more efficient ones, recycling water, etc.
These are two areas where the board cold use some help, that owners need to know what's going on; and people need to communicate - and that's what committee's are for. Start now, because waiting to see what happens almost never works or helps.
Posted by joewest at 6:47 PM | TrackBack (0)
May 7, 2008
Back Again
I took a couple of weeks off from writing to take care of a few other things, but I couldn't stay away forever - there's always some luncacy that has to be written about. The latest comes from one of my favorites - the American Homeowner's Resource Center (AHRC). This is the largest of the "rant" sites (a "rant" site is one that gives people with problems a place to vent, then pours gas on the fire rather than trying to solve the problem).
It seems that the owners of the site lost a court battle and the domain for AHRC was awarded to the winning party. However, you'll never find that little bit of truth anywhere on their site. Instead, they've got their stable of writers all worked up that its a conspiracy to deny themm their First Amendment rights. There is no mention that the owners of AHRC so abused the court system that they are barred from filing any suits, motions or just about anything else without first receiving the approval of the presiding judge of the court. It was their actions in the courts that caused the costs to skyrocket, and when they lost, they lost most of their assets, including the domain.
Shutting down the site won't stop the ranters. They've already begun copying their diatribes to other sites. Shutting down AHRC won't stop the die-hards that rearely listen to anytning other than their own voices (or the little voices in their heads), but it may be a positive factor for those owners who are simply trying to find help with their issues. They may find other places that might actually help.
o those AHRC supporters - its not a conspiracy, its not about the First Amendment - its about using words as weapons, and claims you can't support - and its about blaming your own stupidity on everyone but yourself.
Posted by joewest at 10:28 AM | TrackBack (0)
March 31, 2008
Legislative Idiocy - Continued
Julio Robaino, legislator and main advocate for changing Florida's community association laws, proposed some major legislation, that, if enacted, will probably make being a board member for a Florida condo, co-op or HOA, not worth the effort or risk. Let's take a look at what he's proposed:
- Creates civil and criminal sanctions against any officer, director or association manager that knowingly or intentionally defaces, destroys or fails to create or maintain accounting records
- Prohibits staggered terms for board members (lets not have any experience or historical memory, let's just start over every year.)
- Requires condos to allow storm shutters to be left up year round ( who cares what that they make the building look horrible, we don't want to incovenience those snowbirds who are paying all the property taxes)
- allows the Florida Condo Division to remove board members from office and prohibit some owners from even running for the board (can we get this so that they can remove other elected officials, say legislators)
- Requires the free expression of religion on the condominium premises (without defining what that is - so we can have that goat sacrifice out by the pool - this should lead to some great arguments)
And thats just the start - the language will change from day-to-day. And the advocates who say they're just trying to get some rights for owners, and not to destroy associations, continue on their destructive path.
Colorado and Connecticut are working to allow clotheslines without regard to where they're hung or what they look like - something sure to help with re-sale values in this wonderful market.
I'm sure there will be more.
Posted by joewest at 9:35 AM | TrackBack (0)
March 20, 2008
Legislatures like to impose responsibility while ducking same
Florida, Arizona and Connecticut are all looking at some form of oversight of community associations involving state appointed commissions or something. In Florida, Rep. Julio Robaina, R- Miami, worked hard holding hearings all over the state to make sure everyone who ever got a violation letter or was behind in their assessments got to blast their boards.
As has been the case, they made sure that little mention was made of the fact that the people with issues represented less than a miniscule percentage of of owners, or that problems like embezzlement of association funds, while dastardly, happened in a dozen associations nationally, out of 270,000, or that many of the people testifying before them created their own problem by ignoring the rules that they had agreed to in the first place.
There's an easy way to solve this - first pay the board members $50,000-100,000 for their part-time efforts; then let's give each board member a staff of 4 or 5 people (paid for by the owners) to help them out and ignore it if a few of them happen to be realtives; exempt them from accepting bribes from vendors who get contracts from the association (call it "campaign contributions"); and while you're at it, exempt them from any potential liability that might result from their action or inaction. I mean, if its good enough for the people elected to state legislatures, it ought to be good enough for the people on community association boards, since both are freely elected.
In Arizona, a columnist for the East Valley Tribune has been on a jihad against associations for the past few weeks, looking up everyone claiming that "property rights" or "constitutional rights" are being violated by HOA's. Someone must have told this writer that he couldn't paint his house purple or sent him a violation notice for some weeds. With him, its all too obviously personal, so the subscribers of this paper can expect to read nothing positive about HOA's for the coming future. This is pretty typical in AZ. Make sure everything being built is part of an HOA, then ignore the way the developers build it, then when the owners move in, change all the laws.
It's crazy season, with legislators looking to make their marks before the November elections, so we can expect more of the same. In the end, it will cost all of the owners in community associations a little more to live there; there will be fewer people who want to serve on the board and deal with more bureaucracy, and the professionals, the managers and attorneys whom the ranters love to hate, will be a little bit richer helping deal with the new restrictions, laws and legislators.
Posted by joewest at 10:56 AM | TrackBack (0)
