Southern Walk Annual HOA Meeting - First Impressions

Normally the homeowners' association meetings are boring and I have always avoided them like a plague. Some good souls take upon themselves to take care of the business of the association. Shashi pushed me to go to this meeting today. He made me aware of several issues which had sent alarm bells ringing in my head. Also, he was running for a director's position so I went in to support him as well.

Shashi requested a lot of information from the board and he has felt being stonewalled. He tried to run last year and was disqualified. Unfortunately, he was disqualified this year again because of the last minute change of bylaws by the board of directors (Are these illegal changes to the bylaws?). Although the board may have very good reasons to change the bylaws (what are those reasons?), this showed tactical moves and not strategic thinking by the board.

Anyhow, at the end of the meeting, I came away with some impressions. Perhaps some of them are wrong or still forming and may change over a period of time.

Very Hardworking Board Members: I was impressed by the board of directors. I was able to speak to some of them and learn about them. Being on the board is a voluntary position with no benefits what so ever and it requires tremendous amount of time commitment, hardwork and personal sacrifice. Boards' tasks become harder when the support from the homeowners' is lacking and they end up doing a lot of heavy lifting especially of most intricate and legal issues. We need to thank them for hours and hours of work for the homeowners. It is truly an admirable contribution to the community. Our board has worked very hard to wrestle with a lot of tough issues including treacherous legal matters concerning Openband and homeowners. I wish to thank them for their hardwork.

We are not a community: There are 1112 (I think) homeowners in Southern Walk and in the meeting, there were less than 40 (approximately - what was the exact number?) home owners present. Surprisingly there were two lawyers in the meeting as well who I am told charge us at the rate of $225 per hour and $500 per hour respectively and the meeting lasted good 2.5 hours. Most of the questions which were raised were answered as lawyers will answer them. They were answered vaguely. It clearly showed me that the association was being run by the lawyers and not the home owners. This is my first impression. They advise the board and that is the worst thing that can happen in a community. Lawyers are the last people to understand leadership, community and a sense of belonging. The good question is why do we have two lawyers. And who is paying their legal bills?

Openband Litigation: Open band litigation has cost a tremendous amount of time and resources of the board and the home owners. For one, I am not unhappy with the Openband's services. Infact, I am quite happy. Some of the costs could be lower. We could use some more upgrades in terms of services and equipment. I strongly believe that the devil you know is better than the devil you do not know. And I do not know whether a survey was done to conclude how many are unhappy and what are the alternatives to Openband and what are the costs. We have spent hundreds of thousands of dollars (need exact number) on this issue. The legal costs are astronomical and mounting. Few years back it was decided at a board meeting to litigate Openband. Nobody asked me about it or even conducted a survey about this issue. I have heard that the Openband used strongarm tactics when it came to price negotiations and providing additional upgrades and benefits. They were unwilling to budge as they have a TSA (Technical Services Agreement?) signed by Van Metre which bound the homeowners' for 65 years of service with Openband. And Openband had limitless powers to change prices. I also learnt at the meeting that the Openband has proposed an 8.5% increase in their fees. Do we need to spend so much money to wrestle with these issues?

Lawyer representing us gave a report in the meeting. As per him, we are nearing a conclusion and all homeowners will have a lot of choices in terms of services. When I asked him to provide this brief in writing so it could be part of a communication to homeowners', he flatly refused. When I asked for a reason, I was told we are in negotiations and it could derail the negotiations.

My impression, this is not leadership and I did not come away with a feeling of community, openness and transparency.

When I asked how much we have spent on legal costs, and how does that translate to our fee per month and what are the projections of the future legal costs, there were no answers.

And lawyers have advised the board to have homeowners sign NDA (non disclosure agreements) before they can divulge information about the Openband case. This does not feel like a community.

Those lawyers need to go. This bleeding needs to stop.

Shashi's Disqualification: Bylaws of an association can be complicated and so are the bylaws of Southern Walk Home Owners' Association. The language is ambiguous and complex. That explains the second lawyer in the room. These bylaws need to be thrown out and re-written. Board disqualified Shahi last year so he was not able to run for a director's position. He is mad about this and he has taken this matter to the court. I would probably do the same if I feel the same stonewalling. The lawyers need to stop running our association. Shashi has raised a number of uncomfortable questions about the Openband litigation. He did not receive the answers he deserved. He had to fight for every detail. This fighting has also become a pain in the rear for the board members. The whole situation has become ugly and the recent changes in the amendment of bylaws by the board were in poor taste. The changes disqualified Shashi from running although as I learnt, he had got the highest number of votes in today's elections. And reading the bylaws, as far as I can understand, the board did not have an authority to make amendments without a notice of the meeting to the homeowners. However, the other lawyer in the room had different interpretation on this and advised the board accordingly. This is again not leadership and it does not feel like a community. This atmosphere and sense of adversarial jockeying must change.

