Waldrop Farms Homeowners Association

Transcription

1 Program Evaluation Completed By: ThomDeSco Consulting Firm, Inc Consulting Blvd Atlanta, Ga Waldrop Farms Homeowners Association Deborah S. Thompson Boise State University MET Program 12/12/2014

2 Table of Contents SUMMARY... 2 PROGRAM OVERVIEW... 3 Program Objectives... 3 Program Components... 3 EVALUATION METHOD... 4 Participants... 4 Procedures... 5 Data Sources... 8 RESULTS... 9 DISCUSSION PROJECT COST APPENDIX A: Interview Questions APPENDIX B: Property Management Transition Checklist APPENDIX C: Board Past Decision-Making APPENDIX D: Invoice for Payment Page 1 of 15

3 SUMMARY Waldrop Farms, a covenant community, located just 15 miles east of downtown Atlanta, Ga. The community has 92 homes and is managed by a Homeowners Association (HOA). The HOA is managed by a Board of Directors (4 volunteers who live in the community). The operation of the Board of Directors, has been in existence since 2002, and is defined as a non-profit organization called Waldrop Farms Homeowner s Association Inc. The non-profit organization is responsible for managing and maintaining the overall community. However, over the past few years, the Board of Directors has experienced internal issues. Therefore, a request was made to solicit the assistance of a program evaluator. The program evaluation s role is to identify the organizations current state; expected outcomes; and recommend solutions. The purpose of this report is to provide Waldrop Farms HOA Board of Directors with a recommended solution that should resolve lingering internal organization issues and hopefully rebuild the trust of all homeowners within the community. During the initial stages of this evaluation, the evaluator chose to follow the program cycle (Missions/Goals; Needs Assessment; Program Planning; Formative Evaluation; Summative Evaluation). The evaluation began by identifying missions and goals of the organization. Once mission & goals were identified, a detailed needs assessment was performed. During the needs assessment phase, the evaluator documented organization goals; the current state of the organization; and the desired future state. The needs assessment was followed by program planning. During the program planning phase, the evaluator documented action plans to accomplish each goal. Throughout each phase, meetings were held to provide formative evaluations. The overall evaluation was very beneficial to everyone involved. The results, however, proved the Waldrop Farms HOA Board of Directors needed to make critical changes in the following areas: (Financial Documentation Management, Financial Reporting; Defined Board Roles & Responsibilities; HOA Dues Management, Defined Rules & Regulations; on-time Bill Payment; Filing Income Taxes). GOALS Financial Management Financial Reporting Roles & Responsibilities Checks and Balances HOA Dues Rules & Regulations Monthly Bills Income Taxes Communication EVALUATION FINDINGS CURRENT STATE (Area of Improvement) Financial documentation is not properly maintained and therefore is not always available to support income and expenditures No annual financial statements or operating budgets provided to the community Board members have never reviewed roles & responsibilities for each position No defined checks and balances exist to reduce conflicts of interest or unethical behavior/conduct Some homeowners do not pay dues because of internal issues that exist on the Board of Directors A rules and regulations document does not exist Board members lacks skills and/or time to properly manage monthly bills Since 2003, the Board of Directors have not filed Income Taxes for the HOA Board does not communicate with homeowners in a timely manner Page 2 of 15

