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BrendaM4
(Kentucky)

Posts:21

07/08/2008 5:45 PM
Our HOA just in the past year has started a Social Committee with a budget of $5000.00. We have some disagreements about how these funds should be distributed. We want to have events for adults, teens and children. How has other HOAs dealt with this issue ? Any ideas ? Brendan

NicoleO4

Posts:0

07/08/2008 5:59 PM
Wonderful family bbq's.. picnics.. parties. ( including adult only football parties or the sort in the clubhouse ) ... that is what we us our funds for. BTW your HOA is VERY gracious with 5K!

RobertR1
(South Carolina)

Posts:2153

07/08/2008 7:18 PM
I bet you CC&R's don't give you the right to spend association assessments to pay for this. It is not what you spend the money for, it is where you get the money from that counts. You want to do bake sales or 10 K runs, or car washes or anthing else and use that for a party, no problem. You can even reserve in advance associations facilities and charge admission, and probably have a community yard sale and donate the money for a party and use association facilities, but no way can you takes fees or assessmenrs and use them to buy as much as a coke. You disagree? Show me where it says you can, not that that's the way you have always done it so therefore it is right. In fact our POA just raised over 17K in one huge island wide Yard sale, a huge one day event. All labor was donated by volunteers, community facilities was used for the physical sale, any items left over were donated, and not a scrap remained at the end of the day. A wonderful job and that 17 grand was all donated to the community center. Not a penny went to a party, although parties abounded, so I hear. But folks, that is the way to run a neighborhood effort.

NicoleO4

Posts:0

07/08/2008 8:16 PM
I didn' t say our monies came from the monthly assessements. We have a variety of fund raisers done around the year. I also know that some associations allow for this kind of spending... 5K is essessive

GlenL
(Ohio)

Posts:1375

07/09/2008 12:51 PM
Posted By NicoleO4 on 07/08/2008 8:16 PM I didn' t say our monies came from the monthly assessements. We have a variety of fund raisers done around the year. I also know that some associations allow for this kind of spending... 5K is essessive $5,000 for a hundred unit HOA is a lot of money for this; for a 2,500 unit HOA it's two dollars a household.

BrendaM4
(Kentucky)

Posts:21

07/09/2008 5:59 PM
I live in a 1200 household community and our fees and assessments are $290. yrly. which includes landscaping and grounds work in the common area and upkeep of the walking trails. So far the majority of the 5k Social Budget has gone for childrens' parties, one teen nite, and one adults only social. I feel like the funds should be distributed equally between the three categories: children, teens, and adults but some of the moms of young children thinks it is okay if they spend the majority of the funds on childrens' parties. They rented out a Santa that cost $800.00 which I think was outrageous. Has anyone else out there dealt w/ a situation like this ? Brendam

BrendaM4
(Kentucky)

Posts:21

07/09/2008 5:59 PM
I live in a 1200 household community and our fees and assessments are $290. yrly. which includes landscaping and grounds work in the common area and upkeep of the walking trails. So far the majority of the 5k Social Budget has gone for childrens' parties, one teen nite, and one adults only social. I feel like the funds should be distributed equally between the three categories: children, teens, and adults but some of the moms of young children thinks it is okay if they spend the majority of the funds on childrens' parties. They rented out a Santa that cost $800.00 which I think was outrageous. Has anyone else out there dealt w/ a situation like this ? Brendam

RobertR1
(South Carolina)

Posts:2153

07/09/2008 6:33 PM
Nicole, Nor did you say what if any amount of this fund was coming out of the Regime coffers. And , the assumption that because some regimes do take money from assessments and uses it for parties, does not make it right. We recently spent a pretty good chunk of money justified by the Board with a show of hands at an annual meeting. Special assessments were added on to special assessments to fund these enhancements. Now the assessmnets are done, no one knows if the are paid for, as special assessments still continue and people are starting to question how and what did the monies buy. I mention this because the council has a perfect right to demand how funds are being spent. Even money already approved, bur the Regime does not have the authority and the council does not hold the authority to spent any money that does not go to Real property. IMHO

RobertR1
(South Carolina)

Posts:2153

07/09/2008 6:45 PM
Brenda, Of course you kmew I would have a suggestion for you association. Don't get involved in it, there will be nothing in you state statute of your CC&R's that tasks the Management with providing parties and that goes double for the Board trying to figure out who gets what.

