I live in a community of 46 beautiful town homes in Pacific Palisades, California. For the past two years, I have served on the Board of Directors, which is charged with maintaining the property for the Association.
One of the ongoing clichés about homeowners board’s is the nasty politics that winds up, inevitably, disrupting everyone’s ‘right to enjoyment’. I say cliché because, when I mentioned my current situation to my friend Ceslie Armstrong, she started laughing and suggested that it was so universal, that it should be a situation comedy.
It is truly universal, so in attempt to understand the dynamics of homeowners associations (HOAs) and their relationships with Boards, I started to form a theory.
HOAs have a variety of obligations, many of them financial, so money is probably the most obvious point of friction. However, having spent the last three years working on project rooted in the sustainability movement, my current understanding is that sustainable living is based on the interconnected nature of economic, social and environmental issues. They are mutually connected, so to consider one, without understanding the effect on the other, is a road fraught with peril.
HOA boards need to consider the future, and prepare for those events, so that when the inevitable roofs leak occurs, monies are available to fix it. The mechanism used to estimate those costs is called a ‘reserve’, and the levels at which a reserve is maintained, is up to some variance, as practiced by the Board.
There are several schools of thought on maintenance of the reserve, mostly based on the circumstances of the owners. In our association, we have older residents that have been here for thirty+ years, young families, couples and singles. There are residents with no mortgages and huge mortgages, with large equity and no equity, with large incomes and fixed incomes, that plan on staying for the rest of their lives or flipping it when the market conditions are right.
In other words, consensus is, sometimes, very difficult.
The thing that works against long term reserve building is the political fallout of raising homeowners dues without an apparent immediate need. So the easiest thing for a Board to do (and stay in power) is to not raise the dues and let the reserve dwindle. This becomes a slippery slope, that inevitably winds up as ’special assessments’.
I don’t pretend to be an expert on whether it is a better idea to put the money into a reserve, or ding owners for the big ticket items, but what I do know, is that if the monies are not there, maintenance gets deferred until a pain threshold is reached, and that pain is no fun for anybody.
Sometimes Boards (like ours) try to mitigate costs, by taking on certain management responsibilities on their own. There is no doubt, that intentions in these cases are good, but it causes several issues.
The most impactful is that the interface between the people managing and maintaining is lost. If third-party property managers are not doing a good job, the actions available to the Board are that they can reprimand or replace the management.
But when individual Board members, take on those roles, the ability to criticize gets personal. It is not possible to point out shortcomings without defensiveness. Discussions stop being about the job, or the monies at hand, and turn into personal arguments.
Personal arguments with your neighbors… that involve all of your neighbors.
It’s just a bad scene.
So to recap:
1. Boards let the reserves dwindle.
2. Boards take on management responsibilities as a ‘cost saving’.
3. Stuff happens and everyone gets mad.
This is the slippery slope that simply looking at the price of something causes.
The social and environmental costs need to be factored into any decisions made by a Board. Saving money, at the expense of the homeowner’s ‘rights of enjoyment’ is not a savings, because it diminishes the social and environmental value of the property.
All these things need to be considered.
To simply look at dollar cost ignores the social and environmental impact and sets the Board’s table for acrimony.
Tags: California, Davis-Stirling Act, HOA, Law, Reserves, Social Interaction, Society
