December 7 Board meeting wrap up: Part 1

It was my birthday and I had a golf clinic at 3:30, but I dragged myself there and listened to the audio of the part I missed. Spoiler alert – there is no recommendation on the restaurant and the Board does not blame itself for anything wrong: nothing wrong with the transition to self-management; FAS eviction was all Favil West’s fault, and the $85,000 spent so far on the recall was all the fault of the petitioners.

Owner Comments: $10K for medical equipment

Roger Cooper, SCA owner since 1999 commented on item 12g, the Community Service group’s recommendation for “Approval of an expenditure up to $10,000 to purchase durable medical equipment” (to replace what was previously provided by the Foundation Assisting Seniors (FAS).

Accurately assessing that this is a drop in the bucket of the cost of replacing what FAS was providing free, Roger said that this medical equipment request of $10,000 was just the beginning of a bottomless pit.

Emile Girard had a lot to say (loudly) about this item both at the first comment period and when the item came up on the agenda. Emile highly complimented the Board and the CSG for their good works while he stridently blamed Favil West for everything except the weather: Favil didn’t negotiate to stop FAS’ eviction, even sending out a postcard about service interruption was vindictive and revenge.

Emile apologized for his emotional rant, but Rex welcomed his attack on Favil in a way that was a far cry from Rex’ oft-stated policy to stop speakers from making personal comments about other owners. (Rex certainly stopped me cold when an innocuous comment of mine included a unit owner by name.) Emile is certainly entitled to his opinion, but the meeting chair is not entitled to allow personal attacks when he agrees with them and shut owners up if he doesn’t.

Rex even passed along an untrue rumor stating that FAS was moving out of the area, but I am informed by a FAS Board member that FAS has rented a space not too far from Von’s.

Construction Defect Litigation

Construction defect lawsuit on Liberty Center is in mediation. There was one session in November and there will be others until it goes to trial in 2019. (Rex’s comment that SCA has not changed any of our demands disturbed me a little bit as an odd choice of information tidbit to share with the members. It leaves the impression that he personally approaches mediation with a “my way or the highway” attitude which is the antithesis of the good faith needed to achieve a win-win solution.)

Surplus Funds

I don’t even want to get into the issue about surplus funds, but they changed the minimum acceptable equity level from $500,000 to $250,000 as recommended by the Finance Committee. It’s not my issue, but it might be of concern to owners on fixed incomes who would like the Board to refund the excess to owners or reducing the assessments going forward rather than collecting more than is needed for annual operating costs.

Recall Costs

CFO Jim Orlick reported that the costs for the recall through November approximate $85,000, and I would like to report that I consider that expenditure an egregious failure of the Board’s duty of care to the membership.

It is an beyond disingenuous for Rex, the GM and the attorney to pretend that these expenditures were made in the best interest of the membership. They ordered these unbudgeted payments in violation of NRS, SCA bylaws, the Board Policy Manual the SCA Election & Voting Manual and prevented the Election Committee from performing their chartered duties as volunteers. They should be held accountable for it.

Director Comment Period is awash in self-righteous indignation

Bob Burch spoke at length about his opinion of the recall which he said was because of the Foundation, the vendor issue with the Clubs, and poor communication on less visible issues. He said the recall was caused by a “perfect storm”. He offered a semi-apology to the Clubs for not informing them of the insurance and business license changes, which he then negated by saying that vendors should have business licenses and insurance is a real problem for HOAs. He did not seem to see the real issue as being the autocratic change of practices without prior notice or negotiation with those affected.

Bob’s main point about the FAS eviction was that it didn’t have to happen that way, but still, that it was all FAS’ fault because the Board had bent over backward to be fair. Other people see it quite differently. Please see Favil West’s response that I posted on my campaign website last March. Also, a resident’s answer to refute Bob’s claims published on the AnthemToday blog is worth reading to set the record straight.

Bob read some incendiary passages from  blogs, and tried to elicit sympathy from the audience about how beleaguered Board members are being subjected to such horrible, unwarranted abuse by malcontents.  

Bob echoed Rex’ concerns about how tragic all this abuse of Board members was because it meant that there wouldn’t be qualified people applying for the Board. This is failing to see how the Board is pushing good people away.

What they are really saying is that the petitions to recall four Board members constituted abuse. Such abuse would make qualified people not want to run. Maybe, but more importantly, Bob and his cohorts are doing everything they can to get people who don’t agree with them not to run. 

Totally backward. Qualified people don’t want to serve because of the way the Board treats Directors that don’t “go along to get along”. Who wants to serve on a Board where a majority can just kick a political rival off based on unproven allegations? 

