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A novel idea

Started by EllenS1 • 18 replies • 1231 views

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EllenS1 (Florida)
Posts: 1,148
Posted:
An ongoing problem which many condos and hoas have as we have heard from many, many posters here is the inability to get owners to serve on the board. A suggestion I have, though it may not pass, is to amend the docs stating that while serving on the board that board members are exempt from their assessments and again paying when they no longer are on the board. This would sure be an incentive but there's probbly some law against it..oh well, just a thought.
RobertG12 (Arizona)
Posts: 160
Posted:
I would bet that a majority of bylaws have clauses preventing board members from receiving compensation. I would think the IRS would consider this compensation. Given it is tax day, I can just imagine all the tax complications that would come about for both the HOA and the individuals.

If you have a big HOA, assessments might be up to $100/month. Have 7 board members and ... you do the math of the income you are losing.
MicheleD (Kentucky)
Posts: 4,491
Posted:
I'm a board member and have been for over 13 years

I would not even entertain an amendment such as that.

The way to combat not enough participation is by communication communication communication.

Not by bribing or setting up for a system that could easily be abused.

If we think some boards don't take advantage and try to set up fiefdoms now, wooo boy! You can be sure there'd be some real "agenda setters" standing in the wings if they knew they would either get paid or be exempt from assessments.

They and all their buddies would fill the board.

And Never. Give. It. Up!
MaryA1 (Arizona)
Posts: 7,043
Posted:
Ellen,

I've heard that same thought expressed many times. In fact I've heard of giving door prizes of a free month's assessments. IMO, this is a direct violation of the CCRs which state all members are subject to paying the assessments. If you grant a waiver to someone you are violating the CCRs. Just my opinion, of course!
JohnM3 (Florida)
Posts: 288
Posted:
Eileen as a co-Floridian let me share some things with you. I appeared in front of the Fl Select Comm on HOA and Condos at Pembroke Pines Hearing at BCC School. The are a bunch of phonies class a. All they wanted to talk were people with horror stories. How else do we get nice laws and regs. As each of them stood up to talk all they all talked about was the problems with there own condos where they claim to live. They spoke so highly that the best way to get HOA Boards and Condo Boards was to pay them a salary.

Yet when they finally got around to writing there white paper on there findings they made sure there was a rider on very bill to prevent that from happening. The only intelligent thing they said was Management Companies should stick to there primary business and stay away from other things..............The Chairman of the Comm was taken away from this person because IMHO all he wanted to do is hurt HOAs and Condo's Boards with a mountain of useless rules just causing us to spend money we do not have. Now he has a bill that will stop every board from doing anything to fight back against there rampages into silliness and gross ideas. Like no joining groups that fight for the HOA and Condo Folks. We had to spend $500 dollars to get the silly covers on a wading pool with a depth of 18 inches that makes sense? For what reason because some child played with a pool drain and got her hair caught in it? So the entire state has to buy these idiot covers for the pool drains? This is just the tip of the iceberg that goes on with our elected ____________officials!
Jack
BrennanS (Kentucky)
Posts: 2
Posted:
I am new to HOATalk - but glad I found this resource. It is great to see people out there getting involved and discussing this industry!

I agree with Michele on this.

So much of an effective HOA and Board is communication - any many of the issues that boards deal with is because of poor communication and the result of people feeling like their are things being hidden from them or the "us vs. them" mentality.

The best board members are the folks who did it because they see the importance of leadership in their HOA and are willing to volunteer their time for the good of the ENTIRE community.

If people join just because their dues will be paid, I don't believe they will be unlikely to have the interests of the community as their primary nor will they be likely to put forth the time and effort to be an effective leader in the community.

DJ1 (Ontario)
Posts: 798
Posted:
oooooohhhh, just imagine the potential HUGE impact of doing this.

Hmmm, I as a board member can now have the association pursue all kinds of lawsuits some of which the association will lose and result in a special assessment costing members 1000's of dollars each...but I don't have to pay.

Kind of changes the thought process of a board member if they know they can now act with no checks and balances such as the fear that they too will have to pay out of pocket for any stupid, frivolous, harassing lawsuits.

I can just imagine being a board member in BillL3's association and I now have the freedom to take him all the way up the entire court system and if I lose, only my members get stuck paying the tens of thousands of dollars that have to be paid thru a special assessment.
EllenS1 (Florida)
Posts: 1,148
Posted:
Robert and Mary,

I did say in my post it would require amending the CCRs. As I said it probably wouldn' fly but just a thought.
MicheleD (Kentucky)
Posts: 4,491
Posted:
But it was an excellent topic for discussion.

If you don't have bold ideas, and don't think outside the box, then you get no bold answers and innovative solutions.

By throwing something like this out there (remember, in brainstorming, there are no bad ideas), it gives everyone the opportunity to take it apart, deconstruct it, look for all the flaws, loopholes, etc, and in the process, there's every reason to think a novel or appropriate idea can fall out of the pile.