4 PROGRAM OVERVIEW Waldrop Farms is a covenant community that consists of 92 homes which is managed by a Homeowners Association (HOA). Each homeowner, who signed a deed during their home closing process, is considered to be a member of the HOA and is expected to abide by the rules and regulations as defined in the covenant and bylaws. The Homeowner s Association is managed by a Board of Directors (a team of 4 volunteers who live in the community). The operation of the Board of Directors, has been in existence since 2002, and is defined as a nonprofit organization called Waldrop Farms Homeowner s Association Inc. The purpose of the WF Homeowners Association, Inc. is to provide for the enforcement of the protective covenants; the collective maintenance of community property; beautification of the subdivision s grounds, amenities and homes; civic awareness and social outlets and any other purposes consistent with maintaining a healthy, harmonious and prosperous communal environment. However, for the past several years, the Executive Board for Waldrop Farms HOA has been experiencing internal issues. Therefore, the Board of Directors agreed that the HOA program needed to be evaluated in order to identify areas in need of improvement along with possible resolutions. Program Objectives As a non-profit organization that is responsible for managing the operations of the Waldrop Farms Community, there are specific goals and objectives that must be accomplished. Below is a list of goals/objectives the Board of Directors must adhere to per the covenant & bylaws. Financial Management Plan, direct, organize, monitor and control the financial resources of the HOA Maximize Community profits and minimize expenses Financial Reporting Provide timely and accurate Financial Statements and Operating Budgets Roles & Responsibilities Each board member must adhere to the duties of his/her position as defined in the covenant & bylaws Homeowners Dues Collect annual homeowner dues by following the process defined in the covenant & bylaws Communication Provide timely and informative communication to homeowners Program Components The Waldrop Farms Homeowners Association (HOA) must choose to operate under provision of the Georgia Property Owners Association Act (Article ) of the Georgia State Code. Page 3 of 15

5 Therefore, the Board of directors is expected to provide various services to the community and abide by a defined set of rules and regulations defined in their covenant and bylaws. EVALUATION METHOD For the Waldrop Farms HOA evaluation project, the evaluator is also a staff member and actively participated in the overall evaluation process. Therefore, the evaluator chose to utilize the transaction model. This model allowed the evaluator to combine monitoring with process evaluation through a continuous back-and-forth between evaluator and staff. As a result of using the transaction model, the evaluator was able to incorporate the qualitative. The qualitative technique was implemented throughout most phases of the evaluation. During the initial phase, the evaluator made firsthand observations to understand the present situation. Afterwards, the evaluator collected qualitative data using different data sources. Participants Waldrop Farms is a medium-sized community. Considering the organization is an HOA, the evaluation participants were assigned categories. Category One: Board of Directors Because the Board of Directors manages the overall operation of the HOA, they were selected to be the main participants. For this evaluation, each position on the board is equally important and everyone participated in the data collection process. The Board of Directors consists of 4 team members which are: 1. President The President supervises the executive affairs of the HOA and makes an annual report to the general membership. 2. Vice-President The Vice-President shall assume direct supervision over the responsibility and functions of the committees assigned by the President. This role performs other duties and assumes the role of President in his/her absence. 3. Secretary The Secretary is the recording officer of the association and custodian of its records. This individual keeps a record of all proceedings of the Association, keep on file all committee reports, and to keep the association s membership rolls. 4. Treasurer The Treasurer shall receive and disburse all funds of the Association and supervise a standing committee assigned by the President. The Treasurer pays all bills on order by the Executive Board. In addition, the Treasurer bill members for their dues and maintain a ledger of each member s account. Category Two: Members in the Community There are a total of 92 homes in the Waldrop Farms Community and each homeowner is a member of the HOA. Based on the covenant & bylaws, the board of directors is responsible for Page 4 of 15

