NOTE:  We requested, but received no confirmation nor denial from the Board, Keystone or Security Company on facts as presented here in.



TO:        2004-2005 CZ BOARD OF DIRECTORS

CC.        Spitzer, Todd, California Legislative Action Committee

CC          Campbell, John California Legislative Action Committee


Congratulations and thanks to the 2004-2005 Board of Directors.  CotoBuzz is humbly presenting a proposal for your consideration.  We are glad to meet with the Board collectively or individually, should you require additional clarification.


When reading this proposal, we suggest an open mind and from the perspective of constructive engagement, as the facts can be misconstrued as inflammatory remarks.  On the other hand, one is reminded of the ancient sage “truth never maimed anyone, but made thousands just as uncomfortable”.



Although this proposal is specific to the 2004-2005 CZ Master Board of Directors, the principles are generic and can be applied to other HOAs of similar size - that is >$8.00 Million/Year budget.




Leadership is more than the resources to obtain an MBA.  “Nothing personal, but full-time MBA programs by their nature, attract many of the wrong people – too impatient and analytical, with little experience in management itself”, writes Management theorist and critic, Henry Mintzberg.  “Trying to teach people who have never practiced is worse than a waste of time – it demeans management”, he adds.


Arguably the 2003-2004 CZ Board is a perfect example of what Mintzberg had in mind.  Simply witness the process used to develop the infamous allegedly illegal Delegate Stacking Amendments and the boards insistence that it will not abandon the idea.  Initial communication from the Board president labeled the misguided process a mistake.  The alleged motive was to “fight apathy”


Any semblance of effective leadership starts with building a shared vision.  As Harvard President Lawrence Summers puts it  “At Harvard there is a sense of common purpose, and everybody’s is rooting for everyone else’s success, whereas in Washington, half the city is always a constituency favoring failure”.  Mr. Summers could have well been talking about Coto’s local governing body.  Methods used to fight apathy to date only deepen division and resentment, rather than building a culture of cooperation.


Proposal - Leadership


A.  Leadership - Electoral Reform

If you can keep your head while all about you are losing theirs, you haven't understood the plan.


If Monsieurs Varo and Thagard are indeed serious about fighting apathy, they now have a real opportunity to demonstrate their leaderships skills by embracing electoral process reform. The current CZ electoral process is archaic and as described by former board member, Joseph Morabito “ The Delegate Packing Scheme being advanced by the CZ Master Board of Directors as Amendments to our CC&R's is a clear indication that we need to scrap the Delegate Electoral Process in favor of Direct, Popular Election of our Board Members; one house, one vote, home rule.  Let's be honest, the Delegate Electoral Process has always been used by one group or another to manipulate our Board Elections.  The system is costly, cumbersome and often corrupted by the goals of a hand full of people in Coto for one reason or another”.  “It is time to put a simple, direct, electoral process in place” he adds.  Finally, he recommends  “The Delegate system could stay in place as volunteers not to vote for Board Members; but rather to act as tract or neighborhood advocates who is a legitimate function.  In view of the Delegate Packing Scheme we have before us, it is clear to me that we need to end the Delegate Electoral Process once and for all.  It is divisive, costs money, leads to bad feelings and is really a waste of time.  Direct, popular election of our Board Members is the real reform we need in Coto De Caza; not a system which would allow Board Members to appoint their own electors without any district residency or ownership requirements, both of which are absent from these proposed CC&R Amendments


B.  Leadership - Certification Process

Henry Mintzberg says that “Conventional MBA programs  compound the error by giving the wrong impression of management: that managers are important people disconnected from the daily work….”  It took outgoing director Ed Masotti two terms to find out that “It is harder than I thought.   We put in probably 60 hours a month”  Duh!  On the job training is not the preferred method when managing an $8 million/year corporation.  The 2004-2005 CZ Master Association board of directors can forge a new Coto culture by adopting the CZ Master Director Certification Process.  A copy can be downloaded by clicking here.


