Silent Defiance = New Lawsuit Against the Board

UPDATE: If you are fighting a Crime Free Lease Addendum in Arizona that gives your association the right to terminate your lease, the 2014 Arizona Legislature has provided you all the necessary ammunition you'll need. The legislature added ARS 33-1806.01 which provides that "Owner may designate in writing a third party (e.g., residential property manager) to act as the owner’s agent with respect to all Association matters relating to the rental unit, including the official recipient of legal notices."  This means that as of 2014, an owner can easily argue before the DFBLS that his/her HOA is attempting to re-interpret the law such that an owner "must" (forcibly, and under the threat of fine or lien) designate the HOA as a third party beneficiary to the lease. This is a clear violation of an owners right as defined in ARS 33-1806.01.

This will be my last post for 2012 so that I can set my frustrations aside and enjoy Christmas  and New Years with my beautiful family. Merry Christmas every

Pedro Lopez is quite the anomaly. According to the board, Pedro's term began in February 2010 as the 1 year director per Article 3.2 of the Bylaws. Pedro is allowed to continue serving until he is succeeded by another member of the community, and as the 1 year director, his seat must be renewed at each of the November member meets. Yet in our November 2012 meeting which will be resumed in January 2013 per a reschedule, Pedro was neither required to resubmit a candidacy form, nor did our Management Company or the board acknowledge that his seat is available for re-election.
I asked why the board was suppressing Pedro's succession on October 21st, and again on November 1st. My inquiries would have allowed the board and our Management Company to correct it's assertion that Pedro's seat was not available, but the questions went unanswered.
This week I have asked our Management Company and the board for the third time to correct it's assertion that Pedro's seat is not available. In the coming weeks, they will reveal their answer via the distribution of new candidacy forms. As the 1 year director, I expect to see Pedro draft a candidacy form in order to be re-elected to the board in January 2013.

If this does not occur, I'll be forced to seek answers through the courts, whereby our homeowner fees will be wasted to defend the indefensible - once again padding the pockets of Chander Travis. There are two extremely frustrating points to this latest violation of our By-laws and CC&Rs by our board:
First, the board, our Management Company, and Chandler Travis believe that they can remain silent and defiant without any repercussion, and they are quite right - when they violate the documents, ultimately a homeowner must seek a costly judgement for which any litigation fees and any civil violations will be paid either through insurance, or by homeowners dues. For rogue board members, there is nothing to be lost by silently defying the community documents, and for Chandler Travis, it is a huge payout.
Second, neither our Management Company or the Association's lawyer holds the board accountable for violating the community documents. Consider what occurs when a homeowner leaves a trashcan out, parks on the sidewalk, or has a slight emergence of weeds after a monsoon storm. In these cases, our Management Company and Chandler make an aggressive and cooperative effort to force the member to correct the violation. How is it that the association's lawyer has no allegiance to the homeowners when the board violates the community documents? Is Chandler a paid representative for the association, or a paid representative of rouge board members? How is it that the Management Company offers no sound advice to a rouge board?

Annual Member Meet Part II: The Good, Bad, & the Ugly...

This evening we had our second attempt at making quorum. We achieved 50 members present - just 4 shy of the required 54. The board claimed not to have powers in the governing docs to reduce quorum. As a last ditch alternative, Chris Gillies refused the option of allowing an informal vote to proceed, and stepping down if he lost. Option 2.4 was motioned and seconded again by the members and a third meeting will be scheduled on January 28th 2013. Here is the second installment of the good, bad, and the ugly:

THE GOOD:

Our turnout was still impressive and many folks volunteered to walk the community the weekend prior to our third attempt on January 28, 2013.

The community got to meet Lola. She actively approached folks before, during, and after the meet. She was reminded during the meet that she must continue to triage the bleeding of our homeowners dues, just as she did in 2011 when she cooperated with neighbors and the board to return thousands of dollars in maintenance fees. We are still bleeding Lola. Keep up the good work.

our Management Company has dropped their "all inclusive" rate to $6000 from $6600 monthly. On an unrelated note, there were only half the number of our Management Company staff from the previous meet in November.

our Management Company has radically modified there collection fees which may indicate that we may no longer be 10s of thousands in the hole for an upside down collections policy that went unnoticed by the board for over four years. Congratulations for shifting Management Company before the board had to go about the burdensome task of busting out a calculator.

