By Rusty Bradshaw
Some Sun Cities condo and homeowners association are facing difficult times, and could end up being run by someone other than residents.
Sun City Condo Owners Association and Organization of HOAs of Sun City West officials have fielded calls from residents in multiple areas seeking help in operating their associations. The largest area of concern is a lack of residents stepping forward to serve on association boards of directors. Others find the cost of hiring a management company prohibitive.
“There are so many small associations out there,” said Jerry Walczak, Sun City Condo Owners Association co-president. “There are two of them out there now that really need help.”
PORA of Sun City West and the Sun City Home Owners Association each are responsible for enforcing the covenants, conditions and restrictions in their respective communities, but they are largely for single-family properties. Sun City West has 105 separate HOAs and there are 386 separate associations in Sun City. These latter groups generally serve homes that are commonly referred to as condominiums.
“Part of the problem with associations is that Realtors sell a home to someone and give the impression all they have to do is pay their fee,” said Tona Carruthers, OHOA office manager. “They’re usually not told all the work (for the association) is done by resident volunteers.”
The lack of board candidates is hampering some associations’ operations. Even those that hire management companies need a board of directors, according to Sun City resident Jim Ball.
“Most, if not all, HOA CCRs mandate a minimum three-member board of directors,” he explained. “The board must verify all actions the property manager takes. Usually the management company charges $13-16 per unit for their service.”
Ms. Carruthers believes much of the reason for people’s reluctance to serve on boards is their choice of lifestyle in their retirement.
“They retired so they could have more time for fun, not running an organization,” she said.
However, there are other factors, according to Warren Clucker, Sun City’s Heritage Condos association president.
“I feel why it is hard to find folks to run for the board is primarily a lack of understanding as to what is expected to be a good board member,” he said. “We are preparing to educate folks.”
Mr. Clucker said education classes, perhaps in 2-3 open meetings, will cover topics would include an overall discussion of how the board operates, board responsibility vs. owners’ responsibility, treasury functions, operating cost coverage and reserve funding, list of components with their life expectancy and projected replacement cost along with annual replacement schedule, and annual budgeting procedures. Some knowledge gained is better than ignorance.
“I feel the folks, when they understand things with less anxieties, might really be willing to run for the board without intimidation,” Mr. Clucker said. We will see if it works.
Association board members have avenues to gain knowledge about their task. OHOA in Sun City West and the Sun City COA are designed specially for that purpose. Both agencies conduct regular workshops in which HOA issues are discussed by qualified professionals.
Mr. Ball, a former Sun City COA board member, believes there are other outlets for education, including law firms that specialize in HOA issues. Some have online materials that can be accessed.
Ms. Carruthers believes another factor is those who do serve end up doing it too long and shoulder a large burden.
“People get burned out after a while,” she said. “This is true in small or large associations.”
Some associations, particularly small ones, find it difficult to afford a management company to assist with their operation.
“I am chairman of a 15-unit association and find that management fees are burdensome,’ said Sun City resident Donald Anderson. “I would appreciate getting information about ways reducing management costs.”
One way to do that is by self management. Some association find that successful, but it takes residents interested in doing the work.
“For the past eight or so years we have been adequately served by unit owners,” said Sun City resident Greg Eisert. “We have not had the need to hire an outside management group. We are also in great financial shape with an average 10-month operations reserve.”
However, he understands there are groups that are not as fortunate. He has heard of associations that experienced either lack of volunteers or over-exuberant board members exceeding their authority and bullying other homeowners. Along with this have been stories of funds theft and virtually no reserves.
“For small groups of units such as 20, hiring a professional management group would be financially burdensome, but likely the best thing, given some of the issues I have noted above,” Mr. Eisert said. “Hopefully, the association could get back on track and handle themselves once more after 18–24 months.”
Mr. Clucker believes not all associations are the same.
“We have a full time property manager, but it is not plausible for smaller complexes to have one,” Mr. Clucker said.
Ms. Carruthers believes it is difficult for associations that are self managed.
“Statutes change, and it is hard for all-volunteer managers to keep up with them,” she said.
Ms. Carruthers added management companies can provide training for board members.
Mr. Walczak and Sam Estok, COA co-presidents, researched an option for struggling associations.
It involved the COA offering assistance in some areas of association management, including help running annual and regular board meetings, budgeting, training, assisting committees, CC&R enforcement, document review and reviewing bids for major projects. Under IRS rules for nonprofits, Sun City COA could charge for these services.
“We try to guide them now as much as we can,” Mr. Walczak said. “But some associations need more than guidance.”
He added most associations that need help are those with 12-14 properties. Sun Cities association range from as few as two properties to more than 150.
Associations working together to solve problems is another option.
“My spouse had hoped to bring together presidents of other, small associations adjacent to us (called ‘the Alliance’), which we thought might be useful in that association leaders could explore mutually held goals and challenges,” said Sun City resident Suzy Bannigan. “We still think this is a good idea and perhaps a rotation among presidents could make such a group possible.”
While members respect their own and others’ privacy, Ms. Bannigan believes there is a genuine collaborative spirit. The rules and restrictions keep mutually held standards high and neighborhoods aesthetically pleasing.
“We have not contracted with an outside agency for maintenance or leadership functions,” she said. “I think our attitude — at least so far — has been it is our neighborhood and we are responsible for it.”
However, there are those who do not believe in the association system at all.
“Condo associations are very dangerous and often are run by untrained board members that break the law for their own benefits,” said Sun City West resident Mark Fairall.
He pointed to a Goldwater Institute article about one of his friends who was jailed, paid a fine and lost her condo due to the illegal actions of a condo association. The conviction and fine were overturned after the friend paid a very high legal fee.
“However, the damage was done and she lost everything,” Mr. Fairall said. “You are guilty as charged by the condo board until you prove your innocence. Condo associations have tremendous power as allowed by Arizona law, which is often misused and abused.”