Wednesday, August 12, 2015

Laguna Woods Village transition from Associa/PC, HOA Professional Management to Self FAQs

We understand that some condos in the Village go for as low  as $100, mostly due to the monthly assessment.  Perhaps the move to self manage,met can solve the problem.

According to resident Paul Loughrey, the  information below is  up-to-date,  accurate,and comprehensive.


Are services going to stop?

Absolutely not! Life in The Village will continue as usual. Please remember that the United Mutual went through a similar action with Associa last year. And it is business as usual, only on a month-to-month basis. Now it is GRF’s turn, as our contract expirations dates are staggered across all the Boards. As we have been doing, the GRF Board will work with Associa toward a smooth transition to a management model that allows us to fulfill our fiduciary responsibilities to the residents of Laguna Woods Village. Our goal is to move forward with the people we have and provide The Village with more control over our ongoing management and financial future. That is good for all of the Housing Mutuals, the Golden Rain Foundation, and certainly for the members of our community. We understand this affects our daily lives and our homes. These changes are for the best and will not hinder the delivery of services.
Is it true Channel 6 is going off the air?

No. Channel 6 is owned by the community. The team currently in place will continue to operate the station. Channel 6 is and will remain on the air! 

What is the difference between Associa, PCM of California, Inc., and PCM, Inc.?

ASSOCIA is a privately held, Texas-based homeowners association (HOA) management company. Approximately five years ago, ASSOCIA purchased PCM of CALIFORNIA, INC. and PCM, Inc. PCM, Inc. is an assetless, shell corporation, which employs the people who work here in Laguna Woods Village. Laguna Woods Village is the sole source of revenue for PCM, Inc. in the form of payroll, which last year was in excess of $57 million dollars. Despite the fact that our community pays this payroll, we have been disallowed necessary information as to whom, for what, and how much we are paying for over one thousand staff members. The Davis-Stirling act prohibits such actions.

Why the rush?

Our rising assessments are the number one concern for residents. Despite efforts to get to the core information we need to make sound budgetary decisions, we continue to experience ongoing difficulty gaining access to our own records, located in our own building, housed on our own proprietary software, and run on our own computer hardware. The data that we receive is not sufficiently current to make the best decisions for the community. Without access to data, the fiduciaries of the Golden Rain Foundation, Inc. and the Trustees of the Golden Rain Foundation Trust, are unable to appropriately establish policies, benchmarks, and fiscal levels to properly run the business of our Village. The bottom line is this: To get oversight, we need insight. Without information, measures, and metrics, we cannot control costs, nor see where opportunities are to save money.

What does Associa own in The Village?

Some of our residents are confused as to what Associa owns in The Village. They own nothing. The Trustors and Beneficiaries own every asset in Laguna Woods Village (the land, buildings, streets, vehicles, equipment, furniture, fixtures, and amenities). Associa owns nothing and pays for nothing. It is not their money. It is ours – and we have a right to more control over our money.

You have no experience to run an organization this size. What makes you think you can just pick up and do it?

We have no intention of running the organization, any more than United Mutual is running their part of our community. The support staff and executives will continue on. The staff deserves better, as many of them are working without updated and specific processes and procedures. The staff wants to be productive and to have the right tools in place to accomplish their work. The United Mutual Board still governs the United operation using existing staff, after having gone through a similar non-renewal with Associa.

Is the community transitioning to a self-governance model?

The community has always been a self-governing model. We are not owned by a large corporation, in the manner of Villa Valencia or similar organizations are owned. We are already self-governed by a GRF Board of Directors and Trustees and 3 Housing Mutual Board of Directors (United, Third and Fifty Mutual). Associa is a vendor.

What about my Mutual Board? Are they party to this?

Over the last six weeks, GRF officers met with numerous officers and directors from each of the Housing Mutual Boards. The Housing Mutual directors were apprised of GRF’s intent to not renew the contract with Associa.

GRF scheduled a meeting with Associa and met on June 29th. All four corporations were represented (United, Third, Fifty, and GRF). Joey Carona, the President and Chief Operating Officer of Associa, asked if all four boards were unified regarding GRF’s decision to not renew the contract. The answer was unequivocally yes.

The United Board is already on a month-to month agreement. United was the first Housing Mutual not to renew its agreement with Associa. Clearly, they are squarely in support of the GRF action to not renew.

The Third Mutual had a closed session meeting prior to the Associa meeting. Their Board overwhelmingly voted to support GRF’s action to not renew. The vote was unanimous with the exception of one abstention.

Mutual 50 has always expressed their willingness to work with all parties involved to achieve the best solution to the perceived problem in the governance of Laguna Woods Village.

Both Third Mutual and Mutual 50 have asked their respective corporate attorneys for assistance in amending their existing management contracts with Associa. We support them on their independent initiatives.

