November 30, 2009

Further Thoughts and Information on the Dues Increase Proposal

2009 November 30
Click History for a list of changes and updates.

__As the title suggests, the continuation of this post is my email to MOA Members and provides further thoughts on the Board's proposal for a $100 increase in the dues cap plus COLA. Exchanges of email communications have occurred. As in any good debate, there are different points of view. Any disagreements should lead to a better understanding. The unfortunate part concerning this proposal is that the board did not facilitate a members' debate prior to developing the proposal for a vote.

__My Summary View on MOA's Challenges — I would like to see more emphasis on reaching out to one another and focusing on the common interests to bring the members together to operate, maintain and preserve the recreational facilities in a manner that considers the interests of all the members and is as fair as possible to all members. Reference: my 2007 Jun 13 email to MOA Members titled, We are all in this Michaywe boat together.
Memo: Some of the links including the one above in this post are to my password-protected weblog. If you are a MOA member, please refer to the Welcome & Home page for information on access.
Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal
advice. The information is based on research on information available
in the public domain.
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  • Key Words:_ Accounting Practices (MOA), Business Reviews, Dues and Assessments, Financial Information (2009), MOA Board of Directors, MOA Operations (General/Total), abuse, access to records, accounting standard, accounting, balanced budget, budget, civility, closed meeting, closed session, Covenants Conditions and Restrictions, dues, duty of obedience, executive session, GAAP for community associations, GAAP for homeowners associations, GAAP for property owners associations, governance, governing documents, members' rights, replacement fund, reserve fund, special meeting, user fees, vote
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Further Thoughts and Information on the Dues Increase Proposal (continued)

Date: 2009 November 30
To: MOA Members
cc: MOA Board of Directors, General Manager, Michaywé POA Weblog
Re: Further Thoughts and Information on the Dues Increase Proposal

__The additional items included in this email include:
  • Dues that must be paid to be in good standing
  • Validity of COLA proposal
  • Members' Vote on the 2009 Proposed Dues Increase — Prior motion rejected by 57% to 43% (663 to 497). See Appendix for details.
  • Lot Prices have tumbled — Recent ad in Gaylord Herald Times for sale of vacant lots in Michaywé has asking prices of $1000-1400 per lot. My bet is that most if not all will not be sold and will be forfeited to the state. No dues can then be collected. See Appendix for details.
  • Motion for Dues Increase is Lose-Lose
  • Need Foundation that will be supported by Super-Majority of members
  • Use proven negotiating principles to craft the Super-Majority
Memo: Many of the posts on my weblog concerning MOA dues are indexed in Dues and Assessments. Others are available on my password-protected weblog. See memo in Introduction for information on access. Included are my prior emails to MOA members and other documents. Other links to my password-protected weblog below require the same name and password.
__Dues that must be paid to be in good standing — With the revised notice, the board has made it clear that only 2009 and prior-year dues and assessments need to be paid to be in good standing to vote on the proposal for $100 Dues Increase in dues cap plus COLA. Correcting errors is part of the board's responsibility. Please note that the Q&A included basically implies that the board is right and those who have questioned the board's actions and statements are wrong. Yet the board has not provided explanations for the questions from members.
__One of the truisms in owners associations is that, when the board makes a mistake, the members pay.

__Validity of COLA — However, the board took no action to correct the COLA proposal which is likely invalid under the deed restrictions. A COLA or any other schedule of increases in the dues cap is not specifically authorized in the deed restrictions. Members need the stability and predictability provided by strict adherence to the law and the governing documents.
__With regard to the COLA proposal, there is no indication that the board ever considered whether or not COLA is authorized in the deed restrictions. This lack of checking the obvious shows disrespect for the members and undermines trust in the board. The risk of possible litigation over COLA if the proposal passes is not a risk the association should take. It is the members who will pay for any adverse consequences from the questionable validity, not the board. The policy should be no actions unless unquestionable valid.
__The uncertainty concerning the validity of COLA is reason to vote against the proposal for a $100 dues increase in dues cap plus COLA. If you do so on this basis, it would be appropriate to write the board and explain why and request a proposal that is unquestionably valid.

__Motion on Dues Increase is Lose-Lose — The members of MOA are obviously divided and polarized. Neither outcome from the current proposal will diffuse the divisiveness because either outcome will have many losers — some very concerned and angry.
__Is this the basis or foundation for addressing MOA's challenges? Will the board be more likely or less likely to consider other alternatives if the dues increase is approved? Another factor to consider.

