HOA Insights: Common Sense for Common Areas

018 | HOA Board Heroes: Tough Decisions & HOA Recall Elections

August 28, 2023 Hosts: Robert Nordlund, Kevin Davis, Julie Adamen Season 1 Episode 18
HOA Insights: Common Sense for Common Areas
018 | HOA Board Heroes: Tough Decisions & HOA Recall Elections
Show Notes Transcript Chapter Markers

Explore the challenges of HOA Board decision-making & dive deep into the nuances of an HOA Recall Election.
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Join us as Jonathan Shan, a board member from Plant 51 HOA in San Jose, delves into his journey from tackling community bike locker thefts to navigating the complexities of HOA Recall Elections. This episode of 'HOA Board Heroes' brings to light the vital role of an HOA Board in community decision-making. Learn how tough decisions, community feedback, and unexpected challenges like the paver project and paint color controversies can lead to significant turning points in an association's governance. Whether you're an HOA Board member or a community resident, Jonathan's insights offer a unique look into the dedication and resilience needed to foster a sense of community.

Chapters from today's episode: Tough Decisions & HOA Recall Elections!

00:00 Having documentation for future HOA Board members

01:09  Doing a thankless job for you HOA

02:11 Ad break - association reserves
 
02:43 Introduction to HOA Board Hero Jonathan Shan

03:40 What motivated Johnathan to serve on his HOA Board

04:24 How much time Johnathan spends each week in his HOA Board member role & what motivates him to stay on the HOA Board

06:09 HOA Board term limitations & how it relates to financial health

07:15 What special skills Johnathan brings to his HOA Board

08:04 What Johnathan’s favorite or least-favorite things are about serving on a HOA Board
 
10:17 Johnathan’s experience going through HOA Board recall

16:15 The results of the HOA Board recall

19:20 Johnathan’s advice to anyone that is or wants to be on a HOA Board

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Robert Nordlund, PE
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Jonathan Shan:

We're all learning. Everybody is in learning mode, that there are lots of questions. There was institutional knowledge turnover because the President had been on the board for six years. So a lot of the institutional knowledge was lost. But that also goes back to show how we've as a board and as a culture decided we will document and we will have things for people who joined the board to onboard them properly, to quickly get them up to speed to ensure that they have a clear understanding of the fundamentals so they can stop worrying about the knowledge transfer elements and focus on the decision making.

Announcer:

HOA insights, common sense for common areas exists to help all 2 million volunteer board members nationwide have the right information at the right time to make the right decisions for their future. This podcast is sponsored by for companies that care about Board Members Association insights and marketplace, association reserves, committee financials, and Kevin Davis Insurance Services. You'll find links to their websites and social media in the show notes.

Robert Nordlund:

thankless job, what comes to your mind when you hear those two words. Having served on the board of my condominium association for several years followed by decades of experience in this industry. There's one job that without a doubt deserves to be at the top of the list, an elected volunteer community association board member. So a regular feature of our weekly podcast is one episode a month devoted to sharing the stories of real life unsung board heroes. In Our Eyes a board hero was one of the 2 million elected volunteers who are worthy of recognition for simply performing a thankless job. Well, welcome back to Hoa incites common sense for common areas. I'm Robert Northland and I'm here to share the story of an unsung board hero named Jonathan Shan. This is episode 18. And if you missed meeting our first three board hero episodes, you might want to check out episodes five, nine and 13. But before you hear Jonathan's story, let me introduce you to one of our sponsors.

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Unknown:

So my name is Jonathan Shan. I'm one of the board members at plant 51 HOA in San Jose, California. I've served on the board for about two years at this point, when I'm not wearing a board member hat. I am very much at this point. Just enjoying life finding the great outdoors, hiking, kayaking, spending time with family, all the great stuff that doesn't involve looking at meeting minutes and other notes.

Robert Nordlund:

Plant 51 is a 265 unit condominium community in downtown San Jose. With a budget of 1.3 million. The community is 15 years old. However, the building dates back as far as 1912 when it was first built to be Del Monte foods plant number 51 from which the property gets its name, Jonathan mentioned that he has served on the board for about two years. So we asked him what first motivated him to get involved in the governance of his association.

Unknown:

What motivated me to join the HOA board was really a pedal boat that we had around the bike lockers. So once you enter plan 51 On the right, there's a bike locker area, it got broken into multiple times by thieves, we had lots of bikes stolen. And so there was a decision on whether or not we keep the bike locker and whether we spend the money to renovate it to reinforce the door. And so I was a volunteer homeowner at the time to helping the board. We did a survey we asked owners what their thoughts were. And they said overwhelmingly, they wanted to spend the money and keep that as a bike room and to reinforce the doors. So my first vote on the board was very much funding the $10,000 it took to fix that door. And we haven't been broken into since.