Prior to its distribution, GRF provided Associa the opportunity to review an Appreciation Card expressing both support and gratitude to each staff person at PCM.

There are rumors that the Mutual Boards did not provide input to the full-page notice that was published in The Globe on July 2nd related to the GRF Board action. That is simply not true. As part of our ongoing collaborative communication efforts, GRF informed and engaged all Boards to ensure there is a common voice to our efforts.

Everything was working fine. Why are you fixing something that’s not broken? 
The system is broken. Associa/PCM keeps vast amounts of the community’s information outside of Board control. The inability to have data marginalizes and minimizes GRF's ability to provide proper oversight regarding policy decisions, budgeting, and asset allocation. Fixing the system allows GRF and the Housing Mutuals to operate in an efficient and cost-effective manner. Our goal is to better manage the residents’ money and improve the governance of our community.

Costs and assessments have escalated far beyond the cost of living increases within households in this community. It is imperative that we control The Village’s data. Only when we control our data will we get a full and itemized reporting of both our income and our expenses, including how, when, for what, and to whom monies are paid.

Having a “for profit” property manager is not in our best interest. Associa is a “for profit” corporation. This arrangement adds a layer of management costs in the form of Associa, a Texas-based, absentee management company.

The issue comes down to money — our money: over one hundred million dollars of our money annually. This number will continue to grow, as it has, if we do not act now.

The current management model is broken, outdated, and inappropriate to a community the type and size of Laguna Woods Village. The Village is like a city, with a quasi-government. Outside experts have corroborated this viewpoint for decades and have advised GRF about the necessary value of the operational controls we are implementing.

How does Laguna Woods Village benefit from this action?

Many residents in this community have expressed serious concerns over continuing escalating assessments in The Village. We will be able to better control our rising costs. We will be able to move forward with comfort in knowing our community is well maintained and will remain and endure as an affordable place to thrive. There has been an unsustainable trajectory in monthly assessments for a fixed income, 55+ community. That is worrisome. The community reached its tipping point when assessments exceeded $100 million dollars annually.

Why now? Why did GRF decide to not renew the contract with Associa at this particular time? 
Our contract with Associa stipulated that we must give written notification of non-renewal 6 months in advance of contract expiration or we would be locked into another year. Previous GRF Boards have had studies completed by outside experts, like Ernst & Young, KPMG, Moss-Adams, and several others. The recommendations have been on the table for quite some time. We recently celebrated 50 years, but with our aging infrastructure, we must move forward and implement changes that will position Laguna Woods Village as a destination for a sustainable and affordable lifestyle. We cannot continue with monthly assessment increases that exceed the current Cost of Living adjustments received by our residents.

The time for notice is set forth in the Management Agreement. Here is the specific language required under GRF’s Agreement with Associa:

“ARTICLE 7. TERM. The term of this Agreement shall commence on January 1, 2013, and remain in effect until December 31, 2015 unless sooner terminated pursuant to this Article. The term of this Agreement shall be automatically extended until December 31, 2016, upon the same terms and subject to the same conditions, unless either party elects not to renew by delivering written notice of such election to the other party no later than June 30 of the year the Agreement is to expire.”

GRF followed the terms of the Agreement to the letter. Stanley Feldsott, the GRF corporate attorney, prepared the letter. Mr. Feldsott did so according to the actual language set forth the contract. In the presence of Joey Carona and Matt Kraft from Associa, directors from United Board, Third Mutual, Fifty Mutual, and Golden Rain Foundation, Associa was presented the notice not to renew on June 29, 2015.

When the GRF Board elected not to renew, it automatically began the 6-month notice to Associa that, as of the end of the year, their services will no longer be required by GRF. This is as per the term of their Management Agreement. A similar action occurred with United Mutual. They operate now on a month-to-month basis, providing them with flexibility and negotiation strategies. Given their arrangement is working, it is now GRF’s turn.

By not renewing the Agreement with Associa, GRF is building the foundation for a management system that allows us to fulfill our fiduciary responsibilities to the residents of Laguna Woods Village. Our charge is to ensure an enduring and affordable community. We were elected to this Board by constituents who voiced loudly and clearly that they were not interested in continuing under the “same terms and subject to the same conditions.”

Do you have a plan or not?

Yes, of course we do. The GRF Board is comprised of individuals with decades of executive corporate management experience, from both public and private sectors. We also rely upon the advice and counsel of numerous consultants in various fields of corporate expertise. We utilize outside legal and financial advisors to guide and ensure us we are doing the right thing.

