The Nature of Montgomery Village

MVF History 1994 to 2012

Chapter 1 The Nature of Montgomery Village

Facts Montgomery Village Foundation, Inc. (MVF) is a Planned Unit Development type of Common Interest Realty Association (CIRA). The Third Article of Incorporation of the Montgomery Village Foundation, Inc. states, the Foundation was formed to promote the health, welfare of the Residents of the community of Montgomery Village, Maryland, as described in its Governing Documents as recorded in the land records for Montgomery Village Md.

To own, acquire, build, operate and maintain parks, playgrounds, swimming pools and other recreation facilities, open spaces, common streets, roads and walkways including building structures and personal properties thereto to provide such facilities and services in connection there to as permitted by the law to include and not limited to,

1. External maintenance for properties within Montgomery Village,
2. Garbage and trash collection
3. Fire and police protection
4. Maintenance and upkeep of trees and
5. Other supplemental municipal services,

To fix assessments or charges to be levied against the Private dwelling units and Multi rental units.

To enforce any and all covenants, restrictions and agreements applicable.

The fundamental responsibilities of the Board of Directors of Foundation is to:

 Protect the assets of the Association.  This requires to:

Confront problems as early as possible in their development and take whatever actions are necessary to deal with the problems effectively, efficiently and economically, for the assets of the Association must not be allowed to deteriorate;

Refrain from unduly exposing assets to abuse, theft, or misuse.

Refrain from speculating, experimenting, or taking risks with association assets.

Base decisions on factual evidence or professional advice and consultation as necessary, but within reason; and,

Seek top value for the expenditure of Association funds.

Fulfill Fiduciary Duties. This means that the Board of Directors:

Owe a duty of care in all activities as representatives of the community and are legally required to exercise the same degree of care and, skill that an ordinarily prudent director of a similar business would exercise;

Owe a duty of undivided loyalty and honesty; and,

Have a responsibility not only to provide preventive maintenance of the buildings and grounds, cost effectively provide mandated services and to ensure sound financial management, but also to help maintain and enhance the qualitative aspects of the community.

Definitions Section 1 The following words when used in these Bylaws shall have

the following meanings:

"Montgomery Village" shall mean and refer to all properties shown on

the Town Sector Plan identified and described in zoning application #E-327 approved by the Montgomery County Council on August 24, 1965, in resolution #5-2084, together with those adjacent properties as shown on said Town Sector Plan and any additions or deletions to any of the aforementioned properties as may be designated by Developer.

 "Foundation" shall mean and refer to the Montgomery Village Foundation Inc. a non-stock; non-profit corporation organized existing under the laws of the State of Maryland.

"Common Properties" shall mean and refer to all land, improvements and other properties heretofore or hereafter owned by the Foundation.

Powers & Duties of the Board of Directors Article IX MVF By-Laws

Provide for maintenance of all Common Property section 1

Supervise all officers, agents & employees of the Foundation and that their duties are properly preformed section 2 (b)

Adopt standard of conduct, which includes conflict of interest and fiduciary responsibilities preformed as board and committee members.

Officers and their duties Article IX of the MVF By-Laws.

The treasurer shall oversee all accounting and treasury functions of the Foundation including application and implementation of accounting policies and procedures to properly safeguard the assets of the Foundation. Section 8

The treasurer shall make the investment decisions in accordance with the policies of the Foundation. Section 9

Background The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) glossary defines Common Interest Realty Association (CIRA) as an association of property owners, also known as a Community Association, responsible for the governance of the common interest community. Property owners automatic become members of a Community Association. A CIRA is funded by periodic assessment assessments on members so that it can performance its duties, which includes management and maintenance duties and other duties established in the governing documents and by the state and local status.

CIRA can be a Condominium Association, Cooperative Housing Corporation, Time Share or a Planned Unit Development (PUD). A PUD is a form of land development in which various residents and non-residential structures are clustered to allow optimal use of property and to provide certain open spaces and amenities not otherwise available in traditional forms of subdivision developments with tracts. Montgomery Village is a Planned Unit Development type of CIRA and is required to maintain its financial records, prepare and present it financial statements and require the fiscal year audit be prepared in accordance with the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Common Interest Realty Associations (CIRA).

