AZHOC - Arizona Homeowners Coalition
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Executive Mtg

The Board of Directors held an executive meeting to discuss a light repair proposal and a Management agent addendum. The Mgmt agent contract addendum deals with a negotiation between the Board and Mgmt agent regarding...
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POA and white roofs

I live in a POA association which encompasses many homes. 4100 lots are covered Welcome SRP, our electric supplier, is offering a rebate for home owners who coat their flat roof white as an energy...
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HOA Landscapers

Hi, The HOA landscapers recently dug up 8 plants from behind my wall. I had a landscaper designer measure my property line with a measuring wheel and based upon his measurements, my property extends 7’...
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  • From Dennis Legere on Liquor license

    Ann

    There is nothing in the planned community or condominium statute relative to this issue. This would most likely be based on statute and regulation established by the Department of liquor licenses and control. You could forward your question to the department public information officer Thomas Mangan 602-542-9046. Thomas.mangan@azliquor.gov, I know absolutely nothing about liquor licenses.

    Dennis

    Go to comment
    2023/03/24 at 3:46 pm
  • From Dennis Legere on ARS 33-1813

    Priscilla,
    The board president is absolutely incorrect in his interpretation of the law, and you are. Nothing in the law allows an association to publish the voting results and how everyone voted. What the law says is that the ballots and all associated documents must be made available for inspection upon request for one year by any homeowner. The real issue here though is the concept of secret ballots. The association controls that because the statute addresses that issue differently, so the board president had no valid argument stating that the law was invasive and provides no privacy, the board can change their governing documents to require secret ballots at any time. Because they chose not to is not the laws fault. With a secret ballot the ballot must not identify the person voting so in viewing ballots no-one can ever determine how anyone voted but can see who voted. The association is free to establish balloting by secret or non-secret ballots. If you do not use secret balloting both the association board, management company and homeowners can see how you voted and use that information against you. There are many communities that have done so and resulted in people refusing to vote for anything because of that intimidation and retaliation factor.
    To post that information on a web site for everyone to see was nothing but an intimidation factor used by the association to silence members complaining about the vote. If I were you, I would ask to view the voting results to make sure that the vote tallies were in fact accurate. I personally hat non-secret balloting and will try to introduce legislation that requires association to only use secret balloting.

    While you could argue that the association violated the privacy rights of all homeowners by posting the results the way they did in court it is not a clear-cut case and no specific law was violated with that posting.

    Dennis

    Go to comment
    2023/03/24 at 3:38 pm
  • From Dennis Legere on Inflation factor and annual contribution increase in the reserve analysis

    DPK,
    Inflation assumption are vital to any reserve analysis. To ignore that would be hiding your head in the sand. You can get a detailed cost estimate today for any project but if you only need to do that work in 5 years the cost in five years will be higher than it is today and if not addressed in your analysis you will end up in a shortage of funds to do the work. The annual contribution increase is simply a ploy used to raise more money by most reserve companies. You can address your funding needs in many ways including fixed contribution to the reserves every year. These are choices that can be made, but the cost of future products or services will always increase. We have never experienced negative inflation in our economy.

    Dennis

    Go to comment
    2023/03/24 at 3:10 pm
    • From DPK Kraul on Inflation factor and annual contribution increase in the reserve analysis

      Thank you for your reply. I thought the annual contribution increase might be unwarranted and unnescessary.

      Go to comment
      2023/03/24 at 6:21 pm
    • From DPK Kraul on Inflation factor and annual contribution increase in the reserve analysis

      Thank you for your reply. Yes, I completely understand the need for the inflation parameter. I didn’t understand the need toalso include a “planned contribution increase” parameter. Why would you want to plan to increase your required contribution after you had already included an inflation factor? It just seemed like you were padding an assessement and not acting with the fiscal responsibity required to be an elected member of the HOA. Thank you for noting that it’s a ploy to raise more money. That was my hunch.

