The Semiahmoo Experience With Joint Partners Consulting
- Concerned Semiahmoo Residents
- May 18, 2021
- 6 min read
It is our understanding that at the end of its engagement Joint Partners may have received a letter of recommendation from the SRA [i] Board. Although we not seen this letter and do not know its content, we believe it is important to tell the story as seen and experienced by most of the membership.
Summary
The SRA [I] Board inexplicably declared a crisis of governance in what had always been a well-run homeowners’ association (HOA). Joint Partners Consulting was brought in at a cost ultimately adding up to more than $220,000 to address the situation. As self-proclaimed expert HOA crisis managers they could have reasonably been expected to defuse the alleged crisis. Instead, Mitch Waterman and Jennifer Spidle, through their newly formed company, Joint Partners LLC, provided bad advice and incomplete deliverables. What followed was a series of ill-fated decisions by the Board that escalated into a conflict with the membership, culminating in the President being recalled from the Board. For more on this, please scroll down and read on below.
The Story of the SRA, Mitch Waterman and Jennifer Spidle
Semiahmoo is a development of some 900 high end condominiums, townhouses, and single-family homes in the very Northwest corner of Washington State. The homeowners’ association is called the Semiahmoo Resort Association [i] or SRA for short.
The SRA has been a self-managed organization for all of its 38-year existence. Boards largely consisted of resident retired senior professionals and managers who volunteered their time on a “working board”, which served to keep costs and assessments low.
In 2020 the Board, out of the clear, declared that the organization was “in crisis”. What was wrong? The finances were in order and reserve accounts were adequately funded. The common property was well maintained. No natural disasters had occurred. Storm water was always a challenge, but no more than it had been for the past 38 years. What was the problem? Apparently, the Association’s GOVERNANCE was broken. It was all messed up. Who knew?
A consulting contract was signed with Joint Partners LLC and its principals Mitch Waterman, CMCA [ii] and Jennifer Spidle, CPA [iii], CMCA, at a cost of $165,000 for 6 months of work to address this “crisis” in governance. This was in addition to $40,000 in fees they charged for services before the 6-month contract was signed. The $27,500 monthly cost of this contract far exceeded market value for the services provided. However, they represented themselves as experts in all HOA affairs, especially in crisis management. Their initial assessment painted a dire picture of future legal liabilities and impending doom if the crisis in governance was not addressed immediately. But, they proclaimed, they were ready and able to come to the rescue.
On the recommendation of these expert HOA consultants, the cost of the contract was going to be funded by levying a ½ of 1% transfer fee (Transfer Fee) on the sale of all properties in the SRA community. Such a fee, Mitch Waterman said, is common in Washington for HOAs like the SRA. In fact, it is not. Washington HOA law expressly prohibits it, except under limited circumstances, none of which applied to the SRA!
The membership strongly opposed the Transfer Fee of ½ of 1% and the spending of so much money on consulting services to solve a problem that few understood and most doubted even existed, and the members pushed back hard.
Between the legally prohibited Transfer Fee and a near revolt by the membership, the Board was forced to retract the ½ of 1% proposed Transfer Fee but insisted on continuing the consulting contract. If you think that was the end of it, you would be wrong.
Without the revenue from the ill-fated Transfer Fee, but still containing the large expenditures for consulting services, the 2021 budget showed a big deficit that could only be funded by dipping into reserves. The Board forged ahead. The earlier budget containing the revenue from the Transfer Fee had already been circulated for approval and voting was underway as part of the Annual General Meeting process. That budget was replaced by the revised budget – the one with the large deficit, funded by dipping into the reserves. And voting continued. It was a fiasco of voting on switched budgets. In one and the same election some part of the members voted on the first version of the budget, and the remaining members voted on the second version. The final vote was about 2 to 1 to reject the budget, but the total participation fell just a few votes short of the high threshold required under Washington law to reject any HOA budget. The Board therefore declared the budget “passed”. A large part of membership was very unhappy and trust and confidence in the Board took a big hit.
