HOA residents’ interests often clash with trade group

By Deborah Goonan, Independent American Communities

An update to the 2016 article Homeowners’ Association residents’ interests often clash with trade group CAI.

A reminder that the trade group does not represent the interests of 70 million homeowners and residents in associstion-governed communities.

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In their 2015 Annual Report CAI claimed to be the “single most credible resource not just for community managers and board members but also for the tens of millions of Americans who make their homes in associations.”

More recently, in its 2018 Annual Report, CAE Thomas M. Skiba writes that “CAI is the now leading international authority for community association education, governance, and management.”

But, does the trade group actually represent the interests of more than 70 million homeowners and residents of Association Governed Housing (Homeowners’ associations, condominium and cooperative associations)?

It turns out, many professionals who work in the real estate industry, as well as housing consumer advocates, are highly skeptical. In a 2016 article published the Kansas City Star, critics and a former Trustee member of CAI speak out on the subject.

 

Group shifts its mission — and homeowners get left behind

 

 Who is Community Associations Institute (CAI)?

The best way to get a feel for what kind of organization we’re dealing with is to see how it’s organized and who its leaders are. Let’s take a look at information from CAI’s website.

General organization: (emphasis added)

NATIONAL VOLUNTEER LEADERSHIP

CAI is governed by dedicated members who help shape the future of the growing, international organization, CAI chapters and the community association marketplace at large.

CAI is governed by a 15-member Board of Trustees. The Board is supported by three Membership Representation Groups (MRGs), elected members who give their constituencies a voice in crafting CAI policy and work to ensure that CAI continues to provide services and benefits that members need and value:

  • Association of Professional Community Managers (APCM) Board – Twelve members represent management company CEOs and all other community association manager members.
  • Business Partners Council – Twelve members represent business partner members.
  • Community Association Volunteers Committee – Six members represent community association volunteer leaders and homeowner members.

The MRGs recognize the unique characteristics and needs of each of the CAI member classes, give them a stronger voice in crafting policy and provide a vehicle for making recommendations on CAI services and benefits.

If you look at who serves on the Board of trustees  as of January 2019, you’ll see there are 8 community managers, 3 community association attorneys, one HOA Reserve Specialist, one CPA, and two homeowner volunteer members from the Community Association Volunteers Committee (CAVC).

No matter how you look at it, two homeowner members have very limited influence on a 15- member Board of Trustees made up of mainly of CAI certified community association professionals and business owners.

In addition to the Trustees, here are the criteria for the MRGs. I’ve added emphasis to the number of members in each MRG.

ASSOCIATION OF PROFESSIONAL COMMUNITY MANAGERS BOARD

The Association of Professional Community Managers (APCM) Board represents all community association managers. The Board consists of twelve members: four management company CEOs, two large-scale managers, four managers (who are not CEOs or large-scale managers), and two at-large members. The Board provides input on policy matters to the CAI Board of Trustees and serves as a key resource to staff.

BUSINESS PARTNERS COUNCIL

The Business Partners Council represents product and services providers and professionals. The Council is made up of twelve members, with at least one person who is one of the following: Accountant, Attorney, Banker, Insurance Professional, Information Technology Professional, and Reserve Specialist. The Council provides input on policy matters to the CAI Board of Trustees, and serves as a key resource to staff.

COMMUNITY ASSOCIATION VOLUNTEERS COMMITTEE

The Community Association Volunteers Committee represents community association volunteer leaders and homeowner members. The Committee consists of six members, who are either community association volunteer leaders or homeowner members. The Committee provides input on policy matters to the CAI Board of Trustees and serves as a key resource to staff.

So we can see that there are 30 MRG members in total, but only 6 of those are “homeowner members.” Homeowners are clearly outnumbered by Community Managers and other professionals who profit from their service to the industry by a margin of 5 to 1. That’s why there’s very little meaningful homeowner influence on “policy matters.”

By the way, what does “homeowner member” actually mean?

Well, here are the official qualifications necessary to be a member of the CAVC:

Community Association Volunteers Committee candidates must also meet the following qualifications:

  • Must be a Community Association Volunteer Leader or Individual Homeowner member of CAI and maintained membership for a minimum of two (2) years. (An individual who also is a Community Association Manager or CEO of a Management Company member, or the owner or employee of a Business Partner member is not eligible to serve on the Community Association Volunteers Committee.)
  • Must have served or be serving on a CAI chapter or national committee or board.
  • Must have served or be serving on a community association board.
  • Must not have been officially sanctioned or otherwise censured by CAI relative to a CAI designation.

So “homeowner member” means a current or former board member of a homeowners, condominium, or cooperative association, AND someone who has already served CAI in some way.

Homeowners at large are not part of CAI’s leadership, and most homeowner members would be volunteers on their Association board or one of the committees.

What is the mission and purpose of CAI?

Although the non-profit organization characterizes itself as an educational organization – providing training  and certification for professionals in community association management, law, and insurance – a closer look at CAI’s 2015 Annual Report revealed its true mission and top priority: controlling the Legislative landscape for its members.

In the words of 2015 CAI President, David I. Caplan:

We’re now approaching 34,000 members. Our advocacy efforts have grown too, and they’re bearing more and more fruit. Our state legislative action committees (LACs) continue to increase their influence, while our Federal LAC has greatly expanded its reach in Washington, D.C. We now have a seat at the table in all legislative and regulatory venues, with a voice that is increasingly respected and influential.

Indeed, according to the 2015 report, each LAC’s primary purpose is to mobilize when new legislative proposals are filed, “analyzing the legislation, meeting with legislators, drafting alternative legislation, developing corrective amendments or lobbying to kill a bill altogether.”

CAI has now has 36 Legislative Action Committees.

