A lot of hokum is being churned out by opponents of Proposition 3, much of it not even sensible. Here are ABC’s answers to the flimflam:
- “ABC wants to do away with the golf courses and/or all the amenities.”
No, ABC wants to improve Diamondhead government, not tank our property values. We’ve never discussed amenities or taken a position on them. In our organizational meeting, we had 22 suggestions, two of them related to amenities, from which to choose our initial objectives, Turning them over to the city got one vote, privatizing them got none. That doesn’t mean we oppose those things – just that we’re not about getting down into those kinds of details. What we’re after is accountability and transparency in all levels and functions of government, which certainly includes finances. We want all governmental entities to refrain from wasting Diamondhead property owners’ money on projects and functions that cost more than the benefits they provide, could be better done by the private sector or another governmental entity, or are unnecessary, inefficient, or mismanaged. We want sound, informed reasons and open, responsive explanations for all their decisions.
- “Three POA board members belong to ABC.”
Nope, just two. Two other directors attended one of our meetings and were welcomed. We hold monthly meetings at the E. Hancock Public Library, our goal is accountable and transparent government, our objectives are chosen by vote of the members, and membership is open to all who share our goal, including board directors.
- “Elections every two years for all directors will mean a big turnover on the board that destroys continuity, stability and long range planning.”
Prop. 3 does not impose term limits. Directors who wish to continue on the board can run for as many terms as they wish and will be reelected so long as property owners are satisfied with their performance. Research shows that continuity, stability, and long-range planning are preserved in corporations with annual elections of all directors because shareholders reelect satisfactory incumbents and only replace them when there is widespread, deep dissatisfaction with their performance. POA members will do the same, but rather than enduring four long years of unsatisfactory ones, we would be able to replace them quickly and easily. In short, If there was large turnover on the board, it would be because a majority of members disapproved of the defeated directors, which would mean that their kind of continuity was found unacceptable. Continuity of policies that deeply affect them should be up to the owners, not just directors.
- “Elections every two years will cost more money.”
In fact, the POA already holds elections every two years for 7 directors – 4 officer and 3 non-officer directors, assuming that all are opposed. Under Prop. 3, it’s the same, every two years for 7 directors.
- “Electing all directors at the same time increases probability of an all new board with no experience.”
An all new board with no experience would only occur if a) no incumbents or former directors ran — extremely improbable, based on the POA’s own election history; or b) all incumbents or former directors who ran were defeated, which would only happen if the entire board’s policies and performance were unsatisfactory to a majority of the property owners. That would only happen if you had a whole board made up of obtuse, unresponsive, unacceptable directors in which case no one would want their “experience” anyway. And if that should ever happen, the all-new board could easily gather a committee of former competent directors willing to lend advice and aid from their experience.
- “ABC wants to elect a majority of the board and run it their way.”
ABC has 41 votes in a board election — that’s not enough.
- “ABC said 87% of S&P’s 500 hold annual elections for all directors but a review of companies shows most have staggered boards.”
Once upon a time most boards were indeed staggered – but that time was in 2002. By 2011, Harvard Law’s Corporate Governance was reporting that public companies with staggered boards had dropped from 60% to less than half, less than one-third among S&P 500 [large cap] companies. Two years later, Ernst & Young reported that more than half of small-cap and more than 60% of mid- cap companies elected all directors annually as opposed to holding staggered board elections. The numbers of de-staggered boards have risen since then. It’s a major topic in corporate literature and critics of Prop. 3 clearly haven’t familiarized themselves with it.
- “But that’s all about for-profit corporations and nonprofits are different from those.”
Sure, we’re different in some ways, but we’re exactly alike in our essential problem that Prop. 3 addresses. Directors of for-profits control shareholders’ investments, but shareholders had no control over directors. They could only elect part of the board at a time so if they had unsatisfactory directors who were serving their own interests instead of the shareholders’, they had to wait through 2 or 3 election cycles to get rid of them. Same as us — POA directors control our assets (dues and property values) but we have minimal control over them. When they serve themselves instead of us, we’re stuck with them for 4 years and can’t remove them without the trouble and expense of a removal process solely “for cause” that’s likely to wind up in court. If they’re all up for election every two years, it’s simple to replace the unsatisfactory ones.