Chris Gillies has chosen to come into compliance with the community documents and will no longer accept payments for services from the folks he represents. I commend Chris for setting an example for the members he represents - it must have been kinda rough to charge your neighbors fees and collections for not following the community documents while at the same time being payed to ignore a bylaw that protected Directors from conflict of interest. Welcome to the fold Chris. This may be a turning point for you and I.

Hugh (the gentleman who ran against Chris Gillies) was very vocal this evening and showed a demure and intelligence that pinned our President against the ropes on several occasions. While his writing style and grammar may not bode well for some, Hugh can certainly hold his own and take lead for positive change. I would give my left arm for the tact he has.

Many folks voiced their concerns this evening, and I thank them all.

Leslie Darrington called out the Management Company for not posting the A-Frame signs on Westwind Blvd on the day of the first and second annual meets notifying members, "HOA Meeting Tonight". I'm certain this will help make our numbers on January 28th.

Finally, a neighbor brought in a collections bill for $400+ dollars that was a culmination of a long battle between the board and our Management Company. Our Management Company has recently forgiven the bill, and the neighbor owes nothing! This is a result of our efforts ~ holding the board accountable to a standard of sensibility. Congratulations everyone.

THE BAD:

The board has made very little progress on bids for new management firms in the month since our previous meet. Steve Wadding has ruled that no other Management firm will be considered until the advisory committee has created an appropriate RFQ format. Under questioning from Hugh, Steve admits that this process is completely new, and has never been used in the history of our community. Meanwhile the advisory board sits on quotes and schedules for service from 3 of the top 10 management firms in Phoenix.

Without RFQ, or any other competitive bids, the board voted to accept a revised our Management Company contract for one year.

Steve Wadding refused to address the bleeding of $60K+ in association dollars over the last several years by an upside down collections policy. He characterized the data I presented to him, the board members, the lawyers, and the folks in the community as distortions, lies, and without reference or fact. I suppose I won't go running home to my Mommy knowing that our Management Company has only recently taken the appropriate steps to drastically reverse their collections policy. Meanwhile Steve can further wallow in his laziness and ignorance - his efforts to acknowledge that change is no longer necessary. How embarrassing for the other board members to have to sit in his shadow.

THE UGLY:

Me. That's right. I embarrassed my wife this evening and for her sake I can no longer attend these meetings while Steve remains President. He has the knack of bringing out the worst in me. So much that a neighbor I met for the first time today had to tell me to shut-up. THAT'S NOT TO SAY I WON'T SUBMIT MY ABSENTEE BALLOT THOUGH ON JANUARY 28TH, or walk the community the weekend prior to entice greater turnout. Certainly the folks at the meeting today held there own and didn't need my outbursts. In fact, I may have squelched some very productive dialogue with my outbursts. My apologies to everyone. I assure you that absent Steve Wadding's close proximity, I am a warm and charming person.

A Forty Two Thousand Dollar Question... may go unanswered...

UPDATE: Sgt. John Filas of the Avondale Police contacted me this morning concerning closure of DR#1262767. He indicated based on the evidence provided that since no money went missing, then no illegal activity occurred. He suggested that the evidence does support a breach of fiduciary responsibility by the board for which there are several civil remedies (ie: voting out board members, a civil case to remove the board members, or replacement of the management company).

He also acknowledged that four of the mis-appropriations do appear to be interest free loans or advanced payments and that the board likely approved of the activity noted in the summaries of the monthly financials in question. He pointed out that a rather humorous explanation for the $18K loan in June of 2011 was due to a "billing error" per the monthly financial summary because it's kinda easy to accidentally make a check for $24,300 vs. $6000!

June 2011: Total general and administrative costs were over budget by $32,092.02. Expenses for in-house collection were over budget. Management fees were overpaid in error. There will be no management fees paid until November 2011.

Yeah... been there done that...