      Go to comment
      2023/03/24 at 6:19 pm
      • From Dennis Legere on Inflation factor and annual contribution increase in the reserve analysis

        DPK,
        The issue is how do you raise the money that you need for the end projects. You can raise the money with an annual contribution model that is consistent but considerably greater than your current contribution level or you can raise the money by a contribution level that is increased over time to limit the pain. There are two different aspects of a reserve plan one deals with the nature and cost of future projects and the other deals with how you get the money for the first part. To get accurate projections for future cost you need an inflation factor, to get the money you need for a future project you can go at it with a fixed contribution rate, or an annual contribution rate that varies every year or any combination of the two extremes. If you apply discipline to the process there is nothing wrong with annual increases to the reserve contribution, as long as the target is to have the money you need when you need it. That is simply responsible planning. The issue is has the association used appropriate compounding calculations or di they take the easy way out and simply applied a compounding factor that is totally unassociated with the desired end point for money raised. If after accounting for an inflation factor you have a project that will cost $1,000,000 in 10 years you can calculate an annual contribution increase factor that results in the total contributions raised in 10 years to be $1,000,000 and that would be perfectly acceptable. But if you applied an annual contribution increase factor that was not calculated out you could end up with $1.5 million and that is exactly what you are concerned about. So the real question is has the association done the math correctly in calculating the annual contribution increase factor. This is where a spreadsheet helps to demonstrate the overall plan. You can look out 40 or more years and include all expected projects in that time frame and the expenditures for that time frame and confirm that you have enough money when you need it for each project. If you don’t you have to adjust your annual contributions to meet the demand or eliminate or alter the projected project cost. it is not an exact science but rather a balancing act. that has to be reviewed every 3-5 years to check and adjust.
        Dennis

        Go to comment
        2023/03/25 at 5:44 am
  • From Dennis Legere on Training

    DPK,

    I’ll gladly do a seminar for your community for free. Including an excel spreadsheet that I developed. for my own community. There are many professional reserve study companies that will try and sell you on their product and services. They develop pretty reports with grafts and charts and calculations for percent funded evaluation but all of that is really smoke and mirrors and is only as good as the initial assumptions. Depending on the complexity of your common property this could run you thousands of dollars, but if not truly understood by the board will be useless in one year or less. The only true issue with a reserve study is first to understand and determine your true needs and then to make sure that when each individual item needs to be performed there is enought money in the reserve fund to pay for that expense. Percent funded is a trully useless term but used by every reserve study company, the only true consideration is just in time funding for each and every item in your plan.
    Dennis

    Go to comment
    2023/03/23 at 1:44 pm
  • From Dennis Legere on Homeowners Contact Info

    Suzy,
    While the association will have all of that information they cannot release the phone number and e-mail address of any resident without their prior permission. the owners name and mailing address is a public record and you can request that from the association.
    Dennis

    Go to comment
    2023/03/21 at 5:36 pm
  • From Cynthia Black on Conflict of Interest

    Does this mean that our board, with the majority of members in one facet or another of the real-estate industry, have and can use their inside track on everything from condo unit conditions, and repair history to availability and upcoming sales?

    Go to comment
    2023/03/21 at 6:48 am
    • From Dennis Legere on Conflict of Interest

      Cynthia,
      While there is a conflict of interest provision in law currently it is very weak for these communities, but because a board member works in the real estate industry does not in and of itself constitute a conflict of interest. The board member cannot vote on a contract or action of the board that would benefit themself or any member of their immediate family without declaring the conflict of interest. The board member is not acting in good faith if he/she gives out favors in association business for quid pro quo commitment for financial future gain. This could result in losing their realtors license.
      Dennis

      Go to comment
      2023/03/21 at 7:09 am
  • From Fred on Annual Meeting

    Thanks for the reply Dennis.

    I’m going to make it simple. If we need 200 votes to meet quorum and only receive 170. The board President would say something like ” Since we didn’t meet quorum, we can’t hold the annual meeting” and closes out the annual meeting. This is the way it has been done in the past.

