This post follows up on our previous post: HOA Board legal duties (Part 1)
As always, if there are any inaccuracies, please let us know and we’ll fix them.
2. Duty of Loyalty
HOA board members must act in good faith and for the benefit of the entire HOA community. Their decisions must not be based on personal interests. They also cannot use their position as board members for private gains.
Has the MCA Board acted for the benefit of all MCA Homeowners?
As we described in our post A Summary of where we are now, what the MCA refers to as a “strategic partnership” is no partnership at all. It is nothing more than spending MCA Homeowner money to maintain TMCC the way it has always been: A private club losing $1 million per year.
Based on addresses in a recent TMCC membership list, only 13% of MCA Homeowners are members of TMCC. Even worse, 40% of TMCC members live outside The Meadows, yet are subsidized by MCA Homeowners.
In subsidizing the TMCC the MCA Board has NOT been acting “for the benefit of the entire HOA community”. It has been acting largely for the benefit of TMCC and all its members, 40% of which are not part of our HOA community. While MCA Homeowners benefit from the greenspace remaining, there are many options available to do that which do not require subsidizing TMCC with $1 million per year to remain a private club.
Currently 3 MCA Board members are TMCC members, including the MCA President and Vice-President. The MCA President, while being a TMCC member, is the MCA’s designated TMCC liaison. It is not appropriate that the MCA’s representative to keep an eye on TMCC, is a TMCC member.
Has the MCA Board made decisions based on personal interests?
Although we support the purchase of TMCC’s assets when TMCC’s financial failure put MCA Homeowners in the position of having to buy them or let them go to a developer, it is worth noting that at the time 8 of 9 MCA Directors were TMCC members (or the spouse of a member). This chart shows TMCC membership of MCA Board members based on a 2022 membership list.
7 of 9 MCA Directors were TMCC members (or the spouse of a member) in December 2019 when the MCA Board introduced the Renaissance Access Plan, but did not tell MCA Homeowners that they were paying $600,000 to TMCC for these minor access benefits (first time the fee was “published” was the 2021 MCA financial statements, posted in the latter half of 2021). See page 6 of the December 2019 Meadoword to see how truly minor the benefits were, making it reasonable for MCA Homeowners to believe that these token benefits were in exchange for the $10/yr lease.
We don’t know if or how their TMCC membership factored into decision making, but as a TMCC member it would be difficult not to be influenced by the impact on you and your fellow TMCC members. MCA Board members that were/are TMCC members have received clear benefits from having MCA Homeowners subsidize TMCC versus the large majority of MCA Homeowners.
Has the MCA Board used their position for private gains?
MCA Homeowners are subsidizing TMCC with $1 million per year, and TMCC has about 734 member households with one or more members. That works out to subsidizing each of those member households by $1,362 per year (40% of those households live outside The Meadows and don’t even pay MCA assessments but benefit from the subsidy).
The $10/year lease has been in place for 6 years and the Renaissance Access Plan fee/subsidy is in its 5th year.
$1,362 x 5 years = $6,810 per TMCC member household.
To be clear these gains accrued to all TMCC members, not just those what were also MCA Board members.
Conclusion:
MCA Board Directors are not meeting their Duty of Loyalty to MCA Homeowners. It is critically important to the future of The Meadows that the MCA Board start meeting their duties NOW.
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