Home Owners Association
Presentation
Kurt Kuebler
, CCM
Partner,
K
OPPLIN& K
UEBLERJ. Adrian Morris
GM/COO, Berkeley Hall
Bob Salmore
, CPA
Director of Private Clubs Services, McGladrey
Terra Waldron
, CCM, CCE
Critical Elements of Being a
Home Owners Association
Bob Salmore, CPA
Director, Private Clubs Services
McGladrey
Topics for Discussion
•
Define what type of club you are
•
Compare and contrast
Define what type of club you are
Traditional Stand Alone Social Club
• Membership by invitation only • Probably no refundable equity
• USFRC/SFAS 117/Non-Profit Guide • 990 or 1120
Residential Country Club
• Inside the gates
• Separate club and HOA • Non-resident memberships
• Inherit many shortcomings from developer • USFRC/SFAS 117/Non-Profit Guide
• 990 or 1120
• Likely to have refundable equity • Real estate considerations influential
• Club / community / lifestyle / property value
Large Scale Association
• Bundled community – single purpose entity
• Common Interest Realty Association (CIRA)
• USFRC/CIRA Guide • 1120
Mandatory Membership Residential Club
• Separate club and HOA
• Membership is mandatory in both club & HOA • USFRC/SFAS 117/Non-Profit Guide
• 990 or 1120
• Recognizes benefit of homeowners supporting the club
“Please accept my
resignation.
I don’t care to
belong to any club
that will have me
as a member.”
Remember these Common Themes
•
Incorporated as a corporation “Not-for-Profit”
•
Social clubs should be organized for pleasure,
recreation, and other similar non-profit purposes and
all activities should be for these purposes
•
Personal contact, commingling, and fellowship must
exist among members
–
Members bound together by a common objective directed
toward pleasure, recreation, and other non-profit
purposes
Remember these Common Themes
•
Maintain the community as attractive and affordable
•
Membership joining fees are critical for
re-investment for capital assets
•
Golf courses are the most visible assets
(beautification ranks #1)
•
Capital planning for amenity maintenance and
improvement is critical
•
Strategic planning becomes more critical along with
Remember these Common Themes
•
Operating revenues tend to become “inelastic”
–
Membership level eventually peaks and becomes
static
–
Demographic changes cause step-downs in
membership categories and decreased utilization of
the facilities over time
–
Can only raise prices and fees so high
–
Many costs to operate are essentially “fixed”
•
Standards of Maintenance and Minimum Service Levels
•
Pressure is placed on dues to make up the
difference
Conceptual Issues
9
Bundled Community Private Club
• Not-for-profit but not tax-exempt • Governed by a board of directors • Residence = membership in the club
and access to all the amenities • Residents are subject to all
assessments (HOA fees)
• Few membership categories (often only one)
• Assessments are shared by the members
• Community is usually larger (more members) than a typical private equity golf club
• Operating costs spread over a greater number of unit owners
• Often lower overall costs per resident/member
• State requirements can be complex and stringent
• Not-for-profit but are usually federally tax-exempt
• Governance also traditionally by a Board of Directors or Governors,
• Often multiple membership categories • Dues vs. assessments (possible sales
tax issues)
• Prior to the real estate collapse, a
growing trend was conversion by private clubs to mandatory membership.
Membership Issues
Bundled Community Private Club
• As title to the property is transferred, the owner becomes a club member.
• Prior to turnover the developer is likely to advertise heavily and subsidize costs in order to attract buyers.
• Joining fees often substantially less than private club initiation fees
• Once fully developed, the membership remains constant.
• May have to absorb the cost of non-paying owners.
• CIRA has ability to lien a residence. • Average age of membership?
• Membership by invitation.
• Often a sizable initiation fee, which may or may not be refundable upon resignation.
• Membership retention a critical issue.
• Multiple membership from which to choose.
• Fewer members and more exclusivity • More exclusivity means increased
cost per member.
• Average age of membership? • Greater prestige?
Capital Planning
Bundled Community Private Club
• Common property maintenance a major issue
• Clearly defined in the governing documents
• Common areas maintenance costs can include roadways, utilities, landscaping, fencing, and security
• State statutes may require a certain level of reserve funding (reserve fund assessments)
• Reserve study engineering reports • Dealing with sub-associations a
challenge
• Capital budgets only deal with club facilities
• May decide to use only funds derived from new members’ joining fee
payments
• Funding depreciation considerations • Capital dues or special assessment
funding
• Long-range planning committee guesstimates
Board Governance
Bundled Community Private Club
• Typical Board consists of a representative from each
neighborhood or Association within the community, elected by that
specific neighborhood or Association. • Typically all meetings of the Board
must be posted in advance, and are open to all community members.
• Members attending the meeting must be given an opportunity to speak. • Know your state laws and covenants
• Members of the Board of Directors are generally elected from the entire membership, often from a slate of candidates selected by a Nominating Committee.
• In a private club, the elected Board members generally meet behind closed doors.
• Less state statutory regulation over governance
Key Success Factors for Leading
a Club Community Property
Terra S. H. Waldron, CCM, CCE
Vice President/General Manager
The Desert Highlands Association
It is important that a General
Manager/COO balance his/her
time between community and
A large part of the community’s
success is getting out in front of
issues before they become
•
What components does an H.O.A. require for
success in a private club community?