6 providing services to the community. Therefore, during the initial stage of the evaluation, a letter was mailed (via USPS) to inform each homeowner about the evaluation. Also, to gain insight regarding how satisfied homeowners were with services provided by the Board of Directors, an optional online survey was provided. Refer to the Results section for survey questions. Procedures To evaluate the Waldrop Farms HOA, the evaluator chose to follow the program life cycle. The evaluation began by first evaluating the HOAs covenant & bylaws to identify missions and goals. After ascertaining an understanding of the organizations missions & goals, each member of the Board was interviewed to ascertain different perspectives regarding areas of concern. A one-on-one interview was conducted with the President, Vice-President, Treasurer, and Secretary. The same list of questions was asked during each interview and the results were documented for further review. During the interviewing sessions, members identified different concerns and some appeared to be very frustrated with the overall operation of the HOA. It was apparent, from the interviews, a high level of tension and divisiveness existed between board members. As a result, this behavior had a negative impact on the community. This type of behavior was not normal and the evaluator assumed it may be a contributor to the issues and problems that needed to be resolve. Refer to Appendix A for interview questions. During the needs assessment phase of the HOA evaluation, the evaluator noticed a change in the attitudes of board members. Board members were beginning to realize how the evaluation would be very beneficial to the HOA organization. This change of attitude had a positive impact on the overall evaluation process. Needs Assessment Second, a needs assessment was performed to determine the actual need for the program and how vital it is to the customers. Using the covenant & bylaws as a base, the evaluator documented all tasks the board is required to perform for the community. The results of this information were used to document high-priority goals that should serve as the FUTURE STATE of the revised program/organization. Also, the evaluator held community and board meetings to discuss the current state of the organization and areas of improvement. After reviewing the results of community/board meetings, bank statements/ s, and interviews/surveys, the evaluator documented the CURRENT STATE of the organization. Below is a summary of the organization s high-priority goals; current state; and desired outcome. GOALS Financial Management Financial Reporting CURRENT STATE (Area of Improvement) Financial documentation is not properly maintained and therefore is not always available to support income and expenditures No annual financial statements or operating budgets provided to the community DESIRED/FUTURE STATE At year-end have all required documentation to support income and expenditures in order to produce timely year-end financial statements and budget reports Annually, provide timely financial statements and an operating budget to all homeowners Page 5 of 15

7 GOALS Roles & Responsibilities Checks and Balances HOA Dues Rules & Regulations Monthly Bills Income Taxes Communication CURRENT STATE (Area of Improvement) Board members have never reviewed roles & responsibilities for each position No defined checks and balances exist to reduce conflicts of interest or unethical behavior/conduct Some homeowners do not pay dues because of internal issues that exist on the Board of Directors A rules and regulations document does not exist Board members lacks skills and/or time to properly manage monthly bills Since 2003, the Board of Directors have not filed Income Taxes for the HOA Board does not communicate with homeowners in a timely manner DESIRED/FUTURE STATE All board members fully understand the responsibilities for each board position All board members adhere to a defined set of checks and balances. Have 100% of homeowners pay dues on time within the next 2-3 years Complete a rules & regulations document that is approved & adhered to by all board members Hire a Property Management Company to manage HOA monthly bills Have all back taxes, ( ), filed by end of year Also file 2014 taxes by end of year Provide HOA updates to the community once per quarter (minimum 4 times per year) Program Planning Third, the evaluator performed the program planning phase to determine the means for achieving previously selected goals. Below are a summary of activities to achieve stated goals and objectives. GOALS GAP ACTION PLAN Financial Management & Reporting Roles & Responsibilities Checks and Balances HOA Dues Rules & Regulations Board members lack skills to properly manage finances Roles & Responsibilities for each board position are not documented To prevent conflict of interest, specific guidelines for checks and balances are not defined Board leaders do not have a process in place to follow-up with homeowners who are delinquent paying dues No document exist that defines specific rules and regulations the board members & homeowners must adhere to Hire a Property Management Company to manage the financial operations of the organization. This includes creating and distributing required financial reports to the community on a yearly basis. Create a document that explains specific roles and responsibilities for each board position. Review and discuss position requirements at board meeting to ensure everyone understands and accepts their role. Create a document that defines all scenarios that constitutes a conflict of interest within the organization. Create a process that must be adhered to when performing duties that require funds (making purchases, selecting contractors etc.) Hire a Property Management Company to manage homeowner HOA dues process Create a Rules & Regulations document that defines specific guidelines that must be adhered to. Review & discuss document at board meeting to receive approval and sign-off from all members Monthly Bills Board Treasurer and other In addition to defining roles & responsibilities, each Page 6 of 15

