Travel expenses for board members. What do you think?

[shopgirl Senior Member Find all posts View Profile Close shopgirl]

Okay, so a new guy on the board at my resort lives a distance away, about 1,000 miles. I guess he is going to have to quit because our board president and another board member (that has been on the board for 25 years) think it is a waste of money to pay for travel expenses for the new guy. They said, "we are pinching pennies," so we cannot afford to pay his expenses. Well, I disagree completely.

The first person pres called when the issue came up was the management company's owner for his opinion. Who cares about his opinion? Not me. The second person the pres called was the former president to ask his opinion. I am the third person he called. I said we should pay because this guy is a financial wizard and saved us over $12,000 by suggesting we place additional towels in the units instead of paying for a towel change mid-week. I thought that was an excellent idea and this is something we have been paying for many years. He saved us $15 per week. No other cleaning/straightening is done at the time of the towel change.

Anyway, I have a plan to get rid of our inventory weeks. There are fifty of them to date, many of which have been there for many years. That is a waste of money. We talk about pinching pennies when $25,000 in possible maintenance fees are sitting there with no plan to get rid of them? No meetings to talk about it?

If you read my other thread on dual affiliation with II and RCI, you already know that we have had no meetings this year for the interval owners, only the master association with the whole-owners, which I have no vote, so what is the point of having me as a board member. We had meetings via email that were basically argumentative issues. It is starting again, more of the same.

I cannot believe that a board could become so complacent to disallow travel expenses and basically not do anything for an entire year, always deferring to the management company in decisions.

What opinions to you experts have in these matters?

[Keitht Super Moderator Find all posts View Profile Close Keitht]

Was there anything in the constitution of the resort regarding travel expenses when this person joined the board? If so they should certainly be adhered to. I don't think other board members are actually in a position to override the rules one way or the other.
If there was nothing of any kind in the constitution at the time, was it made clear at election time that the new board member would expect their travel expenses to be paid?
I can certainly see the argument from both sides. If this person is as financially astute as you seem to think, then he is probably going to save the resort far more than he is going to cost. The other side of that coin is to determine just what his travel costs would be. If he travels on a LCC the costs are likely to be low, but if he travels business class on a scheduled airline that certainly won't be the case. Likewise if he wants to drive and break the journey both ways there would be additional hotel costs.
If the constitution doesn't specify, there isn't a simple answer to this one unfortunately.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

If you pay for one now, you may be paying for all soon thereafter.

[Glitter Brunello Super Moderator Find all posts View Profile Close Glitter Brunello]

Check if there's a policy. If not, you may want to consider developing one that won't cost too much but allow for long distance owners to serve on the board. Something like, if distance greater than X, then reasonable expenses not to exceed Y, for the member only, or for coach travel purchased at least Z days in advance, etc...

Maybe a limited stipend to use toward travel so you can keep a handle on costs? I do think it's fair to offer something.

[shopgirl Senior Member Find all posts View Profile Close shopgirl]

Keith, there is nothing in the by-laws to allow a travel expense. I would guess that 27 years ago, when the by-laws were written by the DEVELOPER, this was never an issue that could have been imagined. Of course the developer took travel expenses and never got permission, I am sure of it.

I found an article in Timesharing Today from the May/June 2006 issue. The concensus in that article by Byron Wiegand is that sometimes board members can save money and contribute knowledge that can really be measured in dollars and cents.

http://www.tstoday.com/members/magaz...20involved.pdf

Let's not forget that 50 weeks are in our inventory right now that have been getting zero dollars in MF's. This board is all about letting opportunites go by virtue of their complacency. I want to move forward and get our resort in shape, money coming in, and better exchange options, they want to have coffee and doughnuts. Well, that may be a little on the mean side.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

Foreclosures and deed backs really need to be put back in the revenue producing column to keep a resort in good financial health and minimize fee increases. While foreclosing is something just about everyone hates to do, it is a necessary evil for the resort, and if if you have to give away the resulting inventory, the goal should be to get every week to be revenue producing.

[BoardGirl Senior Member Find all posts View Profile Close BoardGirl]

Sorry, I vote NO.

I travelled at my own expense to run for the board and would be willing to travel at my own expense to serve on the board because the opportunity is more important to me than the money it costs.