ORIGINAL POST: On October 20, 2011, I asked the board, management company, and our associations lawyer why our Management Company made $42K in unauthorized payments to itself from our account at various times throughout 2010 and 2011. The question has gone unanswered to this date. Because I received no answers, I reported the findings to the Avondale Police Department in order to determine whether the transactions accounted for embezzlement of Non-Profit funds. As of this date, Detective Heatherington of the Avondale Police Department has closed the case. No reasoning has been provided, and the board has been given a pass to remain silent. Thankfully the illicit activity appears to have stopped as of June 2011 after our Management Company made an unauthorized $18K payment to itself.

If you are concerned that our board and our Management Company may have engaged in unauthorized lending of our Associations funds, and that they may never be held to account for these transactions, then I implore you to please make a call to the following individuals and lobby for the re-opening of DR#1262767. Also, please contact our Management Company, the board, and the associations lawyer to demand answers and accountability.

EVIDENCE
EVIDENCE SUMMARY: here
DETAILED FINANCIALS: 2010, 2011 (see page 8 on each)

POLICE INFO
AVONDALE NON-EMERGENCY POLICE: 623-333-7001
CASE DR#1262767
DETECTIVE ASSIGNED TO CASE: Heatherington (sheatherington@avondale.org)
SUPERVISOR OF DETECTIVE HEATHERINGTON: Sgt. John Filas

THOSE WITH THE ANSWERS - Send email to all of them here!
PRESIDENT: Steve Wadding
DIRECTOR AT LARGE: Pedro Lopez
OUR MANAGEMENT COMPANY: the owner
ASSOCIATION LAWYER: Chandler Travis

The article, "Preventing Fraud: From Fiduciary Duty to Practical Strategies" is a must read for our board members and the members of our community. It is inexcusable that our board continues to entertain negotiation of a new contract with our Management Company while remaining "pin-drop" silent on possible embezzlement. On Dec 10 this will become the $42K elephant at the center of our Homeowners meet - I'm certain our board and the associations lawyer will ignore it.

The Cost of Collections and Complacency

UPDATE: I have included the months of August through October 2012, and will continue to update as monthly financials become available. As a result of these findings, our Management Company has modified its collection policy as of November 2012.

UPDATE: I have welcomed the board and our Management Company to make any comments or corrections to this post. I will promptly honor and make any corrections they suggest.

Westwind collections processes involve returning money to the Association from members who have fallen behind on dues and incurred late fees, unpaid violations or interest. The collections process has been managed by the owner of our Management Company with the oversight and approval of our board. For any organization, the collections process is a challenge because if it costs more to collect then not having collected at all, certainly the process must be changed. Then again, it isn't much of a challenge if you simply don't care, and that unfortunately is the state of our association.

See the graphs below for evidence that year after year, our Management Company and the Travis Lawfirm have exploited revenue returned from collections for their own profit. Since 2009, our association has a net loss of $62,468 by engaging in our Management Company's predatory collections process.

CLICK THE IMAGE FOR A LARGER VIEW:
You may check these figures yourself using the financials on the right hand pane of this blog. Collection Expenses are those fees paid to our Management Company and it's lawyers: (In House Collection Fees + Legal/Collection Fees). Collection Income is tallied by: (Collection Income + Late Fees (2009 only) + Legal Income + Interest Collection Income).

Many HOA management firms avoid an "upside-down" collections process by charging the entirety of the collection fees to the payee vs. the association. Other management companies partner with legal firms who tack on a collections fee to the payee. Processes like these guarantee that 100% of the collections are returned to the Association, and that the management firm and it's lawyers are compensated for performance. Under the current Management Company's process, mass fines results in mass collections, results in mass profit for the management firm, and a huge loss for the members.