C.  Leadership - Ethics

Countless times members of the 2003-2004 CZ Board of Directors joked about conflict of interest and the “fox guarding the hen house”.  This is documented in a Letter to the Editor written by former director Joseph Morabito and contained in the November 14, 2003 edition of CanyonLife: “What I see happening is the appointment of an Architectural Committee headed by a landscaper and with other landscaper members who do business with Coto.  As Mr. Varo, said jokingly during the board meeting I attended, “we have let the fox in the hen house” to review our architectural standards”.  Another example is the selection process used by the property manager to select technology related services, such as the GuestWorks has come into question.  Robins, a commercial lawyer in Buffalo Grove, Ill, suggest that the recent wave of corporate scandals “resulted from an excessive focus on the superficial at the expense of the substantive”. 


We recommend the 2004-2005 CZ Board to   adopt the Rights and Responsibilities and avoid any semblance of impropriety either in private or in public, including the use of non-homeowners as spokespeople for the board.  Also, undertake a conflict of interest audit - we can supply a template for these purposes.


D.  Accountability

The Estates Villages, General Store, Restaurants and other non-dues paying CZ master members consume a disproportionate amount of infrastructure and services.  Some have suggested that the CZ Master board should enter into an agreement with the Estates and Villages, which require that their respective management companies work together to enforce consistent and equal financial burden for the use, management  and violation of access control regulations.  This is a test  of the leadership skills for the 2004-2005 CZ Master board.


E.  Leadership - Best Business Practices

Regardless of which way you look at it, when The Safest City in America spends  $18.00/person for security, and CZ Master spends over 1,200%  more, there is something wrong.  As former Secretary of Defense used to say, one million here and one million there, soon you are talking about real money!  Perhaps CZ Masters can schedule Quarterly Best Business Practices meeting with RSM and other HOAs?




The 2003-2004 CZ Board used the “Alice in Wonderland” approach with regards to security:


"Cheshire-Puss," she began, rather timidly, "Would you tell me, please, which way I ought to go from here?"

"That depends a great deal on where you want to get to," said the cat.

"I don't much care where -," said Alice.

  "Then it doesn't matter which way you go," said the cat.

--Lewis Carroll


The fact that Thousand Oaks has been recently named the safest city in the country is not an accident.  As mayor pro tem, Claudia Bill-de la Pena said, "Public safety is the council's primary concern.  We will do everything in our power to keep our city safe".  In contrast, the 2003-2004 had security as their number one objective, then allegedly allowed the security director to be terminated by the property manager, made it clear that it was not in the security business and to prove it, proceeded to  cancel  a CHP contract to patrol the community!  By the way, the security budget for Thousand Oaks $2,200,000/year.  Roughly $18.00/person.  For Coto de Caza, the cost is roughly $216.00 per person or close to 1,200%  more!, and these figures do not even take into account the fees commanded by the property manager


If the handling of the Summerfield issues is an indication, the 2004-2005 may be headed in the same direction: “We are aware of the playground vandalism that you have reported ….The less expensive option is being utilized here.  We try to weigh out the cost over safety, etc. on these types of maintenance items.  The parts have been ordered and they expect them in by the early part of next week.  We have been checking in with them on regular intervals as we do not want the park in this condition”  according to a representative from the property management company.  Apparently this means that the same company that was unable to detect an over billing of over $160,000.00 is now making cost-vs-safety tradeoffs on behalf of the 2004-2005 CZ board.  Not only is this a problem in principle, but it also has legal ramifications discussed later. 


A good Security Plan for Coto should include definition of paying and non-paying users, gate access, online information security plan, asset protection, regulation conformance, neighborhood watch, law enforcement coordination, inspection, auditing designation of responsibility as well as designation of fiscal responsibility. 


Many CotoBuzz readers have observed that the huge difference between home prices in the City of Rancho Santa Margarita and Coto de Caza is simply due to the gate.  In fact  homes in gated communities are desirable not only for the peace of mind they offer to residents. Secured properties also are good investments.  Despite the protection afforded by gates and advanced technological systems, gated communities are not entirely crime free, as most of us know from experience. “ Because gates cannot protect residents from themselves, some communities still experience episodes of vandalism and domestic violence.


