How Sun City works, again.

Discussion in 'Sun City General Discussions' started by BPearson, Apr 13, 2018.

  1. BPearson

    BPearson Well-Known Member

    Always good to do a refresher on this topic, especially because it is so foreign to what any of us know. In the first magazine i wrote for SCHOA, i likened it to electricity; most of us know when we turn on a light switch, we get light, but do we really understand how electricity works?

    The difference may be more people have a better understanding of electricity. Sun City is that different from whence they came. No mayor, no city council, no police force or local government body handling services. The closest local service we have is the county, and that is far removed from what most of us knew in our previous lives.

    To make it even more an oddity; Sun City is unincorporated, is not a city, and we are also a non-profit entity. In the real world, the bulk of us came from working lives run by for profit corporations. That fact alone is challenging because for profit companies and not for profit organizations are two different animals.

    Then to further compound things, we are self-governed. Makes sense, because during those formative years there was a massive push to become incorporated where we would have become a city with all the trappings. The battle to prevent it was fierce and raged for better than 25 years. Through it all, the solution was to build something that was sustainable, self-reliant and cost-efficient.

    When most people look at Sun City they see the golf courses, rec centers, clubs and entertainment. The governance is near on invisible. Let's face it, there's nothing sexy about how the community runs. In fact the less visible it is, the more some appreciate the lack of having to be involved.

    This topic can get wordy (and boring) so i will leave you with this question: Is the fact that Sun City's governance is nearly invisible a good thing, or a bad thing?
     
  2. BruceW

    BruceW Member

    IMHO both.

    The bad:
    Being invisible you have folks living there that see governance as some one else's job, in reality it is every resident's responsibility. Like the nice lady that conducted our tour, she said, "I don't vote 'cause the things I care about are great, the board, who ever they are must be doing a good job."
    People typically want to help in some way, but sometimes they just assume someone else will do it or they think they won't make a difference. But if everyone in the community has this attitude, then who's going to be the "someone else" that will do it? Someone else will fight for what's right and someone else will change the "what ever", but not if everyone has that attitude.

    The good:
    Sun City looks attractive because management, the board, etc. are in the background. If a person is OK with others running the community and is willing to take what ever they are given, then Sun City works for them. However is a person wants to get involved then they can join the ranks of governance and again, Sun City works for them.
     
  3. Emily Litella

    Emily Litella Well-Known Member

    Hate to say this, but after living here a few years, I have found most people do not pay attention to SC politics, except for when it affects their pocketbooks. I was kind of shocked about that. I think that if you live here you should try at least to keep current about what's going on. But then, as Bruce said, some folks have no interest. Although I applaud her for volunteering, she should have answered the question in a less, "I don't know and I don't care" way.

    As far as the governance, I think overall it is above satisfactory, and in comparison with other communities we researched, I would say exemplary. Everything is paid for here - no debt - to some of us that gives us peace of mind, and in such an uncertain times is a good thing. Bill mentioned at one time we have economies of scale, which means lower yearly rec fees. Also, so far we've never had a surprise assessment like many newer over 55 communities.

    So I guess I agree with Bruce. You don't have to get involved in the politics, but you should want to keep up, and you should volunteer in some capacity if you aren't working 60 hour weeks.

    It is disheartening to hear someone who is retired, able bodied/sound mind/relatively good health, and financially secure not to want to contribute in some way. Quite honestly, it just strikes me as selfish.
     
    Last edited: Apr 14, 2018
  4. BPearson

    BPearson Well-Known Member

    I was curious to see how many responses i would get to the question; thanks to those who answered. Like in most questions where ones perception is their reality, there was no right or wrong answer. Regarding Sun City, I often factor in our history to my considerations. If you know how it was built, how successful it was/is, then it seems foolish to ignore it. There was an enormous undertaking to create a foundation that was unshakeable, that would endure whatever was thrown at it.

    Perhaps that is why i get so frustrated as i came to understand how little people living here know about it. Nope, you don't need to be an expert, but a basic grasp of what those who came before us would be a good starting point. At the very least, a tutorial for board members, committee members and the staff would be a pretty simple step to take. Including a Sun City history guide in the new residents packet would be easy as well. Maybe someday eh?