How does our Management Company cloak this "upside-down" collections process? Redirection! In each monthly financial report, they begin the INCOME section with a statement regarding how much revenue is driven by the inspection and fining process (a bulk of the collections are initiated by an inspection/fine). In our Management Company's December 2011 report for example, "Total income for the year was $379,253.04. This included $37,388.42 from collections and violations...". But a comparison of the loss our association incurs under our Management Company's collection process with the income we receive from inspections and fines is nothing to write home to mother about. See the graph below:

CLICK THE IMAGE FOR A LARGER VIEW:

How has our board responded to all of this? Have they sought alternatives and guidance from other Management firms? Absolutely not. Year after year, our board has allowed the contract with our Management Company to renew automatically and without consideration of any other firm. Yet our CC&Rs Section 11.12 specifies that a management agreement cannot automatically renew, that instead, "may be renewable only by affirmative agreement of the parties for successive periods of one year or less". And that, "any property manager for the Project or the Association will be deemed to have accepted these limitations, and no contrary provision of any management agreement will be enforceable." The author of section 11.12 felt that the board should be compelled to reflect and consider any renewal of a management agreement, but for a board that is arrogant, ignorant, and complacent, no such consideration will occur.

We can only hope that our new board members will bring about positive change.

Annual Member Meet 2012: The Good, Bad, and the Ugly

We had a great turnout at the 2012 Annual Member Meeting, and change is coming. Here are some of the highlights of yesterdays meeting:

The Good

For the first time in seven years, Absentee ballots were collected for election of a board member.

Our quorum numbered 56 (absentee ballots + in person - outstanding fines = 56 owners)

The vote was rescheduled for December 10 for which a quorum of 53 needs to be met. If we sustain this energy, we can replace one of the three board members.

Our Management Company indicated that it may eliminate it's collection fees and instead roll them into there all-inclusive fee of $6600. This is good news since in 2011, the association spent $31,658 to collect $37,388. This means that of every $100 collected, our Management Company and its lawyer kept $85. The move may mean more of the collections are kept in the associations account.

Several member emails were collected. They will be invited to join westwindavondale.nextdoor.com and to invite their neighbors. This will be a terrific way for us to maintain communication in the community and foster a sense of neighborliness.

At the proceeding board member meet, the board voted to expand it's count from 3 to 5. This created 2 vacancies. Invoking 3.6 of the bylaws, the board promoted Julie Jones, and Delores Ortega to the board. I can vouch that both Julie and Delores are sensible, committed members of the community.

The Bad

The meeting was attended by two association lawyers, and 13 employees of the Management Company. Sigh...

At the proceeding board member meet, the board voted to expand it's count from 3 to 5. This created 2 vacancies. Invoking 3.6 of the bylaws, the board promoted Julie Jones, and Delores Ortega to the board. I know I already counted this as a Good, but I can't get over that this yet another instance where the board locked up terms without an election. The move may serve to discourage some of our members from showing up again on Dec 10th, or running for directorship.

Our Management Company attempted to defend the extraordinary $6600 management fee as an "all-inclusive" cost that creates more predictable administrative cost over time, and provides overall cost savings. Yet the board admitted that it hasn't substantiated this claim by comparing bids from other vendors.

The Ugly

Overall the mood was angry. And it certainly didn't feel good to be there. President Wadding showed that he has no sympathy or tolerance for concerned members.

Many members had the opportunity to speak, and it's certainly evident that the current board and management company is fostering resentment - not communal outreach and neighborliness.

Four Reasons to Vote

Prior to the elections on Nov 5th, flyers will be sent throughout the community urging homeowners to vote in the upcoming November 5th election at Copper King Elementary School, 10730 W. Campbell, Phoenix, AZ 85037. I provided the following four reasons, and would like to give this opportunity for you to dive deeper into these charges.

1) High Fees:

Our board pays a ridiculous amount of money to our Management Company. Is there a kickback to one or more board members? The amount sure seems to suggest so. Read more: We are the Management Company's Cash Cow

2) Unauthorized Interest Free Loans:

Some might call it fraud, larceny, embezzlement, or theft. I wouldn't call it either of those... not just yet. Read more: http://dl.dropbox.com/u/30192195/summary_pic.PNG

3) Board Compensation:

According to Article 3.4 of our Bylaws, no board member shall ever be compensated for any services. Well... unless it's Chris Gillies, cause he's such a nodding head. Read more: http://westwind-hoa.blogspot.com/2012/09/it-pays-to-be-director-at-westwind.html

4) Families of Board Compensated:

ARS 33-1811 states that any compensation that would benefit the family member of the board shall be declared in an open meeting before agreement is taken on the issue. No such declaration was made in the case of Steve Wadding's son. For years he has followed behind the contracted landscaping company trimming and cutting where he believes there are "issues of resident safety". Take your pick of just about any financial statement listed on the left hand side of this blog, and you'll see thousands of dollars paid to a Chris Wadding. No contract exists between Chris Wadding and the association, it is an open-ended, no bid, never ending agreement.