I have spoken to three women who would be excellent on the Board, and they all said they wouldn’t run because they didn’t want to be treated the way I was treated.  

“It’s just not worth it. At my age, I don’t want to deal with it.”

“They are a bunch of ‘good ole boys’ who won’t listen to anyone with good ideas.”

“They’re just on a power trip.”

“I haven’t got thick enough skin to take it.”

Bob, you really need to stop whining about all the abuse that you and the other Directors take after what you and your buddies on the Board did to me.

You, the other male Board members and the attorney ambushed me and accused, berated and attacked me for an hour and a half in July 27 executive session and refused to have an open hearing I requested.

It’s that type of bullying of a person who is supposed to be an equal Director is what drives qualified owners away from wanting to serve on the Board.

But then, I guess you guys already figured that out.

 

 

December 7 Board meeting items of interest

The last SCA Board meeting of the year is tomorrow at 1:30 PM. I’d like to point out a few things that you might not notice immediately, but which are important to for owners to know the full story.

Click here for full agenda.          Click here for draft Board Book.

Financial Report for October

Two things mar an otherwise brilliant job of bean counting:

  1. How much are we paying for who to do what?     SCA is now an employer with 80 employees costing $3.5 million -over 40% of operating budget, there should be a clearer accounting of cost of staffing by budget objective. The Board cannot hold the GM properly accountable nor can the owners be protected from such failures as excessive management compensation or featherbedding, if the accounting obfuscates these facts. And, more importantly, the Board is not holding itself properly accountable to the owners by letting the GM hide what SCA employees (particularly managers) are being paid and what they are being paid for.
  2. Since Adam Clarkson became SCA Legal Counsel on May 1, there have been $185,010 expended for legal fees which was 411% 0f the $45,000 budgeted for legal fees over half a year. This is the same attorney
    • who told the Board the GM did not need its authorization to expend SCA funds for unbudgeted purposes.
    • who does SCA’s debt collection function in the least cost-effective and most draconian way available.
    • who, along with the GM, is responsible for additional unnecessary expenses of at least $73,000 for the recall election which were STRONGLY objected to by the proponents of the recall.
    • who is being paid $325/hour to cause or allow the Board to take unlawful actions against political opponents of the GM and certain members of the Board.

 

Election and Voting Manual Revisions

Reviewing policies on voting may be really boring, but it is important to protect homeowner control over who represents us on the Board. There has to be a sound, uniformly administered system in place to prevent ANY election interference from tampering with ballots, abuse of power, or even unfair communications.

The largest HOA board election rigging scandal in Southern Nevada involved primarily attorneys who were supposed to be neutral outsiders who stacked HOA Boards to channel construction defects litigation.  This Election and Voting Manual is intended to ensure that the SCA homeowners actually control who sits on the Board and that those Board members actually work SOLELY for the benefit of the homeowners.

Yet, it doesn’t matter what is in this or any other SCA policy manual if the Board doesn’t follow SCA’s own rules or if it allows the GM and/or the attorney to manipulate the process in favor or against certain owners.

Cherry-picking which laws to follow is a slippery slope

There are several areas where our election process is not in conformity with NRS or the SCA Bylaws. For example, SCA Board does not have a nominating committee as required by SCA bylaws 3.4a below. While there may be good reasons to not want to have such a committee, this is an example of how problematic it is to simply disregard a provision. The bylaws must be uniformly enforced and not simply disregarded. The narrow exception is when the bylaws explicitly conflict with a mandate in a Federal or state law.

Filling Board vacancies after a director is removed.

The final clause of SCA bylaws 3.6. requires a vote by the unit owner to fill a Board vacancy caused by a Board member being removed.

“Upon removal of a director, a successor shall be elected by the Owners entitled to elect the director so removed to fill the vacancy for the remainder of the term of such director.”

The proposed change to the Election Manual, below in green, apparently attempts to justify retroactively how Jim Coleman was appointed, but even the new provision doesn’t allow for an appointment to be made without any notice to owners, any candidate nominations, or the required vote of owners.

Note that there is nothing in either the existing nor the proposed versions of the Election Manual that gives the Board legal cover for what they actually did to remove me nor what they did to replace me nor what they might be contemplating to do in the next election (keep me off the ballot).

  • How they removed me from the Board by simply declaring my position vacant is not authorized in NRS 116, NRS 82, SCA governing documents or any existing or proposed Board policy.
  • By extension, that also means that there is no legal means by which the GM, the Board or the attorney could refuse to allow me to be a candidate for, or to serve on, the Board should I choose to run again.
  • Also, note that this manual includes the NRS provisions which the Board President and GM violated by using the Spirit to publish their one-sided argument regarding the recall without permitting equal time and access to the opposition. Complaints of these violations are currently being investigated by NRED.