Legal Framework Common Interest Realty Associations (CIRA) are subject to the provisions of the Maryland Homeowners Association Act (Real Property Article, Annotated Code of Maryland, Section 1IB-101,et.seq), Maryland Condominium Act (Real Property Article, Annotated Code of Maryland), and the Montgomery County Code, Commission on Common Ownership Communities (CCOC), (Chapters 10B, 11 A&B & 24B).

Montgomery Village Vision 2030

 Produced by Dave Humpton, Directed by Greg Snellings, Written by Mike Conroy and Staring Bob Hydorn

Fiction The inside cover page of 2012 Montgomery Village Foundation Annual Report www.flourshmv.com distributed with the April 26 2013 Montgomery Village News featured a baseless promotional version of the Foundation’s Mission Statement. Particularly note worthy are the Mission statements on the Nature of Montgomery Village, Communications and Government Relations. 

Nature of MV “Montgomery Village was planned as a New Town Not for Profit Community Organization designed with inspiration and care for people in community with each other and nature” (1) “The Montgomery Village Foundation will continue to work very hard, to help our community flourish and move forward toward a vision of tomorrow…and an enriched quality of life for our residents.”(2) “The Farmers Market flourished in its second year-a wonderful addition to Village life and bringing the community together.”(2)

(1)  Mission Statement MVF 2012 Annual Report, www.flourishmv.com

(2)  President’s Message MVF 2012 Annual Report www.flourishmv.com

(3)  A message from EVP Dave B. Humpton MVF 2012 Annual Report www.flouishmv.com 

Comment Nature of MV By what inspirational authority, law or governing document mandates the Foundation to care for people in community, with each other and nature, enrich the quality of life for our residents or bring the community together?  The Foundation’ budget cannot take care of all those who live in the Village. Living in harmony with nature and enriching the quality living is beyond the Foundation’s level of expertise. The only time people come together in the Village is during rush hour or Saturday afternoon at Costco.

Communicates with members on services through the Montgomery Village News, and online via Facebook, Twitter and the MVF website www.montgomeryvillage.com.” (1)  “MVF has recognized the importance of marketing the community, and this year, plans were finalized and various phases of a marketing campaign were implemented to share both internally and externally what a great community the Village is by showcasing all the positives of life in Montgomery Village. (3). Foundation Staff Working with the Communications Committee, the department has been working to implement the branding campaign “Flourish”, which will include new advertising avenues and a new promotional magazine. The hope is to better market the Village, emphasizing the unique and desirable features of our hometown. (2)

Comment Communications MVF has an obligation to communicate effectively with its residents, owners, business and commercial stakeholders. Its called Customer Service. If the Foundation performs maintenance of the buildings and grounds, cost effectively provide mandated services, provides sound financial management, while maintaining and enhancing the qualitative aspects of the community, the word will get around. The Realtors will be delighted to market and brand the Village while showcasing the positives. The market will tell if Montgomery Village is Flourishing or Floundering.

The Village News has never been trusted as a source of accurate, fair, useful and critical information about the Village. The Village News’s editorial, reporting and communication policies are geared to self-promotion over effective communication. To justify past and current board decisions and actions, its news and features attempt to create an illusion of favorable property conditions, superior service performance by the Foundation’s board, staff and contractors. 

This latest Marketing, Showcasing, Branding and Flourishing campaign is recklessly repeating the Village’s communication failures of the past at a cost the Village cannot afford. The 2013 MVF fiscal year communication budget (Cost Center 32) show four full-time and one part-time employees, a personnel cost of $350,000 plus $161,600 operating expenses totaling of $511,700. The 2012 MVF Income Tax return 990-T Schedule J page 242 of the 244 pages April 2013 Board Package reports, Advertising Income of $141,875, direct cost of $203,689 and loss of $61,814.

The publishing and distribution of Newsletters, Newspapers and website posting of comparable PUDs & CIRAs is normally a collaborate effort between on-site staff and homeowner volunteers. Some Associations have contracted with a freelance writer to edit and produce final copy for posting, printing and distribution. Others distribute their newsletters/newspapers as inserts to local Newspapers. In most cases the entire Communications budget is more than covered by advertising revenue from local merchants and Realtors.