There are still 25+ more reasons to vote!STILL

Please see the timeline of egregious acts!

New Timeline Added

In anticipation of the November 5, 2012 annual Meeting of the Members, I've put together a concise timeline of egregious acts by the board and management company dating back to 2006. Each of these acts can be confirmed by reviewing the Meeting Minutes and Financials available on this blog. If we are to make positive change in this community, it is critically important that we have 134 members present at the meeting. Though an absentee ballot can also count towards your attendance, these absentee ballots are counted by our Management Company. Review the timeline and you'll agree that our board cannot be trusted, and that your attendance is vital.

We are the Management Company's Cash Cow

After a review of Westwind HOA's financial disclosure for 2007 - 2012, a peculiar event occurred in October of 2009. The fee our association paid to the management company jumped from $2800 to $6000 - in a single month!

There is no explanation as to why the board agreed to this extraordinary jump in management fees to a company who had simply changed it's name - from Leisure Life (who maintained a D minus rating from the Better Business Bureau at the time) to our Management Company. To this day, our Management Company, still offers no added benefits or services that weren't previously offered by our previous Management Company (same owner). It was simply a name change that cost our association an additional $3200 monthly. In May of 2011, the board agreed to an additional 5% increase to the Management company. Only a few months later, the board agreed to another 5% increase for a monthly management fee of $6600 today.

Now, are these fees extraordinary? Well, take it from the top 10 management firms for 2012 according to the Phoenix Business Journal. Below are some of their comments. After reading this you might ask, "How the heck does this happen?". Step 1: Eliminate elections. Step2: Pad the Pockets of the Board.

#1 Rossmar & Graham Community Association:

Dear Mr. Jones,

Thank you for contacting our office regarding your inquiry on management fees. As discussed, you had noted that as a homeowner you had concerns regarding the management fees paid by your association. In our conversation, you relayed that your association is made up of 534 single family homes, with two large open parks and one tot lot. As discussed, there are a variety of variables that go into the pricing of a management contract, including complexity of the community, any on-site staffing or extensive amenities.

Per our discussion, the base management fee that we have for similar sized communities is at about $2300-$2700 per month (please note that this is not intended to be a proposal of management services, but simply a comparison for information purposes).

We welcome the opportunity to be considered for management services for your association. We would be happy to meet with the board or it’s representative committee, in order to provide a proposal for consideration. Feel free to have a representative contact me or our business development manager, Arianne Alhvin (Office (480) 551-4301, or via e-mail at aahlvin@rossmar.com) in order to schedule a property visit or meeting.

Thank you once again for contacting our firm. Let me know if there are any further questions (my direct line is (480) 551-4521).

Sincerely,
Any Ferrell CAAM, CMCA, AMS, PCAM
Senior Vice President – Portfolio Division
Rossmar & Graham | 9362 E. Raintree Drive Scottsdale, Arizona 85260
Office (480) 551-4521 | Fax (480) 551-6037 | www.rossmar.com

#3 City Property Management Co.:

Good Morning Michael,

Your question is a good one, but unfortunately cannot be answered clearly, which is not what you are looking for. Monthly management fees depend on many factors. For instance, # of doors, type of community (single family, condo, townhome), amenities, and services required. Typically you can gauge your management fee on $5 a door for "traditional" management. Without knowing specifics on your community and just based on 534 homes, I would say you are paying far too much. You should be at about $2670 per month. But again without know the needs of your community and what is included in the fee, it's hard to say. We would love to offer your Board a bid for management services. If that is something your Board is interested in, please let me know.

Thanks so much and have a great day!

