Misrepresentation: CAI comes with unclean hands

I argue that  CAI exhibits a pattern of misleading advertising, at the national and state levels, intended to induce the public to buy HOA controlled homes and to attain favorable support from the media, the legal-academic community, and state legislators.  In other words, it appears that there is misrepresentation in its advertising.  Here are some examples at the national level and a few CAI state chapters. (Note that I include dates with my quotes as web pages change from time to time.)

CAI Central

“CAI provides information and education to community associations and the professionals who support them. Our mission is to inspire professionalism, effective leadership and responsible citizenship.”  (Building Better Communities, http://www.caionline.org/Pages/Default.aspx, Aug. 28, 2014).

“An international organization dedicated to building better communities, CAI provides information, education and resources to all community association stakeholders, including community managers and homeowner leaders.”  (Who Are We,

http://www.caionline.org/about/who/Pages/default.aspx, Aug. 28, 2014).

“Providing respected professional education remains one of CAI’s core missions—and thousands of managers continue to take full advantage of these opportunities.” (Core Mission, http://www.caionline.org/about/who/Documents/Annual_Report.pdf, Aug. 28, 2014).

Nowhere does CAI mention that it is a business trade organization, a 501(c)6 tax-exempt nonprofit, whose purpose is to benefit its members.[1]  Rather, the impression given above is that it is an educational organization to help HOAs and their board members.  However, HOAs are not CAI members and only 60% of CAI’s members are HOA members called individual “volunteers. However, the dominant factions are the attorneys and management firms who are the vendors to HOAs. Only 2 seats on the 14 member CAI Board of Trustees are for these “volunteers.” (Note that the above term “stakeholders” as commonly used with HOA means the vendors and does not include HOAs).

As a business trade organization, isn’t it a conflict, a violation of its trade group status, to speak for, provide education, and guide the consumers of its members’ services, the HOA?  Shouldn’t that be the job of a bona fide HOA association? A true association of HOAs, consistent with other industry or professional associations, would consist of HOA members who are allowed to vote.  It would allow the vendors or stakeholders – CAI, other management firms or associations and attorneys – to be non-voting associate members.

As I see an attempt to get around not having HOAs as members, CAI’s volunteer application offers discounts for multiple board members who join.  Page 2 is titled, “Membership Application for [association name]” if more than 1 director is signing up. (http://www.caionline.org/about/benefits/Documents/cavl_application.pdf). A 2005 complaint was filed with the IRS  charging CAI with violating its trade group status by having consumers, HOAs, as members.  The result was that CAI dropped HOAs as members and apparently got around this restriction by introducing “volunteer” members. As the application shows, CAI offers inducements in order to influence an entire HOA’s board, a consumer of its members’ services.

“While joining CAI on your own is important, having your entire board connected to CAI is the best way to ensure you are making informed decisions—and an excellent way to help your board members achieve the results, respect and recognition they deserve.”  (Benefit for

Homeowner Volunteer Leaders,

http://www.caionline.org/about/benefits/Pages/VolunteerLeader.aspx, Aug. 28, 2014).

Furthermore, it is unconscionable that CAI advertises and speaks before the policy makers and legislative bodies claiming to speak for HOAs and their members.

“LACs prevented the enactment of flawed legislation while working to ensure that other bills reflected the interests of homeowners, associations and the industry professionals who serve them.” (CAI 2013 Annual Report, State and Federal Engagement,

http://www.caionline.org/about/who/Documents/Annual_Report.pdf,  Aug. 28, 2014).

Let’s examine this preposterous claim even if CAI indeed had HOAs as members.  By its own data, CAI states that 60% of its membership is volunteers[2], and if each were in a separate HOA CAI would have representation of, at most, some 19,200 HOAs.  That would make CAI representation equal to a paltry 6% of all HOAs.[3]   What a blatant misstatement of representation!

 

Selected state chapter advertising – no mention of business trade group or 501(C) 6 tax-exempt

Arizona Central –

“The Community Associations Institute national chapter was founded in 1973 as a multi-disciplinary non-profit alliance serving all stakeholders [does not include homeowners] in community associations. It provides education and resources to America’s 315,000 residential condominium, cooperative, and homeowner associations, and to the professionals and suppliers who serve them.” (http://a.mwapp.net/p/mweb_ws.show2?

xpod_id=77805054&xcanvas=&xid=79759889, Aug. 28, 2014).

New Jersey –

“The New Jersey chapter of CAI (CAI-NJ) is dedicated to enhancing the quality of  community association living, through education, legislative advocacy and  professional development. . . . The Community Associations Institute (CAI) is a national, non-profit organization dedicated to providing the education and resources necessary to foster vibrant, responsive, competent, community associations and helping them promote harmony and responsible leadership.” (http://www.cainj.org/about/about-cai-nj/, Aug. 28, 2014).

Florida central chapter –

An education and resource institute dedicated to the 7,500+ HOA & Condominium Associations in Central Florida, their volunteer leaders, and the business partners who support them. (http://www.caicf.org/, Aug. 28, 2014). For more than 30 years, CAI has been the leader in providing education and resources to the volunteer homeowners who govern community associations and the professionals who support them. (http://www.caicf.org/site_page.cfm?pk_association_webpage_menu=446&pk_association_webpage=470, Aug. 28, 2014).

Orange County, CA chapter –

“The Orange County Regional Chapter of Community Associations Institute (CAI-OCRC) provides education, networking, resources and advocacy for community associations and the professional and volunteers who serve them. . . . Members include condominium associations, cooperatives, and homeowner associations . . . .” (http://www.caioc.org/, Aug. 28, 2014).

Conclusion

When CAI goes before the policy makers, government officials or legislative committees, acting as modern day Philosopher Kings,[4] but raising questions of candor to the tribunal, advocates must speak out loudly.  Any such statements must be confronted, challenged and exposed before the audience addressed by CAI.  Speaking to one another is an empty exercise, unless to exhort others to act.  And after repeated confrontation as above and the recipient fails to act, then challenge the policy maker, the government official or the legislative committee – Why are you doing nothing?  Tell them that you have provided documentation that any reasonable person would agree reflects the unethical and illegal conduct of the lobbyists.  Why are they not acting in a responsible manner?

“In every stage of these oppressions we have petitioned for redress in the most humble terms; our repeated petitions have been answered only by repeated injury.”  (Decl. of Indep.)

References

[1] “IRC 501(c)(6) provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues (whether or not administering a pension fund for football players), which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.” (http://www.irs.gov/pub/irs-tege/eotopick03.pdf). (Contrast CAI with “real estate boards,” more commonly known as the association of realtors, realtor education is focused in its professional members and not on the homebuyer who is a consumer of the services of its members.  Realtors do not lobby for home sellers/buyers, but for its agent members.)

[2] From CAI miniscule minority dominates public policy (2007).

[3] CAI’s Industry Data (http://www.caionline.org/info/research/Pages/default.aspx)

shows 326,000 HOAs and states that it has some 32,000 members (http://www.caionline.org/about/who/Pages/CAI40thAnniversary.aspx). That’s a 32/326.6 ratio of 9.8%.  My best estimate from note 2 above is that volunteers make up just 60% of the members, making HOA representation at about 6% at most.  “At most” means that there is just one volunteer from an HOA, which we know is not true.

[4] “Until philosophers rule as kings, that is, until political power and philosophy entirely coincide…cities will have no rest from evils…there can be no happiness, either public or private, in any other city.” Republic, Plato.  (In other words, “the key to the notion of the ‘philosopher king’ is that the philosopher is the only person who can be trusted to rule well.”