    Before he closes it out, I can simply state this is a violation of ARS 33-1804 section B and then the board will have to take some sort of action to meet quorum so that the annual meeting takes place.

    But let’s just say, I quote the statute, they blow it off and still close out the meeting? Then what? Game Over?

    Regarding the Management Company, yes they answer to the board and the board answers to the community. If I’m understanding you correctly, the board can have a meeting WITHOUT the management company present but it would still have to be open to the public of which I’m sure the management company would show up as being part of the public. I’m assuming there’s no way around this if it got to that point.

    Go to comment
    2023/03/20 at 9:06 pm
    • From Dennis Legere on Annual Meeting

      Fred,
      Fred the law requires that a meeting of the members must be held one a year. if the meeting is called and a quorum is not present it can not be held. So, what the board did violated the law. They were required to either change the quorum requirements or continue to call meetings until a meeting was held in that year. Terms for board members have expired and they need to be filled. You cannot continue a term indefinitely, because you cannot satisfy quorum. The board has the power to go thru the community and make sure that they get the required quorum at the meeting or change the quorum requirement to be more realistic.
      They can be held liable for violating the law via either a suit in superior court or a petition to the Dept of real estate and an administrative law judge.
      Community manager are not members of the community so they have no right to attend any meeting of the board or the members without being invited to that meeting by the board or the members.

      Dennis

      Go to comment
      2023/03/21 at 7:00 am
  • From Dennis Legere on Annual Meeting

    Fred,

    The law requires that an annual meeting of the members be held. It does not state called. If the required quorum is not achieved the meeting is not held and must be reconvened as many times as required to hold the meeting. The board can call meeting after meeting or change the quorum requirements to something more reasonable. The annual meeting is where the board positions are filled. While a quorum of the board can fill a vacancy in the board for the remainder of that term, they have no authority to elect or appoint a board member to a new term. This statute is often ignored as there are many communities in this state that have never held elections at all based on high quorum requirements. These quorum requirements can in most cases be changed by the board, but they don’t want to because they believe that they can extend their terms without needing elections. The statute for a planned community is ARS 33-1804 section B.

    The association board runs the community not the management company the board can do whatever it wants with or without the community manager. The community manager works for the board and not the other way around. The board can hire and fire any contractor at will and often with or without cause. You would have to look at the current contract between the association and the management company for the termination provisions within that contract. Typically it requires 30 days notice.

    Dennis

    Go to comment
    2023/03/20 at 8:05 pm
  • From Dennis Legere on HOA Auditors

    Todd,
    You are absolutely correct, but the law allows any association to choose between the three different types of annual financial assessment unless the governing documents dictate otherwise. Audit, Review or Compilation. Just remember if your CC&R’s or Bylaws say the word “audit” relative to annual financial assessment they are then required to do audits alone. Many older CC&R’s used the term in a general sense and not specifically intending for the detailed and expensive financial assessment of an “Audit”. But the way the law is structured irrespective of that possible intent, if it says audit the association must do an audit annually until such time that they process an amendment to the CC&R’s to utilize a different form of financial assessment.

    Dennis

    Go to comment
    2023/03/20 at 11:30 am
  • From Todd Stevens on HOA Auditors

    In my experience:

    1) HOA management companies provide a list of vendors that are registered with the Community Associations Institute (CAI) for the board of directors to choose from.

    2) HOA management companies recommend compilations over any other audit type

    3) Compilations are very basic and do not show cash flow through the accounts.

    4) Compilations depend on information that is given to them from the management company, so asking the auditor questions will most likely get redirected back to the management company.

    I suspect your ‘audit’ was actually a compilation.

    I have been trying to get our HOA to do anything other than a compilation financial review for years (early post on here) for the same GAAP-related issue(s) you mentioned.

    https://hoa.tascs.net

    Go to comment
    2023/03/20 at 8:25 am