8 Income Taxes Communication key leaders do not review and discuss monthly bills at board meetings Board have not looked for a CPA to file taxes The Board does not exercise open communication with the community board member will be responsible for managing a specific area within the organization. For example: a member will be responsible for one of the following: (upkeep of the community; foreclosed homes; reviewing monthly bills etc.) Hire a CPA to file taxes for the HOA Establish guidelines that require the Board to have one HOA Community meeting per quarter. This is a minimum of 4 HOA Community meeting per year. Program Implementation The program evaluation for Waldrop Farms Community - HOA began in Jun After 6- months of collecting, reviewing, and analyzing information, one of the action plans is ready for implementation. However, all other action plans are currently a work-in-progress. Below is an update on the implementation process for the defined action plans. 1. Hire a Property Management Company to manage financial operations In Sept-2014, the evaluator and other board members began the search for a reputable HOA Property Management Company (PMC). Two neighboring communities recommended the PMC that manages their community. The Board scheduled a meeting with both PMC s to discuss the needs of Waldrop Farms and learn about services they provide. After careful review of the PMC s proposal, in Oct-2014, Waldrop Farms sign a 1-year contract with Dekalb Property Management Company. Since Oct-2014, the evaluator and members of the Board have been working diligently to gather financial information required by the PMC. As of Dec-2014, Waldrop Farms officially completed the transition process and will be managed by a Property Management Company starting 1-Jan Refer to Appendix B for the Property Management Company Transition Checklist. 2. Create a Roles and Responsibilities document In Dec-2014, the evaluator met with board members to begin the process of creating a roles and responsibilities document. By 31-Dec-2014, a document will exist that clearly explains the roles and responsibilities of all board positions. Therefore, this action plan is scheduled to be implemented in Jan Create a Conflict of Interest document In Jan-2015, the evaluator will begin the process of working with board members to create a conflict of interest document. By 31-Jan-2015, a document will exist that clearly define scenarios that constitute a conflict of interest. Therefore, this action plan is scheduled to be implemented in Feb Create a Rules & Regulations document In Jan-2015, the evaluator will begin the process of working with board members to create a Rules & Regulations document. The first version of this document is scheduled to be completed by 31-Jan However, after 31-Jan-2015, the evaluator will turn this Page 7 of 15

9 document over to a board member. The assigned board member will be responsible for updating the Rules & Regulations document. 5. Hire a CPA to manage Income Tax filing In 2015, the hired PMC will utilize services of their in-house CPA to file 2014 Income Taxes. The Board will also need to work with the CPA to file all back taxes ( ). This activity will be implemented by Apr Improve Communication with homeowners In Jan-2015, the evaluator and board members will have an HOA Community meeting. The HOA Board hopes to begin the New Year by updating the community with pertinent information in a timely manner. Formative / Summative Evaluation Throughout the evaluation, HOA Board meetings were held twice a month to review and discuss the evaluation process. During these meetings, formative evaluations were held. The formative evaluation consisted of reviewing and discussing all information gathered during each phase of the evaluation lifecycle. Each board member was responsible for providing feedback on the evaluations progress. This feedback was used to determine if changes needed to be made to certain or all components of the evaluation process. A summative evaluation will be implemented for each action item once the procedures and methods are fairly stable and no changes are required. Data Sources For the program evaluation, qualitative data was collected using the following data sources. Observations: During the initial phase, firsthand observations were performed to understand the present situation of the HOA organization. During board meetings, the evaluator sat and observed the following characteristics while board members discussed HOA issues: (body language; tone of voice; attitude; willingness to cooperate; candidness etc.). Through observation, the evaluator was able to collect personality/character data about each board participant. Throughout the evaluation, all board members were willing to participate when asked to provide ideas and suggestions. However, when actual work/research had to be done to find out information, board members were reluctant to get involved. It appeared that board members would rather someone else do the work. The evaluator strongly believes that board members must be more active in performing tasks. Hopefully, members will be more responsive and take ownership of assigned tasks once roles and responsibilities are clearly defined. Survey: An online survey was available to allow homeowners to answer questions regarding the HOA and Board of Directors. The optional survey was available to homeowners for a 3-week period. Bank Statements: The evaluator reviewed all bank statements from Information from bank statements was used to create financial income & expense statements for The income & expense statements provided a visual financial picture of how the board managed Page 8 of 15