In 2018, Skiba boasts about its increase in membership:

The implementation of the new membership structure and pricing for homeowner leaders has led to significant growth in overall membership.

CAI membership ended the fiscal year at 38,367, an increase of 11 percent for the fiscal year. Overall homeowner leader growth for 2018 was 3,539, an increase of more than 28 percent.

The total number of unique community association members was 3,703, an increase of almost 7 percent under the new structure. Overall membership has grown every month since the implementation of the new structure in October 2017.

And here’s Skiba on CAI’s legislative influence:

This past year, CAI supported Legislative Action Committees (LACs) across the country, with 46 states in legislative session. Our team monitored nearly 1,000 pieces of proposed legislation impacting community associations, including on electric vehicle charging stations, construction defects, manager licensing, service animals, and short-term rentals. Highlights include the passage of a Uniform Common Interest Ownership Act in Washington state and, after many years of advocating, the Georgia governor vetoed a bill requiring a resale disclosure fee cap bill.

 

Legislative influence

While these accomplishments benefit certain professional members of CAI, they certainly do not benefit homeowners and residents of association-governed, common interest communities.

Washington State’s Uniform Common Interest Ownership Act hands over more power to HOA boards, including developer-controlled boards, while restricting the rights of homeowners and residents.

And the management industry continues to rack up high fees for resale disclosure packets, increasing the costs for home buyers, and discouraging transparency in the purchase process.

And CAI’s efforts to protect homeowners against shoddy construction are half-hearted at best. The trade group’s official policy on the issue is to “balance” the rights of developer with homeowners.

CAI supports a developer’s “right to cure” and the use of Alternative Dispute Resolution, including arbitration, to settle construction defect claims. But CAI also supports giving the board of directors sole authority to pursue all claims and litigation against a developer, without any vote of homeowners.

But what if the developer holds majority control over the HOA board? And how can any HOA board truly represent the wishes of its members, if it doesn’t allow a vote on important financial issues?

Clearly, CAI’s policy on construction defects is a far cry from protection of housing consumers. Here are some excerpts to prove the point. (my emphasis added)

Builders must be given an opportunity to present a reasonable plan to repair defective construction, and an association should have the opportunity to accept or reject the plan.

CAI supports legislation that encourages alternative dispute resolution (ADR) as an acceptable alternative to construction defect litigation when consent to ADR is truly voluntary and occurs after the dispute arises.

When the association has the right to make claims (except during the period of builder control), the governing board, as the elected representative body of all homeowners, must be allowed to make claims without owners’ approval. 

RECOMMENDATION

Recognizing that CAI’s diverse membership is affected in different ways by construction defect issues, this policy balances the interests and needs of our members with those of the development community to provide an equitable approach to construction defect legislation and regulations. CAI advocates from every perspective to balance their approaches to issues related to construction defects, and embrace the best interests of community associations as a whole.

Approved by the Government & Public Affairs Committee, April 12, 2016
Adopted by the Board of Trustees, May 4, 2016

Source: https://www.caionline.org/Advocacy/PublicPolicies/Pages/ConstructionDefect.aspx

 

 

How much money does CAI have?

The organization is well-funded for their lobbying efforts. As of fiscal year 2015, CAI boasted 34,000 members, nearly $13 million in revenues, and $2.6 million in net assets.

However, the financial report for 2018 is mixed, according to John Hammersmith, CMCA, AMS, PCAM, 2018 President of CAI National Board of Trustees:

CAI ended the fiscal year with a net operating loss of $130,596 and total net loss of $18,347. Despite these losses, CAI has never been in a more secure and successful financial position. This continued trend of financial success in 2018 has resulted in net asset reserves of $3.7 million. Total revenue of $14,057,383 is the highest since CAI’s founding in 1973 with expenses of $11,069,865. The fiscal year 2018 audited financial statements received an unmodified (“clean”) opinion by CAI’s independent auditors.

 

Government Affairs and Public Policy

In addition, according to Section 3 of their ByLaws, CAI has a standing committee responsible for crafting public policy for the organization:

SECTION 3. Government and Public Affairs Committee.

A. The Government and Public Affairs Committee (“G&PA Committee”) shall be a standing committee of the Board of Trustees and shall be composed of a maximum of twenty (20) members, each of whom shall be appointed for a two (2) year term. The Association of Professional Community Managers Board and the Business Partners Council shall each appoint three (3) members, and the Community Association Volunteers Committee shall appoint two (2) members to the G&PA Committee from among their respective memberships not later than 60 days prior to the following Term Commencement Date. The Board of Trustees shall appoint the remaining twelve (12) members of the G&PA Committee. All such appointments shall be made so that no more than forty-five percent (45%) shall be from any one (1) membership class and no more than two (2) members shall be members of the Board of Trustees. The Board of Trustees shall select the chairperson of the Committee from among the appointees.

B. The G&PA Committee shall be an advisory committee and shall monitor public policy issues on a national, state and local level and make recommendations to the Board of Trustees concerning public positions and non-routine actions to be taken by CAI.

In short, the majority of committee members are appointed by the Board of Trustees, and Community Association Volunteers (“homeowners”) get only 2 seats at the table. On the G&PA Committee, therefore, homeowners are outnumbered 10 to 1. 

The committee develops Public Policies Statements that drive CAI’s political and economic agenda. The policies govern CAI’s legislative stance on matters such as Aesthetics as an Economic Issue, Community Association Manager Licensing Policy, Fair Debt Collection Practices Act, Government Regulation of Community Associations, Lien Priority for Community Association Assessments, and Protection for Community Association Volunteers. In total, there are 34 policies, which are recommended reading for all housing consumer advocates seeking reform of the Association Governed Housing model.