Newbie stopping by to say hi!

Hello all,

I'm a newly "elected" board member. By elected, I mean I was one of 6 people that showed up to the meeting, so we all became board members. But I was wanting to join the board, anyways, so I'm certainly not disgruntled.

Actually there are a total of 4 board members, but 2 have gone dark, and I recently found out the the president (the only other active member besides me) will be moving in 6 months.

I've only lived in the neighborhood for about 1.5 years, so I'm still learning about the history. It's a fairly new community, around 10 years old, but apparently there's been a lot of turmoil with the owners and the HOA. Fees changing every year, documentation getting lost, plans being unfulfilled, etc. We've used a management company for the past 3 years, and it seems like things have been stabilizing, but a lot of the owners that have been around for a while still have a bad taste in their mouths.

So has someone who is excited for the opportunity and optimistic for the future, do any of you have any advice? Things I should learn, etc? I'm starting to figure out how to understand these financial statements and am starting to figure out the current state of things.

It's a military town, so there's a lot of turnover, a lot of renters, and a bunch of people who haven't paid their dues in years. I figure my first goal is to find the payment history to get a good, realistic idea of how much in dues we will *actually* receive per year, so we can start getting together a more realistic budget, see what we can do to pretty up the entrance, etc. We have no amenities, and I know that bothers a lot of people, and we always get the questions of "Why am I paying so much?", so I want to add a little more transparency, newsletters, events, etc.

But anyways, really just popping in to say hi!

Jesse

Hi Jesse!

I do have some advice:

1. If you become president, please work through your property management representative to handle HOA business. The manager is not a resident, it's their job and their work shouldn't be subject to emotion or neighborly pressure.

2. Along w/ the property manager, determine whose accounts are solid and which are non-performing. Every property owner signed an acknowledging that they were buying an HOA-restricted property when they closed, ESPECIALLY landlords. Therefore, there is no expectation of ignorance if you try to collect.

3. Begin following your state collections laws to recoup uncollected money if you can accurately assess delinquency levels. If it's not known due to sloppy book-keeping of the past, "start the clock" from where you DO have good solid ledgers

4. Fully learn how fees can legally be changed in your neighborhood. My HOA, for instance, can only match the U.S. inflation rate for increases without owners directly approving it. Getting this knowledge, then sharing it with your community is important transparency.

5. Be optimistic but take it slowly! Slowly in that "fixing" a bad HOA situation can take three to five years to turn around operations and subsequently build trust.

6. For budgeting purposes, work w/ the property manager to ensure that, in fact, your HOA dues rate, IF IT'S COLLECTING FROM ALL ITS RESIDENTS - is high enough to cover the base maintenance and operations of the HOA organization. (Your dues rate can be high because few people pay it and many others ignore it). Engaged residents will pay their dues. Weak HOAs will raise dues rates to offset uncollected dues/cover non-paying accounts.

6A. Once you know the revenue you can receive, make sure you set aside an amount for capital expenses. My HOA pays its monthly operating costs and saves between 28% and 30% into a reserve account (we have a pool, lake and paved path).

7. Have your property manager find a collections attorney or simply learn which attorney they prefer.

8. Prepare to bring before your open board meeting a proposal for collections, outlining the process. NOW....you will be following your state's collections law but HOAs often allow for "nice reminder letters" that are in addition to state collections. These friendly reminders slow the process but following the strict letter of the law is clean (but non-payers will accuse the HOA of being heavy-handed).

9. Skip hosting events. Without amenities and with people grumbling over dues rates, it's a waste of money. Digital or Email newsletters are excellent. However, you would author them but have the property manager mass-email them to the community so that any inquiries or replies can include the manager before reaching you - the volunteer.

10. When people rage at your future meetings, simply say "Thank you for coming and sharing your opinion." Most simply want to be heard.

Good Luck and if I can be of assistance down the road, shoot me a note. I became president the first year I joined my board. Debt-ridden and argumentative, we all turned it around (and rebuilt relationships in the process).

Jesse,

Sounds like you are the right person for the job. You have a good outlook and a desire to share as you are learning.

I offer the following:

Perhaps the following resources can help:

The Board Member Tool Kit
A GUIDE FOR COMMUNITY ASSOCIATION VOLUNTEER LEADERS from CAI

Best Practices Reports from the Foundation for Community Association Research

Subject: Reserve Studies/Funds 101 thread on this forum

Beginner's Guide to HOA Boards of Directors Duties and Responsibilities from The Educational Community for Homeowners (a California based organization - keep that in mind when they refer to statutes)

The one I have to say sticks out the most to me is

5. Be optimistic but take it slowly! Slowly in that "fixing" a bad HOA situation can take three to five years to turn around operations and subsequently build trust.

Jesse,

I'll respond step-by-step.....

Regarding collections, understand the process but delegate to your manager, who must work w/ the attorney. Stay out of the direct line of communication as having any board member in between the parties carries no upside. Even resident communications should go to the attorney or property manager, depending on depth of delinquency. DO NOT USE COLLECTIONS AGENCIES.....use collections lawyers familiar w/ HOA processes. HOA debt is not consumer debt, like a credit card.

Credit reporting is not a good strategy when your HOA likely has the ability to file liens and ultimately foreclose to force payment. Use the collections process and don't worry about HOA-reported credit agency reporting.

When residents are complaining of high dues rates, what they really are complaining about is a lack of financial transparency and/or wasteful spending on frivolous matters. Guard the money and focus it on the "business." HOA dues are essentially a confiscatory tax....a volunteer one but a required fee nonetheless. If YOU want to engage through social activities, self-fund the party at this point.

A digital newsletter can be very effective. I don't use Facebook groups for my community as I think it's too subject to trolling and "angry" neighbors have an outsize influence and will complain about your every word. You want to articulate policy and vision, not engage in emotional, passive-aggressive, community posts.

The property manager should be instructed to immediately cease ALL communication w/ any resident threatening a lawsuit and direct them towards the HOA attorney or to have their attorney contact your attorney.

If the property manager has a "heated" argument w/ one of your residents, the property manager has a problem. Prop. Managers are paid by all residents, including the angry ones. Tell your manager to straighten up.