What Happens when Common Knowledge Diverges from Reality?

Before I begin today, a few acknowledgements.  I do not believe I will change any minds with this blog post, and that’s okay.  The subject discussed below has been instilled and reinforced in the DNA of many that have lived here for decades.  I do not wish to offend anyone or diminish any memories of how people perceived the early years of Columbia.  However, this is my humble attempt to discuss how the Columbia Park and Recreation Association (now the Columbia Association) was formed, the role of the Board of Directors and the role of the Columbia Council.  Please note that I am not a lawyer and do not propose a professional legal opinion in this matter.  I welcome any legal insight if anyone trained in the profession cares to weigh in.  With this in mind, I base my narrative on the documents available and I hope that if I have missed something, other documents will be produced to refute my claims here.  With that said, pour a virtual cup of coffee and read along.

Editorial Note: Because some of the material discussed here refers back to the early years of the Columbia Association (CA), an occasional reference to the Columbia Park and Recreation Association (CPRA), Columbia’s original name, creeps in.  The reader should understand that both citations (CA and CPRA) refer to the same organization.

Last week I discussed an Explore Howard article that described the dramatic changes some Columbia residents would like to impose on the Columbia Association.  After the article appeared online, I started asking for more information, and was directed to the Maryland Homeowners Association (Inc) website for the documents that describe the legislation.

Of particular interest is the document titled “Major Benefits of Being Members of the Columbia Association (CA).”  The first two bullet points in this document attempt to provide a basis for changing CA membership:

• The sole purpose of the Columbia Association in its Charter is to operate “for the promotion of the common good and social welfare of the people of the community of Columbia....” The Columbia Corporation is currently organized as a nonstock corporation with no other members than the 10 persons elected by Columbia’s ten villages to the Columbia Council, an organization that currently does nothing except elect itself to the CA Board of Directors.

• The Columbia Council was in theory supposed to be the voice of the residents who must pay an annual tax-like fee to CA. Now, the Columbia Council has been made virtually defunct. As to the CA Board of Directors, the CA hired staff has told the Board that their loyalty as directors should be to the staff of CA and to the Board itself, and not directly to the Columbia peoples’ common good and social welfare. Therefore, the exclusion from CA corporate membership of residents who are required to pay annual fees to CA amounts to classic ”taxation without representation.”

The unnamed author begins well enough.  The Columbia Association purpose is stated well.  It is also true that CA is “currently organized as a nonstock corporation,” but it always has been a nonstock corporation and no legislation considered at this time (CA, ABC or otherwise) looks to change this status.

The second bullet point starts off with theory, and this is where it gets dangerous.

“The Columbia Council was in theory supposed to be the voice of the residents who must pay an annual tax-like fee to CA.”

This quote is beyond theory - it is a fallacy.  The facts do not support the theory.  It is something that has been repeated (probably) a million times over the last four decades.  There are a lot of people that believe it a core principal of the Next American City, but it remains, at best, a myth.

I have done some research on this, and what I have found contradicts this popular social mooring.  The evidence I provide is from the early Columbia Park and Recreation Association Charter, Article Seven (Paragraph 3), which states:

(3)  It is anticipated that as The Property is developed, incorporated community or neighborhood associations for the promotion of the welfare of residents of particular sections of The Property will be formed.  Each such incorporated association, which shall meet the standards of organization and membership prescribed by the Board of Directors of this Corporation, shall have the right to elect one of the members thereof to a council, to be known as the Columbia Council, which shall be an unincorporated advisory group whose function shall be to consider and make recommendations to the associations for the benefit and welfare of the Property and the residents thereof.

Let’s take a minute to deconstruct this passage and cut through some of the Charter language.  First we will clear up some definitions:

The Property – the legal definition of Columbia, Maryland.
Incorporated Community or Neighborhood Associations – The organizations we currently know colloquially as “Village Boards.”
Corporation – The Columbia Park and Recreation Association, now known as the Columbia Association.