These proposed changes don’t describe what the Board actually did nor do they conform to the bylaws. The Board is simply pretending they have the authority to act against laws and policies “upon the advice of Counsel”. We’ll see.

Complaints to the Election Committee are not fairly handled

The Election Committee complaint process is to informal and allows for problems at both ends of the spectrum. On one end of the spectrum, informal complaints may be submitted without evidence or substance which could just waste the committee’s time .

On the other end, there is substantial risk of unequal treatment occurring, or even being merely perceived, if there isn’t a good enough procedure defining accountability, investigation, documentation and notice requirements. It’s sloppy management, and it reduces the community’s trust of the election process. It also allows interference in the independence and neutrality of the Election Committee.

In the proposed draft, there is still no standard format for resolving complaints, no required documentation to be maintained in the official SCA record, and no notice of the disposition formally given to the complainant.

I recommend the process defined in the SCA CC&Rs and utilized by the Covenants Committee would be a good model for the Election Committee to employ to fairly investigate and document complaints regarding Board elections.


Board Communications Task Force

In June, I proposed a resolution to improve Board-owner communications , but couldn’t even get a second to the motion. Now, five months later, nothing has been done to increase transparency or meaningful utilization of owner expertise in governance.

Rex appointed a couple of Directors to be a Board Communications “task force” (with no owner involvement)  and here are their recommendations:

Here’s what should be done immediately:
  1.  Either use SCA-TV to video broadcast Board meetings live or use some service like GoToMeeting.com to make the Board meetings accessible online in real time and interactive.
  2. Take the password off the website.
  3. Make the eblast mailing list opt-out instead of opt-in
  4. Follow the lead of Sun City Summerlin’s new GM in attitude.
  5. Stop using Board work groups that withhold information from owners.
  6. Expand the committee structure to utilize expertise of residents and have meaningful owner oversight and influence in governance.

Item 15B “Self-Management” is listed as New Business to be presented by Tom Nissen rather than the GM. The paragraph above the total back-up in the Board book to let owners know what the Self-Management item is about.

This raises a lot of questions about the Board’s failure to protect homeowners by hiring a GM without ANY of the defined terms and conditions of employment required in a management agreement.

  • Why is a Board member making a presentation on the transition?
  • Why doesn’t the GM whose compensation is $100,000 greater than other GMs at comparable Sun Cities like Summerlin make the presentation?
  • Why hasn’t the GM been held accountable for the development of the complete policy framework needed to protect SCA from legitimate risks and potential liability associated with becoming an employer or
  • Why hasn’t the GM held accountable for AT LEAST having written plans and timetables for getting the job done?
  • How will the Board – let alone the owners  – even know if the job is done right and on time?
  • Why did the Board let the GM unlawfully conceal SCA records on the transition to self-management from one Board member in violation of our bylaws 6.4c when this information should have been easily available to any unit owner?

After the Board meeting, I’ll let you know if any of these questions have been answered. Or if there are just new ones.

GM Dumped $73,000+ Removal Election Costs on SCA Owners

The GM is to blame for the big bill – not the SCA owners who must pay it

This huge expense is still climbing, but it was totally unnecessary, not legally authorized by the Board, and did not serve the best interests of SCA.

Both the GM and the attorney should be fired for spending our money to interfere with the integrity of the removal election.

This unauthorized expenditure is sufficiently egregious to warrant the termination of both the GM and attorney, but that won’t happen because the beneficiaries of the election interference by SCA’s agents included a majority of the Board which was apparently important enough to them to stand by and let SCA owners foot the huge and unnecessary bill.

While I was on the Board I aggressively attempted to protect the independence of the Election Committee,  but alone and constrained by ethical boundaries, I was no match for the abuse of power by the Board President and SCA’s agents who were not so constrained.

A well-documented contributing factor to my unlawful removal from the Board was that I informed the Ombudsman on July 24 of my concerns about the need to protect the independence of the Election Committee (and also to protect owners lawfully collecting petition signatures) from the significant GM/CAM/attorney/Board interference I observed.

Berman’s constant improper placement of blame

David Berman continues to perpetuate the myth that these unnecessary and unauthorized costs were caused by the petitioners who (legally) called for the removal election.

This targeting of unit owners is obviously wrong. Owners don’t have enough power to be culpable.

Think about it.

  • If 1,200 unit owners had wanted  the Election Committee to conduct the removal election, but the GM did not want it, would they have been able to make their wishes happen over her objections?
  • If any of the petitioners had come to the Board meeting and begged to have SCA fork out over $73,000 to pay an unknown CPA and the attorney to do the Election Committee’s job, would SCA have spent one dime?

