Update on Discussions with the SGCC

From the SOA President…

On May 28, Board members Danielle Kirby, Ray Lee, and I held an information session open to all SOA members to discuss the current status of the SOA’s discussions with the SGCC to replace the existing amenity access agreement.  At that time, we told you that no agreement has been reached.  However, we were starting to see elements that we believed would likely be in any final agreement, and we wanted to share those ideas and gather feedback from SOA members.  Overall, the feedback we have received from that meeting was quite positive.  Since then, several events have occurred that we thought warranted an update.

Most of you probably already know that a complaint was filed last year challenging the way the amenity access agreement (technically, the “Lease and Management Agreement” signed 11/16/2011) was put in place.  This complaint was filed with the Ombudsman’s Office in the Nevada Real Estate Division (NRED).   In early June, a member of the previous Board provided the SOA with a copy of a letter she had received from a Compliance Investigator for the Ombudsman.  The letter indicated that the Compliance Investigator was going to recommend that the NRED file a complaint against the former Board members, among others, to be heard before the Commission for Common Interest Communities and Condominium Hotels (usually just referred to as the Commission).  It is important to note that this letter was sent directly to the members of the previous developer controlled Board.  No actions of the current Board are included in the Ombudsman’s request for a hearing.

Before discussing the status of the complaint that was filed with the Ombudsman, it is important to understand the process.  Any member of a homeowner association can file a complaint with the Ombudsman’s office at any time and for any reason if they believe that a violation of established rules and regulations has occurred.  An investigator in the Ombudsman’s office will collect information to determine whether it appears that a violation may have occurred.  If the investigator concludes there is no evidence supporting the complaint, he or she will close the file.  If the investigator believes there may be a basis for the complaint, the matter will be pursued further.  How things proceed depend on exactly what the original complaint alleged.

If the NRED believes that a provision of NRS may have been violated, the case is forwarded to the Nevada Attorney General’s office (AG) for further evaluation and disposition.   The NRED is now the Petitioner in the case.  Because the NRED is an entity of the Nevada state government, it is represented by the AG in hearings before the Commission.  If the attorney assigned the case for the AG feels pursuing the case is warranted, he or she will file a complaint and a hearing will be scheduled.  It is important to understand that neither the NRED nor the AG can make a determination that anyone has violated NRS116 (the laws governing Nevada homeowner associations) or any other rule or regulation.  The AG, representing the NRED, will make its arguments to the Commission, and the Respondents will similarly present their case.  Ultimately, the Commission will decide whether anything inappropriate occurred and what, if any, remedies or penalties should be imposed.

On July 2, a meeting was held in Las Vegas concerning this case.  Present were Gail Anderson, NRED Administrator, Michelle Briggs, Deputy Attorney General (assigned to handle this case), and Gina Session, Chief Deputy Attorney General (Ms. Briggs’ supervisor).  Also present were Blake Smith and Tiffany Roland (Respondents), along with their attorneys and John Mackey (representing the SGCC) and his attorney.  I attended representing the SOA along with our attorney.  At the outset, Ms. Session explained that the purpose of the meeting was to listen to anything the Respondents had to say.  The specifics of possible charges or violations were not discussed by either the Respondents or the AG.  Basically, Blake Smith’s attorney suggested that it was premature for the AG to file charges because the SOA and SGCC were already in the process of renegotiating the agreement in question.

The NRED and AG representatives seemed quite interested to hear about the SOA’s negotiations with the SGCC, and asked several questions.   I explained, as I have in previous Board meetings, that one of the first things that the new homeowner Board considered upon taking office was what to do with regard to the amenity access agreement.  We decided to try to renegotiate the agreement to improve the benefits to the SOA because we were advised that trying to invalidate the agreement would most likely lead to expensive and protracted litigation, and we did not give up any rights by trying to renegotiate first.  I gave a summary of the discussion from the homeowner information meeting, including what we were trying to accomplish for the SOA and where the negotiations stood, and I explained the SOA’s position that any new agreement should totally replace the existing agreement.  I also indicated that the Board’s intention was to put any new agreement to a vote of SOA members as we would also need to amend our CC&R’s, which requires a vote.

After the discussion, the NRED and AG representatives left the room to deliberate.  Upon returning after a few minutes, they announced that the AG would delay filing a complaint to allow more time for the SOA and SGCC to see if a new agreement could be reached.  The AG directed the attorneys to draft a stipulation formalizing this agreement, and to submit it to the AG for approval.

So where do things stand right now?  As of the time I’m writing this, the AG has not filed charges.  Also, the attorneys are still exchanging comments, and the stipulation has not been finalized.  Hopefully it will be finalized soon, as it should set some deadlines and give us more clarity on what the new Board may need to do.   Meanwhile, we have re-started negotiations with the SGCC to replace the existing amenity access agreement, but as of today have not reached an agreement.  As I discussed at the June Board meeting, after becoming aware of possibility of a hearing, we reached agreement with the SGCC to suspend building any new amenities in 2013 until the pending complaint has been resolved.  As part of that agreement, the SOA will withhold the $100,000 payment called for in the existing agreement to pay for the new amenities.  This will be done by reducing each remaining payment in 2013 by $16,666.67.  The SOA started withholding with the July payment, and the AG has been updated about this agreement.

That’s where things stand.  As significant new developments occur, we will provide more updates as appropriate.  In the meantime, if you have any questions, please feel free to contact me.

Tony Fakonas
August 1, 2013