__Need Foundation that will be supported by Super-Majority of Members — Unless there is a super-majority of members in support of actions, there will be an ongoing battle of factions in which all members lose. A $100 dues increase will not solve MOA's financial problems. Building the support of a super-majority of members requires fairness to members who have different interests as a minimum.

__Use proven negotiating principles to craft the Super-Majority — This work has already been done and recorded in a short book, Getting to Yes by Fisher and Ury. The authors describe what works based on their experiences as facilitators and mediators in negotiations. See short summary of the book for more explanation. It provides other insights and links to other resources and explanations.

__Getting to Yes defines four fundamental principles for gaining agreement
  1. separate the people from the problem
  2. focus on interests, not positions
  3. invent options for mutual gain
  4. insist on objective criteria.
The board's actions are not consistent with the four principles. In fact, many of the board's actions are counter to the principles. Is it any wonder that there is division and polarization?
__A few thoughts and questions about each of the principles

__1.   separate the people from the problem — The problem must be clearly defined and supported as the correct definition. What is MOA's problem?
  • lack of money
  • organizational model not consistent with the Michaywé community
  • demographics are wrong
  • Is MOA a $400 community?
  • other
__2.   focus on interests, not positions — The classic example of focus on positions is "I'm right, you're wrong. Go to hell."  The interests of members in a diverse community are many. A focus on positions produces winners and losers. A focus on interests creates the need for the next principle.
__3.   invent options for mutual gain — The key words are "invent" and "mutual". Dues increases are neither. The board and members must consider other alternatives.
__4.  insist on objective criteria — This is an objective part of separating people from the problem. What are the criteria that best describe the future state that will be supported by a super-majority of members?
The above is for the board and members to develop. A few other questions:

  • Is a volunteer board capable of managing the current organizational model for MOA and its recreational facilities?
  • If it were, is it a reasonable task with which to burden the board?
  • Will a sufficient number of members volunteer to run for the board so that members have a choice?
  • Is one of the factors too few customers? If so, what can be done to increase number of customers?
  • How can the expenses be substantially reduced?
  • Is it fair to members to charge for golf and bar&restaurant and not to change for use and enjoyment of other facilities? If so, how can this be made more fair?
  • Is it fair to members for free, discounted and preferential golf to golfing members?
  • Had the recreational facilities been set up as an independent business right from the start, what would different from the operation by MOA today? What is to be learned from consideration of this hypothetical?
  • Since members pay dues, shouldn't they receive a discount on goods and services?
  • Do members choose not to eat at Inn the Woods because of tension in the community?
  • Can MOA's problems be solved with dues increases, or should more fundamental changes be considered?
__"If your only tool is a hammer, then every problem looks like a nail." For the board, the hammer appears to be dues increase. I discussed this in my 2009 Oct 15 email to you title Board's Limited Scope.

__We need to find Common Ground.

Sincerely,
Don Nordeen
(989) 939-8240


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Appendix

__Members' Vote on the 2009 Proposed Dues Increase — Prior motion rejected by 57% to 43% (663 to 497). According the my notes taken at the meeting, the voting results on the proposal to increase the dues cap (annual fees) from $400 to $475 beginning in 2010 are as follows:
total votes cast: 1238
not in good standing: 33
invalid: 45
yes: 497 (43% of valid votes)
no: 663 (57% of valid votes)

__Lot Prices have tumbled — This affects all members. Recent ad in Gaylord Herald Times for sale of vacant lots in Michaywé has asking prices of $1000-1400 per lot. The ad reads in part:
"MICHAYWE LOTS. Buy now while prices are low.
* Lot 0596 Eifel Hills $1,100
* Lot 1508 Pheasant Run $1,100
* Lot 1560 Pheasant Run $1,100
* Lot 1619 Pheasant Run $1,200
* Lot 1778 Bob White Way $1,150
* Lot 1852 Gray Hawk $1,100
* Lot 2013 Steep Hollow $1,400
* Lot 2014 Steep Hollow $1,200
* Lot 2017 Steep Hollow $1,100
Log onto www.michaywe.com to view all the amenities you can enjoy now. Click on LIVING, then click on MICHAYWEMAPS for lot location and dimensions."  These lots are owned by an investment company in California. All were previously forfeited to Otsego County. Any dues owning at the time were likely extinguished. They were recently purchased from the County by the investment company for prices ranging from $200 to $500. After 2009 Jan 01, they will have $400 owing to MOA that must be deducted from the sales price. My bet is that most if not all will not be sold and will be again forfeited to the state by not paying property taxes. No dues can then be collected.
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