Both the GM and the Board President had to want SCA money to be spent on agents of their choosing  to run the removal election (incompetently or, more likely, unethically), or OUR money  would still be safely in the bank.

The Spin Doctor at work

Yet, despite all evidence to the contrary, David Berman persists in promulgating this almost laughable propaganda that unit owners could make the GM do something that doesn’t serve her interests. Smug in this delusion, today he blogged with a melodramatic and an almost audible sigh that this big $73,000 number would still be bigger when the attorney and CPA bills all come in:

Sad. SCA deserves so much better.
But, wait, hope may be on the horizon:

CIC Commission recently held a GM accountable despite HOA attorney advice that action was OK under NRS.

If Rex and Sandy having Clarkson on speed dial is no longer as good an excuse as “the dog ate my homework”, then maybe…

AnthemOpinions blogspot reported about a case that was heard at the recent CIC Commission meeting which seemed to demonstrate the Commission’s repudiation of the “the attorney said I could” defense.

 

The Zeitgeist
Perhaps, we are reaching a tipping point.

In the whole country, the public conversation has shifted seismically around sexual harassment. Suddenly, society-at-large is not just standing silently by while men in power abuse vulnerable people with impunity.

Maybe the tide is turning here at SCA too.

Now, owners no longer seem so resigned and no longer seem willing to tolerate inexcusable behavior or poor leadership. A critical mass is forming, and this is a necessary step to creating a healthier balance of power in our community.

As formerly discouraged and disenfranchised owners are more willing to speak up and stand up to bullies, SCA’s bullies will predictably face a Come to Jesus reckoning. A tectonic power shift will occur that, in retrospect, we will be surprised at how long it took us to take our power back.

 

 

On the Advice of Counsel is No Defense

After a relaxing couple of weeks in Cabo, I have been immediately hit by how badly SCA homeowners are being treated by our highly compensated and highly self-serving agents.

This first example from the November Spirit demonstrates how our well-meaning volunteers on the Election Committee have been duped into allowing the GM and attorney to violate the integrity of the removal election process at great expense to the membership.

Who gives the association attorney the power to make such decisions?

No one. At least not legally.

NRS 116 does not give an attorney who is advising the Board ANY authority to decide any policy issue.

NRS 116 does not give the attorney ANY authority to advise the Board to violate any provision of Federal, state, or local law or of our governing documents or policies.

NRS 116 does not give the attorney ANY authority to require the Board or the GM or a committee to take it not take any particular action.

Whose authority is it?

The buck stops with the Board, and they can only legally delegate some of their duties, but can’t delegate ANY of the ultimate accountability. The GM is a licensed manager, and she can’t get out of being accountable for the standards of practice listed in the law by getting the attorney to say its okay to break or bend the law.

NRS 116 and SCA governing documents and policies define clear requirements for:

  • contracts must be authorized by the Board in open session,
  • the Board SHALL NOT delegate policy authority over the budget
  • getting bids for contracts
  • how elections are conducted
  • under what circumstances attorney’s opinions are sought BY THE BOARD and for what purpose

None of the legal requirements were followed in this case, just as they are frequently ignored in other cases, for self-serving purposes and not for the benefit of the membership of the association.

I would like to point out that the issue of the Board President Rex Weddle, the GM Sandy Seddon, and the former-CAM Lori Martin taking actions in excess of their legal authority to interfere with the removal election process is the subject of numerous complaints and is currently under investigation by NRED. If their defense is simply that “the lawyer said we could do it”, they better be ready to take their wallets out. I would expect that feeble excuse to fall on deaf ears.

 

 

 

Removal Election Results

Removing a Director LEGALLY is really hard to do

Predictably, the removal election did not succeed despite over 1,200 unit owners voting to remove Rex Weddle, Aletta Waterhouse, and Tom Nissen from the SCA Board. I say it was predictable because the only lawful way to remove a director is to meet ALL the rigorous requirements defined in NRS 116.31036:

  • More than 10% of unit owners must call for a removal election
  • More than 35% of ALL unit owners must vote YES
  • More than 50% of those voting must vote YES

It was even more predictable because GM Sandy Seddon, Board President Rex Weddle, association attorney Adam Clarkson and their accomplice and lobbyist, David Berman, took unfair actions to interfere with the removal election process to protect the incumbents and to make unit owner pay for the legal removal election approximately $40,000-$50,000 unnecessarily.

