Creating a balance of trust through transparency

I live in a gated community of about 700 homes. A NOTICE OF SPECIAL MEETING was sent out regarding a meeting to vote on a proposed $400.00 increase in the annual assessment for 2015 from $1,600 to $2,000 per lot. This is over the allowed 10% amount. This notice included a Proxy and encouraged anyone that could not make the meeting to sign and return it to the HOA. The Proxy did not allow you to vote yes or no. On several occasions the gate was not passable with a smart card and the Officers at the gate asked you to sign the proxy before allowing the gate to open. I do not think most people understood what they had signed.
As you can imagine, many of the home owners got upset and attended the meeting to vote NO on increasing our HOA fee by 25%. A meeting was held and most, if not all of the attendees (that may have never attended any other meetings) came to vote and protest the vote and voice additional concerns.
One of the reoccurring themes from the homeowners was a distrust of the HOA based on a lack of transparency. I do not think the board is dishonest but I can see why the homeowners are upset. Our website does not give you the ability to communicate with other homeowners about common issues.
Some of the concerns:
Where is our money going? The budget is not detailed and many of the homeowners would like to see exactly what is being paid out.
Who is counting the votes and how do we know the vote was handled properly?
What is the award process for large contracts? $700,000 for security and repaving $380,000 per year. Who is awarding contracts?
The list goes on but I’m sure you get the point. It looks like this forum has many good HOA representatives that I am sure deal with these issues.
I am going to propose that we work on creating more transparency through our website by adding online Polls and Online Documents such as contracts.
Any suggestions on how to create a balance of trust that is based on more transparency would be greatly appreciated.

Consider using directed proxies.

A directed proxy is similar to a general proxy, as it designates someone to act on behalf of the member, but it directs that person to cast the vote a specific way.

To help with privacy, put things like contracts, financials and minutes in a members only area of the website, protected by passwords.

You do raise good questions, but why did it take a proposal to increase the assessment over 10% to get people to ask questions they should have had the answers to long before now? If the homeowners are concerned about transparency, they need to start attending more meetings and asking questions. You may not always agree with the answers, but if you've received a detailed response, that's a start. If you don't receive ANY information or the Board gets downright hostile at anyone asking anything, it's time to vote them out and replace them with people who are more forthcoming.

I believe communication is essential to transparency - financial reports should be itemized and available to homeowners upon request. The Board should be looking at a minimum of three bids for large contracts and should be able to provide details on the services provided. For example, the security budget may pay for the security guard salaries and maintenance of the gate, for starters. You also mentioned repaving - $380K may seem a lot to you, but a community of 700 homes probably has a lot of streets. The stuff used to repave streets is a byproduct of oil and you know how oil prices are going all over the place, although they have been lower recently. And don't forget labor, insurance and other things that can influence how much things cost - stuff your board needs to be able to explain to the homeowners.

Our Bylaws also require the upcoming year's budget to be sent to homeowners by Dec. 1, and it's itemized. We also included projected figures for the end of the year since the Board doesn't meet in December. As former treasurer (and newsletter editor), I'd also have an itemized recap of the previous year's budget in the first newsletter of the year. Putting Board meeting minutes and online polls are a good idea, but I don't know if I'd list the contracts online unless you have a secure section for homeowners only. Otherwise, you should simply they're available upon written request to the property manager.

As far as vote counting, other homeowners might consider volunteering to serve as election officers and count the proxies in the presence of everyone at the meeting. Someone should also review the language of the proxy to ensure its instructions are clear (a review by the association attorney might also be useful to ensure they're worded properly).

From our experience as board members, it's not a transparency issue at all, it's that the majority of the homeowners do not care to ask any questions. Although it doesn't sound like you have a beef with them per se, the question usually comes from someone who gets mad at the HOA for taking some type of action against them. It's the nature of the beast!

If these questions are asked at annual meetings the answers can become part of the minutes and if anyone cares to read or inquire of the minutes, they will learn more about the decisions the BOD makes. Meeting minutes whether for Board meetings or annual or special are and should be made available to anyone person in the HOA who asks for it.