Substituting the above definitions, the passage of the CA Charter is as follows:

(3)  It is anticipated that as Columbia is developed, incorporated community or neighborhood associations (Village Boards) for the promotion of the welfare of residents of particular sections of Columbia will be formed.  Each such Village Board, which shall meet the standards of organization and membership prescribed by the Board of Directors of the Columbia Association, shall have the right to elect one of the members thereof to a council, to be known as the Columbia Council, which shall be an unincorporated advisory group whose function shall be to consider and make recommendations to the Village Boards for the benefit and welfare of Columbia and the residents thereof.

And there it is, the Columbia Council was created to make recommendations to the Village Boards, not the Columbia Association.  As stated in the CA Charter, the Columbia Council was an advisory group, and by the Charter they were to advise the Villages (“make recommendations to the associations”) on CA’s corporate decisions.  Not advise the CA Board on resident’s wishes.

Now, out of an abundance of caution, I can see how it would seem that the Columbia Council was “voice of the residents.”  In addition to being “an unincorporated advisory group,” the CA Charter states that the Columbia Council members were also members of the CA Board of Directors.

(A little foreshadowing here; in the history of CA, not all CA Board members were created equal.  We will get to that soon enough.)

As members of the CA Board, the Columbia Council attended CA Board meetings and provided their input on the CA budget, the lien assessment, capital projects and all other right and proper board agenda items.  The Columbia Council also had their own meetings to discuss CA related matters.  In fact, the Columbia Council met far more often than the CA Board of directors.  In this structure, the Columbia Council would ultimately arrive at conclusions.  They would take positions on policies and proposed projects.  Much of their decision-making was based on their experience as Columbians and in this way; they were the voice of Columbians.  Working within this framework year after year reinforced the romantic notion that they were the “voice of the residents.”  However, until the mid-1980’s, the Columbia Council always held a minority number of votes on the CA Board.  For all the interaction with residents and positions taken on behalf of residents, the Columbia Council never had any decision making power.  If the CA Board of directors acquiesced to the Columbia Council position, it was because of the majority’s wisdom.  Either way, it was the job of the Columbia Council to explain to the residents, through the Village Boards why CA Board outcomes happened.

One final thought on the ABC legislation benefits, the author also describes a scenario in which the current CA Board of Directors is beholden only to themselves and the CA staff.  This is hogwash.  CA staff does provide training on nonprofit board of directors for the CA Board.  It is the same standard for the CA Board as for your local elementary school PTA officers, or any other nonprofit corporation.  Moreover, their proposed legislation has nothing to do with this.  It would not change the duties of the Directors.

Overall, I once again applaud the efforts of those that seek to improve the Coumbia Association.  However, I am very concerned that much of rationale for change is misplaced and founded on strong memories, not facts.  I welcome the author to sit down for a chat and we can set the record straight on this issue.

Cutting Through the Noise and Fury in a Reasonable Community

Recently, Explore Howard reporter Luke Lavoie highlighted potential legislation that would dramatically change the Columbia Association HOA membership. According to the article, three well-intentioned members of our community have authored the legislation.  Although no specifics were provided, the article states:

A group of Columbia residents is proposing a new amendment to the Maryland Homeowners Association Act that would make all Columbia "lot owners" corporate members of the Columbia Association.
Currently, the only members of CA are the 10 members of the CA board of directors.
A lot, as defined in the HOA act, is a parcel of land within a development on which a dwelling is located.

Each of the legislation authors is provided ample quotes regarding their perception as to why the legislation is necessary, and although I believe that each author supports the legislation for a variety of reasons, each seems to have a certain passion or focal point from which they speak.  Maybe that is the writing or just my perception after reading the article.  In addition, the information put forth by each person is not correct.  Don’t get me wrong, it is clear that each person has done some homework.  Through their quotes, it is clear that they have an understanding of the elements involved; but it seems the edges of the truth have been blurred to suit a certain view.

This is not to say that any of these folks are malcontents.  Although I do not know any of the authors personally I believe them to be hard-working people who love their family and the community. Moreover, I believe that their passion for Columbia extends beyond their driveway.  In the aggregate, good neighbors and good Columbians. In a way, their proposed legislation is courageous. However, they are acting on incomplete information.  So in the spirit of good Columbians, let’s try to clear the air a little bit.

