I have to figure most that read this blog have a pretty well versed in the spirit and general nature of this community. For a quick review: Columbia, Maryland was established to be “a better city.” At the outset, this master planned community was predicated on people of all races, religions, economic status and ages living well together. At that time, the town was designed for people of different backgrounds and cultures to live in close proximity. This was supposed to allow for growth and appreciation of neighbors. In the early years, self-selecting residents populated the town with this in mind. I think most in this town would consider this arrangement a success…until now.
Recently, two long-tenured Columbians wrote letters to the editor about Symphony Woods. Now I know that there have been quite a few letters about the park downtown, but these letters in particular stuck out for their underlying logic.
One letter reserved the anti-Columbian theme for the closing paragraph (CA has 'no business' serving others with Columbia homeowners' money):
Recently, two long-tenured Columbians wrote letters to the editor about Symphony Woods. Now I know that there have been quite a few letters about the park downtown, but these letters in particular stuck out for their underlying logic.
One letter reserved the anti-Columbian theme for the closing paragraph (CA has 'no business' serving others with Columbia homeowners' money):
But the real question is, why is CA, a homeowners association, going to develop a "world-class cultural and arts space"? CA was originally called the Columbia Parks and Recreation Association (CPRA). They changed their name, but their original mission to serve their residents remains. They have no business serving others with our monies.
In the second letter, the author is a bit more loquacious, but hits the same points(CA's proposal for Symphony Woods goes out of bounds):
Columbia Association's proposal to develop a Symphony Woods "Arts District" as a regional attraction goes far beyond the association's legitimate scope of interest as a homeowners association. CA's charter states that it is the purpose of CA, "To organize and operate a civic organization … which shall be organized and operated exclusively for the promotion of the common good and social welfare of the people of the community of Columbia and its environs." Drawing in people from other counties fails the "exclusively" test.
This current proposal would put CA's residents' property (i.e. Symphony Woods) — and their assessment payments — to the regular service of patrons spanning a widespread geographic area, not just Columbians— not even only Howard County residents. I question whether this is a proper use of CA assessment payer resources.
In each case, the author raises a questions the validity of the arts district concept. Each author then attempts to tie this question to the fact that the State of Maryland considers the Columbia Association a homeowners association. Raising these two items then leads each reader to the conclusion that amenities within Columbia should be funded for the exclusive use of lien payers.
Read that again. In the community that celebrates diversity, exclusivity is the standard for these residents that have benefited from decades of living here. This point is both breathtaking and disturbing at once. It is an affront to what Columbia is and how Columbians live.
Beyond the spirit of Columbia discussion, the logic behind the exclusivity argument. Simply put, the logic is flawed, and so we come to a teachable moment (probably the best of outcomes).
It is true that the State of Maryland considers the Columbia Association a Homeowners Association. However, the Columbia Association predates the Homeowners Association Act by about two decades. When quoting the Columbia Association Charter, it is crucial to consider the time the Charter was written. In the late 1960’s, Columbia’s purpose as stated in its Charter did not seek to conform to State statute, other than that as a non-profit, non-stock corporation. The aim was to secure status as a non-profit “Social Welfare” organization under IRS Tax Code. This is evident by a comparison of the stated purpose of the Columbia Association:
Read that again. In the community that celebrates diversity, exclusivity is the standard for these residents that have benefited from decades of living here. This point is both breathtaking and disturbing at once. It is an affront to what Columbia is and how Columbians live.
Beyond the spirit of Columbia discussion, the logic behind the exclusivity argument. Simply put, the logic is flawed, and so we come to a teachable moment (probably the best of outcomes).
It is true that the State of Maryland considers the Columbia Association a Homeowners Association. However, the Columbia Association predates the Homeowners Association Act by about two decades. When quoting the Columbia Association Charter, it is crucial to consider the time the Charter was written. In the late 1960’s, Columbia’s purpose as stated in its Charter did not seek to conform to State statute, other than that as a non-profit, non-stock corporation. The aim was to secure status as a non-profit “Social Welfare” organization under IRS Tax Code. This is evident by a comparison of the stated purpose of the Columbia Association:
"To organize and operate a civic organization … which shall be organized and operated exclusively for the promotion of the common good and social welfare of the people of the community of Columbia and its environs."
With the Definition of the 501(c)(4)-1(a)(2) organization in the United States Code of Federal Regulations:
(2) Promotion of social welfare—(i) In general. An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community.