Security axiom:  The more convenient, the less secure.


A. Gate Access

If Coto resident’s behavior is anything comparable to other communities in the United States, most security breaches should come from within.  It follows that vandalism, reckless driving, DUI etc. are committed by Coto residents, their guest, their children or security company employees.  This includes non-dues paying and “transient Coto” residents.  As former security director puts it:  “If the gate runner is a non-CZ Member, who resides in the Estates or Village, they act with impunity, they can and do in many cases continue to violate CZ Master Regulations”


Arguably, Coto residents are a product of the Information Age:  A successful lot with huge egos and PDAs in desperate need of a memory upgrade to hold their full  itinerary.  They are more interested in attending their children’s soccer or hockey practice that in understanding how a so called non-profit organization that has a huge impact on one of their investments and their way of life is run:  Their own home.


Paradoxically, the first thing Coto residents need to do when they invite friends or family over, or even hire service providers is to contact security company personnel so they can have access to the gate. 


What Coto residents really want is to talk to courteous, responsive customer care professionals who will read their minds and not require them to remember one more password, simply to have a family get together or have the house painted.  What they get is a lowest bid temporary workforce with high expectations and glorified titles such as security officer, captain, and security director.  It is clear that the first impression homeowners, visitors and service providers get of how the CZ Masters Association “is being run” is by their experience with the security company. 


An impartial observer can quickly conclude that this scenario is highly explosive.  On the one hand you have a vocal, high maintenance, high expectation client in Coto residents, and on the other a low paid labor force with high expectations of soon joining a bona fide law enforcement agency.  It should be noted that anecdotal evidence suggests that the highest most problem calls come from non-dues paying and or  “transient Coto” residents.  Ideally what is required for this function is customer care professional, not a rent-a-cop.


B.  Enforcement of CC&Rs


On of the first actions taken by the security company immediately after the 2003-2004 CZ Board was seated, was to send security employees to make sure Coto residents had their cars parked per regulation, while leaving along service provider vehicles parked in such a way that they created safety hazards, such as the heavy equipment parked in  blind zone at the intersection of Coto Drive and San Miguel.  Even when the property management company was alerted, the safety hazards remained.


Documented evidence suggests that property management employees currently decide when, how and which rules to enforce, and whether they follow or not direct instructions from the board.




A.  Security - Priorities

Audit Keystone/Security - Refer to templates in table of contents

Use overpaid money to fund independent patrolling from CHP, Sheriff's Office, etc.

Governance - see below for details

Define Scope, Responsibilities and Metrics for Security Company, property manager and create a Security Committee.


B.  Security - Scope

Fear of crime is clearly the driving force behind the growth of gated communities. As the population ages and as horrific crimes are brought daily into our homes by the media, this fear and its accompanying sense of vulnerability will only rise” so writes Stephen R. Olsen is with security company Guardsmark.  He  adds:  “Statistics reveal that such concern is well founded. Although some crime rates have declined modestly in recent years, other serious crimes continue to grow. And juvenile crimes, especially juvenile violent crimes, has skyrocketed nationwide.


Separately, Mary M. Howell from Epsten & Grinnell, observes that “The history of community association security started with a bang in California, with the Supreme Court's decision in Frances T. v. Village Green Owners Association (1986) 42 Cal.3d 490.”   She goes on to show that the court indicated the directors wear at least two hats in their dealings with members of the association: a)  as fiduciaries with a duty in that capacity to adhere to the governing documents and b) and an obligation to maintain the property in a reasonably safe fashion. Therefore, a Safety Plan for Coto is more than a new gate access procedure but should include:  Gate Access, Online Information Security (such as transponder information and GateWorksGuest program), Asset Protection, CC&R enforcement, etc.