10 funds over the past 2-3 years. The financial statements were also provided to the new Property Management Company. Invoices: The evaluator searched through all s to review paid invoices for the past 2-years. This information was used to determine estimates on the 2015 Operating Budget. This data was also collected, documented and provided to the new Property Management Company. RESULTS The primary data source for the Waldrop Farms evaluation was a survey for homeowners to complete. The results of the survey were not very positive. After reviewing and discussing the survey results, it allowed the evaluator and board members to come to a mutual agreement that changes needed to be made to improve how the Board of Directors are managing the operations of the HOA. Survey Total Homeowners: 92 No# of homeowners who participated in Survey: 47 No# of homeowners who did not participate in Survey: 45 SURVEY QUESTIONS YES NO DON T CARE Do you have concerns about the operations of the HOA Board Do you understand what the Board does Do you receive timely board communication Do you receive timely financial reports Do you have concerns about how the HOA funds are used Do you pay your annual dues If no to the above (annual dues) question, is it because of the operations of the Board Do you attend community meetings Do you believe information presented at community meetings is informative Have you considered volunteering on the HOA board 6 41 Interviews Total Board Members: 4 Total Board Members participated in Interviews: 4 Total Homeowners: 92 Total Homeowners who participated in Interviews: 10 Bank Statements Total Bank Statements Reviewed: 30 Year 2012: 12 Year 2013: 12 Year 2014: 06 Page 9 of 15

11 Invoices Total Supplier/Vendor Invoices Reviewed: 9 DISCUSSION In May-2014, it was brought to the attention of the evaluator that the Board of Directors was experiencing internal issues. These internal problems were having a negative impact on the management and operations of the HOA. Therefore, the purpose of the Waldrop Farms HOA evaluation is to: identify the organizations current state; areas of improvement; and expected outcomes. The results of the evaluation allowed the evaluator and board members to see the actual problems that exist. After identifying the problems and identifying solutions, the board can begin the process of implementing the recommended changes. The one thing that stood out throughout the evaluation is: The community continues to vote the same leader (President) in office although this is the second time the Board has experience a setback under this Presidents leadership. The evaluator communicated this concern to Board Members (including the President) and made recommendations regarding the Presidents decision-making skills. Refer to Appendix C for a summary of poor decision making performed by the President. The overall evaluation went very well. Needless to say it took a great deal of work to gather the necessary information. But now that the evaluation is nearing the end, the following recommendations were made to improve the management and operations of the HOA. 1. Hire a Property Management Company to manage the financial aspects of the business 2. Define specific job descriptions for each board position and assign tasks to each position. The job description document can be used to hold board members accountable for tasks. 3. Create a Rules & Regulations document that must be adhered to by current and future board members. This document will be used as a guideline when certain decisions need to be made. Once this document is finalized, updates can only be made with approval from all board members. 4. Create a check and balance process to identify areas considered to be a conflict of interests and/or unethical behavior PROJECT COST The evaluation project for Waldrop Farms HOA began in May-2014 and lasted for 7-months. A daily rate of $500 was charged throughout the life of this project. The evaluator worked a minimum of 30 hours per week. Refer to Appendix D for Customer Invoice. Page 10 of 15

12 APPENDIX A: Interview Questions Board Members 1. How long have you volunteered on the board 2. When did you first notice problems on the Board of Directors 3. What type of problems have you observed 4. Do you believe changes need to be implemented 5. Do you believe other board members are committed to doing what is best for the community? 6. What areas within the organization do you believe needs to be evaluated 7. Do you plan to continue volunteering on the Board 8. Do you have any suggestions for improvement? Is so, what? 9. Explain the duties/responsibilities of your board position 10. Since you have been on the board, have there been any discussions at board meetings to address what each board position does 11. Do board members review financial records at each board meeting 12. Do you know who maintains supporting documentation for finances 13. Can you give me an example of a situation that you would consider to be a conflict of interest 14. Is there a Rules & Regulations document to provide guidance to the community and board Community / Homeowners 1. Are you pleased with the performance of the HOA Board of Directors 2. What areas within the HOA are you displeased with 3. Are there any changes you would like to suggest for the HOA 4. Are you willing to participate on the Board 5. Would you rather have the Board of Directors hire a Property Management Company 6. When was the last time you received a financial statement and/or operating budget from the Board 7. How many HOA Community meetings have you attended over the past 2 years Page 11 of 15