Here are the website links to comparable Associations, Kings Farm Citzens Assembly, Kentland Citizens Association, Quince Orchard Park HOA, Reston Association, Villages of Urbana,  South Riding Proprietary, Columbia Association and Lake Ridge Parks and Recreation Association. Take some time to compare their annual reports, financial reports, audits and publications. Reston is the best model to compare with Montgomery Village as it was planned and developed at the same time, using the same national legal and land planning experts to create the Village. Reference Bill Hurley book, Montgomery Village, A New Town, Kettler Prepares the Plan, pages 61 to 64.  

Government Relations Department that represents the interest of Montgomery Village to all governments and their agencies.”(1) Community Partnership-Reaching out to our community partnership beyond our borders is an important component of MVF’s vision for the future, communicating both in writing and in person, positions favorable to Montgomery Village in regard to county initiatives and state legislation, Partnering with the Montgomery Village Sports Association to acquire state bond money to construct a restroom and concession facility in South Valley Park.”(3). “A state grant of matching funds was approved to construct a restroom and concession facility in South Valley Park, to accommodate the hundred of children spending many hours on park’s sports fields. (2). Government Relations-Sharon Levine continues to monitor county and state legislation and projects that affect our community. A decision was made to hire an in-house legal counsel to assist with collection activities and legislative activities. (2)

Comment Government Relations The volunteer leadership of the Foundation believes that external matters, (representing the interest of Montgomery Village to State and County governments and their agencies), is a priority over internal matters, (providing maintenance of buildings and grounds, cost effectively deliver mandated services and sound financial management). There is an acceptance in the Village of the staff’s administration, the various committees’ input and board’s overall oversight of the Foundation’s operations. As expressed by MVF Foundation Board member Scott Dyer during his recent successful re-election campaign MVF is in the “best financial condition of its 47 year history”. The 2013 Board of Directors election Candidate’s Night discussions and Candidate Statements predominately addressed external concerns and challenges such as town sector zoning, Gaithersburg East Master Plan M-83, Mid-County Highway, Goshen Road widening, Webb Track development and Lake Whetstone dredging.

While Government Relations is a key element of the Foundation’s activities the paramount obligation of the Board of Director is Internal. The Board of Directors has the legal power and total control over the internal operation and organization but has little control or influence over the Montgomery County Government, the State of Maryland and their agencies. In case you have not noticed there are some of us who believe MVF is in the “worst financial condition in history” and the infrastructure of Common Property assets are continuing to deteriorate at a much faster rate than the Foundation’s costly restoration remedies that are now being implemented.

Political Action activity in other Planned Unit Developments or Large Scale Homeowner Associations and Condominiums similar in size to Montgomery Village usually operates through designated committees that work with Political Action Committees of trade associations such as the Community Association Institute or the Apartment & Building Owners and Managers Association (AOBA) and national or regional environmental advocacy organizations.

Government Liaison is routinely preformed on the working staff level in coordinating, cooperative and working with the County Department of Public Works and Environmental Protection on Street Tree maintenance and replacement, County street resurfacing and repair, Street light maintenance, storm water management, lake dredging and shore line restoration.

 The cost of maintaining the Government Relations Department with the hiring an in-house legal resource is approaching $250,000 annually.  Few comparable large scale Associations have a staff person or a separate department dedicated exclusively to Government Relations or for that matter an In-House Legal Counsel.

Comment In-House Legal Counsel In all due respect to Christopher Hitchens, who has an extensive background in Community Association Law, comes highly recommended and is very well respected by his colleges and clients, I have concerns, not about him, but why the Foundation needs a full time Legal Counsel “to assist with collection activities and legislative activities”. The Administrative & Financial department budget for 2013 is $1,308,826, up from $1,064,105 (23.0%) from 2007. The Assessment Collection cost center within the A &F budget for 2013 is $310,445 up from $230,921 (34.4%) from 2007. The majority of the legal collection effort will be working with the Assessment Collection personnel to make them more efficient which should not be time consuming. Can the Foundation afford this luxury? What are the savings and or benefit?

