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DarrinF
(Kansas)

Posts:11

03/28/2010 11:52 PM
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?

RobertR1
(South Carolina)

Posts:5164

03/29/2010 1:40 AM
DarrinF, Looks like you are not an Association Board. You are a developers Board and if such is the case you are in deep water. You need to read the documents you are operating under, is it possible the developer or anyone else selects the governing body of the membership. I don't know what you got Darrin but it sure looks like your development is under total control of the developer. Doesn't your documents call for elections to the Board. If your association was turned over to the association (members), the the developer is nothing more than a single owner with one vote, same as everyone else. You need to search your documents and your state statutes about the organization of a HOA in Kansas. You can find direction about your state by looking at the CAN link on this page, highlighted in yelloe. Good place to start.

TimB4
(Virginia)

Posts:3229

03/29/2010 3:25 AM
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

DarrinF
(Kansas)

Posts:11

03/29/2010 3:29 AM
The developer is still building houses. There are over 100 houses still to be built, so according to him the homeowners have no voting rights yet. There were two other builders out here that left because of differences with the developer. The builder who built my house once told me that the developer and board were embezzling money from the HOA funds. After seeing the most recent budget I am inclined to believe him, which is another reason I asked to be on the board. I feel like I am being left out on a lot of things and would really like to get my hands on the books to see what is going on. The treasurer gets to spend money whenever she wants to. The developer spent his own money to build our clubhouse and pool, but it is sitting empty because she will not give us any money to have any activities or functions. It's ridiculous. Is there any way to stop her or make things better? There are a lot of mad people that live out here and I have told them all that I am here to help bridge the gap and make things better, but I keep hitting a brick wall with the treasurer.

DarrinF
(Kansas)

Posts:11

03/29/2010 3:35 AM
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.

RobertR1
(South Carolina)

Posts:5164

03/29/2010 4:19 AM
Darrin, I know a nice activity you all can engage in and there is minimal cost. Ask your developoer to hold a Townhall meeting with all the owners in that new Club House. Then you ALL will be able to ask all the questions you want about the Board, the secretary, how long it will be before the association is turned over to the owners, explainations about how you all have no vote and that is exactly what you signed up for. Then you can tell the owners what being on the Board means............clear the air. Darrin, if all the owners are so in the dark about their place in the sun(so to speak) you need a Townhall meeting. Also be very careful about tossing out comments of illegal activities about the developer or anyone else, "Someone say's", don't impress mmany judges.

TimB4
(Virginia)

Posts:3229

03/29/2010 4:38 AM
Posted By DarrinF on 03/29/2010 3:35 AM 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

SusanW1
(Michigan)

Posts:5028

03/29/2010 4:55 AM
Darrin - make a motion at the next board meeting to establish this committee - with its own budget. The treasurer is really right - if you want to fund this committee, all expenditures must be approved by the board. The committe can come up with its own budget and progrqam plan for the year and get it approved. It doesn't matter if the board is developer run or elected board run, all business of the HA must go thru the board. If you want this to be a volunteer-run committee, then you have to fund it by donations. But don't be surprised if the board won't let you conduct programs within the community.

RobertR1
(South Carolina)

Posts:5164

03/29/2010 6:06 AM
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.

DarrinF
(Kansas)

Posts:11

03/29/2010 8:33 AM
This is a brand new subdivision. We have no playground equipment, and we just got the clubhouse built. They are still finishing the pool to open this year. We only have 102 houses built, with another 100 plus to go in. We will have 140,000 at least extra by the time it's all said and done. The community wants to have fun and the developer wants the clubhouse used, but the treasurer is abusing her power and doesn't want the clubhouse used. The board isn't having any say because she makes her decision and the developer isn't standing up to her, even though he is president, and I am trying to have a say as VP. The streets are city streets so it is the city's job to take care of them. We have to take care of sidewalks.

MaryA1

Posts:0

03/29/2010 8:37 AM
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
(Kansas)

Posts:11

03/29/2010 8:54 AM
The treasurer is a home owner in the development, and also a close friend of the developer. I just read the CC&r this morning and it states that the developer has the only vote until all homes are completed, which will be several more years. the fishy budget stuff was told to me by my builder who quit building out here because of the developer, maybe just a grudge thing, not sure.

GeraldT4

Posts:1022

03/29/2010 11:16 AM
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.

