treasurer trying to control everything

I just became VP of our HOA. We are a newer development and the HOA president is the owner/builder of the housing development. At this point he has put all the board members in place, including myself. Our treasurer, however, seems to control everything. We now have an activities committee that wants to start building neighborhood morale as there is a lot of animosity between homeowners and the board. The treasurer has told the head of the committee that all activities must be approved through the board and that although we have a good budget for the year with plenty left over she is unwilling to let the committee have hardly any money for functions. She is the one that has caused the most animosity in the development. What can be done to fix these problems?

Darrin,

You don't need to spend money on activities to have activities. We have a neighborhood pot luck. Volunteers bring grills and tables. Everyone brings their own meat, drinks and a dish to share. Works well and everyone has a lot of fun.

Tim

We should be able to spend money to have some activities. We are also going to hold some functions that would make money for the HOA. We have over 85,000 in the bank and a budget of around 45,000. Asking for 1,500 to spend on social activities is not even a drop in the bucket. I have searched quite a few HOA websites and seen social committee budgets from 1,000 to 100,000 dollars.

Darrin,

Have you done a reserve study yet? $85,000 is not a lot of money if you need to repair roads, replace playground equipment, maintain a building, etc. You might not have the money available that you think you do unless a reserve study is done.

How much is being placed in the reserve fund every year?
Will it be enough to mill and repave roads in 10-20 years?
Will it be enough to reseal the roads every 5 years or so?
Will it be enough to replace playground equipment in 10-20 years?

You get the idea.

I'm not saying you shouldn't spend some money for activities if this is what the Board and community desires. I am saying that you should first look at the big picture to see if you really have that money available.

Tim

Tim,
Your Reserve concerns makes sense. However and I could be wrong, that budget and resources you are referring to is the Developers budget and money, he can spend it all and at turn over have nothing left. Would not be the first time.

Darrin,

I suggest you thoroughly read all your gov. docs. The members should have voting rights even while the developer is still in control of the assn. Usually the developer has 3 votes for each unsold property to the members' 1 vote which gives him the majority of votes. But, I've never heard of members having no vote during this time.

How were the board members chosen? All by the developer? Are all the board members property members -- members of the HOA? Usually while the developer is in control the board members are all hand-picked by the developer and not necessarily property owners. He may choose one or two property owners to be on the board but is careful to maintain the majority vote of the BOD by filling the positions with his friends, associates, family members, etc. I'm thinking the Treas is not a property owner (member) but rather a friend of associate of the developer and is really doing what the developer wants her to do. Otherwise, she needs to be set straight on exactly what her duties are.

I'm curious to know what makes you think the developer is embezzling funds from the HOA. That's a rather strong statement to make especially after only taking a look at the budget. The budget only tells you where the anticipated income is coming from and what expenses are anticipated for the coming year. Even just a cursory look at the financial statements would be hard to detect embezzlement.

DarrinF - Tim raises a good point as food for thought about reserve/transition study. However performing one is absolutely premature at this time because it is something the HOA Board does only when the board consists of owners, not the developer. A transition study typically has two components: A Capital Reserve Analysis (CRA) and a Deficiency Study (DS). The purpose of a CRA is to determine how much money to budget and transfer to Reserves annually so the common elements can be replaced over time. The DS is an analysis of the construction of the common elements the HOA is responsible to maintain and replace. These components are bargaining chips for the owner controlled Board and Association to seek remedy and or reimbursement from the Developer. Regarding the CRA, an example of budgeting would be to take the replacement cost of the roadways say $500,000 and the expected useful lifespan say 30 years. The HOA Board would be wise to transfer a percentage of the total replacement cost over time rather than an annual transfer of the replacement cost divided by the number of years that remain in the lifespan. For example, $500,000 divided by 30 years is $16,667.00 annually. For that common element budget and transfer say 5% of $16,667.00 or $833.33 annually. This amount will increase over time as new CRA's are performed. The 5% is what's called a threshold, this is a Board decision on what the Board believes the Association can bear.

Given your Association is Developer controlled it's best to let the Developer finish construction and have the maximum amount set aside in the HOA coffers.