KirkW1
(Texas)

Posts:1145

07/10/2008 10:12 AM
The distribution of the money depends on the membership of the community. If for instance you had two families with children out of 1200, the whole thing is crazy. On the other extreme, if only 2 of the 1200 units didn't have children then not doing so would seem crazy. I think $900 seems pretty steep for a Santa myself, but if I were in the suit it wouldn't seem that bad at all. I personally think that all HOA funds given to the social committee should be spent on activities that will encourage neighbors to get to know each other better. Thus I would spend the entire lot on things like a big cookout. Having Santa show up at said cook out does seem like a pretty decent idea. If the committee is raising its funds separate from the HOA budget, then it should send the funds in the manner it feels fit to.

JohnK3
(Pennsylvania)

Posts:463

07/10/2008 10:29 AM
I'm with Robert on this one, as to dues not being spent on anything which does not benefit the Real Property, which is the raison d'etre of an HOA, or at least ours. We have yards sales once in awhile, and usually a Back-To-School block party. Some Owners participate, some don't, so any funding for them comes from the participants. Our Board discussed whether we should provide all or partial funding, but came to the conclusion that once we pony up for one, we'd be hard put not to pony up for something another group decides it would like being paid for.

RobertR1
(South Carolina)

Posts:2153

07/10/2008 1:10 PM
JohnK3, Good reasoing John, not to mention it is illegal to spend assessments nd dues on items that do not support the whole. If you can tie the contruction of the second Mount Rushmore to benefit each and every association owner and this results in a benefit of the whole (the whole being that which runs with the land), god luck to you.

RobertR1
(South Carolina)

Posts:2153

07/10/2008 1:30 PM
Kirk, A welcome committee is good Kirk, a Social Committee doesn't describe anything except what you want it to be. Why not take this money and set up a good community Web Site? Get your monies worth there, built community there, get to know what your neighbor is thinking and also get Hot News right from the BOD desk direct to you. Also, a website allows you to interact with other communities, other governments and all kinds of state offices and elected representatives.

KirkW1
(Texas)

Posts:1145

07/10/2008 2:11 PM
Robert, First, what makes you believe my association isn't using the web? I would go so far as to consider it insane for my association to not use the web considering that a very high percentage of people have broadband in their homes. (At least 7 of 9 on my street.) Second, I disagree with your belief that it somehow violates HOA regulations to have them sponsor an event to help neighbors get to know one another. By your line of reasoning a pool would also be illegal since some people won't take advantage of that. The HOA has to be fair. If some choose to not bother going that is their problem not the HOA's.

EllenS1
(Florida)

Posts:353

07/10/2008 5:02 PM
KirkW1, I totally disagree with you. When one purchases in a HOA they should be aware that a pool and its upkeep is involved. Ditto for an exercise room or whatever. The real reason HOAS were established was to keep the property up to snuff and protect the values of the homes therein. I doubt that anything in your docs provide for owners to pay for a new year's eve bash, Christmas party, 4th of July picnic or whatever. Next will be a baby shower, retirement party and on and on. Will liquor be served and the association liable for any accidents? I agree it is great to hold events for owners to get together to know each other but this should be up to the people interested in this sort of thing and they should raise the money for such events.

EllenS1
(Florida)

Posts:353

07/10/2008 5:05 PM
Brenda, I can't believe that your docs provide for social activities.

RobertR1
(South Carolina)

Posts:2153

07/10/2008 5:11 PM
Kirk, When we speak here, we speak to pass information and to generate ideas to anyone reading these posts. As I said I have no problem with your opinion, and when we makes statements like I do, such as, show me where it says in your documents a responsibility by the association to throw parties, I don't mean it makes a difference to me if you throw birthday cake parties with life girls. I would caution this might get you in trouble, but not from me. Your pool, clubhouse, office etc, etc and other real property IS specifically covered by your covenants, kiddie parties or drinking parties or bridge parties are regulated by the management of the documents and the use of the real property may well be a freebie for owners, but not for non-members. Cut me a little slack here and give me credit for time served, my opinions are of course a matter of concern with my own Condo, but not all my opinions are formed from living here. And hold above nearly all else, when your are talking Regime Money: "It is not your money." It is not some pot for a group of people that hold the vote to decide how to spend it. The documents decide that, the board may assign precedences but the documents assign authority. But, having said all that, it is just an opinion, not because it don't contain some truth but it matters little what I think, from your side of the table.