Sara Saiz, CAAM®
City Property Management Company
4645 E. Cotton Gin Loop
Phoenix, Arizona 85040
(602) 437-4777 Extension 103
sara@cityproperty.com

#5 Vision Community Management:

Mike,

It was a pleasure speaking with you today.

We have managed Garden Lakes since 2007. We do not charge fees for rental registration programs or rental tracking in our communities. These are standard administrative functions at Vision. Please let me know if any other questions come to mind. I'll be happy to answer them.

As per your request, here is the management fee breakdown we discussed:

Garden Lakes consists of 2,216 homes and has a management fee of $6,900 per month.

Rancho Santa Fe consists of 1,999 homes and has a management fee of $6,750 per month.

Sage Creek consists of 500 homes and has a management fee of $2,000 per month.

The Vision team would appreciate the opportunity to create a custom proposal for professional management and financial services for your community. We are familiar with your community as we have managed many nearby communities, such as Garden Lakes for several years. During our time there we have been able to successfully complete their painting project, re-do landscaping and irrigation, along with addressing lake and associated wildlife issues.

Feel free to contact me with any questions you may have. I can be reached at my office number listed below or on my cell phone at 480-440-7208. I look forward to hearing from you. Have a great weekend.

Sincerely,
Pamela Rottner, PCAM, AMS, CMCA, CAAM
Senior Vice-President
Vision Community Management
9633 S. 48th Street, Suite 150
Phoenix, AZ 85044
Phone: (480) 759-4945
Fax: (480) 759-8683
www.wearevision.com

#7 Premier Community Management Inc.:

Mr. Jones,

Thank you for contacting Premier Community Management in regards to Westwind HOA. For a community the size of Westwind HOA, Premier would charge approximately $2200 for a monthly management fee. Please let me know if you would like me to submit a proposal to you for management services or if there is anything else I could help you with.

Warm Regards,
Lynne Kerley, CMCA, CAAM
Director of Client Services

#10 Associated Property Management Inc.:

Michael,

I hope they are washing your car every week for those fees! Those are by far the highest rates I have ever heard of for an association and I manage some of the higher end communities in Scottsdale. If you get tired of paying those fees and still want good service give us a call. 480-941-1077 my extension is 36, Tom and Trent are the owners of the company and can be reached at ext: 14 & 16. I have included them in this response so you will have their email address as well. I realize there are always politics involved with a change in the management company, but at least they could do interviews to become educated on current market rates.

Good Luck, let me know if we can assist in anyway!

James Stiely
james.stiely@apm-management.com

Dear Michael,

I am one of the owners here at Associated Property Management and I was forwarded your email from James about your management fees. I am happy to provide you or your Board a proposal for property management and I can assure you that our management fee for a deed restricted community of your size would be considerably less than what you are paying now. If your Association with 537 homes has no on site employees or out of the ordinary services than our average management fee for an Association such as your association would be $2,685.

We presently manage 75 communities throughout the valley and have been in business for over 28 years. The reason I stress that is because I want you to know that we are not a fly by night company that would make a statement that we could not back up. We presently manage a couple of communities that were once under management of our Management Company and would be happy to provide references upon request.

Sincerely,

Tom Emele - CAAM, AMS, CMCA
President of Associated Property Management
PO Box 188, Scottsdale, AZ 85252
480-941-1077 ext 14
602-553-4628 fax

It Pays to be a Director at Westwind!

After a review of Westwind HOA's financial disclosure for all of 2011 and 2012, a peculiar recurring transaction of $150 per month stands out. In violation of Bylaws Article 3.4 Compensation, our Management Company has been paying $150 monthly to Director Chris Gillies for "Porter Services".

Article 3.4 Compensation of the Westwind HOA Bylaws states: "No Director will receive compensation for any service rendered to the Association; however, any Director may be reimbursed for actual expenses incurred in the performance of his/her duties."

Authors of this article made it clear that no one will maintain a directorship and be compensated as a nodding head to a "look the other way" management firm. Yet Chris Gillies has been paid $150 per month by our Management Company since November of 2009. By the time the next annual member meeting arrives in November, Chris will have been paid $5400 for Porter Services.