13 APPENDIX B: Property Management Transition Checklist NO# ITEMS LISTED IN HERITAGE 1 Income Tax Return (2012 & 2013) 2 HOA Federal Tax ID# 3 Startup funds to open Association's Operating Account at BB&T 4 Owner Property Address List 5 Bank Statements (2013 & 2014) 6 Monthly Balance Sheet Statements (2013 & 2014) 7 Monthly Income Expense Statement (2013 & 2014) 8 Operating Budget (2014) 9 Assessment Information a) Assessment Amount b) Assessment Frequency c) Late Fee and Interest d) Due Date e) Late Date f) Collections/Lien Information g) Initiation fee / Capital Contribution h) Special Assessments (if applicable) i) Payment Options (if applicable) j) Loan Information (if applicable) 10 Delinquency Report & Prepaid Report thru end of month (if applicable) 11 Copies of Paid Invoices 12 Copies of Checks 13 Deposit History (2013/2014) 14 General Ledger Transaction History (January - November 30, 2014) 15 Homeowner Payment History 16 Vendor Information (contracts, vendor history etc.) 17 HOA Copy of Insurance Policy (with contact information) 18 Recorded Documents a) Covenant & Bylaws b) Rules & Regulations 19 Plats, Site Maps 20 Heritage Property Set-up Form 21 P.O. Box Address and Owner 22 List of Board Members 23 A/R History Payment Record Page 12 of 15

14 APPENDIX C: Board Past Decision-Making Past actions taken by President that HAVE NOT BEEN beneficial to the Board or Community 1. Making decisions apart from Board Meeting (where all members are engaged) Sending delinquent homeowners to attorney (without having board discussions) Not following-up with attorney regarding delinquent account (overcharged by attorney) Requesting community landscaping services (before discussing needs with board members) A landscaping company has provided services for community (over 5 years) and the board does not know the exact amount that is charged. Board has never requested a yearly contract - listing a breakdown of cost and services Past President and Treasurer making critical decisions (apart from the board) Unauthorized payments to the President (Not approved by Community) Not providing community with 2-3 quotes when selecting contractors / suppliers 2. Making decisions that are definitely a conflict of interest and/or unethical Giving treasurer permission to maintain front entry floral (without board approval) Giving treasurer authority to write checks to herself (signed by President) Signing blank checks Giving treasurer permission to repair front entry fence (without board approval) Writing and signing checks to various board members (without proper documentation) Unethical handling of Community Day funds and Front Entry fence repair funds 3. Being Reactive vs. Pro-Active When a homeowner notices a problem in community, if it is not an emergency that needs to be addressed ASAP, the issue should be brought before the board. An example of an emergency would be (squatters in a vacant home, water leak at front entry etc.). In my opinion, a light that is out at the front entry is not an emergency. 4. Overall Management of the HOA This is a business that is still performing critical tasks manually No Financial Statements or Budget Reports Bank Account (too many names on checking account) Tracking homeowner dues, Finances (no accountability), no online banking, bank deposit documentation not available etc. Inadequate payment history for homeowner dues (No follow-up letters for unpaid dues) The President approaches homeowners regarding annual dues and /or infractions (in lieu of mailing letter) Board members lack key skills to operate and manage the HOA No Check and Balance process exist Page 13 of 15

15 Payment of bills (not ALL board members know what has to be paid and how the funds are distributed). Monthly Financial Statements are not reviewed at board meetings. Unauthorized names left on HOA accounts (Ga. Sec. of State, Bank account etc.) Hand-delivering information to homeowners (in lieu of mailing) Infraction Notices (Board needs to exercise fairness when distributing infraction citations. The President exercises unfair practices. No income taxes filed since inception of the HOA Board 5. Bias Treatment of some homeowners (need to be non-bias in ALL decision making) Page 14 of 15

16 APPENDIX D: Invoice for Payment Page 15 of 15