RobertR1
(South Carolina)

Posts:2153

07/10/2008 5:40 PM
Ellen and Brenda, Or course you know how I stand about this. But doesn't it seem sort of illogical for a state(the State Statute) to proclain in a law that parties would be mentioned? Isn't that like the constitution taxing tea? You know what happened when that was tried. If your documents address social events or maybe a little Nascar or Extreme Boxing, doesn't it raise a doubt in your mind. I think we may be blowing this up too high, and can agree community social events are nice and can be very effective to the health and happiness of the community, but we, as owners shouldn't get into financially benefiting a select group of equals. A shot or coke or hamburger still costs money. Our condo has for years, provided a cook out and a Continiental Breakfast at Annual Meeting time. I, and others have expressed their objection, but the practice continues because that is the way it is always done. In reality, if you have to drag people to the alter to get them to even read their documents, what makes you think a hamburger and a spiked drink is going to solidify the association and all problems are solved. Do I exaggerate? Read the minutes of the annual meeting and peruse what a wonderful time was had and how all are transformed into a viable respected, cohesion group of owners, because they vocalized after a couple of beers. Annual meeting is over, they all head back to camp, not to be seen till next year and the ritual starts anew. In my opinion, the good of this all comes external of the activities and Golf Prizes, and happens when a couple of serious about their neighborhood folk sit down and say, "Let's talk about our investment."

EllenS1
(Florida)

Posts:353

07/10/2008 5:49 PM
Robert, You hit on one of my pet peeves "that's the way it has always been done" translated it means no to progress or improvement.

GlenL
(Ohio)

Posts:1375

07/10/2008 6:17 PM
Posted By EllenS1 on 07/10/2008 5:49 PM Robert, You hit on one of my pet peeves "that's the way it has always been done" translated it means no to progress or improvement. Ellen I understand the sentiment but sometime you hear "that's the way it has always been done" is because it works. Different is not always better; remember the "New Coke" fiasco.

DonnaS
(Tennessee)

Posts:2837

07/10/2008 6:49 PM
Brenda, I cannot agree with this entire concept of association funds being budgeted for parties. Out of 1200 members, what kind of percentage participates in these gatherings? If you get 600 out of the 1200, that would be a HUGE number of people participating BUT there still would be 600 people who DO NOT get to enjoy the benefits of their funds being used for social stuff. And as Ellen said, I'll bet the cost of another party that there is no place in your documents that address association funds being used this way. Special interest partys do not include all of the residents--like Xmas Kids partys and teen partys so I would not agree with the entire concept. Perhaps an all residents picnic where everyone can come but again, not on association funds.

KirkW1
(Texas)

Posts:1145

07/10/2008 8:30 PM
I don't buy that the HOA being involved in a block party will automatically lead to baby showers and the like. In fact, the whole argument is a classic example of the "slippery slope" fallacy. But while you are saying there is no reason for a HOA to be involved, perhaps you should consider that your city quite possibly uses tax dollars for an annual block party that some people choose to participate in. Check out the National Night Out. And then call your police department and get their impressions. This program has been very successful and is nothing but coordinated block parties. But then again, HOAs have no basis for reducing crime in the neighborhood. After all crime rate has nothing to do with property values. (Oh, that is right it has a lot to do with property values. Just as getting to know your neighbors is a well accepted means of reducing crime.) The budget doesn't have to be big. Again, it can be as simple as helping to coordinate efforts.