- “ABC must have spent a lot of money on those flyers/inserts. Is it possible they have a financial incentive?”
Yes, we do. We want our investments in our homes or other properties here to grow and thrive. We don’t want directors reaching into our wallets at will to fund their preferred projects with no attempt to find out if we owners want them or whether they are financially sound enough to benefit owners in general.
- “ABC’s figures on realty at Diamondhead have been debunked by local realtors.”
ABC does not develop its own figures on realty in Diamondhead and 14 other nearby communities. We compile them from realtor.com, official website of the National Association of Realtors. Several realtors on Facebook – but mostly directors Craig Harvey and Don Crosby in private – have desperately tried to debunk the website’s “average home prices,” claiming all kinds of mumbo jumbo that doesn’t check out. Somehow they think that denying the well-known fact that our property values are in the tank will make the problem go away. Their denials are absurd in the face of what everyone knows, and ABC long ago debunked the claims of its so-called debunkers.
- “Because of its large numbers and ex officio past president the board represents the diverse interests of members, isn’t swayed by a few, and has been effective in its spending.”
Golf course and country club operating costs have created deficits over the past few years of between $1.5 and nearly $1.7 million annually, a hole filled by property owner’s dues without any evidence that the board’s constant expensive improvements to these amenities are helping the bottom line. Golf memberships have declined to below 250. A review of past and present directors shows a great predominance of retired male golf enthusiasts. A logical thinker can’t conclude from these facts that the board has adequately represented diverse interests, isn’t swayed by a few, or has spent effectively. Have we pointed out yet that the people producing most of this hokum are former board and city officials whose reelections were overwhelmingly rejected by voters in recent Diamondhead elections?
- “Proposition 3 will reduce the collective wisdom and historical perspective needed by the board to steer the POA through expiration of the covenants in 2020.”
Here’s the summary of legal advice the board has received on what can be done when the covenants expire: a) try for 85% approval of each covenant by the membership — but it’s most unlikely that you can get it; b) convince a judge to administratively extend the expiration date — also unlikely; or c) let them expire and hope that what has already been done – adopting the covenants into the bylaws — will work to preserve the POA’s right to collect dues and maintain architectural control. So no. The board won’t need “collective wisdom” or “historical perspective;” just an outstanding lawyer and/or PR person, depending on which option(s) are chosen. But here’s the thing — with Prop. 3, property owners will have more influence over the final decisions. Without it, you get 11 people deciding the entire future of Diamondhead with no need to answer to you about it.
- “The evidence to support this proposition has been a few sentences chopped out of reports about for-profit corporations”.
No, the evidence is from a long list of academic and business articles that is available online at DHNOL, or by contacting email@example.com for an emailed or hard copy list so you can find and read the evidence for yourself. But yes, for purposes of our flyer we did “chop” sentences out of reports because it is, um, a flyer.
- “There are other studies showing that there are good reasons to have 11 to 16 board members.”
Yes, but the POA does not meet any of their requirements. Reasons cited in the research include nonprofit boards that must do a lot of fundraising; large, complex public companies that need directors with a diverse set of financial, legal, and other skills; and any kind of company with a wide range of interests that should be represented. The POA doesn’t fundraise, isn’t a complex public company, and the range of member interests for which it is responsible includes: pools, tennis, golf, country club, airport, youth recreation, and marina. Seven interests, seven directors who, research shows, will make better, more efficient decisions and be more accountable to the property owners.
- “ABC wants to take away your representation.”
No, we want to give you some control over your representatives. Especially the ones who are representing themselves, not you. A Forbes Group article puts it best:
Having a large number of elected representatives doesn’t represent the democratic will of the membership if the representatives are unable to deliver the products and services they want. Representation isn’t an end in itself, but one method of ensuring that members get the outcomes they want. Often less representation produces better results.