    Back to how Sun City works. Knowing the difference between a non-profit and for-profit corporation is important. Corporations exist to make money for the share holders or owners. Decisions are almost always made with that as the bottom line (pun intended). Not for profits are created to serve the group they were formed around, the greater good if you will.

    Clearly two differing tasks with two varying outcomes. And vary often the work dynamic within them is also dramatic. For-profit workplaces are usually outcome driven, where not for profits have both less pressure, less wages and more volunteers. Neither is better or worse, it is just good to know there are differences. For some who aren't familiar with non-profits , they tend to view them through what they knew in for-profit corporations and they see them as falling short of the standards they had in their work life.

    Perhaps the best way to explain it is this: In for-profits, time is money. In not for profits, time is just time. The equation changes when everything isn't measured against a bottom line where the motivation is maximizing profit. Stock holders get angry when there isn't a return on investment, where stake holders in an organization only get frustrated when rebuilding their amenity of choice drags on way too long or the board gets crazy with increases to cover costs.

    All of this matters as we delve into the world of self-governance. Corporations face a wholly different set of issues from organizations. Management staff in both have some similarities, but the boards overseeing non-profits are absolutely different from boards hired to oversee companies. But we will save the boards' governance for the next post.
     
    Last edited: Apr 16, 2018
  5. Cynthia

    Cynthia Well-Known Member

    Just as an FYI, non-profit is not always a clear separation from for-profit, except when for-profits are public. I work for a large non-profit hospital where, I can assure you, time is money. These types of non-profit companies make a lot of money but must do other things, such as giving a percentage of time/services to the community to off-set their taxes and call themselves non-profit. This is just one example of a big-business, non-profit company. I’m sure other types exist.
     
  6. BPearson

    BPearson Well-Known Member

    Fair point C; so i am clear, there is a wide difference from the International Brotherhood of Teamsters and The Little Sisters of the Poor...yet both are non-profits. The point of this was more towards the governance side of the discussion. Most people who end up on the board come from the corporate world. One where the hierarchical structure is pretty well set, with top down leadership being an absolute. Even when overseen by boards, corporations with them tend to use them as support systems to endorse their needs where non-profit boards (IMHO) should play a more substantial role.

    The challenge of course is when boards simply become rubber stamps, buying into everything management is selling, the equation becomes off-kilter. There should be at the very least an equal power base. There are volumes written on the roles both management and boards play, but i tend to fall down on the side of boards set policy, management carries it out. That was how it was years back, but times have changed. The RCSc board has become less involved and more reliant on management.

    It's easy to see why. Let's face it, most of us didn't retire to work 20 hours a week helping run the community. And when you hire a general manager and pay them and their staff pretty good wages, the tendency is to let them do more. Nothing sinister about it, but it is how we have evolved from days gone by. With that evolution comes not only a less involved board, but a less involved community. Hence we end up where we are.

    There are solutions, but that means more work and a different approach. All of which becomes daunting because non-profits are notorious for staying the course, with change being near-on-impossible.
     
  7. Cynthia

    Cynthia Well-Known Member

    Then you can’t only blame the residents for less involvement since the board has adopted a laissez faire attitude as well. This might be the point most residents understand the least...that management is mostly the ones in charge. At least I didn’t.

    Just out of curiosity, not that I think it’s warranted at all, but what does it take to fire the general manager? Does Arizona consider that job “at will” and does the board decide that?
     
  8. BPearson

    BPearson Well-Known Member

    AZ is an at will employment state and unless the GM has a contract i've not seen can be let go for any reason. Of course there are protected classes and proper documentation would be in order just as a matter of good business. That said, the GM has done a good job, given what the board has expected of her.

    Let's face it, the biggest challenge for a community like ours is finding the right fit. Hiring a strong, talented GM makes sense, but when you do, expect them to be overly aggressive in how they run the community. That's where the board should play a larger role. They need be as aggressive as the GM when it comes to insisting they set policy and the GM follow it. Tough balancing act, but when it works like it should, the outcomes are spectacular.

    The last fiasco with the democratic club was the classic example of how it shouldn't work. Now i hear we may be facing the same kind of stupid with the republican club. Let's hope not.
     
  9. Emily Litella

    Emily Litella Well-Known Member

    I do believe the board members that we elect should drive the policies and direction of management.