This could become a slippery slope where there are some that only incur normal expenses and those that take advantage. You do not want to get into a situation where you end up with some members that only serve for 'the free trip.'

just my 2 cents.

[shopgirl Senior Member Find all posts View Profile Close shopgirl]

Really? Free trip? The last trip he made for the HOA meeting on the 4th, he flew in at 7:30 a.m. and flew out at 3:45 p.m. He saved us $22,000 with one motion at the annual meeting. He is worth the price.

We pay for attorneys, good housekeepers, okay management, and hundreds of thousands of dollars in assessments for our many construction projects, plus our annual fees each year, this guy is the first to save our resort any money in recent months. I think we should pay any board member's expenses to fly in for a meeting and fly back out again at the end of the day, unless this board member turns out to be apathetic.

The article I referenced is a good one. I am pretty sure that John Chase does not take care of business at Cypress Pointe without getting reimbursed. We cannot disallow members because they live a distance away. Most people do not live within a resort area, so reimbursing makes sense to me. Otherwise, you have people who serve for years because they live close by. There are so many people that would love to serve but would not be willing to spend money for plane tickets.

It's odd that we will reimburse our management company for every dime of their time and it is automatic. Finally we have a board member that is willing to do a great job as treasurer and is on board with many of my suggestions. You can see my frustrations are evident.

[opkansas Senior Member Find all posts View Profile Close opkansas]

Cindy. . . Really? Free trip? The last trip he made for the HOA meeting on the 4th, he flew in at 7:30 a.m. and flew out at 3:45 p.m. He saved us $22,000 with one motion at the annual meeting. He is worth the price.

Paying expenses for an elected member of an HOA IS A LEGITIMATE COST of doing business. If the board member is not deemed valuable, find a qualified and interested party for the next election.

It sounds as if you currently have a jewel. If a jewelry store gave away their diamonds then . . .

What ever happened to simple common sense and courtesy.

[Dave M Senior Member Find all posts View Profile Close Dave M]

I also vote "no", but not because I think it’s wrong to reimburse directors.

This board member presumably ran for the board because he felt he could contribute. He almost certainly knew beforehand (people for whom it matters almost always ask someone) that there was no existing policy for reimbursement of expenses.

Thus, I believe it would be wrong to adopt a policy to reimburse only this particular board member without a more comprehensive policy that would apply to all current and future directors. Such a policy should apply to all and not discriminate against those that might be “apathetic” as you appear to suggest. (Edited to note that any director who would benefit from such a policy, assuming there are only one or two such directors, should refrain from voting on the issue due to the conflict of interest.)

Thus, the most logical route is to have an agenda item for a future board meeting to consider reimbursing board members for certain expenses, based on criteria that the board establishes.

There is no right or wrong answer. Some HOAs reimburse. Others don't. Some provide a phone hook-up for those that can't attend a meeting. Some boards nix a reimbursement policy because they know there is no shortage of capable candidates willing to serve without expense reimbursement. It's all over the map.

Lastly, I would definitely ask for the management company's thoughts, as the president has done. That's one reason a HOA hires a management company - to provide advice and expertise on a variety of HOA issues, based on the management company's experience with numerous HOAs and the management company’s accessibility to other management companies that have varying experiences. The board is free to ignore that advice, but it would seem silly to pass up the advice that is available. It's likely to be at least as authoritative and "expert" as the advice you will get here.

I have been on numerous BODs of various types over the past 32 years and every one has a different policy for reimbursement of travel expenses. That's partly why I said there is no single answer to your question that is necessarily right or wrong.

[4ARedOctober Super Moderator Find all posts View Profile Close 4ARedOctober]

Perhaps the Board should accomodate other board members on a conference call or web cast so that way they don't have to travel.

As far as paying travel expenses....that can get way out of hand if you are not careful....how about if a board member lives (or moves to) in a hard to get to location or overseas...the cost could be substantial.

If anything I would offer a maximum per diem amount to all the board members to offset travel expenses. It must be budgeted and approved and not open ended.

There are other ways to compensate board members without so much cash out of pocket. How about giving them a week to deposit in II or RCI (since there seems to be so many weeks available) or a certain amount of free bonus time when space is available.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

No money made - no out of pocket

A very wise condominium specialist who has helped numerous condos and timeshares free themselves of developer rule gave us some advice many years ago. You want qualified and caring owners to serve on your Board. You want a cross section of owners especially on a timeshare developments Board. It should be a rule in your documents or by order of the Board that no one is paid to serve. Not doing that opens a door to all kinds of abuse. But no one should have to PAY to serve either. In otherwords no out of pocket expenses for Board members that other owners wouldn't pay. When you think about it thats only fair.

