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Broken Trust 

Ferguson. New York City. Cleveland. Baltimore. Your community. When residents don’t trust their leaders, they will revolt.

When Michael Brown was shot and killed by police on Aug. 9, 2014, unrest spilled over in Ferguson, Mo. Similar incidents—each exposing issues of racial equality, police powers and government authority—followed in New York City, Cleveland, Baltimore and other cities across the country. Yes, community association leaders can learn many lessons from these events.Revolt

Distrust of government officials and the judicial process emerged as the central themes during this unrest. City officials and citizens learned over the past year that trust and effective communications are critical, and all stakeholders must be part of the process.

Much like local government, associations exercise substantial powers over the lives of residents, such as enforcing restrictions and imposing fines for violations. When citizens lose trust in their leaders, they will reject the process and its results. Building the capital of community trust is a fundamental challenge and opportunity for association board members and managers.

Accountability, transparency, communication, apathy and more also contributed to the unrest across the country; all impact your community too.

Resignations and Recalls

The ultimate expression of broken trust occurs when dissatisfied citizens demand resignations or recall elections. In Ferguson, the chief of police, municipal judge and city manager, among others, resigned or were terminated. The mayor faces a recall. Forced resignations and recalls can be disruptive for associations too.

“While feeling powerless to effect change in national or state politics, owners believe, at least at home, they can control their community,” says David A. Firmin, an attorney with HindmanSanchez in Arvada, Colo. “Owners need to be able to trust the board. When board members don’t listen or act in private, trust is destroyed and owners become frustrated.”

Firmin describes a recent tumultuous recall election at a Colorado community of 110 homes that exposed sharp differences between original owners and newer owners who had purchased at deep discounts during the housing crisis.

Three new board members—newer owners who hadn’t integrated into the community—were elected in January 2014. They challenged the status quo and how the manager of 17 years conducted business. The new board was perceived by some as meeting in secret, acting inappropriately and unwilling to listen.

The popular manager resigned, leading to a board recall. Suspicions ran so high at the recall meeting that check-in was held in secret—nobody wanted to show their proxies—and owners screamed at each other. The board was retained by a small margin and was charged with healing the community.

“The recall truly ripped apart the community by forcing owners to pick sides, even splitting votes between spouses,” says Firmin. “Moving forward, I think board members will be more responsive to owners’ desires and act in the best interests of the entire community in an open and more transparent manner.”

Open Board

John J. Ammann, a Saint Louis University School of Law professor, points to another lesson learned from Ferguson: accountability for those in charge.

“People act differently when they know their actions are being observed,” he says.

Ammann thinks community associations, like public government, should have checks and balances and operate with an open and transparent decision-making process. Board members should avoid and disclose conflicts of interest. “Divided loyalty breeds distrust of authority,” he says.

Robert M. Diamond, a partner with Reed Smith in Falls Church, Va., and fellow in CAI’s College of Community Association Lawyers (CCAL), also calls for association boards to be more open with owners.

“Poor communications with owners, lack of transparency and refusing access to records, for example, result in suspicion, distrust and negative feelings about the board and the community,” he says.

According to Diamond, a CAI past president, Ferguson also suggests that associations should foster positive social interaction among residents to build a sense of belonging in the community. He recommends associations develop events and activities for residents, such as block parties and trips to local attractions.

Michael C. Kim, a Chicago attorney and CCAL fellow, believes that a feeling of alienation leads owners to question the legitimacy of institutional authority.

“If owners don’t believe the board is acting for them, then they would reject the board’s authority in various ways, from passive resistance to outright attacks,” he cautions.

Dealing with Apathy

Disengagement from the political process marked Ferguson prior to the shooting. City council candidates often ran unopposed. Voter turnout at the 2013 municipal election was a paltry 12 percent of registered voters, but the election in April featured contested races and a 30 percent voter turnout. Unlike municipal elections, which are decided by those casting ballots, many associations have quorum requirements to conduct official business, including board member elections.

Unfortunately, some associations never reach a quorum and even more operate without a full complement of board members because nobody will volunteer. Apathy is one of the most vexing problems for associations.

Community leaders can take some steps to help solve apathy. Many homeowners are reluctant to serve on the board but would be willing to serve on a committee that addresses a specific issue. Boards can attract volunteers and groom future leaders through these committees and by making appeals through community-wide announcements and personal invitations. Associations also need to shower their volunteers with recognition and awards at association meetings and in newsletters.

Judy Rosen, CMCA, AMS, PCAM, founder of Innovative Community Association Management in St. Louis, counts on incentives to achieve quorum, such as a drawing for a $50 or $100 supermarket gift certificate.

“The best way to involve residents at the annual meeting is to feed them or give away something meaningful,” she says. “Many supermarkets are willing to provide a gift card since so many of the residents shop there.”

Conducting Meetings

The quality of board and association meetings can affect how homeowners perceive their community. Every board, regardless of size, should have an organized method of conducting business.

Many board members would benefit from training on how to conduct meetings.

Some association meetings get slowed down when attendees are allowed to speak on any matter.

“There should be an agenda allowing homeowners to be heard at board meetings. Once the board begins its business, there should be no further homeowner comments unless requested by the chair,” Rosen suggests. Adhering to Rosen’s recommendation can help keep meetings on target and on time.