    Maybe it is that the board actually agrees with the way management is handling things? From all I see on the surface, Sun City is well kept and well run.

    I know if I was a board member and I vehemently disagreed with some important things and there were irreconcilable differences, I would resign and go my merry way.

    I've seen our GM and some staff setting up some sort of function at Lakeview on a Sunday when I was there. Seems like above and beyond the 9 - 5?

    For as much as I've learned, and there's still so much I don't know, sometimes I still have to quote the immortal words of Marvin, and state "I don't even have an opinion."


    Emily "Switzerland" Litella
     
  10. Cynthia

    Cynthia Well-Known Member

    :D :D :D
     
  11. SunCityGal

    SunCityGal New Member

    How Sun City is run? How about when it is hijacked by special interests on the board? Been reading the agenda for this month's coming board meeting. All of a sudden, club executive boards can decide to not be audited by not playing nice with the auditor.
    I like to read the agendas for the upcoming board meetings of the RCSC, just to see what is happening within the scope of the Board of Directors. Might I say, I am a bit taken aback about a motion to all but remove the auditing of clubs. Now I know most all clubs keep a stellar record of their accounting and welcome a review of their financial dealings. Yet, as we all know, not everyone is stellar in the record keeping. This is true of real life so I would suspect it could also be held true of clubs as well.

    The reason I write this letter is due to the basic premise of “Fiduciary Responsibility” ascertained to the Board of Directors. The Fiduciary Responsibility is to the RCSC, a not for profit corporation. Then it is to its members. Always disliked how this power was laid out, but now it is time to look at it strategically for the corporation and its members.

    For this month’s board meeting, there are three agenda items to be voted on by the board. The agenda items in question is Motion #1 and #2. Agenda #1 item was developed by the board, for the benefit of the board, and to this writer, appears to appease some who want to protect clubs from being audited. First, it calls for “selection” of an “approved Auditor”. So, who keeps the list of approved auditors? How will the RCSC know if the auditor is qualified to perform such duties. If an audit is approved, it shall be done with the club’s executive board? What happens if the executive board is not available? Well that is spelled out as well. If there is no action by the executive board of the club, the audit is closed out, and auditor is to create a final report, noting as such. So, why even conduct an audit when the executive board, who be the source of the audit to begin with, can refuse to participate and have the entire process swept under the rug, with no changes, ramifications, or remedies.

    What about the consequences to the RCSC. You see the Corporation carries liability insurance for these clubs under an umbrella policy. If someone is doing something shady under the auspices of the RCSC, the corporation is now held liable. Does anyone know the cost to defend oneself against an IRS audit? Can anyone imagine the cost to the corporation by the time each club would come under scrutiny for its bookkeeping, or lack thereof. This is why you should care. An expense of this nature would more than likely be passed on to you, the member, to pay for in a new yearly assessment increase.

    Motion number 2. I, for one, feel clubs need to held accountable for their actions, to include their financial dealings. If there is a reason the RCSC board feels there is a need to inspect a club’s fiscal dealings, then it should be done expeditiously, and with a qualified auditor, not a choosing of a committee, which could be made up of novices or none of which have accounting or auditing experience.

    Folks, this is a slippery slope this board of directors chooses to take the corporation down. It looks to undermine the power of the board to ensure RCSC is not being held accountable for the actions of a few who may be performing illegal financial accounting. These agenda items look to undermine the very Corporate Bylaws, Article II, Section L, which states, in part, “A Member or group of Members, whether or not sponsored by a Chartered Club, or any other person or persons, must not behave in a manner which jeopardizes the rights and privileges of other Cardholders, their guests or any other person or persons.” Doing sloppy or illegal accounting by a club, places all clubs at risk of the IRS. The due process of proving the accounting efforts of the clubs would then fall to the Board of Directors. Imagine showing, as evidence, to a government official, a board policy which states it is okay to participate in felonious action or deed, and the RCSC condones this. Can we ask for a board policy which states it is okay to not pay our assessment and if we don’t do so in 30 days, it will be swept under the rug for us just because we refuse to participate?

    Motion number 3, well it takes away funding a club has been entitled to and stops it. In other words, if a donor wished to provide funding for a specific project, at their expense, to improve a clubs facilities, it now states such funding is not allowed. Why try and harm what has been a mutually beneficial arrangement to the community and stop it?

