Tuesday • March 28, 2023
Guest Post: The Rouse Project 2.0: The Truth about the Tenure of Former Columbia Association President Lakey Boyd and the Wrongful Smear Campaign Against the CA Board
By Jake Burdett
By Jake Burdett
Over the past few months, Howard County residents have been inundated with news stories, blog posts and social media conversations focused on a purportedly dramatic and controversial conflict between the volunteer, elected members of the Columbia Association (CA) Board of Directors, and the hired CA President/CEO Lakey Boyd. The narrative being pushed by many local blogs and MD-based media outlets has been aggressive and consistent:
This is Part 1 of a multi-part blog post that will explain why this current dominant narrative around the Lakey Boyd situation that much of the public has become convinced of is actually completely false, and is instead the product of a well-coordinated disinformation and smear campaign being pushed by local blogs, media outlets, and community members with significant financial and professional ties to the development of downtown Columbia and the surrounding area, and the CA’s role in that development. In fact, many of the most vocal supporters of Lakey Boyd who have publicly pushed this false narrative are the same figures who organized and led the failed 2021 Developer takeover attempt of the CA Board through the CA elections by a developer-funded and Orwellian-named Dark Money group called “The Rouse Project”.
This series of posts will show that:
Evidence from actual CA contracts signed by Lakey Boyd and related documents will be presented that strongly suggest she was making decisions favorable for The Howard Hughes Corporation and other downtown Columbia business interests at the expense of CA resources and lien payers.
Additionally, it will be shown that Ms. Boyd repeatedly obstructed the CA Board from pursuing their fiduciary duties to CA residents to inquire about and properly oversee how she was allocating CA funds. Any attempts by the CA Board to do so were strongly rebuked by Ms. Boyd and her defenders and were unfairly characterized as attempts to “micro-manage” her. Let’s be clear: attempts at basic oversight over an employee is not at all unreasonable for the CA Board to engage in, and, in fact, they would be neglecting their duties to CA residents if they did not attempt to do this.
Even more concerning, it will be shown that under Boyd’s watch, vital information, documents, reports and statistics were repeatedly withheld from the CA Board, leading them to make several major uninformed decisions on behalf of the CA which could cost CA residents millions of dollars in the long run, and ultimately result in the destruction of Lake Elkhorn and other CA waterways.
All of this and more will be documented in this blog series.
Lakey Boyd as The Rouse Project 2.0
To begin, the three-part blog series published in 2021 by local Howard County activist Hiruy Hadgu called “Beware the Rouse Project” is highly recommended prerequisite reading.
The Rouse Project was an unprecedented attempt by developers (mostly Howard Hughes Corporation) and other downtown Columbia business interests to fund a slate of candidates in the 2021 CA elections, in an effort to take over the CA Board and divert CA resources to these developer and business interests at the expense of CA residents.
While The Rouse Project organization and their candidates espoused a benevolent-sounding agenda, their obvious lack of transparency led many local community Watchdogs, including Mr. Hadgu, HoCo Watchdogs (also this followup post), and even former Howard County Executive Liz Bobo to scrutinize them more carefully and sound the alarm on their true intentions.
In the end, the Columbia/CA voters saw through The Rouse Project’s manipulative facade that exploited the deceased Jim Rouse’s namesake and image, and only two members of The Rouse Project’s slate of candidates were elected in 2021. The following year, both Rouse Project candidates who managed to get elected in 2021 were handily defeated in their re-election campaigns, because it was thoroughly clear to voters at that point that these Rouse Project candidates were working for special interests rather than for the community.
Although no Rouse Project candidates currently reside on the CA Board, it is nonetheless still important to read these past blog posts that document the actions and motives behind the developer-funded CA takeover attempt in the 2021 CA elections in order to fully understand what was really behind the recent events and controversies surrounding Lakey Boyd’s time as CA President.
