Let’s talk about couple concepts that are prevalent in the HOA world. Today what we want to talk about is to show you the three different roles an HOA plays. It is first and foremost a corporation, it is secondly a government and thirdly it is a community. Every good HOA will be healthy in all of those three areas because they all work together. First and foremost let’s talk about the corporation. Every HOA is a corporation of some sort. Most of the time it is set up as a not for profit corporation which is different than a nonprofit. You don’t get tax credits for paying your HOA dues and you’re not a normal 501(c)(3) in that essence and you are a taxable corporation but you are only taxed on some of the things that you bring in rather than everything. Most HOA’s only pay a few dollars in taxes every year unless you’re a really big one and have big businesses that are involved with it. The reason why we bring this up is because HOAs are a corporation which are subject to all corporate federal, state and local corporate laws. Some of the rules that apply to this are FCC rules ie rules for satellite dishes. Some of the rules we have come into good contact with lately are rules around political signs and American flags. There are particular functions that are in state law that HOA boards have to follow and that’s the corporate side of it. One of the other sides is the government. We are set up as an actual government kinda like what you see in the United States. You have a representative that you elect, in this case a board of directors where the board of directors is actually elected by the community to make the decisions for the community on the corporate side. That’s how those two fit together. You out a government together in order to manage the corporation and it’s all one thing. The thing that I want to focus on the most today is the aspect of community. This is probably the area where most HOAs are the least healthy. They have more money in their budgets dealing with the corporate side and government side than they do on the social community side. The community side being how it is, is extremely important. Interestingly, the more money you have in your social budget the less work you will need to do on the corporate or government side. That’s a real focus we could offer to our clients through the next year is focus on the community. HOAs are not supposed to be all about the rules, property values and where the bottom line is. The truth is neighbors that talk to neighbors have neighbors that mow their lawn and neighbors that have a sense of community generally follow those rules better. Over the years we have seen a direct correlation between the HOAs that have the Christmas party and the guy with his trailer in his driveway. The more that you have on the community side the more easily the other areas will work together. So think about that as you go through your budget this year. One of the things that we are asking our boards to do is to beef up their social budget a little bit better. The community aspect will make things better for security, better for actions at the pool and all kinds of different things come together when you can focus on building the community portion of your neighborhood rather than these are the rules, this is what happens when you break those rules. In summary, focus on community this year and the entire HOA will come together better than you even imagined.