42 NRED Complaints against SCA

Interestingly, I have been told that the Ombudsman and an investigator were present at the vote counting today. I understand they came to observe the final step in the removal election because there have been 42 complaints filed against SCA for such violations as:

  • removing the volunteer election committee,
  • paying a CPA without a contract to perform the EC’s duties and performing them so badly some people didn’t even know there was a removal election,
  • not counting all of the petitioners’ valid signatures so Bob Burch wasn’t included on the removal ballot,
  • concealing information from unit owners about complaints,
  • retaliating against owners for making complaints,
  • and, last but not least, removing me, an outspoken homeowner advocate, without having the required removal election at all.

Deceptive eblast reports the news

Saying

“In order to RECALL a BOD member, 2,501 Yes votes were required.”

is a thinly veiled way to disguise the FACT that

“In order to REMOVE a BOD member, 2,501 Yes votes were required”

The Board unlawfully ignored this FACT when they removed me without abiding by ANY provision of NRS 116.31036 and without ANY owners petitioning or voting to have me removed or recalled.

That’s a really fast announcement when you consider that the GM NEVER announced that there were petitions going around in June to remove four directors, or that there even was a removal election scheduled, or that there were 836 signatures calling for a vote of no confidence against her submitted in August with a long list of owner complaints about her performance as GM.

Keep those fun facts in mind when you hear very soon whether the Board has given her an excellent performance rating and a $20,000 bonus. Rex Weddle made the off-hand remark at the last Board meeting that they had discussed “GM performance” in executive session, but item 7A lists “GM Compensation” on the public executive session agenda.

Elder Abuse: Part II – SCA Agents

We have another covert systemic type of elder abuse going on right here at SCA. We have all of the problems endemic to Nevada HOAs in general, but those generic problems have been fueled here by a historically divided community and exacerbated by a poorly-executed transition to “self-management.”

Our system fails to provide sufficient competent owner oversight and internal controls necessary to prevent abuse by professional agents who are supposed to be fiduciaries acting SOLELY in the best interests of the owners,  but who are taking unfair advantage of us for their own unjust enrichment.

You are going to hear this same refrain from me repeatedly:

The biggest risk SCA owners face is being screwed over by unscrupulous agents who are supposed to be acting solely in our best interest, but who are not. They are actually unfairly acting in their own self-interest and profiting at our expense.

The reason “they” kicked me off the Board is they wanted to shut me up. They wanted to prevent me from telling owners what they are doing. They wanted me to stop publicly trying to force them to make system changes that would protect SCA owners from abuse by our own, highly-compensated, but unscrupulous, agents.

Who is “they”?

  • “They” are now (2016-now) GM Sandy Seddon and (May, 2017-now) association attorney/debt collector Adam Clarkson Law Group now.
  • Before (2009-2015), “they” were FirstService Residential (FSR)/formerly RMI, SCA’s managing agent, also licensed debt collector dba Red Rock Financial Services (RRFS).
  • In between (2015-2016), “they” were Alessi & Koenig, LLC attorney-debt collector that went into chapter 7 bankruptcy after being sued on 500 of the 800 HOA foreclosures they did between 2011-2015 and then…
  • “they” illegally morphed into HOA Lawyers Group, LLC (2016) but continued being SCA’s debt collector until replaced by Clarkson.

“They” are NOT necessarily the members of the Board, but “they” need to control the Board. “They”get their hands so far into our pockets only because the Board lets them do it. At least a majority of the Board has to negligently, maybe unwittingly, enable the attorney and management to take over the reins.

I believe the Directors are probably acting in good faith and trying to do their best, but are simply placing their faith in the wrong “experts”. However, even if the Directors are just innocently looking the other way, their ignorance is allowing SCA owners to be taken for an expensive ride.

So, what now?

Too bad for them.

“They”didn’t really get rid of me by unlawfully deeming my Board position vacant.

Now I have the time to tell you all about it. And I think I’ll start with what’s wrong with paying Sandy Seddon twice as much as we should be paying her.

 

Elder abuse: Part I – Guardianship

Many of you may not be familiar with the guardianship problem, but it’s where unscrupulous people become legal guardians and take over the finances and lives of the frail and elderly. They use a legal loophole to victimize the elderly and even take away the rights of the victim’s family. Guardianship abuse has been much worse here in Nevada because of the corruption that is rampant throughout our legal system.

Click this link https://www.newyorker.com/magazine/2017/10/09/how-the-elderly-lose-their-rights for an in-depth article published October 9, 2017 in the New Yorker, “How the Elderly Lose Their Rights: Guardians can sell the assets and control the lives of senior citizens and make a profit from it” by Rachel Aviv.

For more information about guardianship abuse, visit  http://www.stopguardianabusenv.org/ This website was produced by the Nevada Association to Stop Guardian and Elder Abuse, a non-profit organization dedicated to stopping exploitation and abuse of those in need.

