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GIVING AN OPINION
 QUESTION: Is the board allowed to include their opinion about a CC&R amendment when they send out the ballot?
ANSWER: According to a new case, they can if it's limited.
General Prohibition.
The Davis-Stirling Act has a general prohibition against using
association funds for "campaign purposes" for association elections.
That would include membership votes on special assessments, CC&R
amendments and the like. Civil Code §1363.04(a).
Ambiguity.
What does "campaign purposes" mean? The statute defines it to mean
"expressly" advocating the election or defeat of candidates (and
presumably ballot measures). Civil Code §1363.04(b).
What does "expressly advocate" mean? Does that mean an opinion is
allowed or prohibited? Unfortunately, there is no case interpreting this
particular statute. However, a recent case involving a county election
sheds light on the issue because it addresses a similar governmental
restriction.
Expressing an Opinion. In a dispute between a
labor union and Santa Clara County, the court ruled in favor of the
County when a Supervisor used his staff to distribute informational
material and his opinion about a ballot measure. The court explained: .
. . there is a critical distinction between expenditures by a
governmental body for informational activities, which generally are
permissible, and expenditures for campaign activities, which generally
are not. . . .
[The law] does not preclude a governmental entity from publicly
expressing an opinion with regard to the merits of a proposed ballot
measure, so long as it does not expend public funds to mount a campaign
on the measure. . . .
. . . in many circumstances a
public entity inevitably will "take sides" on a ballot measure and not
be "neutral" with respect to its adoption. If every citizen were to have
a right to insist that no one paid by public funds express a view with
which he disagreed, debate over issues of great concern to the public
would be limited to those in the private sector, and the process of
government as we know it radically transformed. Thus, the mere
circumstance that a public entity may be understood to have an opinion
or position regarding the merits of a ballot measure is not improper. . . . (internal cites deleted) DiQuisto v. County of Santa Clara.
Two things
can be gleaned from the case: (1) informational material with a ballot
is allowed and (2) boards can express opinions about ballot measures.
The one thing they cannot do is use association funds to mount a
campaign for or against ballot issues and candidates.
RECOMMENDATION: If a board expresses an opinion, it should be limited to something similar to the following: "The
Board unanimously supports the proposed Restated CC&Rs and asks
that you read the enclosed material and reach your own conclusion before
casting your vote. Once you decide how to vote, please mark the
enclosed ballot and return it to . . ." In addition, if directors
actively participate in an election by sending out mailers and
distributing fliers, They should put a disclaimer in their materials
stating that no association funds were used in the preparation or
printing of the materials.
REPORTING $600
 QUESTION:
One of our owners was told the Small Business Jobs Act of 2010 requires
that she report all individuals or businesses that provide services to
the association worth over $600. Have you heard of such a thing? If each
member of the association reports such information to the IRS, then is
the vendor going to be taxed on the amount multiplied by the number of
owners??
ANSWER: Under the
current rules the association, not individual owners, files a 1099 if
the vendor is a non-corporate entity. The new health care law in its
current configuration would require the association to file 1099s for
all types of entities.
The Small Business Jobs Act of 2010 is
over 100 pages, quite complex and difficult to unravel. Moreover, the
Act is presently undergoing change by Congress. Currently, associations
must use IRS Form 1099 to report services rendered by non-corporate
service providers to the Association if the annual service dollars
exceed $600 per vendor.
In general, with certain domestic help
exceptions, association members are not required to send 1099
information on service vendors they hire for owner-occupied units.
Rental units have different rules.
RECOMMENDATION:
Owners and boards should not try to meet these compliance requirements
on their own. The penalties for errors can be severe. A qualified tax
professional to guide you through your tax obligations is worth the
cost.
Many thanks to Donald W. Haney, CPA, MBA, MS (Tax) of Haney Accountants, Inc. for his assistance with this question.
FEEDBACK
Global Warming.
Boards should carefully consider two issues before installing speed
bumps. I wish I had heard this advice before asking that they be
installed on my street. First, they slow down emergency response
vehicles. Second they increase greenhouse gases for the planet. -David
A.
RESPONSE: Destruction of the planet from speed bumps? Yikes!
Board Questions.
I believe the reason that it is difficult to get members to vote is
that they are too disconnected from the association. Most people are
unaware of all the things a board must handle. This is partially because
many actions of the board are hidden from members in closed meetings.
Therefore, boards should disclose these efforts without disclosing
confidential information. For example, when someone is fined for
non-payment would not a monthly summary of these actions be OK if names
were not disclosed? I believe this could show that the board is working
in their interest. -Robert K.
RESPONSE:
Yes, they can makes disclosures as you describe. Boards could eliminate
many problems by keeping members fully informed about the association's
business.
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