HSV Board Orientation Commentaries

The following are commentaries from three HSV Property Owners on the just-completed 2019 HSV Board Orientation:

Commentary from Tom Blakeman re: 2019 Board Orientation

Dear HSV Board and Administration:

First, thank you to the Board and Administration for making the Board Orientation open to the Members.  These types of actions aid in transparency.  I enjoyed the day one session but did not return for day two.  A few topics of day one stood out as follows. 

Clarification needed

It was not clear how the credentials of the principal presenter qualified her as an expert on non-profit boards or organizations.  A PhD in Philosophy and experience in the medical field (retired only in 2013) were stated but beyond that it was not obvious what her qualifications might be nor were they explicitly stated.  Perhaps this information was in one of the handouts not given to the audience.

No specific HOA/POA organizations referenced

It also seemed strange that the only two main organization examples referred to frequently by both presenters were Baptist Health in Little Rock and a 2nd or 3rd tier university.  Granted that HSVPOA is a unique animal, but there were no specific HOA/POA organizations referenced.  This seemed lacking.  There were some references to one presenter’s law firm and City of North Little Rock.

Membership expects more of a representative model

Types of “governing boards” and voting/representation described were very interesting:  Referendum; Proxy; Delegate; Representative; Fiduciary.  However, it felt like a real stretch in the definition and explanation of Fiduciary and it’s application to our type of organization.  I believe that the Membership here see themselves as and expect that we should be more of a Representative model similar to a city or municipality. More on this below.

Push for 1993 Articles of Incorporation vs 1963?

Considerable commentary by both presenters revolved around our POA Articles of Incorporation with an obvious opinion that we would be better off had we voted to follow the Arkansas 1993 Non-profit law.  One might wonder if this was deliberate in order to set the stage for POA to make another run at such a vote.  Since we obviously voted otherwise just last year, the time spent on this topic seemed way overdone.

Finance Committee recommended

Frequent reference and recommendation was made by both presenters that the Village would be well served by establishing a Finance Committee.  This idea was also embraced by several participants/board members/electees’ during the meeting.  Hopefully, this will be a 2019 Board Agenda item very soon.

“Representative” type model with expanded Board should be considered

Another topic that got frequent mention was the small size of our seven (7) member board.  The impression given was that this is a serious deficit.  However, the presenters stopped well short of recommending that board size be increased.  They also did not venture into the area of our Village changing to a “Representative” type model with a larger board complement.  Perhaps, this is an area the 2019 Board should consider although a Member vote would be required.

Fresh perspective needed

Finally, given that the presenters apparently also gave the 2018 Board Orientation, and that the attorney presenter’s law firm was involved with the failed 2018 Declarations and Articles of Incorporation Vote, it would seem appropriate that going forward the POA and Board should consider changing both consultants and law firms.  If nothing else that would bring a fresh perspective to bear on how our Board and POA might want to operate.

Tom Blakeman, Hot Springs Village Property Owner 03/28/2019

Commentary from Robert Busse re: 2019 Board Orientation

Tom,
I totally agree with and support your effort and the message contained. I feel that someone, Nalley, Weiss, Weidert, ???, has decided that the only correct structure applicable to the HSV Board is that of a Business Corporation (with non-profit alterations for certain laws and tax requirements).

Ongoing process to turn governance into corporate structure

No mention of a more representative form like Municipal management or other known acceptable forms of governance. This form of governing was decided on a couple of years ago, and the ensuing Boards have taken it upon themselves to structure all of our governing documents to fit that style. One or both “expert presenters” have been the same since the beginning of this effort.

At onset no notification given to members

At the onset, there was no notification of members that this action was contemplated/going to take place or even if they felt/wanted a need. In fact, efforts were made to keep the members from knowing what was happening. Today, I was told that this Board and future Boards will continue the perfecting of this Corporate philosophy because the documents now are set up for this form of governance. If a change were to be made the governing documents would all have to be changed first.

High percentage of unanimous board votes

I also thought it somewhat strange that at least one of the presenters mentioned the fact that in the recent past there seems to be an extremely high percentage of unanimous votes on things requiring a Board vote. But, there was no expanded discussion or search for possible reasons or methods to a possible remedy. This point was brought up during a discussion having differing ideas or opinions on subjects and the need to be united to protect against legal challenges. I felt that what was presented to the Board members left little room for any final disagreement among the Board for principally legal reasons. I do not think that differing legally correct opinions or opposition to a matter will draw possible legal action.