    Is this an example of what can happen when the board is invisible?
     
  12. BPearson

    BPearson Well-Known Member

    Good comments SCG, and welcome BTW. One of the points behind this thread was to expand into the whole question of the topic you raised, "fiduciary responsibility" and the one i find even more significant is the decision making process and whether "due diligence" is actually done. I've always hated the legal aspects of governance, but the basics of good governance are at times lacking in organizations. Assuming people come to the party knowing these things are short-sighted and teaching them is challenging simply because it takes time to do it right.

    We'll come back to that, in further posts, but i am curious how and why the changes are being made regarding club auditors. I do know not all of the board members aren't comfortable with the changes. Guess i will have to ask at the next board meeting why this is happening eh?
     
  13. SunCityGal

    SunCityGal New Member

    BP, I would also love to attend this next board meeting, but I have a doctors appointment in the morning. Happened to have fallen off the step in our RV, and while no major damage, just the seven stitches in my scalp, I need to care for the other bumps, bruises, and contusions. I am so interested where this direction comes from. I know there were some letters to the editor written, prior to this past board election, to be wary of the motives of the candidates running. There was an indication there might be personal agendas afoot, especially when it comes to finances, audits, and clubs. It would be terrible to think personal agenda's are being played out, and Sun City's integrity is lost due to a personal grudge.
     
  14. BPearson

    BPearson Well-Known Member

    I suspect over time board members have come with agenda's, pretty much human nature. That doesn't make it wrong, but the problem comes up when those agenda's override their obligation for due diligence. There's ample case law that says boards don't always have to make the right decisions, but they are obligated to make those decisions based on information. To simply make them in a vacuum without careful consideration is when they get in trouble.

    Let me give you an example. There have been several comments regarding the old building on the Grand Ave property being in bad shape. Board members have toured it and have said it is fine. I have heard from others who have been in and around it say just the opposite. It would seem to me reasonable to at least do a cost analysis on putting up a new building that meets our needs in comparison to retro-fitting an old building that may or may not work for the clubs that will be moving there.

    That's one of the reasons i get so out spoken on golf. The 10 year plan to shovel enormous amounts of money into golf has been a slow drip of funds with no real plan. Easy for a board to say it makes sense, but 40 million dollars without sufficient study, research or even a strategy on how to make it cost effective seems short-sighted, if not negligent. The good news is people in Sun City are pretty tolerant and seldom raise these kinds of concerns. That hasn't always been the case.
     
  15. SunCityGal

    SunCityGal New Member

    Great musings there BP. Yes, it would be very prudent, prior to spending dollars, to know the best way to spend said dollars, in a way to meet the needs of the clubs as well as the corporation. Who should it be to make such a decision? The board or the GM? It would appear these decisions are being made with total disregard for the fiduciary responsibility tasked to the board members. Are the board members, with so many being "new", even aware of their financial responsibility to the corporation? Who is directing the board members, as to their commitment to spending monies in a fiscally prudent way? Is anyone paying attention to the costs to the RCSC, as well as the cost of doing business and how it affects the members? Is any of this information available for review by the RCSC members? So many questions, very little information.
     
  16. Emily Litella

    Emily Litella Well-Known Member

    See from someone on the outside and not knowing the people or the history of the topic, I find these vague non-factual speculations very confusing, and also frustrating.

    Why not ask the questions and get all the facts first?

    I did not interpret bp#1 and #2 as above. I see an ad on page 9 of the current Sunviews asking for auditors for the Finance, Budget and Audit Committee. They're looking for resume and references for folks in the community with auditing backgrounds. Having watched enough RCSC online meetings it looks like Director Wieland asks for help every month when his turn to speak comes up.

    So seeing adjustments #1 and 2 seems to me like they're trying to lighten the audit load. That's where the assigned auditor comes in? Maybe there's a deadline for club audits? The newly added paragraph requires more explanation. Like what happens if a club doesn't pass the audit?

    There are a lot of unknowns, but again, being on the outside, this is how I viewed it. I didn't see it as something inappropriate was going on.

    Now what does disappoint me is bp change #3. I always liked to think if I wanted to donate to a worthy project inside the SCF, I could earmark my donation. But now this is not possible, and except for it being more convenient for staff, I see no logical reason for this change.