•
What is the general manager’s role for
maintaining a successful community?
Community Governance
17
•
Organizational Governance Structure
•
Community’s Governing Documents:
o
State H.O.A. laws
o
Community CC&Rs
o
Community Bylaws
o
Board Policy Manual
o
Community Rules of Conduct
o
The Community’s Design Review Guidelines
•
Staff who can assist with research – governing documents,
minutes and/or decisions made over the years
Legal Aspects of an H.O.A.
18
• Communication with the Association’s Attorney
• Real Estate Issues
• Covenants Issues – fair, firm, rules; the tranquility
of the community depends upon it
Security and Safety First
•
24 Hour Security – Security Breaches
o
Police Presentation
o
ADT Informational Presentation
•
First Aid & CPR Training for First Responders (Staff at
Many Levels) – Fitness Center Life Saved
•
Insurance Provider will Conduct a Safety Audit
•
Active Relationships with Local Municipalities (i.e.
Is Everything Under Control?
20
• Credentialed and Well-informed
Financial Controller/CFO
• Private Club and HOA Component
• Separate Budget Controls for
Marketing Membership Director
21
•
Real Estate Expertise
o
inventory, market trends, area brokers
•
Marketing Expertise
o
branding, collaterals, internet, social media
•
Membership Expertise
Community Property
22
•
Design Review Guidelines
•
Building Envelopes
•
Draining Issues
•
Competent Design Review and Residential
Design Review
23
•
Design Guidelines – Updated as Required
•
Example - Rules may need to change when
vehicles require parking outside a garage for an
extended period of time during a remodel so that
members may use their garage for personal
Residential Services
24
• Weekly home inspections
• Driving cars while members are away
• Watering Plants
• Flipping mattresses
• Assembling patio furniture
• Working with outside vendors for water leaks,
repairs, etc.
• Car washing services – twice weekly
• Etc.
The “Community” Difference
25
You are herding human life. The mentality is
different with a community because of
individual home ownership. Everything
becomes so personal that it’s different than a
free-standing country club. …And yes, there
will be covenants violations.
HOA Communications
26
•
Monthly Newsletter Mailings
•
Weekly Email Blasts
•
Emergency Email Blasts
•
Special Mailings
•
Rotating photo screens
•
Postings in Strategic Locations i.e. locker rooms,
the clubhouse, the racquet club, bathrooms and
member mailboxes
The Extras
27
•
Developing a unique HOA community means
thinking outside the box and providing “extras”
that speak to desire to care for the community.
•
Bringing local programs/services to the people
can include such things as art mentoring
presentations from the local museum, new
healthcare services to an aging membership,
etc.
Keys to Success
For Private Club HOA’s
And their Leadership
In the Current Environment
J. Adrian Morris
General Manager and Chief Operating Officer
Berkeley Hall Club
Berkeley Hall Club
An Overview
•
1,100 acre property in SC Lowcountry
•
2 Tom Fazio golf courses
•
36-acre Learning & Practice facilities (Top 10 in the
United States by
Golf Digest)
•
Spa & Fitness Center
•
Indoor and Outdoor Pools
•
6 Har-Tru clay tennis courts
•
7 Dining Venues
•
Riverpark – kayaks, boats, dock access
•
26 Four bedroom golf cottages
Berkeley Hall Structure
•
770 Members
–
554 Property Owner Members
–
216 Non-Property Owner Members
•
Member owned since 2006 (developer
handover)
Keys to Success for Club
in Current Environment
•
Board must think like a developer with real estate
and membership sales
•
Create vision and direction for club
•
Allow management team to carry out vision and
run the operation.
•
Balance the member experience and maintain
fiscal responsibility
•
Develop brand locally and nationally
Keys to Success in HOA leadership
•
Realize that it is more than just a club membership
•
Know what is going on in all areas
•
Make GM the Club’s face to the outside world and be
positive
•
Be accessible to all the Membership
•
Manage by walking around
•
Always support the Board – Always
•
Attend all committee meetings, including ARB
•
Responsible and Accountable
•
All communications and presentations on operations
should be done by the General Manager
The Club’s greatest asset –
the Right Team
•
Strong enough to run own department
•
Commitment
•
Pride
•
Inclusion
•
Low Turnover
Greatest Challenge
Moving Forward
“Maintain a first-class member experience and
assets which support property values, while
keeping the annual dues charges at an
acceptable and competitive level.”
Backing the Right Horse
“Small marketing decisions can sometimes have
surprisingly successful returns.”
Berkeley Hall Club Tour Pro & Resident
Round Table Discussions
•
How do you continue to improve and address
transparency with your board and your
member residents?
•
How do you deal with the fact that members
are around 24x7? They can’t help but
continually evaluate – it’s part of their daily
lives.
Round Table Discussions
•
When do you call or meet with the member
instead of write a letter to document? What is
the balance in handling a grievance/issue?
•
How do you build consensus for reinvestment
or significant improvement projects when
your member/residents don’t have the same
primary interest for being part of the club
