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Poinciana Crisis Instructive For All Of Us

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guest blog by Deborah Goonan

Lots of news in Poinciana the past couple of weeks. As you know, Poinciana HOA, one of the largest in the country with more than 23,000 homes, has been seeing quite a bit of turmoil, particularly in the last 6 months. In April, then Board President Peter Jolly made allegations of financial mismanagement by the management company and millions of dollars missing from assessment reserves. In June, a third attempt to move toward incorporation of Poinciana as a city failed, when the Osceola County Legislative Delegation voted 2-2 on the measure.

In August, residents gathered to protest management company First Services Residential (FSR). That was immediately after the Executive Committee of the Board (including Jolly) met and voted to fire FSR and to transfer $1.6 million in Association funds to a separate bank account. The Executive Committee had the locks changed for the management office. In the meantime the 6 other Board members – 3 of them represented by developer Avatar – held an emergency meeting, voted to rehire FSR and to remove President Jolly and the VP as officers of the Board. Within hours, FSR entered the building in the middle of the night and changed the locks once again.

Because the Board was now split, the matter ended up in court. Yesterday, a Polk County Judge ruled against Jolly and the Executive Committee, reversing their decision to fire FSR and ordering them to return $1.6 million and office equipment they had taken the day they changed the locks on the management office. The new Board President, Dorothy McStay, went on record saying that a recent independent audit indicates no irregularities.

No word at this time, regarding an appeal.

Cynthia Navarro, a resident of Poinciana wrote a letter to the Editor of The Ledger. Regarding a solution to problems in Poinciana, where residents want their right to be heard and for their votes to count, Navarro writes:

The most recent Poinciana Homeowners Association dispute ended in Polk County Circuit Court the day after Poinciana residents were told the county could not help because it was a state issue. More information on this issue may be found at www.prfsc.org website.

This happened because the state of Florida does not provide enforcement capability for Florida Statute 720. That statute provides laws for the running of Florida HOAs such as Poinciana’s. Unfortunately, when it comes to enforcement, the state provides nothing, forcing the members of an association to spend $100,000 or more to address violations of the statute.

As seen in Poinciana, this results in retiree volunteers who serve on HOA boards of directors, taken to court by multi million public corporations in civil litigation. Not unlike David vs. Goliath?

There is a solution provided by the Florida Constitution in Section VIII. It is called Home Rule for Florida Municipal Governments. It provides rights to municipalities that people living in unincorporated communities do not have. It would allow the Poinciana Municipal Government to stand up against the developer-controlled HOA instead of forcing private citizens to bear the burden. It would allow all citizens living in Poinciana to have one person, one vote, as opposed to local elections being decided by developers casting hundreds if not thousands of votes even if they don’t even live in the community as is the case today.

A voter referendum would need to be held to allow Poinciana citizens to decide if they want to establish a municipality. This will require support from the Florida Legislature. This has been tried multiple times for Poinciana with each request being turned down.

Poinciana once again will be asking our legislators for the right to vote on this issue. Hopefully, now they will hear us.

-Cynthia Navarro

Trouble brewing in Poinciana HOA?

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guest blog by Deborah Goonan

You might remember previous blogs about Poinciana HOA in Florida, the community of over 50,000 residents that has been attempting to incorporate as a city for the past three years.

Well, now the Board’s President, President Jolly, has filed complaints with State Attorneys in Osceola and Polk Counties, alleging that $2 million is unaccounted for. Poinciana is managed by mega-management company, First Services Residential (FSR).

WFTV has been covering the story. The Board refused to allow video coverage of a recent special meeting called to discuss complaints filed by Jolly against FSR. Someone even made a motion to remove Jolly as President, but that motion failed to carry.

Believe it or not, Poinciana’s earliest phases were incorporated in the 1970s, but construction is still ongoing today. Tony Iorio, AVP of home builder Avatar (now known as AV Homes) is on the Board of the HOA. Yes, you read that right, the HOA Board still has representation for the Developer, after over 4 decades.

Iorio is seen on this video defending FSR, and claiming that Jolly has no proof of impropriety.

Well, that’s why Jolly has filed formal complaints and requested an audit. We’ll have to wait and see what the auditor’s report says.

An official statement from FSR denies any wrongdoing.

If that’s not enough potential trouble, in recent years, violent crime and gang activity has been reported in the once quiet community, including an attempted murder in January of 2015.

To give you some perspective on what could be America’s largest HOA, according to public records, about 20% of homes were constructed in the 1990s, and a whopping 62% of homes were constructed between 2000-2009. As of June 2014, 23% of homes remained vacant following the housing market crisis. The community is located in the middle of what was once a rural area in Central Florida. Although Poinciana is certainly large enough to be a city, since it is a private planned community governed by an HOA, it does not have its own police or fire protection, and must rely on services from Osceola and Polk counties.

Perhaps these recent events will garner sufficient support for the next attempt at attaining status as an official city.

(link to WFTV coverage of complaints against FSR over missing money)

(link to Orlando Sentinel report of gang violence in Poinciana)

(link to housing Statistics for Poinciana FL)

(link to previous blog)

Update: Osceola delegation denies HOA residents’ third request to make Poinciana a city

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guest blog by Deborah Goonan

A few months ago I blogged about a very large Florida HOA with over 45,000 residents, and the fact that a homeowner’s group (PINCHOS) has been trying for three years to incorporate as a city. In all, Poinciana has nearly 60,000 residents. Under the latest proposal, roughly 47,000 live within boundaries that were to create a new municipality.