Additionally, any reasonable argument dealing with gate access should entertain at least two questions:  a)  What is the purpose of having a gate?  b)  Who are the undesirables and c)  Of those with access to the gated community, who are most likely to vandalize, speed or otherwise violate community regulations?  C)  who benefits and who pays?  D)  what are the types of violations? E)  Audit Plan


In general, the current security company will use Post Notices, SOPs and  instructions as provided by the association’s board or the property manager to determine the level of service they provide.  This includes selective enforcement of certain regulations.  Although this helps the security company plan for personnel, as well as to estimate their revenue for the year, it is not conducive to  CZ Masters becoming a Learning Organization.  What is required is well-defined scope of services to be rendered including metrics, and incentives.  Metrics should include number and type of complaints, number and type of offenders,  total incidents, closed, open, types of incidents, responsibility, Peak hour gate entrance targets, cost to support no dues-paying residents and service providers, etc.


Gate Access is simply a way to remove Opportunity Theft.  Analogous to locking your car even in low crime neighborhoods.  Gates cannot protect residents from determined criminals. Indeed, some believe that fortifications simply announce the presence of something worth taking. Professional burglars actually targeted some of the city's gated communities. Before they were caught early last year, they had stolen $1 million in valuables from at least 90 homes. Savvy thieves know, too, that at night many gatehouses are unstaffed and that cameras and other security measures can be decoys” writes Mary M. Howell with Epsten & Grinnell.


The use of non rent-a-cop personnel to provide best in class gate access is the most cost effective solution, however, we are sure that the 2004-2004 Board is not ready for out-of-the-box thinking at this time.  So, we recommend an overhaul of the security and safety administration as follows starting with a clear definition of responsibilities between property management and the security company.


The security company reports operationally to a security committee composed of board members.


Changes to Post Orders, SOP or instructions considered to be in violation of the CZ Master CC&Rs at the discretion of the security company, need to be approved by a security committee, and not left up to anyone property management employee.  to restrict the scope of the current security provider to only gate access.  This should save some $300,000/year that can be used for safety and asset protection.



C.  Security - Guest passes

Guest pass administration is an excellent illustration of GIGO – Garbage In Garbage Out.

In addition to the various types of passes issued:  From Permanent passes, to Hang Tags, Monthly Construction Passes, etc.  the data collection system is extremely inefficient as described by William Pilot:  From programming errors allowing duplicate numbers (on purpose or due to incompetence), corrupt database to the use of paper systems.  CAI lawyers and property managers love this type of inefficiency as they can charge “reasonable fees” to produce reports.


Another computer adage applies to data collection here:  – if you cannot measure it, you cannot improve it!  On the other hand, if you are not going to use the data, do not collect it!


Why have a proliferation of passes when there is neither closed looped corrective action nor pro-active enforcement?


We recommend that the use of only Resident Passes (to be used by residents and guests) and Service Provider Passes.   The cost of any Service Provider Passes, such as Monthly Construction, Activity Passes, Restaurant Passes, General Store or Golf Course Passes should be borne by the service provider.


Incident reports generated as a result of gate access violations use a closed looped corrective action.  Meaning that they remain open until a corrective action has been implemented and results acceptable to the security committee.


D.  Security - Asset protection

Vandalism such as damage to sprinklers, graffiti, damage to parks (such as the one to Cypress Park) can only be cost-efficiently deterred by random vehicle patrol and resident involvement.  On the other hand, Coto residents are too sophisticated for their own good and , the rent-a-cop random vehicle patrol does not work.  In this case, a bona fide law enforcement patrol, such as the CHP is required, along with a neighborhood patrol watch.  The Association can save something like $500,000 per year. Perhaps a portion of it can be used to contract the CHP - this is not only more effective, but it is also cheaper. 


E.  CC&R Enforcement:

Why pay a rent-a-cop to go see if cars are parked illegally?  This task can be done more cost effectively through the use of neighborhood watches.  The focus should be on safety hazards, rather than to satisfy the need for power by service provider employees.


F.   Institutionalize Security Operating Procedures.

The current administration and dispensing of security resources are very much left at the discretion of service provider employees who much rather pursue their own personal agendas.  Additionally, when a new board is installed, previous knowledge regarding the efficiency is conveniently forgotten.  What is required is a Security Plan actively administered by the security committee that continues after any election, providing continuity and a Learning Organization culture.