Fallacy 1:  The Current CA HOA Membership Happened “by Accident”

From the Explore Howard article:

According to Ketley, it is typical for most developers of homeowners associations to hold governing control of the organization in the association's infancy. However, Ketley said, developers usually adopt a "time out" approach, ceding control of the governing board to residential lien-payers after a certain number of units are sold.

Ketley said CA is currently stuck in phase two of this traditional three-phase "time out" process; with the third phase culminating in the transfer of membership control to residential lien-payers.

"We don't believe there was any malicious intent when CA was originated, we think it was just accidental that it didn't move forward," Ketley said.

To say that it was “just accidental that it [CA] didn’t move forward” is a slap in the face of the CA Board members that have served for the last 25 years.  Now, as with beer, some CA Board members have been better than others, but we have had some very smart, capable leaders in this community.  Among them have been lawyers, college professors, and many other professionals.  In addition, during the last 25 years, the subject of CA governance has come up numerous times.  It is not the case that the subject has not come up.  I can think of at least two task forces that studied CA governance and reviewed all of the CA documents.  I have done some research (with help from the Awesome Columbia Archives) and the transition from the developer (HRD) to Columbia residents was deliberate and clearly spelled out.  It was not accident.

Fallacy 2:  This is America and Our Proposal Provides Greater Representation

From the Explore Howard article:

"We are not asking for something that will make us stand out or different," said group representative and Oakland Mills resident Bill McCormack. "In fact, CA, as it is structured now, stands out and is different. In this case, we want to be like everybody else and adopt a structure that is tried, tested and true."

"When we are supporting CA through the lien fee, we need to have representation. That's critical, that is how we do things in America."

And…

McCormack said the bill would increase communication lines and connectivity between the CA board and residential lien-payers.

"By making a lien-payer a member, it completes the loop and brings Columbia closer together," McCormack said. "Because we lien-payers are not members, the board is disconnected from us. If our legislation goes through, the CA staff is working for us, because we are the members and owners of CA."

I think of all the people involved in creating this legislation, most residents can identify with Mr. McCormack’s remarks.  One of the most commonly stated reasons for changing any Homeowner Association has been based on “fairness” and “this is America.”  In fact, Mr. McCormack has written letters to the editor on the subject before.

With regret, I have to inform Mr. McCormack that the Homeowner Association structure is not intended to mimic governmental elections.  It is instead geared toward stockholder elections for publicly traded corporations.  There has been a lot written about homeowner associations in the last thirty years.  Most of the writing warns of the dangers of “private government.”  None of the writing characterizes HOA’s as “aspiring to Jeffersonian Democracy” through private means. 

I would also advise Mr. McCormack to revisit what he is trying to accomplish and what this legislation actually says. Current voting membership allows Columbian lot owners and renters to vote in HOA elections (with Kings Contrivance and River Hill being the exception – all lot owners and residents over 18 can vote there). It is also important to note that implicit in the voting structure is the fact that people who own multiple lots have multiple votes.  In addition, if more than one person holds title to a single lot, they have to agree and vote once.  So there are some inequities built into the current system.

The legislation that Mr. McCormack offers reduces the voting population to lot owners.  Renters would be frozen out of the process.  Corporations would be frozen out of the process.  And the inequities stated above would continue.  The effect of this would be to magnify the representation of multiple lot owners and would disenfranchise the votes of thousands of Columbians.  If “being more like America” was the intent, this legislation goes in the opposite direction.

It is through the election of Village Boards and Columbia Council Representatives that CA residents achieve representation.  In the Village of Oakland Mills, this occurs during the month of April every single year.  The bottom line is that there is a process for residents to be connected to CA.  They just have to participate to do it.  Moreover, CA provides a number of surrogate opportunities to connect with the Columbia Association.  Residents are encouraged to attend and speak at all CA Board and Committee meetings.  CA has set up a number of advisory committees, constituted of residents, to advise on policies big and small.   In short, the amount of participation is limited not by CA, but by a resident’s desire to participate.