Firstservice Residential Service: I have not been very impressed with my past dealings with them. For one issue, I had to communicate with them at least 15 times and until I threatened to approach my congressman and senator, they did not move. Today, I learnt that they cost us $32,000 per year. And they collect our payments. Really? In today's age, can't we setup automatic credit card or bank payments for our association. Why do we need them? They write the checks and collect payments?

Perhaps, my impressions are premature. Perhaps some of them are inaccurate. Perhaps some of the information I have is inaccurate. I have not been an ideal homeowner association member myself. I never went to a meeting before. In the 11 years I have lived here, this is the first meeting I have attended thanks to Shashi. It has been a mistake not to be involved. The price is much higher association costs than we should be paying.

All of the homeowners need to get involved before it is too late.

 

RedRock,

I attended the meeting and totally agree with your views. I also believe that Shashi should litigate the matter of his disqualification from the board and specifically determine if the board followed the requirements for changing the bylaws. For example, it is my understanding that the Bylaws require the following measures be complied with before a change can occur:

Article XII - Amendments
These Bylaws may be amended by a Majority Vote of the members if the proposed amendment has been inserted in the notice of meeting or all of the members are present in person or by proxy. Except for Articles 4 and 12 and Sections 2.2 and 2.5 hereof, these Bylaws may also be amended by a Majority Vote of the Board of Directors; provided, however, that the proposed amendment has been inserted in the notice of the meeting.

Thus, if the board passed the change during the November meeting it would have listed the proposed change in the notice of the meeting for November (I don't have a copy of the notice for November to determine if that occurred).

In addition, there may be legal concerns with the board action based on the Articles of Incorporation. For example, the following discussion was listed on another thread that, if accurate, may support Shashi's claim if he decides to litigate:

[Start Quote] ""Another interesting fact: The SouthernWalk HOA Articles of Incorporation requires that there be a 67% vote of the members, NOT just the HOA Board, in order to change the requirements for eligibility to run for the Board.

Specifically, Article VII, Section 7.2 states that a member can run as long as they are not financially delinquent for more than 60 days.
Article VI, sections 6.3 states "at least a 67% vote of the members shall be necessary to adopt any amendment of these Articles..."

The Articles of Incorporation trump anything in the bylaws. THe HOA Board CANNOT by itself change the rules set down in the Articles of Incorporation.

Unless SouthernWalk members are fine with their rights and voice being trampled on, this question should be raised at the Annual Meeting. Maybe there is some other legal interpretation that I am missing.
Even if it is legal, it is morally and ethically reprehensible the lengths this Board will go to keep someone for getting elected to it." [End Quote]


JAGMAN

 

Perhaps you are correct. Things need to be simplified and automated. In today's technological age, 32k to is a hefty fee to pay (it is more than an interest on a mortgage). In addition, the service is simply not there.

 

@RedRock Thanks for the detailed write up. I could not attend the meeting as much as I wanted because I was busy with other stuff. But this is crazy. Lawyers attending the HOA board meeting ? How did it come to this ? Perhaps because we just did not involve ourselves or ask questions as Sashi did. If the board members are doing such an awesome job then a little sunlight won't hurt anyone. We need to increase transparency. Why are the board members required to sign NDA ? Why are Lawyers on the retainer for the board meetings ? Why the tactical ( and by some accounts illegal) move to disqualify Sashi ?

 

@RedRock, great post. I agree with you 100% on your points about having the lawyer lead the meeting. I talked with Shashi before the meeting was over and asked him if he would be able to work "with" the board. His points were very critical of the current board. The one major take-away is that I hope whoever volunteered to "communicate" with all of us follows through. The meeting times and locations should be widely broadcast so that we homeowners can participate.

 

Sunstoner,

Yes, I am critical on the functioning of this board based on my experiences over the past couple of years. I thought I explained how I would bring value to the board by fostering debates in the board meetings.

In my opinion, unanimous voting on all the issues is not needed. The whole idea of having multiple board members is to bring various points of views and ideas, to the discussions. After debating and considering all opinions, the board votes and the majority prevails. That is how healthy boards operate. My opinions are formed after attending several SWHOA board meetings.