G.  Security Coordination

Gate access, Asset Protection, CC&R enforcement, Neighborhood Watches and any other security related activity need to be properly coordinated with the Board of Directors and service providers.  Adam Crawford and Stuart Lister of the Centre for Criminal Justice Studies, University of Leeds, conducted a study of initiatives that seek to provide public reassurance through visible patrols in residential areas suggest:

Greater engagement between local crime and disorder reduction partnerships and the private sector, to improve both provision and oversight of the extended policing family.

The establishment of regional policing boards with responsibility for regulating and coordinating service delivery across the extended policing family. Such boards could play a major role in enhancing community safety efforts and encouraging best practice. Boards might also provide an element of democratic accountability where regional assemblies are to be established.

The establishment of information sharing protocols between members of the extended policing family.

Joint tasking to ensure a clearer division of local policing endeavors and reduce duplication.

Structured briefing and tasking to ensure intelligence-led patrolling and the effective targeting of insecurity 'hot spots'.


H.  Measurement and Control and Audit

Security compliance should not be left to the service providers, but should be assigned to the security committee.  In the unlikely case that a committee cannot be convened, the service providers should certify to compliance to objectives on a monthly basis.  Then on a quarterly basis, the security committee or the board should undertake an audit.  You can download a security template audit that can be customized for these purposes by clicking here


I.  Security Legal

From a review of various legal cases regarding HOA security, Epsten & Grinnell ‘s Mary M. Howell concludes;  “ the association, must always exercise extreme caution in discharging its duties. The association should:

1. Regularly inspect physical premises. Light the comers, repair the fences and gates, locks, parking control devices and automated security systems.


2. Keep up with local events and news. Warn members of any occurrences of nearby crime, particularly those involving assaults.


3. If contemplating hiring a security provider, ask for and check references. Ask about prior complaints. Ask for full information regarding employees to be assigned to your project. After hiring, monitor the performance of employees. An association can be liable for negligent hiring (as when an association hires a convicted child molester for security work), as well as for negligent supervision of employees. Be alert to complaints from residents as well as non-residents regarding the performance of the security service. Keep a paperwork trail of security events, and of the performance of security providers.

When a property management company employee is allowed to make safety-vs-cost decisions “We try to weigh out the cost over safety, etc. on these types of maintenance items”, without a detailed Security Plan, does not make sense and exposes the association to legal issues.


J.  Support for CASPP

A consolidation of Service Providers would not only decrease traffic and improve security, but it would also benefit Coto residents.  Analogous to the OPEN program for Small Businesses from American Express,  the Board can adopt a Coto Approved Service Provider Program.  The program would consist of compiling and publishing a list of service providers from A-Z, from attorneys to landscaping to construction.  A minimum requirement would be for three or so residents to recommend the service provider.  Additional information, such as background checks, cost and quality can be included.


K.  Security – Confidential Information


Effective information security programs are critical to organizations that want to thrive and grow in an increasingly dangerous online world. But, as they say, "the devil is in the details."   A review of the communication between IEM, Keystone and Votaw initiative to install GateWorks, which was supposed to take one week, and has been going on for weeks now,  is more reminiscent of the old “who is on first” joke than an illustration of project management competence, let alone a through understanding of security implications.


“Information is an asset and therefore must be protected to ensure its confidentiality, integrity and availability. This includes private personal information, the authenticity and reliability of information and related services, and the appropriate use of facilities by people in government” - Issued by Office of Information & Communications Technology, Department of Commerce, April 2004.





Triple Constraint


2003-2004 CZ Board:  Focus on the superficial rather than the substantive?


The previous issue of CotoBuzz defines the components of the Triple Constraint as the

·         Annual Budget,

·         The Property Management Company and the

·         Legal Counsel.