RobertR1
(South Carolina)

Posts:2153

07/11/2008 5:33 AM
Kirk, I don't think I, and others that have posted about this has any personal vendetta to dictate to anyone about anything. These posts are absolutely full of stuff that folks cull from the whole and use to buttress there argument or position. I imagine they copy it and at the next whatever wave it in the air and proclaim, "and here's the proof." I have done exactly that if I feel I am passionate enough about an agenda I MUST see considered (passed). It has it's good side and it's bad. But I would hesitate to berate any of the posters here because of something they posted and then proceed to spin it into something that didn't say or imply. Except for those of us older than dirt, we pretty much have to watch we don't start anything controversal or cutesy. I like controversy, I think it produces good things, but only if the controversy has direction, fine line there. Again, just hoping from my posts do accomplish the Doctor's Golden Rule, "Do No Harm."

BruceF1
(Connecticut)

Posts:588

07/11/2008 6:57 AM
In our HOA we don't mix social activities with official business. We do have a social "committee" and we do have a fundraising "committee", but they are made up of volunteer homeowners. The committees have not been established by the board and their members are neither appointed by the president nor by the board. These committees organize and run themselves. They do not have official status such as our landscaping committee or our architectural control committee, and there are several very good reasons why. 1 - Taxes. What about the money raised for and spent for social events? If the committee has official status, that money, legally, has to show up on the books of the HOA. Remember, under the IRS rules for an HOA (1120-H), you have to meet certain reqirements with respect to funds. Those requirements are no more than 40% income from outside sources (non dues), and no more than 10% of your expenses can be on non-qualified expenses (and social events are not a qualified expense because according to the IRS, "at least 90% of the association's expenditures for the tax year must consist of expenses to acquire, build, manage, maintain, and care for property"). Any money collected separately to help defray the cost of an event (let's say you charge $10 per person for a picnic) has to be declared as outside income, and the amount you actually spend on the event is a non-qualified expense. Even if you don't inadverdantly find yourself in a tax paying situation, why add to your bookkeeping headaches? And, if your fundraising committee and your social activities actually make money, you could find yourself giving Uncle Sam a share. 2 - Liability. Does your HOA insurance cover you if someone is injured at a social event? Certainly, such events increase your risk. Does your insurance allow for this? Your insurance probably provides coverage if someone is injured on common property, but what about at an HOA-sponsored event that is at a remote location? 3 - Discrimination. If a social event is an official function of the HOA, there is the potential of inadverdantly finding yourself on the wrong end of a discrimination lawsuit. You think that's far-fetched? Let me tell you a true life story. A few years ago our social committee planned a holiday party. Our clubhouse wasn't built yet, so the committee decided to have it in the function room on the second floor of a nearby popular restaurant. Because this was an old establishment, it was grandfathered and the second floor wasn't handicapped accessible. Simple oversight, mind you, but a handicapped individual living in our HOA could easily have sued the HOA claiming they were discriminated against because they were not able to attend the party (if it had been an official HOA event). 4 - More hidden issues. Depending on the laws in your state, there may be other issues to consider. An HOA is (usually) a legally chartered corporation; a "business" entity. You're supposed to know better. It is not the same as a group of individual homeowners who have decided to get together and do someting as a "private" group. For example, do you have a permit to serve food? Do you have an entertainment license? An HOA "business" may need one; a group of people holding a private function may not. In Connecticut, a church auxiliary or a parent-teachers organization can hold a bingo night. An HOA cannot (because we are not an IRS Chapter 501(c)(3) charity). And so, life is less complicated if we don't get the HOA officially involved in activities that have nothing to do with the real property of the association. We leave that up to the homeowners as private individuals.

RobertR1
(South Carolina)

Posts:2153

07/11/2008 7:30 AM
Bruce, Every once it a while a post flys across these screens that has a sort of invisable "Flashing lights and loud sirens." Yours is such a post. Wonderful job of explaining a very different look at a very misunderstood problem. For my money, this one goes it my special file I keep that says things way better than I. I am sure there is always counterpoints that wil be argued but you post is tough to contridict. Your reference to associations serving Real Property can not be overlooked, in fact, the real property is the ONLY thing that does matter...........bottom line. The Board doesn't govern the people, it manages the real property, or is supposed to. The Board does not collect assessments and fees and special assessments to make the people happy, it is to provide for the health of the Real Property. I am sorry to say, that after all this time spent in this condo, I can count on two hands all the people I know that had a handle on this. And some of them, even though they understood the concept, elected to be one of the millions of folks who say, "I don't want to get involved." I hope you will pass on to your Board that I admire their interest and intellegience that enabled them to grasp their job as an elected representative of the Real Property.