To understand how The Rouse Project in 2021 and their candidates and backers are relevant to Lakey Boyd’s time as CA President, it is important to recall what The Rouse Project publicly stated as its motives for forming and running candidates. These publicly stated motives by The Rouse Project can be summarized into two main groups:
The first publicly-stated motive of The Rouse Project, of wanting to prioritize racially diverse candidates, quickly revealed itself to be nothing more than deceptive & insincere virtue signaling, as most of the candidates they ended up running and supporting were also white. One of the few non-white candidates they ran, who lost her race, is now an employee for the main developer that funded The Rouse Project: The Howard Hughes Corporation.
However, the second publicly-stated motive of The Rouse Project was actually surprisingly honest and transparent: The Rouse Project and their developer and corporate funders not only sought to control the CA Board, but they also wanted to ensure that the CA President would be under their influence, as well.
Luckily for Columbia residents, The Rouse Project was not successful at taking over the CA Board in 2021. But unfortunately for Columbia residents, The Rouse Project did apparently get their wish of having a CA President in their pocket with the hiring of Lakey Boyd.
The next parts of this blog series will detail some of the specific favors for Howard Hughes Corporation and other corporate and developer entities that seemingly occurred under Lakey Boyd’s watch, and will demonstrate her concerning lack of transparency with the CA Board as they attempted to provide oversight and make fiscally responsible, informed decisions. Also included will be a breakdown of the biased, bad faith, coordinated attacks on the CA Board related to this issue that were led by select community members and media outlets with clear conflicts of interest regarding the development of Downtown Columbia and the CA’s role in that process.
Favorable Contracts to The Howard Hughes Corporation-Owned Properties Awarded Without CA Board Knowledge or Approval
In order to understand the conflict surrounding former CA President Lakey Boyd’s tenure, it is essential to know the relationship between the CA Board of Directors and CA President/CEO and how that working dynamic is supposed to function.
The ten members of the CA Board of Directors are unpaid volunteers who live in the community. Each Board member is elected annually by the residents of the Village in which they reside to serve as CA Board representative for one of the ten Villages of Columbia .
The CA President/CEO, on the other hand, is a highly paid staff member who is selected and hired by the CA Board to work with Board members and CA staff to carry out the CA’s responsibilities and duties to CA residents in whatever way(s) that CA residents and their elected Board representatives see fit.
This is a critical dynamic to emphasize: The CA President is a hired staff member who is required to report directly to the CA Board, the democratically elected entity that serves as the CA President’s hiring manager and supervisor. Thus, through this representative governance, the CA president indirectly reports to all CA residents who elect the CA Board members and pay the CA President’s salary through their annual CA dues.
If a CA President refuses to work cohesively or effectively communicate with the CA Board, awards favorable contracts to private entities which affect CA resources without ever disclosing these deals to the Board, and restricts the Board’s attempts to provide oversight and communicate with lower level CA staff, a serious breakdown in trust, communication, and overall effectiveness of CA leadership occurs. Unfortunately, former CA President Lakey Boyd was seemingly doing all of these things, and this is what caused the CA Board — the entity that had only a short time ago enthusiastically hired her — to assign her an unfavorable annual review and explore all corrective actions available to them, including potentially replacing her with a new CA President who would prioritize community interests.
One of the strongest powers the CA President has, granted by the CA Bylaws, is the ability to enter into contracts on behalf of the CA–even those which may greatly impact the CA’s finances–without CA Board approval and without even having to disclose to the Board that the contracts have been entered into at all.
While this bylaw still exists today, actions taken by Lakey Boyd during her time as CA President demonstrate how this power can be abused, including the awarding of seemingly favorable contracts to Howard Hughes Corporation-owned properties, and other corporate and developer-related entities tied to The Rouse Project.
One glaring example of this was the contract awarded by the CA during Ms. Boyd’s short time as CA president to the new lessee (a tenant in a commercial lease) of the old Clyde’s restaurant space on the Lakefront in Downtown Columbia.
The Columbia Association actually owns the open-space property adjacent to the Howard Hughes Corporation-owned building where Clyde’s operated out of, and the CA has long contracted with the businesses there to allow them to use the CA’s outdoor open-space as a dining area, for a fair monthly rent price.
While there is nothing wrong with the CA making contracts with developers and corporations/businesses, it is expected that the terms of the contracts should give CA residents/lien-payers a fair shake, and that the contract should not not needlessly waste or undervalue CA resources, including the use of their open-space.
Unfortunately, as will be shown below, former CA President Boyd seemingly gave the new tenant of the old Howard Hughes Corporation-owned Clyde’s space a contract which is hard to describe as nothing less than what seems like a sweetheart deal for the Howard Hughes Corporation entity, and did so without the knowledge or approval of the CA Board.
Below is a copy of the map used in the recent contract for the new Clyde’s Space tenant, “The Collective 13 Hospitality Group, LLC”, signed by Lakey Boyd as CA President/CEO on December 30, 2021. Although the contract was signed by Lakey Boyd without the Board’s consent or knowledge, the full contract was able to be obtained by legal right via a Maryland HOA Act Request by a CA resident.
The Howard Hughes Corporation owns the former Clyde’s building itself, but the CA owns much of the open-space around the building, and typically contracts with Howard Hughes Corporation and/or its tenants to allow them to use the open-space as an outdoor dining and entertainment space for a fairly-priced monthly rent.
As CA President, Lakey Boyd signed a contract with the new Clyde’s space tenant, The Collective 13 Hospitality Group, LLC, to allow them to use the outdoor open-space labeled as Area A1, Area A2, Area B1, and Area B2 on the above map.
There would be nothing inherently wrong with this contract as long as the open-space property had been contracted for a fair market value in a way that maximizes its use for CA residents and lien-payers. However, when compared to previous rates that the CA charged to lease this very same open-space property in the past, that the contract signed by Ms. Lakey seems to have greatly undervalued the property’s true worth, and has in turn apparently given a sweetheart deal to Howard Hughes Corporation’s tenant.
Below is the very first page of the lease agreement that former CA President Boyd signed with the new tenant of the Howard Hughes Corporation-owned building, which outlines that the contract is indeed for the outdoor Areas A1 and A2 and Areas B1 and B2 in the map, and also contains the monthly rent payments that the tenant is obligated to pay to the CA for the use Areas A1 and A2.
As can be seen in Section 3.1 of the contract, under Ms. Boyd’s leadership and without the knowledge or consent of the CA Board, the CA agreed to lease Areas A1 and A2 to the tenant for $1,400 a month. Importantly, this lease was established for a period of six years (Section 2.1 specifies it is a 72 month lease), and the monthly rent price was set to remain unchanged for all six years of the lease, with no annual increases included.
There are two alarming issues with this contract:
Again, there is nothing inherently wrong about Lakey Boyd making a contract with the new tenant to allow them to use the CA’s open space there, as has been done in the past, as long as the open-space is being contracted for at fair market value in a way that maximizes its use for CA residents and lien-payers.
One way to estimate the fair market value of this particular open space is based on what it has been valued at in the past, in contracts with prior tenants. Below is a map from the 2013 lease contract signed by the then-CA President Phillip Nelson with the then-tenant (Clyde’s) of the Howard Hughes Corporation owned building for Clyde’s use of the CA’s open space. Similar to the 2021 lease, this 2013 lease contract was obtained by legal right via a Maryland HOA Act Request by a CA resident.
There is a key difference between the original 2013 lease agreement signed between then-CA President Phillip Nelson and then-tenant Clyde’s, and the 2021 lease agreement signed between then-CA President Lakey Boyd and current Howard Hughes Corporation tenant The Collective 13 Hospitality Group, LLC: while the 2021 lease contract signed by Lakey Boyd was for use of CA-owned open space Areas A1 and A2 & B1 and B2 (over 5,000 square feet of CA-owned open space), the 2013 lease contract signed by Phillip Nelson (map pictured above) was only for use of CA-owned open space Area A1 (just 982 square feet of property).
A side by side comparison of the map for the CA-owned open space that the original 2013 Phillip Nelson lease was for (on the left side) vs. a map for the CA-owned open space that the 2021 Lakey Boyd lease was for (on the right side) can be seen above, as a visual aid.
In the 2013 Phillip Nelson lease map on the left, the lease was only for the tenant (Clyde’s) to use 981.68 square feet, which approximately lines up with the 960 square feet in the open space labeled Area A1 in the 2021 Lakey Boyd lease on the right.
Additionally, the 2021 lease signed by Ms. Boyd allowed the new Howard Hughes Corporation tenant (The Collective 13) to use not just open space Area A1, but also open space Areas A1, B1, and B2. Again, while not inherently wrong, all the open-space being contracted should be awarded at fair market value in a way that maximizes its use for CA residents and lien-payers.
The 2021 lease contract listed separate monthly rent terms for Areas A1 and A2, and Areas B1 and B2. Let’s examine the monthly rental rate that the Lakey Boyd-led CA charged The Collective 13 for Areas A1 and A2 ($1,400/month flat rate for 6 years), and how that compares to the monthly rental rate that the previous tenant (Clyde’s) was required to pay by then-CA President Phillip Nelson for just the CA-owned open space in Area A1 according to the 2013 lease.
Before this examination, it is important to note the substantial difference in size between just Area A1 contracted for in Phillip Nelson’s 2013 lease, and Areas A1 and A2 partially contracted for in the Lakey Boyd 2021 lease: the 2013 lease for Area A1 allowed the tenant (Clyde’s) to use just 981.68 square feet of CA-owned open space, while the lease of Areas A1 and A2 partially covered by the Lakey Boyd-signed 2021 contract contains 1,425 square feet of CA-owned open space — approximately 45% more square feet than what was awarded by the 2013 lease.
Common sense would dictate that the monthly rent rate for Areas A1 and A2 partially covered by Lakey Boyd’s 2021 lease would be roughly 45% higher than the monthly rent rate for the significantly smaller area covered by Phillip Nelson’s 2013 lease, and also adjusted for inflation.
Instead, as shown below, under Ms. Boyd’s leadership, the CA charged a monthly rent approximately 65% less ($1,400) than what this comparable 3%-annual inflation-adjusted rate should have been for Areas A1 and A2 (a 45% larger property area) in 2021 ($2762 * 1.45 = $4,004).
Pictured above is the monthly rental agreement between the Howard Hughes Corporation tenant (Clyde’s) and the CA from then-CA President Phillip Nelson’s 2013 lease contract with Clyde’s, for approximately Area A1 of CA’s open space.
As mentioned earlier, unlike the 2021 lease signed by Lakey Boyd with the new tenant, Phillip Nelson’s 2013 lease complies with the industry norm of increasing the monthly rent annually, likely to keep up with the cost of inflation, since the increase in monthly rent from year to year seems to be about 3%.
Beyond Lakey Boyd straying from this industry norm, what is more concerning is that despite the 2021 Lakey Boyd lease contract being for 45% more open space than the 2013 Phillip Nelson lease contract was when it came to Area A, it charges the Howard Hughes Corporation tenant over 50% less monthly rent than it charged the previous tenant eight years prior, without even adjusting that rent for eight years worth of inflation. The rental rate in the 2013 contract was as much as $2,845 a month for 981.68 square feet of CA-owned open space, but only $1,400 a month for 1,425 square feet of CA-owned open space in Lakey Boyd’s 2021 lease contract)!
At this point, it is worth explaining what a fiduciary duty is, and how it is relevant here. “In terms of businesses and corporations, a fiduciary duty is an obligation to act in good faith, with the care of a reasonable person in a similar position and the belief that their decisions are in the best interests of the company and its shareholders.”
Although fiduciary duties are often talked about in the context of for-profit corporations, fiduciary duties also apply for Corporate Officers like the President of a 501(c)(4) non-profit service corporation such as the CA. In the context of a 501(c)(4) non-profit corporation Homeowners Association like the CA, the President and Board of Directors’ fiduciary duty is towards the members/residents of the HOA, rather than to the shareholders of a private for-profit corporation.
It is the fiduciary duty of the Board of Directors and of Corporate Officers (like the President) of the CA to make sure that any contracts, leases, financial decisions, etc. entered into by the CA on behalf of all CA members/residents is in the best interests of those residents, meaning any contracts with private entities like The Howard Hughes Corporation tenants are for fair market value so that CA member/resident resources are not being disproportionately taken advantage of for private gain.
By unilaterally signing a contract to lease CA open space for a 50%+ decrease in monthly rent for a 43% increase in open space for Area A compared to the previous tenant, and for a monthly rate that does not increase annually to account for inflation in accordance with industry norms and prior CA practice, former CA President Boyd raised serious questions about whether she was upholding her fiduciary duty to CA members. It is worth noting that breach of fiduciary duty is a valid cause of action for a legal claim in Maryland.
The terms of the 2021 lease contract signed by Ms. Boyd become even more concerning when examined further. This lease was not just for CA-owned open space in Areas A1 and A2, but also for Areas B1 and B2. Recall that the original 2013 lease contract was only for Area A1. However, an Amendment was added on February 8, 2016 to this 2013 lease which added CA-owned open space Areas B1 and B2 to the contract.
The 2016 Amendment to the 2013 lease contract referred to Areas B1 & B2 as the “Pavilion”, and can be seen in the map from the 2016 lease Contract Amendment pictured above. Comparing the monthly rental rate that the CA charged the Howard Hughes Corporation tenant (Clyde’s) for the CA-owned open space in Areas B1 & B2 (The Pavilion) in 2016 with what Lakey Boyd’s CA charged the new tenant to use the same open space in the 2021 lease contract raises the same concerns about fiduciary duty that resulted from our earlier analysis of the 2013 vs. 2021 contract terms for Areas A1 & A2.
A side by side comparison of the area labeled “The Pavilion” in the 2016 Contract Amendment (on the left side), and Areas B1 & B2 in the 2021 lease contract (on the right side) are shown below to illustrate that they are indeed the same areas of open space, just being referred to by different names in different lease contracts and being represented a little bit differently on different maps. The 2016 Contract Amendment uses an aerial view of a real image, whereas the 2021 contract uses a sketched drawing of the relevant plot of land and sections of CA-owned open space being leased through contract.
Unfortunately, once again, former CA President Boyd seems to have leased out CA-owned open space in Areas B1 & B2 (The Pavilion) for a significantly lower value than the contract with the previous tenant leased it out for. The monthly rent rates for The Pavilion/Areas B1 & B2 in the 2016 Amendment to the 2013 Phillip Nelson-signed lease are shown below. Note that it was then-CA Open Space Management Division Director Daniel D’Amore who signed off on this 2016 Amendment, rather than the CA President.
Similarly, the monthly rent rates for The Pavilion/Areas B1 & B2 in the 2021 Lakey Boyd lease contract can be found below, in Section 3.1.2.
Besides the large difference in monthly rent rates for the same open space, there are also several other important differences between the terms of the Howard Hughes Corporation tenant’s use of the CA’s Pavilion when comparing the 2016 Amendment to the 2013 Phillip Nelson lease with the 2021 Lakey Boyd lease.
First, the 2016 Amendment to the 2013 lease seems to only allow the tenant (Clyde’s) to use the Pavilion open space for 6 months out of the year, whereas the 2021 lease seems to allow the new tenant (The Collective 13) to use it year-round; again, there is nothing wrong with this year-round use of the open space by the tenant, as long as the monthly rent they pay for it is a fair rate.
Another very important difference between the 2 contracts is that the 2016 Amendment to the 2013 Phillip Nelson lease only allowed that tenant (Clyde’s) to use the CA-owned Pavilion/Areas B1 & B2 open space 4 days a week (this was changed to only 3 days a week in a Contract Amendment signed the following year, but with no difference or reduction in monthly rent for the tenant Clyde’s), whereas Lakey Boyd’s 2021 lease seems to allow the new tenant (The Collective 13) to use it 7 days a week; again, there is nothing wrong with leasing out The Pavilion open space to be used 7 days a week, as long as that increase in usage is reflected in the difference of monthly rent being charged to the tenant for its increased use.
Finally, just as with the monthly rents charged for the use of Areas A1/A1 & A2, the 2016 Amendment to the 2013 Phillip Nelson lease complies with the industry norm and has a monthly rent rate for The Pavilion/Areas B1 & B2 that increases by about 3% every year to account for inflation, whereas Lakey Boyd’s six-year contract leases The Pavilion out for a stagnant flat rate that never increases over the course of its term.
Since the 2021 lease allows the new Howard Hughes Corporation tenant (The Collective 13) to use the same amount of open space with The Pavilion/Areas B1 & B2 for twice the amount of time as the previous tenant (Clyde’s) was allowed to use it for under the 2016 Amendment to the 2013 Phillip Nelson lease, then one would reasonably expect for the monthly rent rate to be significantly higher under the 2021 Lakey Boyd lease.
However, the opposite is glaringly obvious when the monthly rent rates of the two leases are compared. The 2021 lease only has a flat monthly rent rate of $2,000 to use the Pavilion open space for all seven days of each week, whereas the 2016 Amendment to the 2013 lease had a monthly rent rate as high as $3,343 for the tenant’s use of the very same open space for only half of the week.
In other words, Lakey Boyd’s lease constituted a 40%+ reduction in monthly rent for The Pavilion compared to the previous lease in 2016, without even adjusting for inflation, while allowing the new tenant to use the open space for more than twice the amount of time each month than the previous tenant who was paying much more per month was allowed to. When adjusted for inflation, the commensurate monthly rent for The Pavillion in 2021 should have been approximately $5,680. Instead, under Ms. Boyd’s leadership, the CA rented this space out for a 65% discount (just $2,000 per month) with the 2021 lease.
It is hard to imagine how this substantial reduction in monthly rent in 2021 for the same Pavilion open space being used for more than twice the amount of time each week compared to a 2016 contract could possibly be justified as fulfilling a fiduciary duty to get fair market value for CA’s resources.
On top of all of this, Section 2.2 of the 2021 Lakey Boyd-signed lease also allows The Howard Hughes Corporation’s tenant to unilaterally extend the terms of the contract for an additional 5 years, after the initial 6 year contract ends. Upon the 5 year extension, the monthly rent rate for Areas B1 & B2 of CA’s open space would still remain stagnant/flat year after year at only $2,000/month, bucking the industry norm of increasing gradually each year to cover costs of inflation, rising costs of living, etc.
This means that in the year 2032, the CA could still only be getting paid $2,000/month for the use of thousands of square feet of arguably the most desirable outdoor seating open space available to a restaurant venue in Columbia/Howard County, compared to the roughly $5,680/month the CA would have received for leasing out the very same open space had the terms of the lease for the previous tenant been kept, including the 3% annual increase in monthly rent to account for inflation.
Section 2.2 of the 2021 Lakey Boyd lease does, however, increase the monthly rent due by the Howard Hughes Corporation tenant for the use of CA-owned open space Areas A1 & A2 if the tenant unilaterally renews the lease for 5 years, but it is only an increase from $1,400/month to $1,600/month, and once again, the monthly rent rate for those 5 additional years remains stagnant, and does not follow the industry norm of increasing a little bit each year to cover costs of inflation, rising costs of living, etc. This means that in the year 2032, the CA could still only be getting paid $1,600/month for the use of CA-owned open space Areas A1 & A2, compared to the roughly $3,823/month that the CA would have received for leasing out only Area A1 had the terms of the lease for the previous tenant been kept, including the 3% annual increase in monthly rent to account for inflation.
Concerns About Lack of CA Board Oversight and Risk of Losing Tax Exempt Status
At this point, it is worth noting that former CA President Boyd signed off on this 2021 lease without the knowledge or consent of the CA Board, and we only know about the questionable terms of this lease contract due to the work of a vigilant CA resident who requested copies of the current and prior lease contracts under the Maryland Homeowners Association Act. Since the CA bylaws grant the CA President the unilateral power to enter into contracts such as these on behalf of the CA without the CA Board’s knowledge or consent and without having to inform them of entering into such contracts, there is no telling how many other similarly questionable contracts Ms. Boyd may have entered into with private entities on behalf of the CA.
Aside from the massive loss of revenue to the CA from entering into seemingly low-ball contracts for the use of their open space — estimated at approaching 1.06 million dollars from just the 2021 contract analyzed above, these types of questionable contracts under Lakey’s Boyd leadership actually pose an even far greater threat to the CA: they could potentially cost the CA its tax-exempt status as a 501(c)(4) non-profit service corporation.
It is hard to overstate just how detrimental the CA losing its tax-exempt status as a 501(c)(4) non-profit service corporation would be not only for Columbia and Howard County, but for the state of Maryland as a whole. The CA has a budget of $70+ million/year, and if they lose their tax-exempt status, then suddenly, they would have to start paying likely millions of dollars in taxes, meaning the CA would have to cut millions of dollars in services to account for those new taxes or drastically raise annual HOA tax rates for CA residents.
More realistically, CA residents, who’ve been accustomed for decades now to the excellent services, amenities, and resources that come with being a CA resident, would likely demand that the level of excellent services, amenities, and resources that they’ve come to expect remains without significant annual tax increases, so the County and/or State taxpayers would likely have to bail the CA out to fund these things for CA residents that the CA could no longer afford to fund themselves after losing tax-exempt status.
The IRS has a manual for guidelines on how 501(c)(4) non-profit organizations must behave to retain their tax-exempt status, and there is even a section for Homeowners Associations like the CA who are 501(c)(4) non-profit organizations.
On Page 15 of the PDF (but Page 13 of the original IRS Manual), Rev. Rul. 72-102 states that one of the criteria that 501(c)(4) non-profit Homeowners Associations like the Columbia Association must follow to remain tax-exempt is that “Its activities are for the common benefit of the whole development rather than for individual residents or the developer.”
In other words, if seemingly arbitrarily low-balled contracts such as the one presented above, signed by former CA President Boyd were determined to be primarily for the benefit of Howard Hughes Corporation (and its tenants) rather than for CA residents as a whole, then it could potentially be a violation of IRS Rev. Rul. 72-102 and could cost the CA its tax-exempt status as a 501(c)(4) non-profit service corporation.
Defenders of former CA President Boyd may argue that the terms of the December 2021 lease contract awarded to the new Howard Hughes Corporation tenant (The Collective 13) was signed during the COVID-19 pandemic and that the lower monthly rent rate and no annual inflation adjustments were justified due to “pandemic hardship”.
It is true that many businesses were struggling financially during the pandemic and that the previous tenant did not renew their lease potentially because they were unable to afford the monthly rent rates they were being charged under their contract established in 2013.
In a case such as this one, would a rent reduction for a future tenant be justified?
Let’s address that question with a few other questions:
How many Howard Hughes Corporation residential tenants were either evicted or did not renew their leases during COVID due to financial hardship?
Did the future tenants who moved in after the prior tenants were forced out due to hardship also receive a 50%+ decrease in monthly rent?
It is highly doubtful that this occurred. Even if the extremely low rental rates in this 2021 CA contract were set using COVID hardship as justification, the contract spans 2021 to 2027 and could even be extended through 2032, well after the effects of COVID are no longer a significant justification for hardship.
Beyond that, even if a rent reduction was justified, how was this drastic of a reduction calculated? Why was inflation adjustment not included? Answers to these questions are exactly the kind that the CA Board of Directors and the public deserve. These types of contracts and leases should be getting appraised for fair market value, rather than picking some arbitrarily low number.
It was incumbent upon Lakey Boyd as CA President to fulfill her fiduciary duty to CA residents and prove that a valid methodology was used to establish these seemingly low monthly rent rates as the true market value for the CA-owned open space that she leased out to a tenant of the private developer Howard Hughes Corporation. Otherwise, the CA would be at risk of violating IRS Rev. Rul. 72-102, potentially putting the CA’s tax-exempt status as a 501(c)(4) non-profit service corporation in serious jeopardy.
Since Ms. Boyd was not obligated to disclose any of the contracts she made with private entities on behalf of the CA, the extent to which she may have exploited this power granted to her by the CA Bylaws remains unclear. However, the evidence that is publicly available clearly establishes that grounds for significant Board oversight and consideration of her replacement existed and that changes to the CA Bylaws are urgently needed to prevent such overreach from ever happening again.
The Tip of the Iceberg
While the concerning information above is enough to demonstrate why former CA President Lakey Boyd was heavily scrutinized by the current CA Board, it is unfortunately only one of many concerning aspects to her tenure. The next parts of this blog series will focus on other very concerning and questionable contract(s) and easement(s) Lakey Boyd helped facilitate in a seemingly highly manipulative way regarding Lake Elkhorn and other extremely harmful “stream restoration” projects that will benefit private developers, their connections and Lakey Boyd’s ties to The Rouse Project, Lakey Boyd’s apparent dishonesty and lack of transparency with the CA Board, and the unfair and biased, bad faith attacks on the CA Board for trying to rein in Lakey’s behavior by certain community members and media outlets with clear conflicts of interest regarding the development of Downtown Columbia and the CA’s role in that.
Author Bio: Jake Burdett is a resident of Elkridge, MD & is the Vice Chair of Our Revolution Howard County, a progressive civic group dedicated towards transparent and accountable government and getting corporate money out of politics. Any documents used in this blog post can be requested by CA residents under the MD HOA Act, or can be requested directly from Jake Burdett at firstname.lastname@example.org .
Author’s Note: The title of this blog may beg the question “Didn’t Lakey Boyd resign as CA President months ago? Why does any of this matter still?”
While Lakey Boyd may no longer be CA President, she is still very much active in public life in the Howard County community. Unfortunately, many of the facts and evidence presented in this blog post have not been shared widely, leaving most Howard County residents gravely misinformed about Boyd’s tenure and abrupt resignation and believing a carefully-crafted false narrative that Lakey Boyd was an innocent martyr who was unfairly pushed by the CA Board.
Additionally, the elections for CA Board and Village Boards are on April 22, 2023, and without the record being set straight on this concerning, high-visibility situation, many CA Residents may otherwise vote for candidates solely based on their stances about Lakey Boyd and the CA Board, without knowing that these stances are misguided and that some of these candidates may be beholden to special interest entities that do not have Columbia’s longterm wellbeing as a priority.
Thus, before the upcoming 2023 CA elections, this series of blog posts will inform Howard County residents of exactly what Lakey Boyd was truly doing as CA President and will vindicate the CA Board members who wrongly had to endure months of character assassination simply for trying to provide oversight of a CA President/CEO who was suspected of catering to special interests at the expense of CA residents.
Even though Ms. Boyd is no longer CA President, the very same special interests and co-opted community members, groups, and media outlets/blogs that fought hard to keep her are continuing to grasp for control of the CA for completely self-interested reasons in new ways with the upcoming election and beyond, and CA residents need to be hyper-vigilant to watch out for that.
It is this Author’s opinion that any CA candidates who have overtly and enthusiastically expressed support for The Rouse Project and/or Lakey Boyd, and who have villainized community members for trying to shine a light on Lakey Boyd’s potentially unethical actions as CA President, should be considered with extreme skepticism. Such 2023 CA Candidates to be wary of include:
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