Even though the Developer controls the Board, Reserves must be set aside by the Developer controlled Board. Granted many don't, however the owner controlled Board can seek the amount that should be set aside from the Developer in the future. I suggest Darren keeps a close eye on the budget and seek people to join the Board that share his vision and passion for community. As well, make it clear to the Developer of the community expectations by show of attendance at any open meeting that may occur.

I think Glen an Gerald make some practical sense Darrin.

There is always the possibility that an active involved community will be looked upon as a commercial for the developer, to sell units and establish a good reputation. It also serves to put the developer on notice that turn over might be more than transfering a zero bank balance to the ownership when the time comes, albeit a long time in the future. It also serves to have on tap a ready pool of owners willing to take over and pocessing the knowledge to run the train. It also is true, there is no time like the present to form that community spirit Glen refers to, before apathy takes over. There is nothing you all need from the developer to become a community force, set your own agenda, and do your own thing.

also, when i took over as vp, the developer said he would fill me in on every aspect of what goes on with the board. i was supposed to be filled in on all budget matters and have never seen the books or had anything explained to me. i find that odd as well.

Well, here comes the curmudgeon again (what else is new).

I think I've read this poster's complaints completely. And if I have, I have to admit that I not only like what the treasurer is doing, I find it odd that a board member would have issues with it.

But to back up a bit first, Glen and others are correct, the developer still controls and you have little if any recourse until he is out of the picture.

However, all is not lost because you can take advantage of this opportunity to serve on the board and use it as a learning experience for when the HOA membership takes control of the association. Trust me, you are going to need this learning period.

Next, you lament that the membership doesn't trust the "board," which is one reason why you are supporting throwing money at socializing and "morale" building.

From where I sit, it feels more like the membership doesn't trust the DEVELOPER, who is, for all intents and purposes "The Board."

But the resident board members can use that to their advantage and begin laying the groundwork for the membership to trust RESIDENTS on the board. And you don't need to throw money at it to do so.

You are board members (though currently impotent to an extent), ACT like board members.

You are allegedly leaders in your community. ACT like it.

The resident board members, with or without the treasurer, can establish "community conversations," or "development dialogs," or just resident rant sessions, and you can hold them in any of number of places for free.

The board members in attendance act as a "listening" board to the concerns, questions and issues of the residents.

You tell them the Catch-22 you are in, but assure them that you will take all of their concerns to the developer. Let them know he has the final say, (which they probably already know anyway, but also let them know that fact will not stop you from being their voice. Convince them that you are their advocate. That is your goal from these discussion meetings, and it's the only goal you need right now.

That will build an enormous cache of trust once you finally get legitimate control.

Now, about the treasurer.

She is absolutely CORRECT to prevent any committee from unaccountable spending.

Unless the board has voted the committee to do so, and according to what I've read of your posts, it has NOT, then it is foolish and every bit in her "power" to refuse to fund anything for the committee WITHOUT PRIOR BOARD APPROVAL.

So you are really mischaracterizing her "control," because you did, in fact, state that she would not do so WITHOUT PRIOR BOARD APPROVAL. If the majority of the board found value in what the committee was doing, they would be approving expenditures for it.

Sorry you don't like that, but she is absolutely fiscally prudent taking that position.

Sorry you don't like that she is a friend of the developer, but it is wholly within his right to put someone in that position whom he can trust.

Sorry you don't like that she has influence enough on the other board members to prevent them from funding the "activities," but, again, I find that fiscally prudent as well.

The fact is, as others have stated, IF morale building is the goal of the committee, little or no funds can do the job.

I know because we did it.

The committee can have a membership chili cook off. Requires NO expenditures whatsoever.

We invited our local district councilman to be the judge. Required NO expenditures whatsoever.

We solicited local businesses for donations of items for a drawing for prizes. We got TONS of items and coupons.

Required NO expenditures whatsoever.

In addition, IF the committee DOES come up with a legitimate "activity" that it can provide a legitimate ROI for in its presentation, then the board will be more likely to approve funds for it.

My guess is that the committee has come up with weak, lazy activities and not engaged in strategic planning, which often results in the characterizations I made above, simply "throwing money" at a problem without real analysis of what the problem is and without developing efficient, cost-effective solutions.

I would bet if your committee could do that, even the mean ole treasure would be able to see the value and the board would be one step closer to approving funds for it.

But Michele, that's the American way.