Before any effective management of the Triple Constraint can even be considered, the Scope of Services need to be defined, otherwise you end up with a moving target and a waste of funds.  Once again, the performance of the 2003-2004 CZ Board can be used to illustrate the point”


To date, nothing substantive was done to correct the culture that created an over billing of $168,000 by the security company and went undetected by the property manager.  Quite the contrary.  According to sources within the security company, recently new instructions to security personnel instructs them to stop documenting tardiness and attendance deviations.  Instead, these are to be brought to management’s attention, verbally.  The security company sends invoices to Keystone based on hours work.  We have asked security, Keystone spokespeople and board for Time and Attendance Audit Programs or practical means to avoid over billing, but have had no response to date and suspect none exists.  Donie Vanitzia, LA Times’ contributor calls HOAs " an ATM for property managers.  Now we understand why"  See Vanitzia's article What the HOA Board of Directors does not want you to know:  WAKE UP CALL.


The recent wave of corporate scandals “resulted from an excessive focus on the superficial at the expense of the substantive”, claims Marty Robins, a commercial lawyer”.  The 2003-2004 board focused on “fluff” according to former board member, Joe Morabito.  “Fraud, Waste Mar Plan to Wire Schools to Net:  The problem:  The school district applied for and spent money, even though it lacked some of the basics, such as PCs or upgraded electrical systems, to make use of the Internet gear and had no budget to buy them”, so reads an article in the front page of the June 9, 2004 USA Today. There are too many parallels between this story and the way CZ master has been handling technology implementations, such as transponders, databases, etc.   


NEC Unit Admits It Defrauded Schools

"Congress established the E-Rate program to help educate the underprivileged," said Kevin V. Ryan, the United States attorney in San Francisco. "This criminal attempt to steal funds from the program comes at the expense of children across the country, and is totally unacceptable." - read more....  but this never happens in our backyard!


Is, the  November 20th  encounter between the security director and property management employee a case of the employee focusing on the substantive, superficial, or simply a power struggle?    “Guest parking is for guests only”, said employee, and ordered that vehicles owned by residents of Fairway Oaks be towed away”, triggering an irate resident to call and complain that “Rule #12 of their sub-association parking rules permitted Fairway Oaks Residents as well as guests to park in the guest area on a first-come-first-serve basis”.  Security director calls employee of  resident’s complaint, and warns employee that “….we may not only be violating the current sub-association rules, but were possibly liable for damages if we towed vehicles -contrary to their parking rules. Response from employee: “…tow the vehicle”!


What about disobeying direct instructions from board member as evidenced by failure to comply with request for Foil Parking Stickers, because “the printer she selected was no longer printing in foil stock”


Then there is waste, at CZ Masters’ expense of the printing of Coto Maps in “wrong format, which resulted in the street names being un-readable”.


And on the issue of Extended Pass Issuance resolution “…was no secret that (she) was unhappy with the decision and considered it a dilution of her authority and power.


Then there is the issue of inefficiency because the system CZ Master has paid for cannot communicate with the various components “…During the last two years, we received request on a frequent basis from Keystone regarding Incident Reports. In many cases these Incident Reports had already been sent to Keystone.  This request for duplicate reports was caused in many cases by a filing system organized by date and not by resident address or location.”


Or the issue of questionable service providers, selected using questionable practices as evidenced by this anecdote:    The quality of systems support provided by both I and V for the most part begrudgingly slow or non-responsive. In particular, a systems technician, exhibited a persistent attitude of arrogance, and looked-down on the security staff with disdain.  During one of his visits to the Sports Park transponder office, a mature, courteous, and conscientious transponder officer, stated that it would sure be nice if the transponder staff could get another workstation to get caught up on our paperwork. He,  in an angry tone snapped back, “you don’t need another computer and you’ll never get one.  He always arrived unannounced and required immediate access to the computer systems”.


One can clearly see a pattern when considering projects such as the GateWorksGuest Project: A review of  communications records related to a Coto Upgrade Punch List aka GateWorksGuest Project  between various parties,  including a board member and property manager employee, starting May 1,2004 clearly shows that::

·         No basic project management practices are being used, such as defining the scope, functionality, budget and schedule for the project.

·         What was supposed to take one week, is now taking weeks.

·         There is no Information security expertise is non-existent:   “Information is an asset and therefore must be protected to ensure its confidentiality, integrity and availability. This includes private personal information, the authenticity and reliability of information and related services, and the appropriate use of facilities by people in government” - Issued by Office of Information & Communications Technology, Department of Commerce, April 2004.

Clearly this is simply the tip of the iceberg – in this case, it is the tip of the Triple Constraint and clearly shows the need for proper oversight.  A clear Closed Loop Corrective Action where, given a budget, the scope of services is defined.  The property manager must work to a Statement of Work, and be responsible for variances, both in scope and cost, in addition to penalties due to incompetence.


Triple Constraint - Legal Counsel


In the vast majority of homeowner associations the builder writes the “laws” otherwise known as covenants and is the only one with input on how they should be drafted. Making the rules in a Monarchial setting means that the power and authority does not come from the people being governed, in fact, they have no say whatsoever.  Previous CZ boards have had as an objective to “reduce the high level of litigation” without a foundation to support such a noble object.  What is required is a recognition that since anything that is said will be scrutinized, it is best to be open, transparent and accountable.  Perhaps the best vehicle to develop such culture is through electoral reform to reflect democratic ideals, establishment of measurable and actionable objectives and the establishment of an arbitration committee.


On January 10, 2003 Richard Glassel was sentenced to the death penalty in Arizona for killing two Ventana Lakes homeowner association board members during a board meeting on April 19, 2000 A spokesperson for Ventana Lakes said, “He [Glassel wanted to prune his shrubs to his liking.” Glassel killed the board members over the homeowner associations (HOA) right to trim his shrubs.

Planned communities and homeowner associations have evolved from a utopian socialistic ideal to undemocratic, private governments that govern without a Bill of Rights, proper “checks and balances,” and without elections. It is estimated that over 50 million Americans live in approximately 205,000 covenant-controlled community, governed by a homeowner association.  More and more Americans are moving into these types of communities every year. This is more a cause of spreading association-governed housing developments than an actual desire by Americans to live in this type of community.

Obviously, the Glassel example is an extreme case but it certainly drives home the point that seemingly petty disagreements can quickly spiral out of control.  Anyone who regularly attends CZ Masters meetings may say that these meetings are anything but civil, and could be breeding grounds for another Glassel-type of incident/


Another case of HOA harassment occurred in Las Vegas, Nevada. According to Diana Sahagun, a reporter for the Las Vegas Sun, “Elisa Ross installed a hidden camera outside her home because she is living in absolute terror – not of burglars, but of her homeowners association.” Ross was questioning the boards’ practices, which was an unwelcome intrusion. Sahagun goes on to report that, “Board members, she said, threatened that if she didn’t stop questioning their practices, they would retaliate. When she kept asking questions, fliers started appearing around the neighborhood with her name, address, and phone number, telling neighbors to ostracize her.”


The bottom line is that members of a HOA board of directors automatically assume a high level of risk.  In the best of cases, anything they say can and is used against them either in a court of law, or in the court of public opinion.  In the case of the CZ Masters, with an archaic form of representation, one could argue that it has a modern and legalized dictatorship. Is it any wonder that the 2003-2004 CZ Master board gave us the allegedly illegal Delegate Stacking Amendments, conceived behind closed doors?


In the June issue of CotoBuzz, we cited Keystone as saying:  “The Board approached legal counsel regarding the issue of how to fill delegate vacancies when they occur and we are unable to get a quorum  of the neighborhood to vote or we have been unable to meet all of the  other criteria within the CC&Rs to ensure that the unrepresented neighborhood can vote".  But sub-association president Joe Bower, after consulting with his legal counsel writes in a flier dated May 25, 2004 “the whole amendment process has been illegal and flawed from the start”.  Certainly there are better ways to increase participation and using closed-door type of deliberations seems to be an oxymoron.  Not abandoning the idea altogether and in fact a promise to revisit the issue seems asinine.  This simple incident encapsulates all the issues surrounding management of HOAs in general and CZ Master specifically.  Either legal  counsel in incompetent, not involved, the board is autocratic, incompetent, or a combination thereof.