KirkW1
(Texas)

Posts:1145

07/11/2008 9:47 AM
..,The Board does not collect assessments and fees and special assessments to make the people happy, it is to provide for the health of the Real Property. I am sorry to say, that after all this time spent in this condo, I can count on two hands all the people I know that had a handle on this. ... Wow, and some don't like the way I post. I still find it amazing that you don't grasp that social functions can improve the health of the real property. If your HOA chooses not to do social functions that is fine. I don't live there so I don't really care. But understand other people do see a solid connection between a social function and the health of the real property. And this isn't just members of HOAs. It includes city councils and police departments who choose to put National Night Out in their budget. Quite honestly, I can't imagine placing 10% of the budget into social functions. Nor do I see having any committee with an HOA raiding significant funds from outside the HOA. (Keep in mind that if your membership donates money to a party fund this is not outside funding. Outside funding comes from non-members typically from renting out your facilities.) But it is something to think about along the way.

RobertR1
(South Carolina)

Posts:2153

07/11/2008 10:25 AM
Kirk, Youre quote, "Wow, and some don't like the way I post. I still find it amazing that you don't grasp that social functions can improve the health of the real property. I quess you got me Kirk, I have no defense. Maybe I can make the paper by being the first Terrorist dedicated to destroy Block parties. I have noticed that our local town's "Night Out Party" is well attended, and lots of different food and drinks are presented at nominal charge by merchants, and some merchants even keep their stores open late that night. The city pay's for entertainment (excellent venue), and police force has to pay overtime to accomodate the crowds. I see nothing to upset me about all this. I would probably feel different if it happened in our courtyard, and we were supplying the set-ups and Pringles.

BruceF1
(Connecticut)

Posts:588

07/11/2008 10:44 AM
Posted By KirkW1 on 07/11/2008 9:47 AM (Keep in mind that if your membership donates money to a party fund this is not outside funding. Outside funding comes from non-members typically from renting out your facilities.) Kirk, Not true. You should read 26cfr1.528 which describes what is exempt and non-exempt function income for HOAs. "Outside income" is actually a misnomer because it does not mean income from sources outside of the HOA. The correct term is non-exempt function income. Non-exempt function income includes: "(3) Amounts received from members for special use of the organization’s facilities, the use of which is not available to all members as a result of having paid the dues, fees or assessments required to be paid by all members;" Thus, if you collect money from association members to attend a picnic, for example, that is not exempt function income unless that money is collected from all homeowners in the form of regular assessments. Another example would be a "pool use fee" charged only to members who desire to use the pool. Still another example would be a fee to use the clubhouse for a private party, whether is is an outside party or a private party by a homeowner. Our clubhouse, for example, is ONLY rented to association members for private parties, and those fees are non-exempt function (outside) income. EVERY bit of income better appear on your form 1020-H. Don't mess with the IRS. We have our social functions. We just keep them separate from HOA business and avoid the bookkeeping and other potential liability and legal headaches. We don't have to worry about food permits, entertainment licenses, etc. It's just a group of neighbors having a private party.

BruceF1
(Connecticut)

Posts:588

07/11/2008 10:51 AM
Oh, and I neglected to mention alcohol. If a minor ends up with an alcoholic beverage at an HOA sponsored event, watch out. (Even if he goes and gets daddy a beer from the cooler.) Not to mention that if there are alcoholic beverages at an HOA sponsored event you probably need a license for that, too. And that probably goes whether the people bring their own or not.

BruceF1
(Connecticut)

Posts:588

07/11/2008 11:57 AM
Brenda, Oh, hey, you know what? We all got sidetracked on whether the Social Committee should even be an official part of the HOA and what you really asked was how to spend the money. So, whether you decide to have the social committee part of the HOA or keep it separate (my recommendation), what kind of events do you plan? I think, to be fair, you need to keep the needs and desires of all of your community in mind. Certainly, there are family events (maybe a picnic?), and there are adult events (maybe a holiday party?), and there are events for children and teens. Maybe an Easter egg hunt, a halloween party, whatever. There are lots of examples. I would say try to keep it balanced.

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