Comment Partnering with the Montgomery Village Sports Association “to acquire state bond money to construct a restroom and concession facility in South Valley Park to accommodate the hundred of children spending many hours on park’s sports fields” (2),

Cost Benefit As stated on Welcome to South Valley Park post of February 8, 2012, “The limited use of South Valley Park by visiting sports teams and Lawn Theater patrons does not warrant the expenditure of a quarter of a million dollar for South Valley Park Restrooms.” The original cost was estimated between $230,000 to $250,000, $150,000 for construction and between $80,000 and $100,000 for sewer–water and electrical connections and permit cost. At the April 2013 MVF Board of Directors meeting, the Board approved a contract for Engineering design service for the South Valley Restroom and Concession facility to Benning & Associates for $20,600 with authorization to spend up to $25,000 to cover reimbursable cost and hourly cost as needed for meetings and permit processing. However, this cost maybe as high as $60,000 depending on the outcome for a waiver request from MNCPPPC for a plat requirement for a natural resource inventory and forest conservation plan encompassing the areas where the bathrooms and concessions stand would be built. As it stands now the utility connection, permitting and engineering cost could range between $105,000 to $160,000 before building design and construction cost.  

Legality The objections that Don O’Neill has raises are valid. The Foundation cannot use operating or capital funds to build on Common property a structure for the use and benefit of another organization. Dave Humpton in his 2013 Annual Meeting Message from the EVP identified top priority capital projects implemented in 2012 stated “Community partnership, reaching out to our community partners beyond Village borders is an important component of MVF’s vision for the future including Partnering with the Montgomery Village Sports Association to acquire state bond money to construct a restroom and concession facility in South Valley Park”. Bob Hydorn’s Message from the President stated “A state grant of matching funds was approved to construct a restroom and concession facility in South Valley Park, to accommodate the hundreds of children spending many hours on the park’s sport’s fields.”

Questions In protecting the assets of the Association were the Board decisions based on factual evidence, seeking top value for expenditure of Association funds and has the Board refrained from taking risk with Association funds?

In fulfilling their fiduciary duties did the Board exercise the same degree of care, skill that an ordinarily prudent director of a similar business would exercise?

In exercising its power, duties and responsibility did the Board supervise all officers, agents and employee of the Association to ensure their duties were properly preformed?

Comment Montgomery Village Vision 2030 Since the final Vision 2030 report was approved by the MV Board of Directors and submitted to Montgomery County Council and Planning Board, as outlined in the March 1 2013 edition of the MV News article by Roslyn Price Montgomery Village –our flourishing community;

Rollin Stanley the Montgomery County Planning Director, who so ably worked with the MVF Long Range Facilities Planning Committee Vision 2030 program, resigned to accept a position as Planning, Development and Assessment Department for Calgary, Alberta, Canada’s third largest city.

Of the four properties identified as an important part of any overall plan the Village Center, Professional Center, Montgomery Village Golf Club and the corner of Lost Knife Road, only the Golf Club is still flourishing.  Such Core Elements of Vision 2030 such as “Creating of a pedestrian-friendly environment that interconnects with the trails network”, “Developing an architectural dramatic gateway to the Village”, and  “Creating a mixed use town center environment at the present Village Center” have faded into the background.  

The MVF Long Range Facilities Planning Committee process provided an excellent framework for crafting obtainable goals and objectives. However, it also produced a good feeling sedative of denial of the Village’s most critical concerns, the Foundation’s blotted costly ineffective bureaucracy, crumbling infrastructure, financial chaos, fleeing commercial institutions and increasing crime.  The Village has isolated itself from Upper Montgomery County communities and the City of Gaithersburg that encompasses the Village on all borders and has taken NIMBY to a new level of rightist denial of its own serious but correctable conditions.  Montgomery Village cannot save and protect the environment alone, however, it can do its part and ensure the Foundation does the right thing to manage, maintain, enhance, preserve and protect its treasured assets of its parks, rivers, lakes, trees, landscaping, recreation facilities, storm water facilities, and wildlife habitats.