At the two resorts I serve as a Board member for the Association has taken two different approaches to travel reimbursement. The first established a policy at the first meeting of the owner controlled BOD. It says that each attending member will get reimbursed for the cost of airfare or mileage up to the cost at non-restricted, coach airfare purchased at least 14 days in advance. They will also be reimbursed for taxi, rental car, tolls and parking. Since 2001 we have budgeted the full amount each year in the operations budget - $34,000 - which represents $3.96 per week for the cost of the BOD. A bargain for those who don't put in the time and effort that the Board members do. But we have never spent more than 55% of the budget as we all try to keep costs as low as possible as we realize every dollar out is paid for by the owners. And we usually hold 6 meetings a year. We have always been upfront about the expense and document every penny used. No owner has ever questioned the cost.

At my other resort they had a situation where most of the Board members lived within an hour or so of the resort. Most never wanted to request reimbursement as their cost, except for the time, was low to attend. But recently two Board members from other states were added and they cannot simply absorb the cost to travel to meetings. Rather than have the members keep track of each expense and reimburse them they decided to simply use the round trip mileage at the IRS rate to pay for travel. That has also worked out OK.

The important thing is no one should be forced to pay to be a volunteer. If they don't want the reimbursement thats fine but it should be available to them. It must be reasonable and not abused. Not allowing travel expenses just makes it more likely you will get poor representatives rather then the best to volunteer their time.

On a very similar note under the guidance of that specialist we also instituted better controls on all the bank accounts. Every one now requires at least one Officers signature - many require two in addition to the management companies. Operational funds are placed into a special account each quarter, based on the budget, that can then be used for regular operation by the management. Disbursments from the reserves or tax funds require an Officers signature as would any funds from operating above the quarterly allotment. While I don't know how your Association does it too many seem to leave the Management in control of the accounts and depend on the reports and audits for control. We found too many problems can be hidden from the Board doing that and thus took a much more involved approach since 2001. The cash flow is the lifeblood of any resort and most if not all of it comes from the owners. It is the number one duty of the Board to be the guardian of that money.

[opkansas Senior Member Find all posts View Profile Close opkansas]

I also vote "no", but not because I think it’s wrong to reimburse directors. Do I detect Flip-Flop?

This board member presumably ran for the board because he felt he could contribute. He almost certainly knew beforehand (people for whom it matters almost always ask someone) that there was no existing policy for reimbursement of expenses. Thus, I believe it would be wrong to adopt a policy to reimburse only this particular board member without a more comprehensive policy that would apply to all current and future directors. Such a policy should apply to all and not discriminate against those that might be “apathetic” as you appear to suggest. (Edited to note that any director who would benefit from such a policy, assuming there are only one or two such directors, should refrain from voting on the issue due to the conflict of interest.)

I didn't read into Shopgirls comment that it would be only one person that would be reimbursed. I believe that all directors should vote on this issue; the director has already made a decision to serve for the best interest of the resort.

Thus, the most logical route is to have an agenda item for a future board meeting to consider reimbursing board members for certain expenses, based on criteria that the board establishes. VERY SIMPLE ANSWER!

There is no right or wrong answer. Some HOAs reimburse. Others don't. Some provide a phone hook-up for those that can't attend a meeting. Some boards nix a reimbursement policy because they know there is no shortage of capable candidates willing to serve without expense reimbursement. It's all over the map. I AGREE A SECOND TIME. VERY LOGICAL AND SIMPLE.

Lastly, I would definitely ask for the management company's thoughts, as the president has done. That's one reason a HOA hires a management company - to provide advice and expertise on a variety of HOA issues, based on the management company's experience with numerous HOAs and the management company’s accessibility to other management companies that have varying experiences. The board is free to ignore that advice, but it would seem silly to pass up the advice that is available. It's likely to be at least as authoritative and "expert" as the advice you will get here.

Reference the experts: You are assuming that all is just wonderful in the consulting world/management groups. I have been involved for a long time in businesses who have contracted with large companies to purchase all their products. I have NEVER seen ONE national contract that actually SAVED the contracting company money and in ALL CIRCUMSTANCES the companies expecting the savings have PAID A PREMIUM.