RobertR1
(South Carolina)

Posts:5164

03/29/2010 12:14 PM
Gerald, That's a pretty good look at the Reserve Fund Process. I suspect if you could only ask one question of all associations and the answer would be a measure of how effective the HOA is; that would be the question to ask. But exposure here on this site for any period of time seems to indicate the developer is not going to be transferring any reserve funds to the HOA because of any influence a developer board has over the finances of the developer. It has been aptly explained the developer at this stage has pretty much absolute control over the Board, a fact our OP has not fully realized yet. Now, we have seen on this site developers that do care about the association once they are gone and strive to build a reputation for reasonableness. Then we have the economic situation of today and the Bottom Line gets more and more attention. Considering all, your last sentence raises some eyebrows.

GeraldT4

Posts:1022

03/29/2010 12:39 PM
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.

GlenL
(Ohio)

Posts:3526

03/29/2010 1:02 PM
Darrin, the treasure is right the Board controls the funds not the committee, so at the next Board meeting make a motion to give them an annual budget. It will either pass or not but there are other ways of doing things, in the past (until apathy prevailed) we used to do things like a community cookout, each family would pony up $10.00 and the committee would buy the fixins in bulk. A couple of people would move their grills over by the pool and the party was on. At Thanksgiving the Board would buy the turkeys which homeowners would prepare and everyone that came brought a side dish.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair. - George Burns

RobertR1
(South Carolina)

Posts:5164

03/29/2010 1:45 PM
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.

DarrinF
(Kansas)

Posts:11

03/29/2010 2:25 PM
Thank you for the comments so far, keep them coming. I understand the board controls the money, of which I am a part. However, she thinks she controls everything...she is trying to run the show with no other BOD input. If the board does vote, i expect it's either a 2-2 tie, or a 3-1, for a social budget...I guess I was of the understanding that I was paying almost 400 a year, along with everyone else who lives out here, for this subdivision to be a great place to live. right now barely anybody knows each other and most of the things the social committee would like to do are low cost,or could even make money for the HOA. having to seek approval from the BOD to start a walking club and have a neighborhood clean up sounds a little silly to me. Also, just a sidenote...four months ago our clubhouse was finished. the social committee chair was told to plan a grand opening and given a budget. the chair planned and priced everything and presented her plan to the treasurer. the treasurer said she didn't like the plan, and planned it herself, spending double what the chair person was budgeted. now, if that's how it's done and to then turn around and say we have no money to have social events, I think that's a little ridiculous.

DarrinF
(Kansas)

Posts:11

03/29/2010 2:28 PM
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.

GlenL
(Ohio)

Posts:3526

03/29/2010 5:18 PM
Darrin, like it or not the developer is in charge and his word goes so if he wants to let the treasurer control the purse strings that’s the way things are until transition. You’re right usually the treasurer does things at the direction of the Board not the other way around but you’re not really on a real Board until the developer is gone. The best thing to do is go along and do the things you can until transition then is when changes can be made and you will be in a position to make them.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair. - George Burns

MicheleD
(Kentucky)

Posts:4491

03/31/2010 8:34 PM
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.

RobertR1
(South Carolina)

Posts:5164

03/31/2010 11:01 PM
MichaelD, Well................You can vacation all you want, but I get to be #1 curmudgeon. I love that word. Besides, you beat around the bush too much. Never a directed thought. You will have to admit that from where the OP sits, he sees a different picture than you, from your vantage point of having been there and back. It is hard for him to accept reality when he can't make any sense of it. You are of course right, he or they, if the case may be, are not going to wave a wand and all becomes logical to them. They are holding a basket with scant tools needed to flip the screen. But they are in this for the lang haul and the answer to the treasurer problem or differences could well be time, and attention. You also must admit it is not very comfortable to sit at a Board Meeting table, and know you have little influence and in some matters......no influence. But right now, as you point out, there are other ways to skin a cat and there are benefits to learning the job, as long as you can keep your eye on the prize. This appointed position is a tough one at best, you expect to represent the membership and right now the membership has little influence, has to play secomd fiddle to the chosen ones, and is expected to be able to push and pull by the membership. So be it, I agree, just look long term, keep your interest level high and wait for the new day, while you set all the framework to finally do the job right......once in a lifetime experience. I am glad you are back and I am sure the gov'ment is happy you got your taxes done, it will make that oil exploration project more comfortable, as soon as your check clears. Again, welcome back.

GlenL
(Ohio)

Posts:3526

03/31/2010 11:58 PM
Posted By MicheleD on 03/31/2010 8:34 PM 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. But Michele, that's the American way.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair. - George Burns

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