Laguna Woods Village is unique, but similar business models have been studied nationwide in preparing our transition plan. Every Leisure World in the United States, for instance, has transitioned over the years to a similar model of governance that we are developing. Other large (non-Leisure World, 55+ communities having populations in excess of 2,000 homes) were also analyzed. Our model will be uniquely designed to perform according to the needs of all four corporations in Laguna Woods and the members we serve.

What happens to Laguna Woods Village after 6 months? 
During the coming months, we will continue to work with Board officers, directors, staff, union leaders, and consultants to transition to a management model that sets the foundation for our community for the next 50 years. Our transition team is moving ahead accordingly to provide ourselves with the necessary tools to establish a seamless transition for our residents.

This is a complex thing to do. Can you do it?

Yes, we can. And we will. We know it is complex. That is why we are involved with experts across the gamut: legal, management, financial, technological, communicational. We are engaged and geared-up, no matter what you’ve heard. This is a complex management arrangement that can be simplified to provide greater accountability and better staff management. This will control costs for Laguna Woods Village.

We know this is going to take some time to accomplish. The GRF Board Members are seasoned professionals, who volunteer their time to make a difference. This is a process toward improvement — and ideally, it is an ongoing process, as routine reviews and audits are part of the general course of good business development.

The GRF Board is stalwart in its resolve and commitment to improving the operation of The Village. Those Board Members slated for re-election in November are determined to remain on the GRF Board and see this long overdue and absolutely necessary change become a reality.

What's this about 17 issues? I heard that there are 17 items that haven’t been dealt with – what's that all about?

There were 17 suggested changes from Associa that were presented in January 2015. Many of these changes, if they were to be adopted, would have systemically altered the way Laguna Woods Village works on a daily and long-term basis. GRF believes that most of these 17 items would not have been in the best interests of the community.

A little history: In the Fall of 2014, the GRF Board met with an executive of Associa and expressed displeasure about issues of fiscal accountability. Associa advised that they would retain (not at GRF's expense) an independent audit team to assess Laguna Woods Village. The audit team scarcely met with PCM staff. Many key members of the staff met with the team for less than 10 minutes each. Alvarez & Marsal, a turnaround management and performance improvement firm, provided 17 recommendations that were focused on turning over more control to Associa.

The Golden Rain Foundation is a strong advocate for the staff of Laguna Woods Village. One of Associa’s recommendations, however, was to “Refresh Current Onsite Leadership Team.” Associa’s explanation was that the “current executive team is well-intentioned and loyal but lacks direction towards industry best-practices and is paid above Associa standards market.” Associa’s use of the word Refresh is an unfortunate term. Further, they see this recommendation as yielding a 10%-20% estimated savings. GRF is looking for savings by having better oversight through insight into all aspects of our expenditures. GRF values the current Laguna Woods Village staff and their commitment. That is why we want to continue a working relationship with them. In an effort to deliver a perceived savings, Associa recommended pay cuts and staff refreshing to achieve that goal. Such an approach would also decrease our existing level of service. GRF is not supportive of such measures.

Another item that Associa proposed was to move our banking relationship from a locally known institution to one of their “exclusive” ones. The Board believes having a personal banking relationship is crucial – and that means keeping it in our own neighborhood.

Another item that Associa proposed was to “Transition Vertically Integrated Services to 3rd Party Providers.” Outsourcing functions like landscaping and fleet management was part of this suggestion. Our community enjoys its current staff of hard workers.

Another item that Associa proposed was to cancel our current Dynamics AX project (accounting and management system) and utilize an Associa solution. This suggestion would further marginalize our oversight capabilities.

Can you give us some insight into the new plan or model? 
Yes! Finally, we can, since we have announced our non-renewal to Associa. Our plan includes a more direct management relationship model. It embraces empowerment for each of the Mutuals and GRF. It provides accountability by making accessible all financial information line items, which we currently do not have. By eliminating barriers, we will be able to better negotiate future contracts with vendors and be a more competitive community. With data control, we will be able to set up correct standards, goals, objectives, and measurements for our staff. Presently, we operate without performance metrics and benchmarks; budgeting is place-marked. This is no way to operate our one hundred million dollar business. We are leading forward with robust technology (Dynamic AX) that is already being implemented into our accounting systems. And we are out to change the previous culture of fear and distrust our community has experienced.

I’ve heard it all before. This is more of the same. How’s this different from previous GRF promises? 
We’re different because we’re doing things right. We’re fixing problems from the past, issues that go way back, before many of us even lived here. Of all the other similar Leisure World-type communities throughout the country, we are the only one that has had this unusual structure. Our impressive-sized community is not well served with a traditional HOA model. If this were such a great management model, wouldn’t the other similar senior communities use it, too? They don’t. And there’s a reason they don’t. It is not effective in allowing the Board to perform its functions. We need itemizations of our costs and access to data to provide proper oversight. It’s that simple. We want to right the ship and fix ourselves systemically – as a legacy for future generations.