Robert Nordlund:

As you just heard, Jonathan saw a problem that the community was experiencing, and not only took the steps to resolve it, but took the initiative to survey the entire community of both homeowners and tenants to figure out how the board's funds should be spent. And Jonathan did that without even having a board position. Now that he's on the board. We wondered if he spends a similar amount of time each week on his board member duties. Here's what Jonathan had to say.

Jonathan Shan:

Probably an embarrassing amount of time and it's not just me, it's every single board member we we joke about how this is almost their second job and that we At this point, because of the activity and the volume of work that we have, are spending probably, I'd say a good five to 10 hours depending on the week.

Robert Nordlund:

Now that the bike area situation is resolved, we are curious as to why Jonathan decided to stay involved with the association.

Jonathan Shan:

So what's motivating me to stay involved at this point, and I am actually done after this term, I will not be continuing on the board, but I will still be an active support within the committee's and everything else the board needs from a consultation perspective. What motivates me is the sense of community and the fact that folks are very appreciative. I walked down the halls and people say thank you so much for all that you're doing. We know it's a crazy thing that we don't see at all, there's a level of gratitude that they have that aside from maybe the five or 10% that are not very appreciative, it really is for the rest of these folks are truly appreciate it, because they know we're building a great thing within our community by adding so much involvement. And it's not just me, it's every single board member, here's

Robert Nordlund:

Jonathan mentioned that he will no longer be serving actively on the board at the end of this next term. This made us wonder how many seats there are on the board. And if plant 51 had term limitations to those seats,

Jonathan Shan:

so we have five members on the board. And there are currently no term limits, which is a little bit concerning in terms of the burnout, especially with the amount of work that happens and board members serve for two years. And they're rotating on a two and three member per year voting basis. So we alternate that way. So we keep enough of the institutional knowledge to report,

Robert Nordlund:

here's Jonathan's perspective as it relates to the association's financial health.

Jonathan Shan:

If I were to think about whether or not the association is well funded, we are at about 55.5% funded right now, there are plenty of opportunities. And there are lots of risks whenever a unit that has a non owner, originating water leak, for example, if it's in the sprinkler system, and it's an uncommon area, for example, those are expenses that we had not anticipated. Hence, why we have reserves reserves are absolutely critical for us and our ability to shore up those reserves and ensure that assessments support that, in case of a rainy day, a literal rainy day, especially in California is so critical for us.

Robert Nordlund:

With all board heroes, we feature on this podcast, we want to know what special skills they've brought to the board. And in Jonathan's case, what special skills he'll bring to the association's committees, once his board member term ends,

Jonathan Shan:

I don't think I have any special personalities in terms of what I bring to the board aside from probably being difficult and asking a lot of questions. But I do believe what I bring is an understanding of strategy, business process and the ability to see whether or not we're achieving our outcomes. And so a lot of what I've been able to bring is a strategic plan for the HOA board to think about what are the priorities because we have so many different items moving, and so many different things that we could be focused on. And the question for us is, are we focused on the right things? And are we going to get the outcomes that we expect, especially as we talk about vendors, and what they're able to provide in terms of performance that we need,

Robert Nordlund:

with Jonathan's term on the board coming to a close, we wanted to know what his favorite and least favorite parts of serving on the board were

Jonathan Shan:

favorite aspects of serving on the board is very much just seeing our amenities go up, I heard a lot in the podcasts about how that's really the best state for us to be in when we don't have to deal with the fundamentals and the fixes that we have. And we can start looking at how do we make the community a great place to live for folks that really is embodied in the vision of what we have. For our community, the hardest parts are making really tough decisions and decisions that people may not necessarily agree with. But I'm not as worried about whether they agree or not, I'm worried about whether or not they respect the fact that we had given them open forums to actually air out their concerns, have a voice in all of it. But at the same time, respect the fact that we've got to make tough decisions that they may not always agree with.

Robert Nordlund:

A recurring theme in Jonathan's answers is his desire to provide an open forum for the members of the community, for them to get involved as he did. It's an important duty of the board, however, providing an open forum for angry homeowners. And that can lead to some pretty challenging social situations. We asked Jonathan to speak about this. So my

Jonathan Shan:

biggest challenge as a board member, has very much been the bullying that at times I've been subjected to either as the new person on the board or I don't know at times, there may be concerns about my experience and understanding how things work around here. And at times asking very disruptive questions. I live in Silicon Valley, California. And so we always question authority. We're taught to do that. We're also questioning why things are the way they are and are there better ways for us to do things and so I've been on the receiving end of a lot of those. I've been here for a long time. Who the hell are you coming in? Who in the world are you to tell us what to do? You don't understand how it works around here.

Robert Nordlund:

These challenges of already from homeowners to board members are not uncommon, as I'm sure many of our listeners are aware. This leads to the reason why we wanted to talk to Jonathan in the first place. Plant 51 conducted a board recall earlier this year, we asked Jonathan to give us a summary.