Who does the Board represent?

The subject of “who does the HSV Board represent” came up several times. In most cases the answer given was the Association. There were other references to assets,  Mission, Vision, Value statements, governing documents, etc., but very little reference to the members as individual living beings. I asked the primary presenter, during a break, what about the individual member’s ideas, wants, desires, and input being represented. She had a very difficult time with the answer and finally made it part of a director’s fiduciary consideration.

Villagers given very little consideration

This idea or concept of little representation is completely foreign and difficult to accept for most Villagers who have been brought up and lived in a representative environment where membership has input and the majority rules. But by almost leaving out the individual dues paying member it certainly appears that we owners have very little involvement in the overall importance of things.  

Today’s morning session pertained mostly to what and how the Board does things and the responsibilities of the sitting Board members. I only had three things that struck me. 

Unnecessary and dangerous expansion of power

The scope of the POA and its responsibilities in the last 5-6 years has expanded significantly and therefore the oversight and leadership required by the Board has correspondingly expanded. There were several comments by the presenters of HSV having only seven Directors, but nothing said about growing that number.

It seems to me that the entire scope and feelings of responsibility (need to be involved in and acting on) has grown/expanded unnecessarily and dangerously recently. Present leadership has in its thinking that the POA is responsible and should have input into many aspects of a member’s life. I just got the feeling that if things are left unchecked by good sense and/or money that sometime down the road the POA would blossom into a quasi-city or state type government.

The POA has expanded into many losing endeavors

I just think back to when folks bought land or moved to the Village how I believe, that the only things we wanted from the POA were to responsibly manage our money and take care of our assets, infrastructure, and amenities. Nothing more, nothing less. But, we are now in the real estate, food and beverage, entertainment, watercraft/recreation equipment businesses, which are venture capital, profit, and loss type endeavors, all of which are losing money and needing a subsidy.

Should we not be reducing the scope and responsibilities of the POA/BOD instead of continuing to grow?

Responsibilities of BOD becoming too large

In the same vein of POA growth comes the need for the HSV Board to keep up with its job leadership and oversight. With this expansion, it requires Board members to sacrifice more and more of their time and have increased training, knowledge, and/or expertise to do /handle the job of Director. I sincerely believe that as the size of the POA, and its perceived duties/responsibilities increases, the availability of volunteer candidates with the qualifications and desire to act as a Board Director is going to decrease. We will soon run out of people who can and will do the job as described by these “experts”.

Why is Corporate form of governance better?

This whole exercise was very interesting, enlightening, and informative. The history/timeline displayed and expanded on was, to me, the best part of the orientation. Although the problems, deficiencies, shortcomings, etc. were highlighted by this time graph, there was no correlation between the faulty experiences and the operating philosophy presented. To say that any part of the philosophy would have precluded an event was not made. That seems to be another reason to question, why this “Corporate” form of governance is any better than another form.

Robert Busse, Hot Springs Village Property Owner 03/29/2019

Commentary from Lloyd Sherman re: 2019 HSV Board Orientation

Purpose of Orientation is to convince BOD they are responsible to organization and not property owners

 We are considered a 528 under the subset of a 501(c) and it is a classification for homeowner associations for tax purposes. The real concern should be that the HSV BOD/CEO have taken this to the extreme and are setting up the Village to operate as a for-profit corporation by changing Bylaws and policies to neuter the Board and transfer more decision making and power to the administration. The first day of the orientation was all about laying out that case and intimidating the candidates into coming over to the dark side and joining the movement. This is how they have molded previous candidates into a position where they cannot follow through with their commitments to the property owners. Orientation is to convince them they are responsible to the organization and not the property owners.

Present course leads to Peter Principle in full effect

 Everyone should be made aware that the orientation of HSV Board members has ONE focus in mind. Convince them that their duty is to the organization and not to the property owners. This concept has been in place for 5-6 years now and will be nearly impossible to reverse while the majority of the Board buy into turning the operations into a business entity. In addition to being non-representative to the property owners, it results in becoming all things to all people and going down paths we have no specialized personnel to accommodate. It also spreads our resources short and cannot lead anywhere except to the Peter Principle being in full effect. We as property owners are akin to a salmon swimming upstream!

Lloyd Sherman, Hot Springs Village Property Owner 3/29/19

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