2004-2005 CZ
MASTER PROPOSAL
NOTE: We requested, but
received no confirmation nor denial from the Board, Keystone or Security
Company on facts as presented here in.
FROM: COTOBUZZ
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”.
Introduction
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
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?
SECURITY
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.
SECURITY PROGRAM PROPOSAL
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 – MVP
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
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
Priorities:
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
·
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
·
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.