On July 2, the Golden Rain Foundation announced it would terminate its contract for management services with Associa/PCM. Questions as to why it happened and where GRF is heading were left unanswered. The Globe sat down with Associa CEO Joey Carona and GRF President Kathryn Freshley separately and asked them the same questions.
Q: What led to the termination?
Carona: Things were running smoothly after Associa acquired PCM five years ago. From what we heard, things had been great. Things were working smoothly, the boards were happy, the staff was happy. It all started shifting as soon as the new GRF board began to take greater prominence. It was a board that really had one mission in mind, and that was to reduce costs. Laguna Woods has a large operating budget, and they believed there was opportunity to do it in a more efficient manor. GRF wanted to change the management structure and go into a self-management model without a management company, where the community would directly hire the employees, as opposed to hiring a management company who hires the staff and manages them. The board said that they didn’t trust the current executive team. They wanted everyone gone, including Jerry Storage, because, they said, they are overpaid and they don’t give us what they want.
There was a call from multiple board members to have a blanket 10 percent reduction in payroll and personnel costs. We took everything they shared with us and we tried to document it in a way that took it from just ideas and gut reactions to actionable items. We gave them these 17 different plans and, as we presented it to them, went through all the pros and cons. From there we never received a response from GRF until the termination notice.
Freshley: The problems have been here for years. GRF lacked any oversight over Associa’s operations. The lack of transparency created a wall between GRF and Associa, and culminated into reckless spending and lack of confidence that PCM employees were doing what GRF wanted them to do. Because there is kind of a wall with Associa, we didn’t have the data we needed to make logical decisions. They are our employees because we are paying everything, but we don’t know how people were being compensated. We don’t know what the employee pay and benefits are, which are 50 percent of our costs.
When (former GRF director) Mike Comer was on the board, he called for a review of Jerry Storage and drafted a list of problems to send back to Associa. Associa hired a consultant to come in and diagnose the problem. When they came back and made the presentation to us, they said, “These are the things we see are issues. These would be our recommendations to you; it’s up to you to decide whether you implement them or not.”
Associa wanted to bring in new people, outsource financing to Texas, but bringing someone else in wouldn’t solve the issues. These were things that were absolutely unacceptable; if we lose the financials, we lose control over the entire community. When we got the 17 recommendations, it told us that they view the community from their model, which doesn’t fit us.
The fundamental difference between our HOA and the other HOAs Associa manages is we’re not a typical HOA. And that is the basic fallacy in the whole thing. Read more: