Please Do Not Disturb

Common Ground™
September/October 2014
By Mike Ramsey

Even the most successful communities wrestle with apathetic owners. What can you do, if anything, to disrupt Please Do Not Disturb disinterest?

It was far from ideal, but a Florida homeowners association managed by Brad van Rooyen’s company was able to function with just two board members at the helm.

Then one of the members died.

When van Rooyen tried to recruit someone to help keep things going, the effort didn’t go well.

“You would think out of 50 homeowners you would at least find one person,” says the managing partner of Tampa-based Home Encounter. “We sent out three or four mailings, knocked on doors, spoke to people who’d even been on the board years before. We couldn’t get one person to volunteer.”

Desperate times call for desperate measures. Legal counsel OK’d a temporary plan to appoint a nonresident—one of van Rooyen’s employees—to the board, which was able to perform its duties once again.

“That was really for me—as a manager—a wake-up call that people just don’t have an interest in their associations,” he says. “It wasn’t because they had a bad experience. It wasn’t that they were unhappy. It was just that they simply didn’t care.”

It’s not an isolated case. Other professionals and volunteer leaders have likewise wrestled with apathy—that lack of owner participation and interest that can undermine the well-being of a community association. In rock-bottom scenarios, experts warn, complacency among owners can allow corruption to flourish at the board or management level or lead to financial ruin. More typically, though, apathy tends to stymie associations as they try to reach a quorum to hold an election or conduct an annual meeting.

“If you have a generally apathetic community, you might never make quorum,” says James McCormick, a managing partner of the California law firm Peters & Freedman. “You have to send (ballots or proxies) out again and again and again. And every time you send it out, it costs the association an additional sum.”

While some sets of governing documents allow boards to reconvene at a later date and hit a lower threshold, others don’t have that kind of fallback. For the particularly problematic cases, McCormick has advised clients to amend their documents to create a more realistic quorum level. The Catch-22, of course, is that they must shake the trees to get a supermajority of votes necessary to change the CC&Rs.

The next option in California is to petition the court to authorize an amendment, provided certain conditions have been met—another expense. “It’s several thousands of dollars,” McCormick warns.

Veteran Washington, D.C.-area attorney Bob Diamond, a partner at ReedSmith, says quorum levels established by the earliest community associations didn’t prefigure the challenge of wrangling enough owners to conduct business.

“There were so few community associations that we didn’t have a track record of knowing,” says Diamond, a CAI past president and a member of CAI’s College of Community Association Lawyers (CCAL). “Industry leaders didn’t envision that there would be 5,000- and 50,000-unit associations. They were looking at the 50- to 100-unit, multifamily building or townhouse project, which is what most of them were at the time.”

Today, when he helps developers create standard-size communities, Diamond usually recommends a quorum level of 25 percent. “It’s a floor,” he notes. “I think that protects the other 75 percent to the extent that if there’s a big issue going on in the community, then you’re going to get more than 25 percent to show up.”

Offsetting Complacency

The challenge of eking out the necessary participation from owners has prompted more than a few professionals to suggest converting apathy to outrage. Their solution: Put a controversial item, such as a special assessment, on the agenda and then pull it after everyone shows up for the meeting.

“It seems like if a building is running fine, nobody shows up,” says Chicago-area condominium manager Julie A. Peterson, CMCA.

Unfortunately, there is no magic solution. But where there is a will—and a few dollars—there may be a way to lessen apathy’s impact.

The Hilton Head Plantation Property Owners Association was barely making its 50-percent-plus-1 quorum when the time came to collect ballots and proxies for its board elections and annual meetings. Managers and board members adopted a series of strategies in hopes of building a cushion into the tallies, says general manager T. Peter Kristian, CMCA, LSM, PCAM.

They shoehorned the ballot and proxy onto one single-sided page for owners to endorse and mail back. They also recruited and screened enough candidates to make sure elections were contested. And they used grass-roots efforts to tell the community’s 4,300 owners about looming deadlines.

Still, the avalanche of responses they hoped for never materialized. Board members decided to sweeten the deal by holding a drawing. Anyone who sent in their ballot and proxy at least a week before deadline became eligible to win one of five $200 gift certificates.

That did the trick. For the past decade, Hilton Head Plantation has had “literally hundreds of votes to spare” each year, Kristian says. Winners typically use the prizes to pay down assessments.

“I’ve had residents say, ‘I’m totally against this raffle. Why are you doing this?’ And I say, ‘Because it works,’ ” says Kristian, a CAI past president. “Should I have to use it? No. Everyone should want to know what’s going on in their community, and they should be involved in its governance. But the bottom line is they’re not.”

Drawings also are common at Florida condominiums, but the associations cannot use their own funds to provide prizes, says Ellen Hirsch de Haan of the Tampa law firm Wetherington Hamilton. Nor can they reduce the assessments of an individual member. Associations typically use prizes donated by their vendors or from merchants who are trying to drum up future business.

“They have also collected proxies at pancake breakfasts, coffee hours, social club meetings, at the association office, by the pool and so on, in order to conduct their business,” says de Haan, a CAI past president and CCAL member.

It also doesn’t hurt to make meetings enjoyable—or at least provide snacks.

“Associations should take advantage of the serious power of fun. Meetings should be social occasions as much as anything else, featuring food, music and time to socialize,” says Matt Leighninger, executive director of the Deliberative Democracy Consortium, which studies civic engagement.

Professionals concede drumming up interest can be a lot of work. Some are surprised community association residents aren’t more willing to cooperate and govern themselves.

“Community associations are probably the only chance a lot of people will have to be directly involved with some sort of government,” says McCormick, the California attorney who has advised clients on reaching quorums. “You can have an understanding of everything that goes on, and you can know if the light’s out you don’t have to call public works and wait two weeks for them to come out. It’s within our authority to get it fixed right away.”