There is more information that shouldn't be posted than there are that should.

good luck

Just a point about minutes. They are written from the point of view of the person taking the minutes. I've seen some things in our meeting minutes that are not just facts but there is additional commentary from the writer. When it comes time to approve the minutes, everyone just agrees to what is written whether accurate or not.

I want to thank all of you for contributing to my questions!

I hope more people will give me points of view that will help give me direction.

I have talked to the BOD and they liked what I had to say. They could not understand why more people are not reading the newsletter. This is the primary communication tool. We have an OK website but it could work much better by offering Surveys and a message board.

I know it must be difficult to manage an HOA. I know that I have no idea what should and should not be transparent to effectively run the HOA. As an outsider looking in, it looks like the same issues we have with our government. You have good hearted people that have been elected to reflect the wishes of the community. You have staff that have been hired to help the elected and you have the people/homeowners. Over time the people who elected the original BOD have moved on. The new people/homeowners that have moved in over the last 5 to 10 years are starting to see that the community has needs and that those needs are being addressed differently than they would expect. Our community has many of the original owners moving out with young families moving in. We have the original staff that was hired over 23 years ago making most of the decisions and the BOD has shuffled back and forth with basically the same group. I know it sounds good that we have a newsletter and people should be reading it and attending meetings. The reality is that most families do not have time to keep up with what is going on similarly to the way people keep up with the politics of our nation. Most people can only keep up with issues that matter to them at the time. I think it is up to the HOA to keep people informed with as many tools as they can. It should not be difficult to send packets of information out that are easy to understand and can be responded to electronically before it is voted on. I think I can help that part.

I have a group of about 80 people that would like to see more forms of communication. Most of them think that our property manager is making $185,000.00 per year. They think that votes are not being counted correctly and that we have a good old boy network of contractors that are giving kickbacks. I have no idea if anything crooked is going on but regardless of who gets elected and what changes are made, we will end up back to this same result if we cannot create a better bridge between all groups. We are not going to be able to change the people/homeowners nature of not getting involved until they get mad about an issue they do not understand. However, someone must keep trying to bridge the gap.

If the community wants a change or more transparency, they can vote online. If the numbers are for making that change, a vote by proxy could easily and quickly be turned around. The idea of voting by proxy with a collective group that are connected electronically is powerful.

From – Crystal: From our experience as board members, it's not a transparency issue at all, it's that the majority of the homeowners do not care to ask any questions.
Reply – I know it looks like that from the BOD viewpoint but I think most people do not have time to research what is going on and do not know what questions to ask. Then you get a view point of the homeowners that the BOD thinks we are ideots for asking the question and fire back with didn’t you read the newsletter.

From – SheliaH: Road work of $380,000 may not be much, The homeowners should consider volunteering to serve as election officers and Itemized recap of the previous year's budget.
Reply – Road work: this was just the first year. The total is over $1.8mil based off of a consultant’s report. I own a large commercial construction company and do not put much faith in consultants’ giving out pricing. Like the idea of volunteer election officers. We have a budget but it needs more details.

Question – Should the staffs pay be viewable to the homeowners?
- How would you address possible kickback concerns?
- Should we have term limits for the BOD and staff?
- What oversight does the BOD really have over the property manager?

Okay start shooting me down LOL!

Of course they are not. I'm the only homeowner who ever speaks up and asks questions. The minutes are riddled with Banks said this, Banks asked that. We told her this or we told her that. I seem to be the main topic. The minutes are taken by the BOD secretary's wife not the secretary. She has a personal issue with me because I question things.

My point was minutes always have the bias of the writer no matter what. It's just like a reporter reporting a story. It's impossible not to bring some personal bias to what is written. Just stating to use some caution here when relying completely on the accuracy of the minutes.

If a management company is employed, the staff would most likely be employees of that company, not the HOA so the answer is no.



Are multiple bids being taken? Are these bids available for the owners to see if requested? We have had this same situation and given offers to review the bids, strangely no one showed up to even look them over.