Boards also face a dilemma when decisions are made behind closed doors, even if there’s a legal reason to do so. Part of the problem, according to Maryland attorney P. Michael Nagle, a CCAL fellow and CAI past president, is that some boards go into an executive session for an appropriate reason but then stay to discuss issues that should be open to owners.

Security and Enforcement

The relationship between police and residents was an important revelation in Ferguson. Most community associations don’t have police authority, but many employ security guards, door attendants and others interacting with residents.

Diamond calls on associations to carefully select and train security personnel. He says association security needs to be welcoming, respectful and helpful.

“For communities with a security component, personnel should present a positive initial interaction with residents and visitors,” advises Diamond. “They should avoid confrontation and behavior that could appear to be discriminatory.”

Another flashpoint for controversy in associations includes enforcement of restrictions and rules.

A violation notice may be the first contact a homeowner has with a board member or manager, but it shouldn’t be. When a notice is sent, it creates an unfriendly or even hostile environment. Instead, Ammann, the Saint Louis University law professor, says the initial interaction should be positive.

He points to how police in Ferguson now are playing basketball with teens.

“Similar to community policing, boards should proactively walk the community and meet residents as neighbors to create positive interaction,” Ammann advises. “When the board has an enforcement action, the first step should be an informal meeting with the resident, not an impersonal notice of violation.”

Diamond suggests publishing a written policy stating how restrictions will be enforced—ranging from actively searching out violations to passively responding only upon receiving a complaint.

“Although the policy may be adjusted over time, this practice lets homeowners know what to expect. The objective should be voluntary compliance, not using fines as a source of revenue,” he says.

A personal meeting or a friendly reminder can make all the difference in rules enforcement.

“I always counsel the ‘nice’ letter first, or preferably, a phone call or visit, but not all boards do this,” says Nagle, the Maryland attorney.

Independent Appeals

The lack of a meaningful process for homeowners to appeal board or committee decisions can produce owner distrust too.

Many planned communities have an architectural review committee. If a homeowner believes the committee made a decision in error, does he or she have an option to appeal?

“To provide a truly independent appeals process, the architectural review committee should exist as a separate committee with its own members, thus allowing appeals to be heard by the board,” Rosen suggests. “Board members may serve as a liaison to the committee, not as a voting member; otherwise, the appeals process would be undermined.”

If a dispute can’t be resolved by an internal appeals process, an association should turn to mediation and arbitration. Litigation should be the last resort, not the first step.

Costly Revolts

Much like the Colorado community counseled by Firmin, several associations experience turmoil during recall elections.

The Pines at Dickinson Condominium, a 256-unit community in Maryland, learned how disruptive a revolt could be in 2011, when an owner circulated a written list of complaints. The board’s response was ignored. Overwhelmed and frustrated by a room full of loud and aggressive owners, board members resigned and walked out, leaving no one in charge. A community without a board could be at serious risk.

“If you have a situation where no one is paying insurance, no one is keeping up the common areas, and the whole place is in shambles, the local government could initiate a court process to take over the association,” warns Brian D. Moreno, a senior associate of SwedelsonGottlieb in Los Angeles and CCAL fellow.

Nagle, the Pines’ attorney, found the bylaws frustrating. The annual meeting wouldn’t occur for five months. The board couldn’t fill vacancies because there were no board members to appoint others. A special meeting required a petition signed by 25 percent of owners—a labor-intensive, time-consuming and uncertain task.

Since the bylaws weren’t much help, Nagle determined the management company was authorized to continue essential operations and call a special meeting. The manager gave daily updates to owners and scheduled a meeting within six weeks at which a new board was elected, thus avoiding a crisis. (Read more about the Pines in “The UnOccupy Movement,” Common Ground, July/August 2013.)

Meanwhile, an effort to upgrade the 15-year-old governing documents and other matters led to a recall vote in 2012 at Legends South Homeowners Association in Missouri.

Distrust spread in the 750-home community due to a disgruntled board member and ineffective communication. The board was concerned that a cap on assessments in the documents could limit the association’s ability to meet future needs. Unfortunately, word spread that the board sought higher assessments and wanted street parking rules, among other issues.

A faction of homeowners set a recall meeting and quickly gathered proxies to control the vote. The recall ousted the board, but a new one wasn’t installed. The city intervened and appointed a receiver—a homeowner who worked with the association’s manager—to continue essential operations and schedule an election meeting. The process took five gut-wrenching months.

Diana Rothbarth, CMCA, AMS, PCAM, the community’s manager, recalls that while the board had been operating properly, it failed to communicate effectively in response to the rumors. She describes the experience as “a high-alert, divisive, stressful time that challenged my expertise and ability to remain politically neutral.”

Based on these dramatic experiences, whether broken trust results in board members resigning en masse or being ousted in a recall election, owners must do their best to ensure a smooth transition to a new board committed to the interests of the whole community.

Ferguson provides a laboratory of learning for association leaders, managers and attorneys. All stakeholders need to realize the importance of decision-making that is open and transparent, the value of creating positive relations with residents, and the necessity of building harmonious and vibrant communities based on trust.

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