SCA resident, Rana Goodman, the President of the nonprofit, is mentioned in the New Yorker article. Rana deserves our profuse thanks for being such a tireless advocate for these most vulnerable among us. She has successfully gotten some legal changes to allow us to prospectively (before we are of diminished capacity) nominate who we want as our guardian so we can prevent some unscrupulous professional guardian from swooping in and taking over our lives.

It’s tragic to think that this type of abuse can even happen. Legal guardians are supposed to be fiduciaries. They are supposed to protect people who can’t take care of themselves. They are supposed to act solely in the best interest of the client. They are supposed to use the powers they “legally” get over their wards only for the good of the person under their charge, but sadly, and with the support of lawyers and judges, many helpless people have been victimized.

Whenever there is a lot of money involved, there will be those who will scam the system and rip innocent people off, and with unfortunate frequency here in Nevada, there will be judges and attorneys who help them get away with it.

As time goes by, I will show you in my blogs how a similar type of systemic corruption is pervasive within Nevada HOAs, and I’ll show you how it can work unfairly to the advantage of HOA agents, like managers, debt collectors, and attorneys, to rip off HOA owners. I’ll show you how SCA’s former agents essentially stole my late fiance’s house, and I’ll show you how SCA’s current agents are getting the Board’s unwitting blessing to rip SCA owners off in a lot of different ways.

$50,000 for the removal election and still counting

Last June I did not think passing around recall petitions was a good idea. I thought it was a fool’s errand – disruptive and doomed to fail.

However, I am a strong, some say overly-aggressive, defender of owners’ rights. I just hate it when people with power abuse ANY owner’s rights, but especially if they use dirty tricks or create an uneven playing field and make the little guy pay the price. 

That’s what’s happening here now. The opponents of the removal election are making owners pay way more than we should, and they are trying to get us to blame the wrong people.

All the tens of thousands we will be paying for this removal election (above the less than $10,000 cost of an annual election) could have been avoided if the GM hadn’t blown me off by not even acknowledging my July 20 email:

Sandy Seddon didn’t answer me. Why should she? She knew that there was no one on the Board except me that cared one whit about maintaining the independence and neutrality of the Election Committee. Quite the opposite, she knew that she had the votes to approve anything she wanted to do make the removal election process difficult.

Who decided that these actions were in the best interest of owners?

Now, SCA owners are obligated to pay a bungling CPA firm $20,000 for the work done through September 30 no matter how poorly it was done. We will be on the hook for maybe triple that amount because their errors or omissions are significant enough that a second recall ballot may need to go out with Bob Burch’s name added to it.

Who made the decision to take away the Election Committee’s job?

Who decided that it was in the owners’ best interest to use an attorney and a CPA for the removal election when the attorney in five months is already billed $150,000 – FOUR times the $37,500 budget (In just September the attorney billed $43,873 and the CPA who replaced the volunteer Election Committee billed $20,000)?

Did I mention that there was:

  • no RFP for a CPA,
  • no approved CPA contract,
  • no Board approval to change the Election and Voting Manual,
  • no budget authorization for the CPA, and
  • the CPA has made so many mistakes that there might have to be a second removal ballot?

 

 

 

Defending the GM and her excessive compensation is a slippery slope

I have heard many SCA homeowners talk about the recall election and their main focus of concern seems to be the cost of removing Rex, Aletta, and Tom from office.

However, the real issue of this recall election should be the unnecessary costs these Directors have created, and insist homeowners continue to pay, rather than admit they are wrong. Their visceral hostility to my professional assessment of how to address excessive executive compensation is what got me excluded from meetings and decisions and is the real reason they kicked me off the board.

Refusal to utilize professional compensation standards for GM is unacceptable.

Excessive executive compensation may be justified in the eyes of the board members who approved it when the GM was hired in November, 2015, but they erred significantly in the compensation for the GM going forward which is easily $100,000/year too high.

The problem needs to be corrected by using expertise within our community, but instead, it was exacerbated by Rex appointing Tom Nissen and Bob Burch, a Board work group, and excluding me with threats of legal action regardless of my expertise. There are professional standards and practices governing compensation in the public and/or non-profit sectors that cannot be legitimately dismissed, but have been. Compensation for a job class is based on a number of factors normally determined by a classification and compensation survey of comparable agencies within the geographic job market conducted by trained and independent persons. SCA lacks a needed professional protocol for this.

 As delineated in our Articles of Incorporation, SCA was incorporated in 1998 as “a non-profit corporation organized under Chapter 82, Nevada Revised Statutes”. As such, the Board, contrary to what they believe, must operate under the good governance principles of a non-profit even though we are not a non-profit in the sense of a charity under IRC 501c3.

