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@@@