Is GRF in charge of everything now?

No. The plan for moving forward does not put GRF in control of everything here at The Village. In fact, it places controls into the hands of the Mutual Boards by providing them with fiscal information and the tools to enable accountability. That’s good for all our Mutuals and for the whole of our community.


What is GRF?

GRF stands for the Golden Rain Foundation. We are a non-profit corporation that oversees the management and maintenance of the facilities and services within the community. We make recommendations and adopt resolutions, rules, annual budgets, and appropriation of funds.

Are you replacing the staff?

That is not our intention at all. We understand the problem with the current vagueness about the coming changes – and we will do all we can to alleviate uncertainties moving forward. We respect the staff and understand that they provide not only expert service, but are also experts in servicing our unique community of seniors. We share in the attitude of loyalty and knowing that the relationships forged over the years are profound, meaningful, and human. GRF values the institutional knowledge of the staff here in The Village. This is very important to us. Yet, as pointed out in the 2013 KPMG report on Planning and Procurement: “Documented policies and procedures are limited across the program and business units.” We will be developing manuals and operating procedures, integrating and stabilizing programs and processes, developing proper documentation, execution, integration, and on-going process reviews for continuous improvement across the business unit.

Who do I report to now?

Report to the same people you’ve always reported to. It’s business as usual as we move forward. The change in the reporting relationship is strictly between GRF and the General Manager. We are setting up a direct relationship with the GM, rather than going through Associa, the company that owns PCM.

So am I going to have a job in 6 months? 
The Board has the utmost respect for the staff that has served us all so well over the years. It is our utmost desire and most sincere hope to continue a working relationship with all the staff as we progress through the next 6 months and beyond.

What about my benefits and vacation days?

Nothing changes. Your benefits and vacation days stay the same. We recognize your years of service and appreciate the commitments you’ve made to our community.

Will I be able to keep my union job? 
Yes. The three Mutual Boards as well as GRF all have contracts with the union. The action of non-renewal with Associa is not related.

What’s this information card all about?

Due to the action we took on June 29th, we decided to open up communication channels with all the staff. The Appreciation Card that was delivered was reviewed and deemed acceptable by Associa in advance of distribution. Our goal was to simply express our sincere intentions and to communicate more effectively with everyone. Given the unusual and unique nature of what is happening, we are sharing the information we can, and we will be communicating more frequently and with greater depth in the days and weeks ahead, as evidenced by these FAQs. 


Does this action of non-renewal put our community at risk?
No. Quite the contrary, by not renewing our agreement with Associa, GRF is building the foundation for a management system that removes barriers and reduces expenses, allowing us to fulfill our primary goals. Our charge is to ensure that Laguna Woods Village thrives as an enduring and affordable community.

Who can I ask for more information about what's happening?
We have just set up a Speakers’ Bureau where you can arrange an appointment for a Golden Rain Foundation Board Member to speak at your club or public gathering on any issue.

For more information about requesting a speaker, you can email or call Heather Rasmussen, Public Relations Officer for Laguna Woods Village at:

Here are other sources of information:

- Tune-in to Channel 6 or attend Golden Rain Foundation Board Meetings;

- Be on watch for the Golden Rain Foundation e-Newsletter;

- Subscribe and read the Mutuals e-Newsletters;

- Be on watch for information flowing directly to you, door-to-door;

- Go to

Why was this done in secret?
As you know, negotiating our management contract is difficult and requires a certain amount of discretion. GRF kept all the Boards informed throughout the process. At the time, due to the unknown outcome, information was not circulated publicly. This is a major step forward and we welcome the ability to share more information with everyone as we transition to a new management operation.

What is this website, LagunaWoodsVillageFYI? That site was set up to serve out FYI type of news to the community. We just did a soft launch of it recently, and you can see it advertised in The Globe. We will be addressing many issues, to bring clarity, and to defuse misinformation you may have heard. Look for these announcements in The Globe and online in the coming weeks

The Wealth of Associations (HOA) - Separation of Chumps and State
First, the CZ Master Association, by law, has one mandate:  Repair, Replace and Maintain (RR&M) common areas.  That is, there is a clear separation of Chumps and State: 
October 1, 2007  
Responding to ad hominem missiles lobbed by defenders of the various CZ Master Association (CZMA) subsidies, former member of the CZMA board of directors, Joseph Morabito figures that he “.. is upset with me now because I keep hitting the subsidy issue and he apparently is active in the Sports League.  At some point, the Board will have to deal with the subsidies going to non-members and even Members who are not paying their fair share of the extra expense they are causing the Association” and our response is encapsulated below:

1 comment:

JL "Buzz" Aguirre said...

Third Mutual's Position according to OCR: