Wednesday, December 28, 2016

Will Your Community Association be Sponsored by Advertisers Someday?

I read recently that some of our national parks in the U.S. are going to permit advertising in certain locations within the parks.  The reason for this move is ostensibly due to the appeal of millions of annual park visitors who spend many hours or days enjoying the natural beauty of these venues. Corporate America knows that a large captive audience provides the best opportunity to have a branding message resonate.  Despite the logic, to me some things should be off-limits, sacrosanct if you will.

The continuing trend to brand everything and carve out messaging on every available blank space has me thinking about the potential for advertisers to look inside private residential communities next. Many condominium and cooperative high-rises as well as large HOA communities already allow certain advertising activity such as cell phone towers and ads in their social directories and on in-house cable channels.  Most of that activity, however, is relatively unobtrusive and does not raise any eyebrows.  This could change if companies look next to large, private residential communities which contain hundreds or even thousands of residents along with the guests of those residents entering and exiting the community each day.  Can you imagine the potential for advertising, particularly in creative ways?

Some untapped areas might include:


  • Ads on the community bulletin board, association website, newsletter and other communication portals;
  • Ads on bus benches and other stops in communities with transportation systems;
  • Targeted sponsorship for certain recreational amenities or events. For example, the exercise room sponsored by LA Fitness, the Spring Picnic sponsored by Publix;
  • Signage at the community entrances and guard house;
  • Ads in the elevators, mail room, laundry facilities and other common areas.
Some larger communities in Florida and likely throughout the country are already experimenting with allowing more advertising involvement in their community's lifestyle. I have been to social events in client communities where portions of the event costs were defrayed by contributions from vendors who provide services to the community. I think more communities might consider these advertising arrangements if they were approached by companies to do so but up until now corporate America does not appear to have given much thought to the potential for community association advertising.

That might change and volunteer boards must decide in advance how to navigate these potentially risky waters.

Advertising inside your community might very well fall within the category of 'be careful what you wish for'.  It is important for community association boards to remember that they are typically operating not-for-profit corporations. As such, while certain sources of income other than the collection of assessments can be used to defray costs, they can also trigger tax consequences.  In Florida, boards can grant long-term easements so these kinds of advertising arrangements could be structured as easements which could prove difficult to vacate early if the association experiences buyer's remorse.  Boards considering such arrangements in the future would be well advised to consult with experienced counsel to discuss how long the initial term should be (a trial period would be best) and to craft sufficient disclaimer language advising residents and guests that the association is neither advocating for nor vouching for the advertisers in the community.

It is equally important to understand that once you start deriving revenue from a certain source, it is easy to become dependent on that revenue and therefore loathe to turn off its source.  While advertising is the fuel which drives the capitalistic engine, when it is used in a private residential community setting, the big question becomes whether such advertising will improve the quality of life in our communities or will it merely make it more difficult to seek refuge inside our previously tranquil communities.

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