If there had not been a crisis before, there definitely was one now! During this time, the Board was being advised by the Joint Partners, Mitch Waterman and Jennifer Spidle, experts in HOA crisis management. In fact, Mitch Waterman was acting as Interim General Manager pursuant to the consulting contract.
Soon it became known that had the budget been rejected, the consulting contract with Joint Partners would have terminated automatically without penalty. Now that the budget had been declared passed, the SRA would instead owe Joint Partners a $45,000 cancellation penalty if it had wanted to terminate the consulting contract, which was an unconscionably high termination penalty.
It is not known to us what advice Mitch Waterman and Jennifer Spidle gave the Board or what role they played in this matter. We do know however, that they did have a large financial stake in the outcome.
And so, the work on the supposedly broken and dysfunctional governance began.
Pursuant to the consulting contract, Mitch Waterman was named Interim General Manager (sidelining the long-time incumbent Executive Director), and Jennifer Spidle was named Accounting Manager. One employee was quickly let go and the long-serving and well-respected maintenance manager quit in frustration, to quickly be replaced by an employee Mitch Waterman hired while at Sudden Valley, another large HOA South of Bellingham. Mitch Waterman and Jennifer Spidle both worked at Sudden Valley earlier.
The output of the consultants consisted mostly of a collection of mission statements, detailed and bureaucratic procedures, codes of conduct and committee charters, etc. Few if any tangible improvements were visible to the membership as a result of all the money spent.
The 6-month consulting contract was to end on March 30, 2021. The membership asked the Board for a commitment not to continue the expensive consulting work with Joint Partners, or to hire its principals, Mitch Waterman and Jennifer Spidle, as employees. At first, the Board refused. Things went from bad to worse. As pressure from the members mounted, the President grudgingly agreed not to renew the consulting contract with Joint Partners but continued to refuse to commit to not hire the principals as employees or bring them back under another newly formed entity.
The relationship between the members and the President continued to deteriorate and culminated in his removal from the Board in a recall election with heavy turnout and a 76% vote to recall him.
The crisis had grown even deeper. And during much of this time the President and the Board were being advised by Mitch Waterman and Jennifer Spidle, who were supposed to be experts in defusing just such a crisis.
And the story still does not end there!
Recently it came to light that the President and Mitch Waterman had worked together to have the final payment under the consulting contract made even before the contract ended, circumventing internal controls that – ironically – were supposed to have been put in place or at least strengthened by Jennifer Spidle as one of the deliverables of the consulting contract. The findings of a review of this matter by an SRA member, a CPA not affiliated with the board, can be read here.
At the time the final payment was made no audit or evaluation had been performed to determine whether the deliverables under the contract had indeed been completed. The same member conducted an audit of the deliverables of the consulting work in the finance area. The findings were that, although Joint Partners had stated that the deliverables had all been completed, a significant number had not, and much of what was delivered was of questionable quality and practical value. As far as we know, a similar assessment of deliverables in the non-finance part of the contract has not been performed as of this writing. The complete report on the finance related audit of deliverables can he read here.
In the end, the SRA, which had been tranquil and at peace, ended up in big turmoil and with a $220,000 decline in its bank account. If part of the job of the crisis managers from Joint Partners had been to avoid or defuse a crisis, the opposite had happened. In at least one case, that of the Transfer Fee, Joint Partners gave bad advice and its involvement had the appearance of a conflict of interest. Trust in the board had taken a big hit and $220,000 of the SRA’s funds have been spent on consulting that mainly produced paperwork, while many deliverables remained incomplete. As for positive results? If there were any, they are few and any deliverables that can be identified came at a cost that was so high that it made no practical or business sense.
[i] The Semiahmoo Resort Association (SRA) also does business under the name Semiahmoo Residents Association. Both names refer to the same organization. [ii] CMCA is the abbreviation for Certified Manager of Community Associations. More information on this designation can be found here. [iii] CPA is the abbreviation for Certified Public Accountant. More information on this designation can be found here.
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