Jonathan Shan:

So as I mentioned, we have five members on the board. And I serve as the director, which is also known in some places as the member at large. And so we had a few incidences and a few programs that really dissatisfied homeowners, that lets the recall of the President and Vice Presidents roles, one of them being the paver project within one of our courtyards, it was pretty much unilaterally decided. And it was an, the rest of the board had had gone along with it at the time not knowing the full implications. We had challenges with our vendors. We had challenges with the project management company, we had challenges with the pavers, and the construction folks themselves. And what ended up happening is, it was a project that happened during Surfside condo, or waterproof testing was asked for. And there were discussions and concerns about cost waterproof testing. And that led to pretty much a stalemate. And that's still made perpetuated for two years. So to the point where the community was no longer tolerated. But it wasn't just the precipitating event. Between the delays and the pavers. There was also concerns about the paint color that was chosen in the common areas and the doors. So in the hallways and the doors, a color was unilaterally chosen, it was not voted on by the board, the board had authorized for funding for the paint. But without a decision making mechanism or process to get input from the community. There was unfortunately not best practices followed, we didn't have a committee that was in charge of the paint committee who would provide inputs recommendations from experts, we didn't have expert consultation in terms of paint color palette, and how it matches our community or how it was supposed to transform within our community. And a lot of the lack of voice through everybody was a huge concern. And people were not provided the input and the ability to at least provide their thoughts and opinions. And if we went with a decision which the board is very much entitled to, people would at least have that transparency and understanding which is really at the heart of data, Sterling and all, all of us not making decisions in the background, but really being as transparent as we can with the community on those decisions that we made.

Robert Nordlund:

Since regulations covering board recalls can differ from state to state. We asked Jonathan to clarify how recalls get initiated in the state of California.

Jonathan Shan:

So a recall in California starts with a petition in California, any of the owners can initiate the petition and I believe the threshold was 15%. We had over 90 I believe 95 folks who had signed the petition for recall, so we had lawyers who were brought in to consult and make sure we were to hearing to Davis Sterling, David Sterling in California as an act was not very clear either on the eligibility and in the full requirements of what it took to recall board. As we learned, it takes just a simple majority of those who actually do vote in the actual recall once you've got the petition through to recall

Robert Nordlund:

spokes, while any homeowner can initiate the recall and sign the petition. Board members might feel conflicted when presented with it. So we decided to ask Jonathan, if any board members at plant 51 signed the recall petition,

Jonathan Shan:

no members of the board actually signed the recall petition. This was something that the homeowners started and it really it was up to the homeowners voice and we had to be objective on the side and not part of that process.

Robert Nordlund:

As Jonathan mentioned, before the petition passed with 95 homeowners signatures, we wanted to know what happened when the sign petition was presented to the board. And here's what Jonathan had to say.

Jonathan Shan:

When the board was presented with the successful petition. We really relied on our property management company. They brought in the lawyers to have the discussions about what is and isn't the criteria within Davis Sterling to make sure we were adhering to the regulations required there. And we also had to choose a vendor for the elections. And we had looked at the one that we usually use for elections. And we have also looked at additional options and alternative vendors and compared costs. We still have a fiduciary duty to make it as cost sensitive as possible to not overspend our community funds

Robert Nordlund:

with two recent gubernatorial recalls in California's history. We were curious if HOA board recalls were conducted in a similar manner.

Jonathan Shan:

So we were told by our lawyers that the recall process is very much modeled after the California Governor because we know we've had that happen in a template Gavin Newsom recently and then also Gray Davis with Arnold Schwarzenegger in the past, so the goal of the recall was first to determine that it was a two step process that was combined into one vote. The first question is, do we recall each of the roles? And so there were those in favor of recalling the president. And then there were those not in favor. And the same thing would happen with the Vice President. So folks in their ballot, were given a choice between President yes or on the recall vice president yes or no. And then after that there was a

Robert Nordlund:

After a long and arduous process. The recall second part that was about if no, than which of the following candidates would you actually vote for and then you'd also have the candidate BIOS behind there as well for each of them, including the folks who are getting recalled. election at plan 51 was finally conducted. We asked Jonathan for some detailed results,

Jonathan Shan:

the results of the recall election, were on the first question of whether or not there should be a recall at the president and vice president. There were over 158 voters, and 11 of them voted to retain the president, whereas 145 voted to recall and on the Vice President, seven had voted to retain and 148 had voted to recall. And the numbers are a little bit off in terms of the adding up because not everybody voted on certain parts.

Robert Nordlund:

New members on the board can be a real upheaval at any association, especially after a recall election, wanted to know how Jonathan felt about the new board members and the current culture.

Jonathan Shan:

So as part of the elections, we did have new board members that were put in place. And I'm very thankful for them. We had folks who had led the recall, one of them did get voted in. We also had folks who have been very prominent the community, one of them is a lawyer. It's very helpful for us in terms of not official legal advice, but still with the right mindset and the framework that we need. We are all learning. Everybody isn't learning about that. There are lots of questions. There was institutional knowledge turnover, because the President had been on the board for six years, and had a lot of institutional knowledge with a lot of turnover on the other positions. And so we had to end We had a new property management company, so a lot of the institutional knowledge was lost. But that also goes back to show how we've as a board and as a culture decided we will document and we will have things for people who joined the board to onboard them properly, to quickly get them up to speed to ensure that they have a clearer understanding of the fundamentals so they can stop worrying about the knowledge transfer elements and focus on the decision making elements.

Robert Nordlund:

Jonathan clearly feels relieved and grateful about the new board members. However, what's going on in the board meetings isn't always indicative of how the community feels. We asked Jonathan to speak about that.

Jonathan Shan:

The atmosphere in the community post recall is one of relief. I don't think anyone derives joy from a recall. It is not a pretty thing, the community relations, the toxicity, all needed to end. And I think what we fundamentally had was a restoration of trust by the community in the board, and about the board's decisions would need to be in the board's ability to drive and move projects forward the projects that were stalled, and it is not an easy process, even with a new board. To move these projects along. We are currently undergoing multiple vendor revaluations, we've had multiple bids that we've had to also lead with property management transitions as well. And so it's been a lot that everybody has had to pitch in on. And it truly takes the whole board.

Robert Nordlund:

Since Jonathan's term as a board member ends in November, we asked him to imagine what the new board can do to improve the association's overall health in the next year.

Jonathan Shan:

So if I were to look a year from now and see what where the board had gone and was able to accomplish, I would say it would be the ability to get together and make some tough decisions, be able to bring true restoration in terms of the projects that have fallen behind. So the completion of those projects, and the reinvestment of amenities for our community to be able to make this a really great place to live.

Robert Nordlund:

Finally, we wanted to give Jonathan a chance to give some advice to other board or community association members that are considering a recall. Here's what Jonathan had to say.

Jonathan Shan:

If there was any advice I would give to board members or even HOA members who are considering a recall or on the end of a recall. It is a lot of money between the lawyers and the elections. And so the first thing is, is it worth it? And is it something that we cannot walk back from our resignations, the right thing as a board member to do for the community. And at times, it may be a difficult position because board positions and the board work overall is a labor of love. And folks are very attached to the work and it's very hard to step away. But we have to think about the greater good. And again, it's common sense for common areas. It's about everybody It's not just about individuals. And we have to be able to have healthy board members who do this work as a labor of love but not as the toxic labor of love. It can't be a toxic relationship, it must be even if the right intents are all there. So my word of advice is really look within yourself and understand what drives you, and what the right decisions are for the community, not just for ourselves, and also be good to yourself as a board volunteer because it truly is a thankless task.

Robert Nordlund:

Thank you for listening. And thank you, Jonathan, for performing a thankless job. Well, kudos to the board and the community at plant 51 for taking their responsibility seriously, to act in the best interests of their association. We hope you gained some HOA insights from the Jonathan's story, and that it helps you bring common sense to your common area. Thank you for joining us, we look forward to another great episode next week.

Announcer:

You've been listening to HOA Insights, Common Sense for Common Areas, you can listen to the show on our podcast website, HOAinsights.org, or subscribe on any of the most popular podcast platforms. You can also watch the show on our YouTube channel. Check the show notes for helpful links. If you like the show, and want to support the work we do, you can do so in a number of ways. The most important thing you can do is to engage in the conversation, email your questions or voice memos to podcast@reservestudy.com Or leave us a voicemail at 805-203-3130. If you gain any insights from the show, please do us a HUGE favor by sharing the show with other board members. You know, you could also support us by supporting the brands that sponsor this program. Please remember that the views and opinions expressed by the podcast do not constitute legal advice. You'll want to consult your own legal counsel before making any important decisions. Finally, this podcast was expertly mixed and mastered by Stoke Light Video & Marketing. With Stoke Light on your team. You'll reach more customers with marketing expertise that inspires action. See the show notes to connect with stoke life.

Having documentation for future HOA Board members
Doing a thankless job for you HOA
Ad break - Association Reserves
Introduction to HOA Board Hero Jonathan Shan
What motivated Johnathan to serve on his HOA Board
How much time Johnathan spends each week in his HOA Board member role & what motivates him to stay on the HOA Board
HOA Board term limitations & how it relates to financial health

What special skills Johnathan brings to his HOA Board
What Johnathan’s favorite or least-favorite things are about serving on a HOA Board
Johnathan’s experience going through HOA Board recall
The results of the HOA Board recall
Johnathan’s advice to anyone that is or wants to be on a HOA Board