An easy-to-read article, WHAT IS “REASONABLE” COMPENSATION FOR A NON-PROFIT EXECUTIVE? describes one professional method for addressing GM compensation issues:
“Establish a Good Governance Framework
As a preliminary matter, non-profit Boards must establish good governance processes and procedures.  As suggested by the Treasury Department, good non-profit governance in the area of executive compensation starts with the following basic framework:

  1.  Set and follow established procedures for determining compensation;
  2.  Use responsible effort to determine appropriate or reasonable levels of executive compensation; and
  3.  Maintain appropriate oversight of executive compensation levels.

Owner complaints of GM compensation should not be treated as beneath the Board’s notice.

The hot-button GM compensation issues listed below involve major deviations from standard compensation principles. I wanted the Board to take back policy control and be accountable to the homeowners. The other Board members wanted to pay the GM whatever they decided without having to listen to me ‘bitch’ about it or to my insisting that they explain their rationale to owners.

  1. The GM was hired at $250,000 which was $100,000 more than Sun City Summerlin paid to hire their Executive Director in 2015, and both SCA and SCS recruitments occurred at about the same time.
  2. We also pay for $100,000 for a CAM Lori Martin (recently replaced), so in essence, we are paying two people $400,000 (including increases, bonuses and benefits) for the work that other HOAs pay a single person under $200,000 on contract to accomplish. I have found that other larger and more complex HOAs pay for a top executive to operate the HOA under their own CAM license.
  3. In addition, Rex and the rest of the Board Members, gave the GM a $20,000 bonus, six months after she took over duties from FSR, the management company. However, to date, Rex has not been able to give a good justification for the bonus. The Board has refused to publicly adopt any GM performance standards.
  4. They cannot explain why there was a need for a 10% increase in owner assessments when we were moving to self-management as a more cost-effective form of operations.
  5. They claim that the GM’s big compensation was justified by the saving she accomplished when taking over early from FSR (a savings which was not known or predicted when she was hired in 2015 at such an exorbitant salary.)
  6. Why didn’t the $30,000/month for nine months that was supposedly saved by her early transition show up in the bottom line in the 2016 audit?
  7. The GM hired a CFO at $190,000 + benefits to handle our comparatively small $10 million budget. This compensation is also way out of line with the proper pay for that job class, maybe as much as double what others pay in this market for comparable work.
  8. The same problem of compensation rates based on a total disconnect with the local market rates for comparable jobs occurred again with the Facilities Manager compensation at $154,000, again double what other Sun City HOAs are paying in our region.

The combined compensation of four executives unreasonably takes up about 10% of the operating budget. However, but before I could finish my analysis, they ordered me to cease & desist asking questions. After prohibiting me from researching this subject further, they illegally removed me from my position on the Board on completely unrelated, bogus charges.  This is the Board’s fatal step off the cliff, and SCA is still tumbling down the slippery slope of an unfair, overly-politicized system.

Transparency and accountability to owners is essential, but inadequate at SCA.

As fiduciaries, the Board should be much more transparent and accountable to the homeowners as they fund all employee salaries. Compensation practices in organizations that are funded by taxpayers, donors, or assessment payers are necessarily different than compensation practices permitted in the private for-profit sector. The extreme resistance to this notion of transparency, accountability and homeowner oversight of GM compensation and performance standards has been a major source of contention between me and the other Board members who are overly protective of the GM to the detriment of the effective governance of the association as a whole

Sound personnel and salary administration requires formal policies which should NOT be delegated to the GM without competent owner oversight.

Coming from for-profit and military backgrounds, the current Board members don’t see a problem operating without strict policy control of positions, classification, and compensation. Nor do they see that this oversight can be provided more effectively and consistently by owners with relevant professional skills BETTER than the function can be performed by the Board which may or may not have members with the proper expertise. They don’t see the problem they create by abdicating complete control over position control, performance expectations, and compensation, a third of the budget, to the GM without an adequate system of accountability.

Just as there is a Finance Committee, SCA should be a Personnel Committee which includes owners, and at least one Board member,  as required by NRS 82.206(3) to utilize the expertise of owners with backgrounds in HR, with an emphasis in the public and non-profit sectors, to oversee the development of personnel policies appropriate to a self-managed Sun City. I submitted a proposal for such a committee to the SCA Board at the January 26, 2017 Board meeting, but it was given zero consideration and, despite my request to have my written comments included in the Board Book, it’s as if it never happened.

Once the salary is set for the job classification, performance standards, and measurements must be publicly adopted to determine any bonus. Absent customer-service ratings and other performance measured against publicly-adopted standards, any compensation increase by the board is irresponsible.