MaryA1 (Arizona)
Posts: 7,043
Posted:
Sound philosophy, Michelle, but not everyone has the common sense to look at a "novel" idea in that way. Some would just take the idea and run with it and not do any research into whether or not its even legal. Especially with this particular "novel" idea. Just the thought of not having to pay the assessments would cause some board members to not give much intelligent thought to the idea. All they would be thinking about is the savings they would enjoy. My assn fees are only $460/yr but some condo assn's pay that much per month. The savings could be rather significant in some assn's.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Mary, I agree totally.

I was basically only referring to the "brainstorming" process, or problem-solving process.

I didn't want Ellen to think we were necessarily trashing her idea.

I think as long as people realize, when they do things like this, throw out novel ideas, that it's a process of discovery.

While the original "idea" might not work, for whatever reasons, many outstanding ideas were discovered in the course of searching or researching for something else.

Silly putty comes to mind.

And White-out.

MaryA1 (Arizona)
Posts: 7,043
Posted:
Michele,

Very true, indeed!

My former assn comes to mind. The "novel" idea that was thrown out more than once is that we should just dissolve the assn. Not until my husband, during his tenure as Pres, finally got it in writing from the City that they would NOT take over maint of the common areas did this "novel" idea cease to be an issue.
EllenS1 (Florida)
Posts: 1,148
Posted:
Michele,

Thanks for your support. I don't feel trashed in any way but do like to float ideas to see where they will go. I encourage my teen aged grandson and 12 year old great grandaughter to put forth their own ideas. The are fortuante in that they go to a school that proclaims "teach how to think and not what to think. You would be amazed at some discussions we have, in particular the 12 year old. One of my least favorite phrases is "because we've always done things that way"...ugh!
KirkW1 (Texas)
Posts: 1,665
Posted:
Several things concerning this that I don't really get:
1) The by-laws prohibit it - this can be changed. In fact, a single vote at an annual meeting is often enough for this change.
2) Tax implications - well yes it would create imputed income. So if you have assessments of $100 a month then the BOD member would have to declare $1200 in income on their taxes. That is hardly the problem of the HOA.

Now I do agree that it opens the door for abuse. In many cases in this area they would either simply "interpret" this to mean exemption for all units owned, or seek to expand the definition. There is a condo in the Dallas area where the president of the HOA has been buying up foreclosed units most of which are being foreclosed upon by the HOA.

Now something that you might want to consider is to instead pay for a meal for each meeting that is held. For instance, you could have a meeting that starts at 6:00 and dinner will be ready for the BOD member. That might make a difference today with many people so over-scheduled. (It might not as well.) And while this could be abused, I don't think many would find this the incentive to set their fiefdom.

I do think that making the association relevant to the membership is a key factor in getting participation. This is part of why I think associations should participate in things such as National Night Out. It gets people to meet each other, and gives them a sense of belonging. It really doesn't take much of a budget to do it either. Last year we served hot dogs and hamburgers for about $1 per unit. If participation goes up the cost will go up as well, but I think many will find it worth the cost.
RobertG12 (Arizona)
Posts: 160
Posted:
Kirk, be careful when you suggest a meal for the BOD. That is still compensation and the BOD are using the entire owner community's monies to pay for their meal. If you believe in BOD should get compensation (and it does not violate your rules) then your HOA could do it. However, having a BOD spend money on themselves really smacks of promotion self interests. No matter if it is a good or bad idea, just think of the perception of what non-BOD owners think. IMHO I would never endorse such a plan.

The night out is a totally different issue.
KirkW1 (Texas)
Posts: 1,665
Posted:
Robert,

If you provide a meal at a meeting then it is not compensation in the eyes of the IRS. If you provide the meal apart from the meeting then it would become income.
GeraldT4
Posts: 1,022
Posted:
And where is the money going to come from to make up the maintenance revenue lost from not collecting it from the board members? Everyone else's maintenance fees will need to increase in order to compensate.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Whether it's exempting assessments or feeding the board at every meeting, it's still rewarding the board members for doing something they "VOLUNTEERED" to do. Since when do volunteers get paid? They knew this was not a paid job when they put their name on the slate. If the whole membership agrees the board members should be compensated, then the bylaws need to be amended accordingly and anyone running for a board position will know that their "compensation" is earned income, reportable to the IRS.
KirkW1 (Texas)
Posts: 1,665
Posted:
While I agree that membership should approve of a plan to provide a meal for each Board meeting, this will not be considered income by the IRS. But then again, I doubt the IRS will be the least upset should someone report it.

Now if the HOA decided to exempt the Board from fees this would definitely be considered imputed income. And depending on the value of such exemption they may need to provide proper paperwork to document what should be claimed on income taxes. To be honest, if not enough people want to volunteer, then perhaps they should pay the Board.

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