04 September 2007

Baltimore Examiner Declares War on Columbia, Maryland

No, not really; but given the Examiner’s proclivity for misleading headlines, why not join the party? What we have today is poorly constructed editorial from the Baltimore Examiner. It’s headline “Columbia Association milks homeowners” seems to only tangentially enter into the body of their piece. Ostensibly, the topic of the editorial is the recently released salary data for the top positions at the Columbia Association.

“If only government employees were paid as handsomely as Columbia Association
officers. Heck, if mere residents all could make as much, what a happy place
Columbia would be.”

This lead-off sentence promises much to come, but little follows. Yes, if only government employees were paid as much as Columbia Association (CA) officers. But CA is not a government, so why make the comparison? Even more troubling is the second statement, trying to relate senior management salary to all Columbia residents. If all Columbia residents were senior officers of corporations, then yes, there would be a valid comparison, but as we all know, not everyone in Columbia is the President of a Corporation, a CFO, etc…Lord knows I am not. (and by-the-way, I find Columbia, day-in and day-out a pretty happy place to be, regardless of salary.)

Rather than lobbing ill constructed arguments, such as:

"As The Examiner reported last week, five of the seven top officers at the homeowner’s association earned more than $100,000 in fiscal 2007; President
Maggie Brown earned $207,973 with her bonus.

The average adult in Columbia makes about $41,000 a year, according to 2006 Mapinfo/AnySite Demographics. "

The Examiner staff should have done some research (it is, from what I am told, a newspaper) to find out what other executives that live in Columbia make. This would give an apples to apples comparison. Or maybe they could look into what executives at other non-profit organizations, with revenues in the $25M-$50M range make. Or what the salaries of executives at other quasi-governmental organizations make (WSSC comes to mind). Otherwise, to state the average adult makes $41K seems to imply that the President of a corporation should make $41K. Bad idea.

The editorial does mention one salary:

As members of a quasi-governmental group, homeowners have a right to think
salaries would align with those of Howard County government employees.

But they don’t. The chief administrative officer in the county makes $154,000 a
year.

I also find it interesting that the Examiner editorial staff seems to go out of their way to demonstrate how relatively “poor” Columbians are, when just five days ago they were trumpeting the comparative wealth of the State of Maryland and Howard County.

Now, I agree that homeowners “have a right to think salaries would align with those of Howard County government employees,” but how about some supporting evidence? What other organization locks their senior staff's salary to government pay? Anyone? How far should this mimicking of governmental parity go? The Howard County government does see its way to pay council members on the order of $50K/yr. Should CA start paying the board of directors above the average Howard County salary (as sourced by the Examiner editorial board) for their services?

The Examiner then goes on to detail Howard County property taxes and the CA lien/assessment:

"As Howard County residents, Columbia homeowners pay $1.01 in property taxes for every $100 of assessed value. On top of that they must also pay a base “fee” to
the Columbia Association.

That tax is $0.68 per $100 of assessed value on half of the property or about $1,579 on a home valued at $464,294, the average selling price of a home in Howard County in July. If you want more than CA’s basic services you pay more.

With that kind of fee only the wealthy can afford to live in Columbia. "

I find this particularly interesting. The Examiner states that the average annual salary in Columbia is $41K, then states the average home is valued at $464,294, and then comes to the conclusion that the CA fee is the reason folks cannot afford to live in Columbia. Let me first say, if a home costs ten times your salary, it is not the CA fee that is going to stop you from making your payments.

This type of argument also hides another reality. Given the data of a selling price of $464,294 in July 2007 seems to imply that most people are paying a lien (and a property tax) on an assessed value of more than $450K. This is not so. As we know in Howard County, the amount of your assessment can only increase by a small percentage each year. So if a homeowner purchased a home 5, 10, 20 or 40 years ago, the value can only increase incrementally year to year. A few years ago, CA implemented a similar regimen (with some involvement from the Maryland General Assembly)

So the home that now sells for $464,294 today may have sold for $190K - $200K a few years ago. That means that people are not paying the $1579 stated in the editorial, they are paying less. It is only the people that purchased in July 2007 that would be paying that rate.

The Examiner editorial then adds:

CA spokesman Steve Sattler said the association uses consultants to determine
salaries. Who cares. Common sense says the pay scale is out of whack with both
equivalent jobs and community values.

I find this conclusion especially dangerous. "Who cares?" I believe a lot of people care. That in fact would be one of the reasons to write an editorial as such. Moreover, boiling down an argument to “common sense” is just another way of saying there is no supporting, credible evidence to support their argument.