Contrary to what I believe is in the best interests of the membership and my literal interpretation of NRS 116.31085, Rex has aggressively blocked the PUBLIC adoption of GM performance standards to a ludicrous level. He claims that the law does not require members to know what factors or measurements control GM compensation. Further, unit owners haven’t been informed how many of your assessment dollars have gone to the attorney to prevent me as a Director from seeing documents showing what performance expectations the Board had adopted in executive session (if any). In my view, this skewed interpretation of the law benefits no one except the GM, attorney, and Rex, the man who would be king.

 

Refusal to use my expertise to address owner concerns about GM compensation was only the beginning. SCA’s system of accountability has been seriously damaged by how the Board mis-handled the GM’s frivolous threats of litigation.

This dispute is the real impetus for my being unfairly kicked me off the Board. Rex has allowed the GM to use the attorney to block ANY audit of the GM’s compensation and performance by me as an individual Director. This politically-motivated act could only be  accomplished by paying the association attorney literally thousands of dollars to conceal SCA documents from me and bless violating SCA Bylaws 6.4c:

Bylaws 6.4 ( c) Inspection by Directors. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of the Association and the physical properties owned or controlled by the Association. The right of inspection by a director includes the right to make a copy of relevant documents at the Association’s expense.

Concealing records and unequal treatment of independent Board members are two of SCA’s BIG unacceptable governance practices.

Whether the GM’s salary is correct or too high is not the critical issue. The huge problem is the kind of system that’s created when when the Board tolerates the GM throwing a hissy-fit because I did a salary verification with her former employer, and then claims I am not authorized to identify myself as an SCA Director or ask questions about GM compensation, and then orders SCA’s official records be sealed from my view. I was threatened with litigation, accused of violating my fiduciary duty, and many other humiliations, including shunning, for refusing to just shut-up.

In what world is it justifiable to treat a volunteer Director in such a horrific manner?

In what world is there any possible way I could have used GM compensation information to make a profit in unrelated quiet title litigation as they claimed?

SCA’s system of accountability and responsible governance has been seriously damaged by how the Board mis-handled the GM’s frivolous threats of litigation.

The GM’s actions, to prevent me from interfering with her gravy train, and to shut me up about demanding higher performance and responsiveness to homeowners to qualify for her high level of compensation were acts so egregious that, in my book, she should have been fired for her vindictive and retaliatory acts alone.

Owner concerns should never be ignored

The biggest reason Rex, Aletta, and Tom should be voted off the Board is that they chastise owners who have concerns about GM performance and adamantly refuse to hold the GM accountable for one of the most critical aspects of her job – owner satisfaction. And, they have spent thousands of our assessment dollars misusing the attorney in an attempt to silence criticism of the GM’s management style that many perceive as autocratic, divisive and unfair.


Refusal to listen

When over 800 people complained about how the GM is performing (by signing petitions) and stated that they have no confidence in her ability to lead our organization, the correct response by both the GM and the Board would have been to look at what the customers are complaining about and find a fix. However, the Board’s solution was to silence her detractors by yelling “Enough is enough!” and then give an irrelevant litany of her deferred maintenance accomplishments. I propose that during this recall election, Rex, Aletta, and Tom need to be held accountable for refusing to listen to, or correct, ANY of the extraordinarily high number of owners’ complaints about the GM.

Refusal to accept owner oversight

Before I was elected to the Board, I campaigned on the principle that there should be owner oversight in relation to personnel issues. I ran for the Board because of my expertise in HR and employee contract negotiations and proposed performance standards that would be linked to the GM compensation as well as, customer service ratings as part of the GM’s performance evaluation.

The Board’s reaction to my proposal was not only “NO,” It was “HELL, NO.” The Board refused to design a system that allowed ANY owner input into the GM’s evaluation and compensation. Additionally, President Rex’ strategy for keeping the decision-making overly consolidated and away from owner involvement is to refuse to have owner oversight committees even on an ad hoc basis.

I personally brought several recommendations to the Board to increase owner-involvement in oversight of insurance, investments, legal services and personnel, none of which got approved. The Board is steadily moving away from effective means for using owner expertise in governance and controlling costs.   Rex simply uses his authority as President to appoint work groups of two Board members so he can exclude owners and  Directors he does not agree with or he wants to punish. This politicizing control is, in my view, a Machiavellian abuse of power, and it prevents the creation of a system that would produce (significantly) better results for the membership.

Refusal to treat owners as customers

That, my fellow neighbors and homeowners, is the way your current HOA Board of Directors is refusing to utilize much-needed owner expertise while simultaneously dismissing your right to complain about the performance of staff that you pay to manage this community responsibly. Pay more. Get less.