    Ask questions, get facts. Speculation just perpetuates a negative rumor mill which is never constructive, IMO.

    Perhaps the board can elaborate further on why they're making these changes to allay any suspicions.

    Just MHO.
     
  17. Cynthia

    Cynthia Well-Known Member

    Yes. I was confused at the last meeting when this was brought up. One response said something like they didn’t want to be involved with people who wanted to donate just to lower their taxes. I don’t understand that. Why care if people donate to lower their taxes. It’s completely legal. No charity cares about it. Or did I misunderstand that response? Please anyone who can attend, try to ask them to clarify the reason. It’s very odd.
     
  18. aggie

    aggie Active Member

    This is my take on what/why the change in directed donations was made. The Sun City Foundation is a 501(C)3 charitable organization and all donations are tax deductible. The RCSC is a 501(C)4 non profit, donations are not tax deductible but they can accept donations toward specific projects(I think?). Sun City Foundation's mission is to aid those in financial need with the main purpose of assisting in payment of the annual assessment following a thorough application process.

    The problem with directed donations to SCF is that say the Vintage Vehicle Club(or individual donors) wish to donate $10,000 earmarked for their new building..... the donors can write it off as a charitable deduction(because of the SCF's 501C3 status) but the money is actually funneled through the RCSC for expenses. This is what they mean by money being washed through the Foundation. I'm not sure if this is how the large donation to the Lawn Bowling upgrades was handled a few years ago.

    Correct me if I'm mistaken please....
     
  19. BPearson

    BPearson Well-Known Member

    Damn, some days i wish i was just dumb and in the dark. Aggie gave the explanation that Stella gave at the last board/member exchange meeting and that is the answer as to why the motion is there. I wasn't there to argue over the motion so just kept my mouth shut. And yes, the change was originally made so there could be a write-off for the near on half million dollars donated to improve lawn bowls clubs and greens around Sun City.

    Like all things though, there is the rest of the story. Allowing the write-off was perfectly legal and in fact was blessed by the attorney back when it was done. The logic was this: If residents donated to the foundation as a pass-through to the RCSC on specified projects, they in essence were helping keep the costs down on all RCSC card holders. That of unto itself is a good thing. Think about this way: If an independently wealthy Sun City resident were to donate a million dollars to the Vintage car club for a building, that would be a million dollars that wouldn't come out of the RCSC coffers.

    I suspect i am one of only a handful who have read the RCSC letter of application for the tax status to the IRS, the articles of incorporation and the by-laws. I was the president of the Foundation for three years and we actually looked at trying to make the Foundation into what it was originally intended for. The IRS application was in 1985 or 1986 and included the idea for the Foundation to be used for virtually any end that would improve Sun City. Remember this was well before the PIF (1999) and there was some hope the Foundation would become a funding vehicle for all things Sun City.

    I know this because an attorney who used to live here wanted to work with us to turn it into something far more than paying rec fees. His first goal was to look at the IRS application and it was clear we had latitude to do almost anything. He moved due to illness and the attempt died.

    Sadly, the Foundation never took off like they had hoped and had simply become a funding tool for those who were financially unable to pay their rec fees. It became a mutually beneficial arrangement because rather than leaning those who were delinquent, they could apply for assistance and not be faced with one more bill they couldn't pay.

    Not crazy about the change, but unless and until someone makes the effort the Sun City Foundation will remain a minor player in the community.
     
  20. Cynthia

    Cynthia Well-Known Member

    I still don't think I quite understand it, the implications both for and against the change, but maybe I just need to read the posts again.

    Is there a list anywhere of all the foundations and organizations in SC (not the clubs) and their function and status? For example I know about The Posse, the Sunshine Services, SCHOA, now the the Sun City Foundation but I don't really understand how they are funded. And I'll bet there are more organizations I don't know about. What is the purpose of all of these as separate entities. Does SC own any of them? I should stop saying does SC own it, shouldn't I, and say does the RCSC own it. I think there are no actual owners of SC except that property owners own their individual lots. It gets confusing. I need an organizational chart.

    And I just thought of something else. Are the clubs considered a 501 c 3 or 501 c 4?
     
    Last edited: Apr 21, 2018

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