Triple Constraint Recommendations - Fiscal  Responsibility

Once and for all the 2004-2005 Board must demonstrate intestinal fortitude and assure that all who use the community's infrastructure and services pay for them - that includes the Estates, Villages, Los Verdes, Golf Course, General Store, etc.


Triple Constraint Recommendations – Legal Counsel


In most instances legal counsel is the de-facto CZ Masters manager. This happens because of poor leadership skills, such as those exhibited by the 2003-2004 board of directors, lack of commitment (not spending the time to understand the issues in detail), lack of experience, incompetence or a combination thereof.


A. Think – The famous Nordstrom’s single word, policy manual can apply here.  Why even ask legal counsel to review  delegate-stacking amendments conceived behind doors, regardless of the motivation?


B.  Electoral Reform – promote true democratic electoral reform.  The broader the audience, the higher the quality of the decision.


C.  Arbitration – develop an arbitration process and work with sub-associations to  agree to arbitration so issues such as the abandoned Los Verdes areas can be taken care of cost effectively and expeditiously.


D. CC&R reform – create a legislative committee chartered with reforming CC&Rs, so they read more like a corporate operating manual , and then make it available electronically to all residents.


Governance reform -  Hire a CZ Masters Manager.  All service providers report to the CZ Manager.   This provides for CZ Master corporate memory – that is, non-performing service providers are held accountable regardless of election results.  The funds should come from cost reduction in security program and operational efficiencies gained from an audit of the Triple Constraint.



Triple Constraint  Recommendations – Keystone



1.  Define Scope of Keystone responsibilities.  Remove current executive who thinks she has authority to interpret and enforce CC&Rs at her discretion, authority to make cost-vs-safety (for Coto children) trade off decisions, remove security director, etc.

2.  Audit Keystone and Security company - see templates below.


Nothing is impossible for the person who doesn't have to do it – as a group of volunteers, the CZ boards become too complacent since they do not have to do actual work.


If you fail to plan you are planning to fail – simply witness the performance of the 2003-2004 CZ Board. It took them roughly six months to develop the  2004 Goals and Objectives and then the another six months to fail to meet any of them.  The tools below should help with the plan, audit and control of the 2004-2005 CZ Master Budget

·                     State of Coto Security, a White Paper

·                     Security Audit Template

·                     How to safeguard Coto resident’s personal information

·                     How to reign in on the Triple Constraint:  Financial Controls Manual

·                     How to reign in on EIM and Votaw – Due Diligence IT Template

·                     How is your property management company doing?  Business Efficiency Template

·                     How is your property management company spending your Coto homeowner’s money:  Accounts Payable Audit Template

·                     Add it all up and see how your Triple Constraint is doing:  Audit Matrix Grading

A.  Conflict of Interest – Having the CZ Master security implementation report to Keystone is a grave mistake, a conflict of interest and a case of the fox guarding the hen house.  The Security White Paper prepared by the former security director provides factual evidence regarding built-in operational deficiencies with the current set up.  Ideally what is required is a CZ Masters Manager as explained above.  If this is too big a task for the 2004-2005 CZ board, perhaps it can be started by having the security service provider report directly to the board or to a security committee.


B.  Governance reform -  Hire a CZ Masters Manager.  All service providers report to the CZ Manager.   This provides for CZ Master corporate memory – that is, non-performing service providers are held accountable regardless of election results.  The funds should come from cost reduction in security program and operational efficiencies gained from an audit of the Triple Constraint.


C.  Define the scope – Clearly outline Keystone responsibilities – they are simply a service provider.  They are not to interpret CC&R on the fly, they must follow a strict process to select other subcontractors.


D.  Trust but verify:    Immediately commence an audit – this should include the following (Please contact us should you need audit templates)

·         Audit Plan Template

·         Business Efficiency Template

·         Conflict of Interest Template

·         Expenditure Cycle Control

·         Safeguarding Customer Information Template

·         Information Technology Audit Plan


E.  Measure:  After the audit, issue a grade using and  Audit Grading Matrix – Grade– contact us for template if required.