In one monthly meeting, President Cotti proposed that the board adopt payment acceleration provision which is available in the Bylaws. Payment acceleration means, if the homeowner is delinquent, the HOA has the right to demand from the homeowner not only the delinquent payments but also the payments for the remaining calender year in advance. After a few minutes of pitching for the payment acceleration, she asked if any any directory would move the motion to adotpt it. Vice President John Hines said the he did not understand and pointed at Directory Mike Makaily for the motion. Mike claimed he does not understand it either. Tom Wade, then FirstService agent said there is only one homeowner delinquent that month. Attorney Constance Miller who was present in the meeting said the acceleration could be triggered when the delinquent notice is sent to the homeowner (60 days delinquent). President Cotti spoke about the acceleration policy for a few more minutes. John Hines proposed the motion is a very convoluted language (would love to see the minutes how it is recorded) and Director Makaily seconded it. The motion was adopted unanimously.

That in my opinion is not a healthy functioning of the Board. How could the Directors propose a motion which they claimed they do not understand and vote unanimously? Not a single question was raised by another o the directors present.

If I were in that meeting as a director, I would have raised the issue of hardship of homeowners. When a homeowner goes into financial hardship either because of sickness or loss of job, they might fall behind in payments. How would a homeowner who had difficulty in making two months payment make the rest of the year's payments in advance? I would have pushed for the threshold for acceleration policy, if at all, to be at least 4-5 months delinquency which establishes either inability of the homeowner to pay or unwillingness to pay. 4-5 months gives sufficient time for the homeowner to get into a payment plan agreement with the association.

The adopted resolutions reads (as posted by President Cotti) on the factbook page. Collection activity starts after 60 days delinquency and the homeowner fails to appear in the hearing or the board determines to go for collections(someone correct me if I am wrong).

2) Effective immediately; when delinquent accounts are sent to the collection firm, the HOA has instructed the firm to "accelerate" the assessment for the remanding fiscal calendar year.
3) Delinquent Accounts, are required to pay the entire balance owed to the HOA in order to have Telco Service restored. On an ICB the HOA will review potential payment plan options.

I would have voted in descent of this motion.

When the motion was made to charge a homeowner's account over $1500 because he dared to to write a letter seeking inspection of the documents, I would have argued and voted against he motion. This motion was voted unanimously without any discussion.

I tried to get explanation from HOA why they charged my account. They did not respond. To protect my credit rating, I had to pay $1500 and then go to court to get my money back. During the hearing, John Hines testified on behalf of HOA. My attorney asked him what provision in the association documents or the state law he used to justify charging me $1500. He pleaded ignorance. Upon further question he said he voted because the President asked him to vote. And then went on to say that the Association's counsel Constance Miller told him to vote. Director Ronald Rubin could not provide any answers in the court either.

That is the way this HOA works. How can I not be critical?

BTW, these board members complain that I have sued the HOA? That is a deliberate attempt to mislead the homeowners into thinking that I am giving troubles to the HOA where as the opposite is true.

In the present situation, I would have voted in favor of negotiations with Openband but would introduced a motion for presenting the settlement to the homeowners for their input before finalizing it.

A board which has unanimous votes all the time is an unhealthy board.

I suggest every one to attend SWHOA and BHOA monthly meetings to compare. In BHOA meetings, motions are preceded by a healthy debate. I want to see healthy debates in Southern Walk HOA.

"Difference of Opinion" and "Ability to Work Together" are not mutually exclusive.

 

I have attended several SWHOA monthly meetings in the past. Attorney Constance Miller was present almost all of the meetings. I always wondered why the HOA is paying for the attorney whose services are not needed in the meetings. This for a HOA whose responsibility is only to manage the Openband contract.

 

@JAGMAN - I have reviewed the SWHOA bylaws and I do not see anywhere where they have unilateral right to change the bylaws. The bylaws can ONLY BE AMENDED AT THE ANNUAL MEETINGS provided the PROPOSED AMENDMENT has been inserted in the notice of meetings.

In conclusion, I agree with your analysis.

I am very very concerned with the state of affairs at SWHOA.

 

@flynnibus - Frankly I do not know any alternatives. I know we have quite a few people with IT background. I would love to know if there are alternatives to managing collection from the members?

I was however impressed by one company who demanded that they do direct debit to your checking account and they never chased anyone for money. That ran like clockwork. Would that not work?

 

Is this a board running rampant and out of control? Homeowners are on the hook? We need some answers.

 

@flynnibus - OK. That was just an idea.

 

@JAGMAN The Southern Walk bylaws were drafted by Van Metre and are quite strongly sided in favor of the board of directors. So in conclusion there are poorly drafted for the homeowners' rights. The board has been clever to get lawyers at our expense to have them run the show. However, that is not leadership. It is politics.

I am sure lawyers in their infinite wisdom have given them an interpretation upon which they are acting.

However, all this is costing the homeowners.

 

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