Another interesting aspect of the 501(c)(4) tax code designation; corporations that carry this designation cannot limit their facilities to a particular membership. In fact, their facilities and common areas must be made available to the general public. Because the terms “social welfare” and “community” are difficult to define, the IRS published an extensive report on the subject (“Social Welfare: What Does It Mean? How Much Private Benefit Is Permissible? What Is A Community?”) in 1981. The following passage is taken directly from the report:
Following its unsuccessful efforts, to clarify this problem the Service published Rev. Rul. 74-99, 1974-1, C.B. 131, to modify Rev. Rul. 72-102. This new ruling provided that a homeowners' association, to qualify for exemption under section 501(c)(4), (1) must serve a "community" which bears a reasonably recognizable relationship to an area ordinarily identified as governmental; (2) must not conduct activities directed to the exterior maintenance of private residences, and (3) the common areas or facilities it owns and maintains must be for the use and enjoyment of the general public. The ruling indicates that an association of homeowners that enforces covenants and owns and maintains common areas and streets is presumed to be organized and operated primarily for the benefit of its members, unless it overcomes this "prima facie" presumption by satisfying the three preceding elements.
In addition, the following bit of guidance may also be helpful to those that believe geography dominates the actions of the Columbia Association:
Size of membership in ratio to local population is not controlling on whether an organization is "civic" or "social." The number affected is not the criterion. A private project may touch an appreciable segment of the people or a large physical area and yet, for want of of the considerations mentioned, not be converted into a civic or social undertaking. Classification as "civic" or "social" depends upon the character - as public or private - of the benefits bestowed, of the beneficiary, and of the benefactor.
And in case anyone was wondering if the IRS has changed its stance on Social Welfare since 1981 (heck, I did), here is an excerpt from their current page on 501(c)(4) organizations (scroll down to Jeopardizing Exemption).
In summary, the Columbia Association was created two decades before the Maryland Homeowners Association Act. It was formed as a Maryland Non-Profit, Non-Stock Corporation and received tax-exempt status from the IRS as a 501(c)(4) Social Welfare organization. By this designation, the Columbia Association must demonstrate that their works benefit the community as a whole and not just members. In addition, open space and facilities owned by CA must be accessible to the general public.
It is worthy of noting here that the Columbia Association has worked through the last twenty years stating to the IRS that they do not operate in the manner of many other homeowners associations (to preserve their 501(c)(4) status) while at the same time adhering to State Law regarding homeowners associations. I posit that if HAL were presented with this dilemma (instead of keeping the Odyssey’s true mission secret), Dave would have never stood a chance.
Now, getting back to the logical fallacy; we have clearly established that adhering to the “lien payers only” position put forth by the authors would jeopardize the Columbia Association’s tax exempt status.
The next question we have to ask is “do arts districts exist as 501(c)(4) or 501(c)(3) organizations? The answer is a very big yes.
It is worthy of noting here that the Columbia Association has worked through the last twenty years stating to the IRS that they do not operate in the manner of many other homeowners associations (to preserve their 501(c)(4) status) while at the same time adhering to State Law regarding homeowners associations. I posit that if HAL were presented with this dilemma (instead of keeping the Odyssey’s true mission secret), Dave would have never stood a chance.
Now, getting back to the logical fallacy; we have clearly established that adhering to the “lien payers only” position put forth by the authors would jeopardize the Columbia Association’s tax exempt status.
The next question we have to ask is “do arts districts exist as 501(c)(4) or 501(c)(3) organizations? The answer is a very big yes.
Arts districts have been created throughout America, and most are designated as either a 501(c)(4) – CA’s current designation or a 501(c)(3) the designation sought for the Symphony Woods Trust.
So the last timber to fall here is the homeowners association argument. As in “should CA, as a homeowners association, be creating an arts district?” As I have alluded to here, I believe that the homeowners association label is just one face of the Columbia Association. I believe that an arts district affiliated with the Columbia Association, no matter where it is located, is just as relevant to Columbia as anything else CA does. I say this without any corroborating report or obscure article for justification. I just believe it. So I ask you, who is more anti-Columbian, the guy who says sometimes CA will do things that are not traditionally associated with homeowners associations, or the people that write CA should enforce an exclusive doctrine at their facilities?
So the last timber to fall here is the homeowners association argument. As in “should CA, as a homeowners association, be creating an arts district?” As I have alluded to here, I believe that the homeowners association label is just one face of the Columbia Association. I believe that an arts district affiliated with the Columbia Association, no matter where it is located, is just as relevant to Columbia as anything else CA does. I say this without any corroborating report or obscure article for justification. I just believe it. So I ask you, who is more anti-Columbian, the guy who says sometimes CA will do things that are not traditionally associated with homeowners associations, or the people that write CA should enforce an exclusive doctrine at their facilities?