Lastly, the second theme in Mr. McCormack’s quotes emphasize that CA should “be like everyone else.”  However, he does not cite examples (and to be fair, they may have been left out of the article).  If there is in fact a better way, I would like to see some case studies before this legislation goes to Annapolis.  I have no illusion that CA is without flaw; there are some things that I really don’t like about the organization.  On the other hand, I do think that they do many things well.  If “everyone else” is doing it better than CA, show me the data.  I strongly suspect that there are a number of HOA’s that don’t do as good a job as CA, and the remaining ones are at best marginally better than CA.  Said a different way, the top performing (whatever that means) HOA’s in Maryland may be a little better than CA at certain metrics (whatever they are), but the differences are so small that they do not justify completely altering the membership of the organization.

Fallacy 3: The Proposed Legislation will Create a New England Style, Alexis de Tocqueville Town Hall where Citizens Directly Vote on Budgets and Issues

From the Explore Howard article:

According to ABC member Joel Pearlman, under HOA law corporate members are required to have one annual meeting, at which the members can vote on polarizing issues like amendments to governing documents and considerations for the annual budget.

"All we are looking to do is make minimal changes to allow (the residential lien-payers) to have one public meeting a year to decide on which issues are important," Pearlman said. "Whatever it is in the future people think is important enough to deal with, this would give them a forum to do that."

Pearlman said the changes are meant to affect the political structure of the organization, not the legal structure, meaning the CA board would not be legally bound to honor recommendations or votes by the lien-payers.

My concern with Mr. Pearlman’s remarks is his misreading of the Maryland Homeowners Association Act.  With respect to meetings, Section 11B-111 states (in part) the following (emphasis mine):

§ 11B-111. Meetings of homeowners association or its governing body
   Except as provided in this title, and notwithstanding anything contained in any of the documents of the homeowners association:

   (1) Subject to the provisions of item (4) of this section, all meetings of the homeowners association, including meetings of the board of directors or other governing body of the homeowners association or a committee of the homeowners association, shall be open to all members of the homeowners association or their agents;

   (2) All members of the homeowners association shall be given reasonable notice of all regularly scheduled open meetings of the homeowners association;

   (3) (i) This item does not apply to any meeting of a governing body that occurs at any time before the lot owners, other than the developer, have a majority of votes in the homeowners association, as provided in the declaration;

      (ii) Subject to item (iii) of this item and to reasonable rules adopted by a governing body, a governing body shall provide a designated period of time during a meeting to allow lot owners an opportunity to comment on any matter relating to the homeowners association;

      (iii) During a meeting at which the agenda is limited to specific topics or at a special meeting, the lot owners' comments may be limited to the topics listed on the meeting agenda; and

      (iv) The governing body shall convene at least one meeting each year at which the agenda is open to any matter relating to the homeowners association;

As stated in 11B-111.(3).iv, the governing body shall have one meeting with an open agenda such that anyone can speak about anything.  This is much different that having a quorum to vote on items.  I have to give credit to Mr. Pearlman’s aspirations.  His reading of the Homeowners Association Act is much closer to the classic Alexis deTocqueville passage on New England towns:  "In towns it is impossible to prevent men from assembling, getting excited together and forming sudden passionate resolves. Towns are like great meeting houses with all the inhabitants as members. In them the people wield immense influence over their magistrates and often carry their desires into execution without intermediaries."

This type of participatory democracy is an ideal with great allure.  However, there is little evidence that changing the Homeowners Association Act would cause it to happen.  The data we currently have on public participation indicates the opposite.  Columbia elections are held every April and have settled into a pattern.  Most villages see about 10% turnout and many of the Columbia Council races go uncontested.  During the remainder of the year the number of people moved to attend meetings and participate can be measured in the dozens. It is difficult to see a groundswell of participation down the road if current participation levels continue to remain weak.

