Another SOA Board of Director (BOD) homeowner meeting was held at TCTC on November 12 to present the case for the proposed amendments to the Somersett CC&R’s. This one was not as “lively” as the previous one held at the Aspen Lodge on November 6, nor did it appear to be as well attended. However, the questions/comments raised by attendees were basically the same and centered around authorized spending limits, quorums, impact on Country Club Lease Agreement negotiations and timing behind the CC& Change vote.
A summary of these discussions follow:
The BOD advised that the $500K limit for purchase or annexation of real property (i.e., before homeowner approval), was felt to be a reasonable value based on the association’s annual budget of $4.5M. That no formal financial or scientific analysis was performed to come up with this value.
When questioned about the authority to make multiple purchases up to $500K without homeowner approval, the BOD, without refuting such authority, stated that this was highly improbable in that funding would not be available without raising assessment levels over their authority to do so.
When questioned about there being no limit placed on the BOD’s authority to lease property, the BOD’s defense was that was the way the amendments language came back from the SOA Attorney and they just “missed it” and there was no intent to be devious in this regard.
Background – A quorum is the minimum number of association members to submit ballots or be present at a meeting (proxies accepted) to vote on a measure for it to be valid. The proposed CC&R changes define homeowner approval of purchases above the 500K limit as being a simple majority of a homeowner quorum. However, the proposed changes did not define what quorum applied to these changes. At the Aspen Lodge meeting the BOD president said a 50% quorum would apply. This was challenged by several homeowners who quoted other provisions in the CC&R’s that established a quorum at 20%.
At TCTC meeting the BOD President acknowledged that the 20% quorum requirement was indeed the correct value, which means that given the approximate 2480 unit owners, the minimum number of voting members for the measure to be valid would be 496 and to pass would require a minimum of 249 affirmative votes. However, the BOD President expressed the opinion that for significantly high dollar measures, the probability that a high number of homeowners would abstain from voting was very low.
An attendee commented as to why the BOD did not explain and quantify the quorum issue in their letter to sent out with the ballots, or within the amendment language itself. Rather than creating confusion and leaving it up to homeowners to figure out what a majority vote of a quorum meant.
Impact on Country Club Lease Agreement
When questioned about the impact of the proposed CC&R changes on the future Country Club Lease Agreement vote, The BOD advised that these were unrelated issues. Implying that a lease agreement vote was not subject to the proposed changes.
An attendee expressed an opinion that under the lease provision of the proposed amendments, the BOD could enter into leases, without a dollar limit and without homeowner approval, as long as homeowner assessments were not raised above their authority to do so. The BOD’s first response was that the amendment in question only applied to the purchase, annexation or lease of real property and that the Country Club Lease Agreement would not fall under this category. This premise was challenged by another attendee and some unresolved discussion ensued. However, in closing the BOD clearly stated that the re-negotiated Lease Agreement would definitely be put out for homeowner vote regardless of what this provision stated.
Another attendee asked for a clear definition as to what would constitute homeowner approval of the re-negotiated agreement. After some discussion the BOD advised that the 20% quorum would most likely apply.
When questioned about what would be in the new agreement, the BOD respectively replied that it would not be appropriate to speculate until a letter of intent is generated. The BOD did state that homeowner meetings on the agreement would be held before voting.
Timing on CC&R Amendment Vote
At least three attendees commented on the content and timing of the CC&R vote. Concerns centered around why the rush to vote on amendments related only to the purchase, lease or annexation of real property. Why not expand the amendments to incorporate all necessary changes now that the association is no longer under developer control and/or other changes that make sense for the community. The bottom line suggestions being that the BOD withdraw the vote, consider other changes and resubmit?
The BOD made their case for a piecemeal approach based on an opinion it would be to complex and difficult for homeowners to address multiple changes at one time. This approach was supported by another attendee.
Most of the homeowner comments at both the Aspen Lodge and TCTC meetings questioned the authority being given to the BOD under the proposed amendments. It is clear to some that an over aggressive BOD could financially commit the association to pay large dollar amounts for the purchase, annexation or lease of property without homeowner vote or a vote subject to a 20% quorum for approval. I guess it all boils down to one commenters question as to how much do you trust the current and future BOD’s to do the right thing?