News reports indicate that Osceola County Legislative Delegation vote was split 2-2, along party lines on the matter, with two representatives not present at the time the vote was taken. A Department of Revenue report, based on a feasibility study, has concluded that Poinciana meets the financial requirements of a city, and stands to take in millions in revenue if it incorporates as a municipality.

At the hearing conducted last month, the delegation reportedly heard from residents both in favor of the proposal and opposed. Those opposed fear that becoming a city would lead to a tax increase, despite a feasibility study’s conclusion to the contrary.  Debate on the finer points has been put on hold for yet another year.

One of the reasons PINCHOS is in favor of municipal incorporation: typical of large HOAs, Poinciana is divided into 9 Villages, and the President of each Village Board serves on the Master HOA. Property owners elect the Master Board, but many of those owners are not actually residents of Poinciana. Meanwhile tenants have no voting rights to elect their leaders. That’s equivalent to taxation without representation! Predictably, the HOA Developer and the Board spoke against Poinciana becoming a city at the Delegation meeting.

According to another recent television news report, Poinciana has been struggling with crime and vandalism. Because they don’t have City status, they cannot have their own police department. Therefore the HOA has decided to spend $100,000 on increasing security staff and adding security cameras.

Keith Laytham, spokesperson for the owners’ group in favor of municipal incorporation says his group will continue to work with State Rep. John Cortes to put Poinciana on the map as a city in its own right.

(Bay News 9 article on controversy) 

(Orlando Sentinel article on Poinciana)

(Letter to Ledger.com from a Keith Laytham)

(WFTV video, Poinciana HOA to spend $100,000 on increased security)

(Previous blog about Poinciana, and why many residents want to create their own city)

Florida Reporter ‘Gets It’

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Florida and Nevada are probably the worst states in the country for HOA abuse. There are a thousand ways to steal private homes from their rightful owners, and it happens many times each day, probably each hour. It’s a national tragedy that state and federal politicians are absolutely unwilling to examine. No, it’s much easier to turn your back in the direction of the proffered cash. A shame, for sure.

At least more and more members of the media are ‘getting it.’ The latest is Orlando Sentinel reporter Beth Kassab. Yes, if she Googles her own name, she’ll see this post!

(HOA abuses need reform: Orlando Sentinel and Beth Kassab)

 

 

HOA Residents Try To Bail Out

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guest blog by Deborah Goonan

The HOA, Association of Poinciana Villages (FL), wants to become a city. In fact, a group of residents have been attempting to become a municipal corporation for several years. The group has recently completed a feasibility study that it will submit to Florida Legislature.

It seems as though the large subdivision of Poinciana is tired of being underfunded and getting no services from Osceola and Polk Counties, despite the fact that 47,000 residents pay taxes to both Counties and the state of Florida. Their mature HOA cannot provide needed services provided to residents of nearby cities of similar size. Apparently the residents pay assessments, while the developer does not. The residents are tired of Developer Avatar retaining majority control since 1971 and want each resident to have voting rights, instead of a 9 member Board of Directors voting on behalf of each of Poinciana’s Villages. What a concept!

Who can blame these residents? After all, compare PUBLIC local government (municipal or county level) to PRIVATE governance in HOAs.

*A municipality has access to property and sales tax revenues, low interest loans, issuance of municipal bonds, state and federal grants. * The HOA is limited to collection of assessments that are NOT based on assessed property values. (often the $50K home pays the same assessment as the $500K home and even commercial property owners) The HOA has very limited access to financing through loans.

*A municipality can take advantage of economies of scale, and can cooperate with nearby towns and cities, or enter into local agreements to provide needed services. * HOAs have no option to collaborate with neighboring communities or public entities to provide needed services. In fact, its governing documents (the so-called CC&Rs contract) often state that the local governing entity will NOT provide such services, because the Developer has given away owner rights to these services as part of the development agreement at the time permits were issued.

*Local government elected officials are compensated, are publicly vetted, and they generally possess experience relevant to their respective roles. They often have term limits. Should these officials fail in their work, they are usually voted out of office in the next election. If they engage in unethical or illegal conduct, they will eventually be investigated, and held personally liable, without constituents having to bring a legal suit. *The HOA Board is comprised of volunteers who are practically immune from personal liability and oversight. The burden is placed upon owners and residents to investigate wrong-doing or spend personal funds in filing a civil suit.

*Voting and elections in a city – one vote per registered adult voter vs. one vote per unit (dwelling) owned. That means tenants vote, and each adult in the household gets to vote. No one in the community gets more than one vote. * The HOA Developer is granted weighted voting rights and appoints the Board as long as he controls most of the votes. After turnover, Boards are often elected by representative voting members, proxies, and other dubious means. Of course, allocation of voting rights is inequitable: the more property one owns, the more votes one has. They and the managers they hire often lack necessary personal and professional skills to do the job.

*The city has sovereign immunity, limiting its legal liability. * The HOA is a corporation that must insure itself against potentially high legal liability.

This is one evolving story to monitor closely.

(article on Poinciana seeking municipality status)
(PINCHOS residents group statement on reasons to incorporate)
(Letter from PINCHOS to Florida Legislators)