GUESS WHO GET THE REIMBURSEMENTS, REBATES, COMMISSIONS? Hint - not the contracting company. If you go back through your records and and compare your maintenance fees before the "Management Company"and compare those figures with your current fees, I am VERY confident that you would find a LARGE discrepancy.

The Management Companies receive multiple "Reimbursements" from suppliers that the management company dictates that the resort MUST use. I have NEVER seen any line item on the Income Statement that shows suppliers volume reimbursements.

There are HORROR stories about management companies. Ask VRI about the "success" of their relationship with Sunterra Pacific.

I have been on numerous BODs of various types over the past 32 years and every one has a different policy for reimbursement of travel expenses. That's partly why I said there is no single answer to your question that is necessarily right or wrong.

SUMMARY

Thus, the most logical route is to have an agenda item for a future board meeting to consider reimbursing board members for certain expenses, based on criteria that the board establishes.

[shopgirl Senior Member Find all posts View Profile Close shopgirl]

He would actually take that option, the week in the account without charging him anything for it. But can you do that without giving the deed? Do you have to actually own a week? Those would be questions some of you can answer.

Dave, we do need a financial person that can take the time to watch over our expenses. We have not EVER had a person who takes the job seriously enough to really go over the books. This guy was such a surprise at the owners' meeting. He actually pointed out that we did not have quorum, even though it has never been discussed before and we have probably NEVER had the 1/3 of the proxies that it takes to have quorum because the current two existing board members before me always thought it was 10% for quorum. The new guy pointed out that there has never been a change in the by-laws to reflect this number. It is 33%, not 10%. Yay for him. If they cannot pay, I will be a lone voice again and there will be no treasurer. This is very difficult to my mind.

Also, this management company, really the owner, is so different from those you are familiar with, Dave. He determines if we are going to take deedbacks and under what circumstances, he determines the minimum values for weeks in our inventory without any say from the board, he keeps us from using our weeks with other exchange companies because of our exclusive contract with II. He is all powerful. I don't like every decision to go through him. He is supposed to be employed by us, yet I feel I have to walk on eggs around HIM! He has been management for our resort now since its beginning. 27 years of management gives the guy too much ownership, though he doesn't own anything. He makes a lot of money from our resort and constantly asks for increases, or rather TELLS us of increases.

He is so different with the board for another resort. He actually does not run things there. I want to move forward, he wants us to stay in the dark ages. He hand-picked one of our newest board members to replace one that dropped out. It is absolutely ridiculous to give a manager that kind of power. I like the new board member, I do not have an issue with him at all. I do have an issue with the management company and do not mind telling him in person or in front of the board.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

Most resorts I am aware of pay the reasonable expenses of board members attending meetings and also sometimes pay their expenses in doing other legitimate association business. The latter applies particularly in self-managed resorts. This is good policy, as many good people would refuse to run for the board if they had to pay out of their own pockets for the privelege of serving. The policy should apply to all board members in the same fashion. Many HOA's schedule meetings at slow times when they can find units for board members to stay in to avoid hotel expense. On the OBX, a number of resorts have sometimes worked together to find empty units for each others board members for a meeting.

There are those who occaisionally abuse the system. I know of one former HOA president, for example, who charged milage to come down for his own timeshare week for vacation to the association on the grounds that he did some association business during the week. To make matters worse, his resort was in joint management at the time, and he submitted bills to BOTH resorts, each for 100% of his milage for his own vacation week so that he could be paid double when he was coming anyway! Such abuses, however, seem to be rare. It is more common for board members to eat some of their own out of pocket expenses rather than bill the HOA.

One of my SA resorts had two Americans on the board. I have always wondered if they had their expenses paid to board meetings. I know that some Caribbean resorts hold their meetings on island (like Aruba Beach Club) and their mostly (if not all) American board is paid expenses to go down for those meetings.

No competent board should eat out of the hand of the management company,
ESPECIALLY when it comes to internal board policies involving board members.
There are many issues where their opinion should at least be heard, but this is NOT one of them. In fact, it is an issue where their opinion should not have been solicited at all, much less first! One of my resorts at one time did not even let the manager attend HOA board meetings unless invited in temporarily for a specific question. That policy was too far in the other direction and fortunately has since changed.