As above if a management company is employed, the staff again does not work for the HOA. Also on the staff, considering it is their livelihood, how would you feel if they informed you at your job that they wanted some new viewpoints and handed you your severance check? In addition, you cannot just put "term limits" on a paid staff; you have state and federal employment laws that come into effect.
On the BOD, most BOD's have problems just trying to find someone who will serve much less trying to force a change with no one to replace them. We are currently running one short just due to lack of interest.



Actually quite a bit as they are the ones giving the contract to the management company. We just forced a personnel change with our new contract that we had been promised for the last several years. To be fair the management company was hamstrung due to Federal laws in taking action.

The overall answer is that there is no shortcut to community involvement. In order to make change there would need to be changes on the BOD but trust me, even if 100% of the board was voted out and replaced the same issues and questions would remain.

I will never shoot down anyone who asks a question - if you knew the answer, you wouldn't have asked!

The first part of your response pretty much sums up a huge problem with HOA living - it really does demand you pay more attention to the association's activities. Unfortunately, many homeowners believe what they were told about HOAs being "carefree living" - just pay a fee and go on about your business. The HOA can put out tons of information, but as you said, people only care about issues that are important to them at the time. If they don't pay attention to what they're being told, ask questions (lots of them) if they don't understand, and attend a meeting once in awhile to listen to the proceedings, you end up with a lot of misunderstandings. Sadly, some people don't have the attention span of a gnat to consider issues that affect their biggest investment.

Equally sad - board members who forget they must leave their personal agendas at the door and make decisions that will benefit the ENTIRE community. If you're more concerned about being liked and getting re-elected than learning best practices in running a HOA and applying them, I don't want you as a board member.

Now, one person's response to your questions:

Oversight over the property manager - the Board should have complete oversight, but don't confuse that with micromanaging his/her job (you hired him/her for a reason.) Board members need to look at the property management contract to see exactly what the company is supposed to do, and perform periodic performance evaluations, with an audit thrown in to check the books. If the Board wants the property manager to take on other tasks not listed in the contract, be prepared for a new contract - and the cost that goes along with it. The property manager should be acting at the direction of the board, providing updates on when and how X was done. The property manager can advise the board, but the final decision belongs to the board, so he/she shouldn't be voting.

Staff pay - if you've hired a management company to run daily operations, I really don't think what they pay their staff is anyone's business. As a former board member, I was more interested in what we were getting for the management fee we paid every month and if it was quality work. If the Board and/or your homeowners are dissatisfied with the manager's quality of services, that should be discussed with the property manager. If the company doesn't improve its performance, the Board can consider hiring another company.

Possible kickbacks - begin with looking at how contractors are selected. I know many management companies suggest various people, but that doesn't mean the board shouldn't be doing its due diligence - starting with asking about the relationship between the contractor and management company. Or contractors and specific Board members. There should be processes in place on soliciting bids, checking the contractor's reputation with groups like the BBB, talking to references, etc. All Board members should refrain from participating in any discussion involving a contractor with whom they have a relationship, nor should they cast a vote on whether to hire that contractor.

Term limits - Regarding the Board, this sounds like a good idea, but in fact, will there be other homeowners willing to step up? Too often, the answer is no - so Board members serve year after year after year. At best, this leads to burnout, unwillingness to consider new approaches and at worse, it leads to rouge behavior. A good board has a mix of new and experienced members - the experienced members can educate the newbies on the history and the new members can bring in fresh energy. Regardless of how long one serves, continuing board education is essential for everyone to find out what the best practices are.
In a related matter, the association isn't necessarily obligated to hire the same contractors year after year. The key is results and competitive rates - if you have a good contractor, you may want to stick with him because it can take time for a new contractor to learn how to work with a HOA (not the same as working for a single homeowner). On the other hand, bidding out the work is a good way to keep long time contractors on their toes - if they want to keep the account, they need to be willing to compete.

SheliaH(Indiana) - Thank you for your comments. We do not have a separate management company. The PM was hired back in 1986.
I will be meeting with a committee to go over what our next step should be.
Thank you!