Chris Gillies isn't the only director enjoying a compensatory relationship with our Management Company. Since 2011, our Management Company has paid Chris Wadding's son $6055 for various porter services. $3420 of this amount was for "Tree Trimming and Removal" despite that in 2011, the HOA maintained contracts in the amount of $8,100 monthly to Proqual Landscaping. Our Management Company paid Chris Wadding $555 for "Tree Trimming and Removal" as recently as April 2012 despite a 2012 contract with Mariposa Landscaping who had charged the HOA $560 as of April for the exact same service.

Why is it a big deal whether or not Directors and there families are compensated by our Management Company?

Our Management Company fees are 3 to 4 times more then other management firms for neighboring communities. Since securing a monthly compensation to Chris Gillies in November of 2009, the fees have increased by 10% (this value may be updated higher if it is found that fees were lower in 2009 and 2010 - awaiting information). Pam Rottner of Vision Community Managment provides the details in an email dated July 28, 2012:

"We are familiar with your community as we have managed many nearby communities, such as Garden Lakes for several years... here is the management fee breakdown we discussed:

Garden Lakes consists of 2,216 homes and has a management fee of $6,900 per month. ($3.11 per home per month)

Rancho Santa Fe consists of 1,999 homes and has a management fee of $6,750 per month. ($3.76 per home per month)

Sage Creek consists of 500 homes and has a management fee of $2,000 per month. ($4.00 per home per month)

Westwind consists of 534 homes and has a management fee of $6,600 per month. ($12.35 per home per month)"

In addition to the management fee, Our Management Company charges thousands of dollars yearly for office supplies, and rental registration/tracking programs. Pam Rottner explains that for the surrounding communities, "We do not charge fees for rental registration programs, rental tracking, or office supplies in our communities. These are standard administrative functions at Vision."

So you can conclude quite easily that the reason our Management Company can get away with thousands of dollars in exorbitant fees is because they pad the pockets of the majority of our Directors and their family members. This also explains why our Management Company actively suppresses and discourages absentee balloting.

Positive Change... A New Advisory Committee

CORRECTION:I was wrong in thinking that Officer's / Director's terms can expire without an election or successor. ARS 10-3805.E says, "Despite the expiration of a director's term, a director shall continue to hold office until the director's successor is elected, designated or appointed and qualifies, until the director's resignation or removal or until there is a decrease in the number of directors."

Any previous insistence by me that the board could not establish a quorum of directors having expired terms was wrong per ARS 10 which applies to corporations and associations.

And so, how do we bring about positive change, without being able to make a quorum of the members? Keep in mind that it pains me to say that we are "unable to make a quorum of the board", because I believe we can if the Association proactively distributed absentee ballots - until that happens, then the assumption is that we cannot without positive change.

Well, positive change has already come about with the establishment of the Advisory Committee. Legally established on May 18, 2012 and led by Director Chris Guiles, the group has already saved the Association tens of thousands of dollars on a new landscaping contract. With that they have proposed new ideas and changes that will beautify the community and hopefully invigorate participation in the community.

Members of the Advisory Committee include: Allen Dodson, Delores Ortega, Steve Feniello, and Chris Gillies (Director). Much thanks and hope to these three individuals for helping to bring about positive change.

My visit with other homeowners...

Today I had the privilege of meeting Delores Ortega and Steve Feniello. Along with Allen Dodson, these members recently approached the board with an alternative landscaping contract that has saved the community $40K annually.

After my meet, I drafted a letter to Chandler Travis the legal representation for the HOA. I will post his response as soon as it arrives.

Hi Chandler,

Today I visited with Delores Ortega (L332), and Steve Feniello (L330). They mentioned that elections did not take place in November 2011 because they were told by our Management Company that a quorum of the members was not met per Article 2.4 of the Bylaws. Additionally, these members of the association were led to believe by our Management Company that the annual meeting to elect officers of the board requires "in person" attendance of 25% or more of the total number of eligible votes in the Association. This is a clear misrepresentation of Arizona Revised Statute 33-1812 which requires the association to "provide for votes to be cast in person and by absentee ballot". This is in accordance with Article 3.1 of the ByLaws which states that: "Elections for the Board of Directors may be conducted in any one of the following manners (i) by voice vote, roll call vote, hand vote, or written ballot at an annual meeting of the Members; or (ii) by written ballot indicated by mail."