In closing, the authors of this new legislation should be commended for their efforts.  However, they have provided little evidence as to why this change needs to occur.  Their conclusions have yet to be supported by evidence of a better way.  I hope any individual elected to the State Legislator would require much more details from these individuals before taking it to Annapolis.  Although the authors claim the proposed legislation will result in “minimal changes,” you have to consider the changes would affect more than 30,000 lots (and even more voters).  HoCoBlogs@@@

Watchdog Legislation Goes Public

In my last post, I asked for the Columbia residents that are proposing legislation to fundamentally change Columbia Association membership to make their views public.  They have posted their proposal on the Maryland Homeowners Association, Inc website.  To facilitate discussion, I will repost their work here.  I have some thoughts on this, but would prefer to allow for discussion beforehand.  Please note that the posting of information below is in no way an endorsement of the language provided.  Take a look and let me know your thoughts:

First Document:

Rationale and Major Benefits of Being Members of the Columbia Association (CA)

• The sole purpose of the Columbia Association in its Charter is to operate “for the promotion of the common good and social welfare of the people of the community of Columbia....” The Columbia Corporation is currently organized as a nonstock corporation with no other members than the 10 persons elected by Columbia’s ten villages to the Columbia Council, an organization that currently does nothing except elect itself to the CA Board of Directors.

• The Columbia Council was in theory supposed to be the voice of the residents who must pay an annual tax-like fee to CA. Now, the Columbia Council has been made virtually defunct. As to the CA Board of Directors, the CA hired staff has told the Board that their loyalty as directors should be to the staff of CA and to the Board itself, and not directly to the Columbia peoples’ common good and social welfare. Therefore, the exclusion from CA corporate membership of residents who are required to pay annual fees to CA amounts to classic ”taxation without representation.”

This legislation would give the following major benefits to Columbia lot owners:

• The ability to meet as members and have a stronger voice on issues involving how CA operates and collects and spends the money it receives from members, such as CA’s budget, issuance of debt, changes in the annual charge CA imposes, and any broad policy question affecting members.

• The right to attain fundamental rights, such as ensuring accountability and transparency within CA, that are normally available to members of other homeowners associations in Maryland and that are specifically granted to members by CA’s governing documents.

• The opportunity to amend CA’s governing documents as required to serve the residents of Columbia.

• The effective date of this legislation could be moved to October 1, 2014, to permit ample opportunity for the Columbia Association to accommodate the expanded membership structure.

Second Document:

PROPOSED AMENDMENTS TO TWO SECTIONS OF THE MARYLAND HOMEOWNERS ASSOCIATION ACT TO ADD LOT OWNER PROTECTIONS AND TO CLARIFY DEFINITIONS OF SIMILAR TERMS: “MEMBERS” and “CORPORATE MEMBERS”

§ 11B-113.6    Additional protections for lot owners

a) Legislative intent. -- It is the intent of the General Assembly to provide additional protections to lot owners subject to this Act in homeowners associations organized as nonstock corporations in which not all lot owners are corporate members.  The section would grant corporate membership to any lot owner excluded from such membership.  As corporate members, these lot owners would have the ability to further expand upon the rights provided by this Act.

b) Definition of corporate member. -- In this section,  a “corporate member” is defined by the provisions of Title 5, subtitle 2, of the Maryland Corporations and Associations Code.

c)  Additional lot owner protections. -- Any Maryland homeowners association organized as a nonstock corporation that does not automatically include all lot owners as corporate members shall add immediately all excluded lot owners as such corporate members with all rights provided by the corporation’s governing documents and Maryland law.

§ 11B-101(i)(3) A “member” of a homeowners association is any lot owner and any other person that the homeowners  association may wish to designate.

AND BE IT FURTHER ENACTED, That this Act shall take effect October 1, 2014.

Lead by Example

A recent article on the Explore Howard website reveals that three Columbia residents are seeking to introduce legislation at the Maryland State level to dramatically change Columbia Association HOA membership.  Given that these residents have advocated for greater transparency and seek to stop CA's proposed legislation, I ask that these individuals release their proposal to all Columbia residents as soon as possible.  This document must be given to Columbians now rather than after it appears in the General Assembly so that residents clearly understand the intent and depth of their proposal.  To do any less would shrink from the transparency they seek of others.  With all due respect, demonstrate your beliefs in deeds and not only in words.  HoCoBlogs@@@