Tag: large-scale HOA

Elitist large-scale HOAs

Understanding private elitist HOAs as social welfare HOAs

Data on HOA member demographics is scare but I’ve been able to uncover  documents, 11 years apart, that lead one to believe that H-O-As are elitist for the most part.  A CAI  survey showed 79% respondents with incomes over $50,000 and 86% with some college of more.  US Census showed 24.4% and 44.9% respectively. A confirming study on a large-scale H-O-A showed 88.1% with some college or more and 76.4% with income over $45,000.

According to CAI’s LSA (large-scale associations) category of 1,000 or more units, a Nevada CAI survey showed a mere 2.0% were LSAs. This emphasis by CAI on LSAs, a small minority of HOAs across the country, impacts all H-O-As of every size in the state as a result of its intense lobbying efforts, its one size fits all policy.

These surveys are not  consistent with the totality of social welfare HOAs as contained in the IRS databases of 36,532 organizations filing under (c)4. Just 10.8% (3,931) of these organizations met the criteria for “homeowner associations” under the IRS subcategories, a far contrast with the surveys. Analyzing the justification by the IRS for one large-scale H-O-A raised concerns about the (c)4 tax-exempt process.

The absence of any discussion by SCG, a large-scale H-O-A, of it’s social welfare status  and related activities is compelling.  Based on my many years exposure to HOA legalities, I would hazard a guess that the board had advisers and assistance in preparing and filing its application.  SCG has close ties to CAI by virtue of its directors being CAI members, its attorney and CAM being CAI members, and its accounting firm, Mansperger Patterson & McMullin, also being a CAI member.

Read the full research study at elitist H-O-As.

What is the range of HOAs by revenue?

In this post I will not be discussing CAI’s dominance and influence on HOA-Land, its legalities, environment or culture, but setting the CAI record straight.

All that I now about HOAs I learned from CAI,

from its polls, surveys,  and fact sheets going back as far as 2005.  All of which revealed some 70% plus  happy and contented homeowners in their land of milk and honey. 

I have been concerned about several issues not addressed by CAI’s findings, one of which was the distribution — number of HOAs in each category by size — according to population, by preference, or by revenues as used in this study.

The data for the above charts was taken from the extensive IRS  EO BMF files[1] (over 1.8 million entries) and massaged using EXCEL. (The slanting line is the downward trendline showing fewer and fewer HOAs as their siz increases).  It is a list of all current tax exempt organizations from which coded ‘homeowners associations’ were selected.  Only 2 of the 3 Regions (representing 58.2%) were included in my research. Only a miniscule 843 organizations classified as a 501(c)4 social welfare organization (SWO) were found  meeting the 5 applicable sub-designations HOAs.

The  source of the IRS database came from mandated annual 990 tax filings, signed and certified like any other tax filing; unlike responses to polls and surveys. It is revealing that there are just 10.7% large-scale[2] HOAs (LSA) according to CAI’s definition, of all those SWOs on record and where CAI is most interested — it’s where the money is.   

What this tells me is that of the 351,000 HOAs in America, as claimed by CAI, these social welfare HOAs are “sub-atomic” dots in the playing field, either because they don’t care, they gain nothing so why file complex 200+ page forms, or it just doesn’t apply to them.  It seems only relevant to the larger moneyed HOAs that can gain a little tax benefit from telling the IRS that they really do social welfare work, when the common boilerplate CC&Rs do not indicate such activities for these private membership, contractual subdivisions. 

This emphasis on LSA becomes very meaningful when you take a broader perspective and step back away from the “trees” so you can see the “ugly forest” that CAI doesn’t want you to see.  In addition to the above findings on SWOs and LSA, and the extent of CAI’s presence and influence on HOA boards,[3]  the ugly HOA forest is exposed. 

Until CAI has been held accountable and made to answer for its conduct, advocates will continue to spin wheels and getting very little accomplished.

References

[1] Exempt Organizations Business Master File Extract (EO BMF). (May 10, 2021).

[2] Large Scale Associations CAI study, 2016.

[3] Who’s in charge of the larger HOA? The BOD or CAI?

Who’s in charge of the larger HOA? The BOD or CAI?

Over the years I’ve come to believe that the CAI member HOA attorney are really in charge and run HOAs, especially the larger ones where the money really is.  Its influence runs the gamut from its CAI School of HOA Governance,[1] to pervasive lobbying state legislatures, and its CAI Manifesto.[2] The manifesto is its “white paper,” 2020 and beyond, in which it advises its followers to influence state legislators and the courts.

QUOTE “Most legislators do not thoroughly understand common-interest communities or who their patchwork legislation is actually protecting. Legislators too often shoot from the hip, passing laws that ricochet and cause collateral damage. And they will continue to do so in the future unless the CIC interests undertake vigorous lobbying and education programs and awareness campaigns to enhance their understanding.“[p. 7][emphasis added]. UNQUOTE

In 2016 CAI published its survey[3] of large-scale associations (LSA) that revealed some insights into the strength and dominance CAI attorneys who are involved with the policies and operations of LSA HOAs. CAI  defines these associations as having more than 1,000 lots with an operating budget  of $2,000,000 or more, and that “provide municipal type services.”

QUOTE “CAI’s Large-Scale Managers (LSM) Committee . . . provides input on education curriculum, best practices, public policies related to management or operations of large-scale community associations, or identifying what is of value to the large-scale manager membership” [p. 2]. UNQUOTE

By “municipal type services,” CAI explains,

QUOTE “Many municipal governments viewed this new community housing concept as a means to transfer various public works and recreational responsibilities to a third party, which possessed the ability to assess property owners for the administration of these varied services.” UNQUOTE

The facts revealed

You may ask, so what has CAI really done or is this mere words? Based on CAI’s own data in the 2016 LSA survey, with only 94 respondents, readers can see the extent of CAI’s presence in these large scale HOAs — these master planned communities and these active-adult and retirement communities.  Reworking the data, the study revealed that 83.5% use an HOA attorney, which is not surprising for HOAs that can have as many as 9,000 homes or more and revenues that can reach upwards to $20,000,000.

Also not so surprising is that 92.5% of the HOA’s top leaders – president, CAM/COO — are CAI members in a strong case for conflict of interests.  As for senior staff, 64.9% are CAI members, and just 44.7% are on the BOD.  Understand that an HOA can have one or all three categories at the same time.

Consequences

I ask again, who runs the HOA, and where does the BOD’s advice come from if not from the teachings of the CAI School of HOA Governance? I suspect that the smaller the HOA the lower the percentages using an attorney or having CAI member HOA officials. The money isn’t there! 

This translates into follow the money that focuses legislators, the media, the political scientists, and the constitutional law think tanks on the LSA HOAs, treating the smaller HOAs as local nuisances. This is one good reason for failures in obtaining meaningful HOA reforms and even daily operational reforms.

References

[1] The foundation and principles of the School can be traced back to CAI’s Public Policies, The CAI Manifesto (its 2016 “white paper”), its numerous seminars and conferences, its Factbooks and surveys, its amicus briefs to the courts, and its advisories, letters, emails, newsletters, blogs etc. I have designated these foundations and principles collectively as the CAI School of HOA Governance.

[2]  Community Next: 2020 and Beyond (May 5, 2016).

[3] Large Scale Associations CAI study, 2016.