I would like for you to advise your client that continuing to mislead our community on the difficulties of changing the status quo is arbitrary and capricious to her fiduciary responsibilities to this association.

And so now I'd like to flip the coin and focus on Arizona Revised Statute 33-1249.B which governs how a "Quorum of Directors" is defined. It states: "Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any meeting of the board of directors if persons entitled to cast at least fifty per cent of the votes on that board are present at the beginning of the meeting." This is in accordance with Article 3.9 of the Bylaws which state, "A majority of the Directors present at the beginning of the meeting will constitute a quorum for the transaction of business. Unless otherwise specified by these Bylaws, the Articles, or the Declaration, every act or decision done or made by a majority directors present at a duly-held meeting at which a quorum is present will be regarded conclusively as the act of the Board."

Now, per our Management Company, Steve Wadding's term expired on Nov 2011, likewise Pedro Lopez term expired in Nov 2010. I see nothing in Arizona Statute 33 Chapter 9&16, or within the ByLaws which allow a board member whose term has expired to act in any official capacity as an officer of the board, or to continue acting in any official capacity until succession.

In this scenario, how will the board attain a "Quorum of Directors"at the next meeting in May with only a single director? Without being able to make a "Quorum of Directors", it is nearly impossible for the HOA to transact any business. This scenario is designed to be avoided by the staggered terms outlined in Article 3.2 of the Bylaws, however the board has found itself in this position by failing to elect a successor to Pedro Lopez in 2010 despite plenty of interested nominees within the community.

And so, I'd like to know how you will advise your client to proceed through this predicament. I am awaiting a response, and so are the members that I met today. Will you either:

• advise our Management Company and the remaining director that the one or two directors whose terms have expired continue to operate in there full capacity in order to establish a Quorum of Directors in May? If so, what ARS statute or Article in the ByLaws gives them the authority to do this?
• advise our Management Company and the remaining director that as fiduciaries to the association, that the most reasonable and fair course of action is to allow the Advisory Committee established on Novemeber 2011 consisting of Allen Dodson, Delores Ortega, and Steve Feniello to prepare/mail-out absentee and in-person ballots for the Meeting in May?
  

Sincerely,
Michael J. Jones

Meeting Minutes and the Good Ol' Boys

Westwind HOA meeting minutes are provided in the pane to the right providing a historical reference since 2004 of all board decisions and "elections". A review of those minutes shows how the board determines it's members - no surprise, it's a Good Ol' Boys Club. During 'elections', the board nominates an officer who's term has just expired, and the officer becomes re-elected by a motion. This process guarantees that anyone voting by in-person ballot or absentee ballot per ARS 33.1812 and Article 3.1 is disenfranchised. It also usurps an election by hand or voice roll-call per ARS 33.1812 and Article 3.1.

See the following board minutes for a review of how the Good Ol' Boys club works:

• Feb 2, 2006
• Nov 20, 2006
• Jan 21, 2008
• Nov 17, 2008
• Nov 6, 2009
• May 6, 2011
  

New AZ Laws to Limit HOA Powers

In 2011, the Arizona Legislature passed the following bills:

HB2245: Allows members to videotape or audiotape open meetings.

HB22717: prevents an HOA from charging a fee for the use or placement of indoor or outdoor display of a for sale or lease sign by a unit owner on their property.

SB1148: Re-asserts that homeowners have right to due process facilitated by an Administrative Law Judge from the Department of Fire, Building and Life Safety. If you have a legitimate complaint against the HOA that falls under ARS 33 Chapter 9 and 16, then this could be your best route.

SB1326: prevents an HOA from prohibiting the Gadsden Flag, and prohibits the HOA from front or backyard display of flags. The HOA may limit the height of a flagpole to no more than the height of the rooftop, and may limit the display of flags to no more than 2.

Additional pro-homeowner bills passed during the 2011 legislature include HB2609, SB1149, and SB1540.