Does Eastman Need a Council?

What does the Council do?

For the past decade the primary accomplishments of the Council have been:

•                Approved spending $4.5 M on a New Center with:

                  --No architectural plan

                  --No due diligence on what the current building status is or what spending is required

                  --No RFQ/RFP defining the building cost of whatever a committee (consisting of almost entirely golfers) decides it wants

•                Approved the Universal Amenity Fee 2011

•                Approved spending $4.5 M on South Cove 2008

•                Diluted its financial authority and scope of responsibility, such as in Paragraph 8.6 which is documented here:

•                Abdicated responsibility for the Golf Committee and Golf Oversight.

o   Continues to ignore golf costs and the golf financial drain on community including a 25% reduction in golf membership fees.

•       Abdicated financial responsibility for Restaurant and Center.

•       Abdicated financial responsibility by eliminating quarterly financial report from Finance and Budget Committee Chair.

o   Neglected its financial oversight of the community’s financial performance by ignoring the FY 2014 Audit Report failure to even conform to GAAP.

What are the Council MEMBERS’ Current Responsibilities?

1.    Change the community's Declarations and Covenants:

•       The most recent example of this resulted in the Amenity Fee. This could have been accomplished simply by the Board indicating they needed a 4% incremental operational spending increase to cover its excess spending.

Instead, the community got a complicated fee structure reducing golf membership fees by 25% as well as other golf fees, and increasing costs for others who do not actively use the amenities. This is clearly an issue that should have been decided by all community members.

2.    Approve a proposed capital expenditure pursuant to Article VIII 8.6(a) of the Declarations (See below)

3.    Consider a proposal to borrow money for any purpose pursuant to Article VII Section 7.7(g) of the Declarations (See below)

THAT’S IT FOLKS

Some things the Council does not do:

•                It has no authority on setting the budget.

•                Outside of approving phraseology, it has no operational financial authority or responsibility. Its capital authority is minimal.

•                It does not oversee or review the activities of any Committees.

•                Since in most cases, Council reps can vote any way they want, they only represent themselves.

•                Few members demonstrate any concern regarding the content of Financial Statements.

What the Council Members Prohibit by their existence:

•       Consistently has failed to allow Direct Vote to become an open transparent dialogue amongst community members and to enable a Council vote authorizing Direct Vote on major financial expenses.

•       It prevents the ECA members from representing themselves as to what the community spends on what and why, as well as what checks and balances are provided for ECA members’ rights.

Furthermore, the Council blocks financial accountability and visibility as to what and how ECA funds are being expended. Its existence prohibits an open transparent participation in the financial decision process on the part of members. Members are simply to pay the bills and much like any group whose basis is authoritarian leadership, accept what they are told without question. Failure to do independent due diligence yields all power and knowledge control to the authoritarian leaders.

If the Council were eliminated today, would you notice? To answer this question, Eastmanites need to consider what is the added value of having a Council to each of us and to the community as a whole? Some questions that concerned residents might ask themselves are:

1.    Is the Council simply an obstacle to empowering Eastman residents to vote directly on how their community is operated and how their money is spent?

2.    Is the Council just a huge waste of time, which buffers the Board from having direct accountability to the residents?

The cost of having the Council involves not just meeting time but all the employee direct costs associated with it--the costs of more than 20 committees, endless reports and an overwhelming bureaucratic complex. But how would the community run without it? Pretty much as it does now is the answer. The only difference would be that the Board would no longer be able to hide behind the Council and their Committees. The community would instead hold them directly accountable and perhaps the community members might decide that the repetitive failure to comply with GAAP financial reporting requirements and meaningless, unverified financial statements distributed by the General Manager is unacceptable.

Further, the refusal of the General Manager to provide specific Center financial history, as documented here would not be tolerated by his employer. No elected official would be allowed to call for a capital funding vote without being required to provide a detailed Renovation Cost List in priority order of required renovations. Here is a Capital Improvement example:

·      A detailed Center Renovation Cost List in priority order of required renovations categorized as follows:

a.     Must do: 0-12 months / Dollars per major item  

b.    Need to do: 0-12 months/ Dollars per major item

c.     Want to do: 0-12 months/ Dollars per major item 

d.    A similar list created for 12 to 60 months 

See Post http://eastmanblog.blogspot.com/2014/07/a-shell-game-renovate-center.html

Voting power in the Council is discriminatory based on the Special Place you live in. Those on the golf course have 17 representatives as do those in West Cove, which represents 41% of the Council voting power. The other 14 Special Places have the remaining 59% of the voting power scattered about in fragments with 5 Special places having 5 (five) representatives each and the remaining crumbs of representation dabbled about.

Is the ECA Council a sham to ECA members?

Article 7.7

(g) borrow money by the issuance of secured or unsecured notes…. and (iii) in any other circumstances with the approval of two-thirds of the members of the Council present and voting (Revised 09/12/09). (Added 7/11/98).

Article 8.6 The following provisions shall govern the use of monies collected by assessments …..:

Capital expenditures (with the exception of existing infrastructure [e.g. roads, drainage, bridges, etc.], equipment and vehicles, all of which the Board is authorized to expend and which capital expenditures are not subject to the limitations set forth herein and below), which exceed the above 2% limitation but are 25% or less of the budgeted revenues from the combined Operating and Capital Assessments, shall require approval by a majority of the Council members present and voting and a majority of the Board (Revised 09/12/09).

Contributed by Bob Logan who is the CEO of a consulting practice since 1993 which provides expertise on improved business, financial and operational performance as well as leadership.