As for equivalent jobs, once again, only one job title was cited, that of a government position. CA is not a government, it is a private corporation. Comparables of other private corporations, both for profit and non-profit should be used. The salaries of other large homeowner associations should be used. The salaries of other quasi-governmental organizations (such as WSSC or the NYNJPA) should be used. And, if any can be found, any other organization of similar size that voluntarily uses a local government pay scale should be used. The Examiner provides none of this data.

As far as community values, this comes from a media organization with women in bikinis adorned with “I survived roe v. wade” and "Imagine No Liberals" t-shirts on their website.

The Examiner editorial closes with the following two paragraphs:

"Columbia homeowners should demand pay cuts from Columbia Association officers.
They must also demand that the group post employee salaries and its budget online in an easily accessible portion of the Web site to allow for better oversight of the association.

Transparency is a key way to ensure those charged with supervising Columbia reflect the priorities – and incomes – of the homeowners paying their salaries. "

Interesting. Without making a case that a quasi-governmental organization should be paid at a local government scale, the Examiner puts forth that the population of Columbia should demand paycuts of the executives. It appears that this suggestion separates performance from pay and is an invitation to chaos. Moreover, demanding pay cuts from CA officers demonstrates a lack of understanding of the Columbia Association by the Baltimore Examiner. The CA Board decides the compensation for the CA President directly. Indirectly, the CA Board decides staff compensation by approving the operations budget. The CA President determines senior staff compensation directly. If anyone is to be implicated, the CA Board should be the stating place. Keep in mind, the CA Board recently approved an increase in the CA President’s salary. After awarding the CA President a $7,000 pay increase this year, CA Board member Gail Broida (TC) was quoted in the Columbia Flier saying:

"I feel that Mrs. Brown will do her absolute best under her current contract to
lead the organization forward and the board working with Mrs. Brown will be
successful in advancing our policies," she said.

After the Alliance for a Better Columbia released CA salary data, the following CA Board members were quoted in the local media:

The whole salary issue has always been very difficult," Russell said, because the association is much larger and responsible for more than the typical homeowners' association. It's neither a private, profit-making company nor a full-fledged government. – Barbara Russell (OM)


I feel like the executives are paid a reasonable fee,” she said, adding they don’t receive benefits comparable to government employees. – Cynthia Coyle (HC)


I would also encourage the Examiner to post its local and corporate officer’s salaries and compensation, and their budget, on their website. It certainly would be transparent.

In closing, let us all agree that more research needs to be done. The CA Board is about to embark on its third salary compensation study since 1999. When this data becomes available, we will all be able to see what the market bears for the executive staff. To tie staff pay to local government pay without any substantive argument is foolish. Topics such as executive pay and compensation are a serious subjects and should not be exposed to the whims of “what feels right.”

Taking a long view, reducing pay based without justification will create morale problems and will provide yet another signal to the most talented out there to stay away from Columbia. As the search for a new CA President begins, some of the most talented available will take the time to review the previous year of half the CA Board asking for the CA President to be dismissed. Following that up with unsubstantiated pay reductions will only drive highly qualified candidates farther away.

5 comments:

J. Newburn said...

Bill, Incredible post. Thorough. And, I guess I say this because you've just expressed my thoughts, only with a lot more research behind them.

I find myself so disappointed with a newspaper that I'd love to love. I like the Examiner, a lot. But their headlines? They are frequently sensational, often bordering on irrelevant, and -- I would add -- irresponsible for a quasi-metropolitan newspaper.

Do traditional newspapers not understand that a sea`change is occurring? Do they not get that an entire new way of broadcasting information (social technology and then some) is occurring right under their noses? Do they not understand that old-style, contention-based news coverage is rather unappealing to newer generations of readers?

That's my two yen, at least. You said everything else.

A Broken Screen Door said...

Great post, Bill. If only the Examiner put this much thought into their writing.

Tom said...

If only the Examiner editoral staff read these blogs . . .

Anonymous said...

The Baltimore Examiner is bullying CA because it wants them to evenly spread their newspaper advertising dollars instead of just channeling most of their newspaper advertising to the Columbia Flier (which is owned by Tribune who is the parent company of the Baltimore Sun). CA and Patuxent Publishing are tied to the hip.

Jason - Columbia Md Mortgage said...

Don't have to worry about this anymore, the Examiner didn't make it past the recession. Newspapers are hurting because they can't generate the advertising dollars anymore. Most of it is being spent online.