Gregory Alexander, a Cornell University property law professor, says he was surprised at the prevalence of apathy when he studied the issue in Phoenix-area communities in the mid-1990s.

“It seemed counterintuitive to me, especially because those were upper middle class suburbs where people had a fair amount of expendable income and leisure time. People in that class usually care a lot about their surroundings, their environment and how it’s governed,” he says.

His advice to community associations: Sponsor regular social activities that allow residents to interact, such as picnics or softball games, as a way to prime the pump for more serious involvement.

“One thing builds on another. Getting people to routinely interact with each other on a social basis tends to lead to more formal types of participation. You see that phenomenon often in public schools where some have pretty extensive and successful forms of social interaction among parents, which then snowballs into very active parent involvement in the school’s governance,” Alexander says.

McCormick believes the industry could do a better job of publicizing the positive and empowering aspects of living in a community association, given the negative news stories that sometimes emerge. He and other professionals also agree that keeping residents informed and being receptive to feedback is always a good pre-emptive strategy to combat apathy.

“Find the best tools for your community,” McCormick says. “Some association like paper newsletters, some like e-mail only, and some are using Twitter or Facebook or other social means to engage with residents and create a larger sense of community.”

To Pay or Not to Pay

Another routinely discussed idea—though rarely employed—is offering payment to encourage new leaders to step up. Governing documents, however, often prevent board members from receiving anything other than reimbursements for expenses, and some state laws may ban board compensation altogether.

For the communities that could, in theory, pay board members, many managers and attorneys advise against it. Their reasons range from ethical—the spirit of community association leadership has long been voluntary—to pragmatically legal.

“In California, association directors have a large amount of legal protection by being volunteers. By ridding yourself of that volunteer status, you are throwing away the liability protections that are otherwise offered by statute,” McCormick says.

And yet some boards have been paid in one form or another.

Peterson, who manages a condominium in Chicago’s western suburbs, served on a townhome board in Riverside, Ill., that offered board members a $75 discount on their monthly assessments of $125.

The catch: Each of the three board members had assigned duties, such as overseeing snow removal or gutter and sprinkler maintenance, which were clearly spelled out on paper.

“It didn’t really compensate you for your time, but it was something,” Peterson says.

The arrangement was not without controversy at the nine-unit, self-managed association. As new owners moved in, some would show up to the annual meeting and grouse about the break board members were receiving.

The board’s response was always the same: Knock yourself out, join the panel, assume the designated duties and get the assessment discount.

“We’d give them the three sheets of paper and say, ‘Here are the duties of each one of us. Choose whichever one, and you can have the position.’ You’d never hear from them again,” Peterson says.

CAI past president Stephen R. Bupp, CMCA, AMS, PCAM, a proponent of compensating leaders, recalls the backlash one Maryland condominium board encountered at an annual meeting in the 1980s after proposing elected leaders each receive $200 a month.

“We had a roomful of hostility,” says Bupp, a retired management company executive. “The thing went down in defeat, 70 percent opposed, 30 percent in favor. The board members said, ‘Thank you for your vote,’ and one by one, they resigned and got up and left the room. There was no board then.”

“Of all the people complaining, of course, no one was interested in serving,” he adds. “They were just interested in complaining. At first, they were all happy, and then they realized, ‘Somebody’s got to do this.’ ”

For communities where the idea may fly, Bupp says, the trick is finding the right amount to offer: not too much, not too little.

“It shouldn’t be so much money that it matters for one person or another to get on the board, like it’s his or her sole support,” he says. “But if you are on the board, and you feel like no one else is participating … at least you’re getting something out of it.”

The Candlewick Lake Association in northern Illinois pays its seven board members a $50 monthly stipend. General Manager Theresa Balk, CMCA, says the sum is trifling when considering the time each member spends e-mailing, attending at least one meeting a month and doing committee work at the 1,800-home community.

“Nobody’s on the board for the money. They might have another agenda, but it’s not for the $50. It’s kind of a ‘Thank you, we appreciate what you do,’ ” Balk says.

What if board service became mandatory? Donna DiMaggio Berger, a shareholder for Becker & Poliakoff law firm in Fort Lauderdale, Fla., and a CCAL member, has blogged about the idea of instituting a “draft” for community associations.

“I wrote the blog tongue-in-cheek,” she says. “But the only way to finally solve the issue of apathy in communities is to address it the same way we address apathy in the court system. How many people do you think would volunteer to serve as jurors if our jury duty system ceased to exist? Our legal system would likely grind to a halt.”

Much like the court makes exceptions for some jury candidates, Berger says there would need to be carve-outs for an owner’s extenuating circumstances. Any community association board draft would need to be imposed at the statutory level, she believes.

“I cannot imagine any community could actually pass an amendment requiring mandatory board service. If a community was developed with that system in mind, that would be an interesting test case,” Berger says.

A draft won’t be necessary at the Florida homeowners association where van Rooyen, the management professional, installed one of his employees to help run the board.

After eight months, he found a replacement when a new resident moved in and called the office.

“I said, ‘Well, I’m glad you called. Let me tell you, we’re in desperate need of a homeowner. Can I sign you up?’ ” van Rooyen says. The new owner happily accepted the role.

More good news: A former board member who stopped serving due to scheduling conflicts was suddenly available to rejoin the board. While there are supposed to be five members, three is an improvement.

“How do you fix apathy? It’s almost like a habit,” van Rooyen says. “Something has to change in community associations. An awakening has to happen to overcome this. Otherwise, we’re going to be asking this question 10 years from now.”

Mike Ramsey is a Chicago-based freelance writer