Rating Rex’s Self-Management Report Card

Demonstrating all the transparency and humility we have come to expect from our supreme leader, Rex Weddle once again used SCA’s official house organ, the Spirit, to stroke the ego of the Board and GM by giving a glowing Self-management Report  Card. Although Rex didn’t give any letter grades, let’s fact-check his assertions of outstanding performance, and I’ll offer the letter grade I think is warranted:

SCA made the right decision to be self managed.

True. The former Boards’ grade should be a B for taking action based on specific plans and goals to correct deficiencies.
The current Board should get an F for failing to follow through on good work done by prior Boards.

SCA’s management company FSR needed to be replaced, but for more reasons than either Board acknowledges. FSR was double dealing by being both the managing agent and the debt collector following the collapse of the real estate market.

Even with a solid management agreement, previous Boards did not keep FSR from grabbing profits from abusive collection practices. Prior Boards were unaware of the negative impact these abuses had on owners’ property values. Their attention was overly focused on deterioration of property values caused by excessive deferred maintenance of the common areas.

The current Board has also over-emphasized catching up on deferred maintenance, and has not held itself or the GM accountable for other critical areas (customer service, owner relations, transparent communications, fair and open culture, strategic planning, protection of individual property values, and maintenance of high quality amenities and other lifestyle options). Ultimately, this Board has a failing grade because their lack of accountability to owners is supported by paying an attorney to say that the rules don’t apply to them.

According to Rex, a Human Resources model was included as part of the transition.

False. This Board scores an unequivocal F.

Adequate human resource systems are not in place needed to protect SCA from “employer liability”. It is a disgrace that since 2015, the GM has not presented ANY plans or timetables for developing these internal controls or for incorporating essential expert owner oversight. The most important feature of transitioning to self-management is that SCA is now an employer. This failure has already resulted in:

  • excessive management compensation (the GM gets $100,000+ more than the market requires and three other managers annually take in more than a quarter million dollars more than SCA should be paying);
  • lack of performance standards (GM bonuses provided without justification despite massive owner dissatisfaction with her performance);
  • lack of contractual service level expectations (they remain undefined and unmeasured);
  • lack of written terms and conditions controlling GM employment (no management agreement makes her an “at-will employee” who is subject to the SCA Personnel Handbook. Unfortunately for SCA owners, SCA’s attorney has fabricated imaginary“rights” for her that she has asserted against SCA in threats of frivolous litigation and that allow her to act like a “super Board member” rather than as staff).

No 2018 assessment increase.

True, but the grade is still D.

Assessments were increased without clear justification in 2017, and those excess funds have been repeatedly used as validation of the quality of self-management. But, many questions remain unanswered:

  • Why were rates increased in 2017 if $300,000 in budgeted transition costs were saved by reducing the 9 of the 12-month budgeted overlap of the GM and FSR?
  • Why was a 12-month overlap of the GM and FSR budgeted anyway?
  • Why was the entire 2017 rate increase transferred to reserves? If the assessment increase was intended to reserve for walls & fences, what happened to the construction defects settlement for the walls if there was no remediation of the defects?
  • Was the 2017 increase intended to bring up the reserves funding level? If so, that has nothing to do with the difference in operating costs between using a management company and being self managed.
  • Was it for the Liberty Center? If so, why was it not a one-time assessment?

Whatever the reason the 2017 assessments were increased by over 10%, it can’t be ignored while the Board congratulates itself and the GM for not having another assessment increase in 2018.

Per Rex, Tom Nissen’s December Board report comparing SCA to other self-managed HOAs, shows the transition is going well.

False. The grade is D.

Tom should be given credit for researching other HOAs, but should be given no credit for answering the wrong question and deserves no credit for  timeliness and no credit for owner participation.

Tom’s report simply reaffirms that going to self-management was the correct thing to do. It might also support the idea that it was good that the Board adopted a policy to increase the reserves by increasing assessments in 2017. Regardless, neither of these have anything to do with whether the Board and the GM are doing a good job in the transition to self-management.

Showing that SCA’s assessments are relatively low says nothing about cost-effectiveness or about any differences between using a management agent and being self managed. Further, comparing assessments with other HOAs is not really informative unless you eliminate all gated communities from the comparison.

“The Board has made it clear that the complete transition would take a minimum of three years. There is still much to do and more culture change to undergo.” -Rex

True, and yet, the grade is still a big, fat F.

If there is another 1 ½ years to complete the transition, what specifically is planned?

  • Why are there no written plans and timetables?
  • Why is there no transparency and no standards for GM accountability?
  • Why is this Board resisting the necessary culture change by treating owners who are even mildly critical of the Board or GM with such disdain?
  • Why has the Board strenuously rejected developing the committee structure needed to provide expert owner oversight over HR, legal services, insurance and other amenities that has been successful in other self-managed HOAs?
  • What steps has the Board or GM taken to change SCA’s culture to be more inclusive, fair and transparent?
  • What steps has the Board taken to ensure that SCA owners won’t be taken advantage of by unscrupulous agents?

The transition to self-management is very successful in handling deferred maintenance.

True. The grade could be an A, but since there is no transparency, no way of measuring cost effectiveness, and no standard for defining priorities, I can’t be that generous. But remember, no matter how well this portion of property management is done, the grade for it should count only as about 25% of an overall grade for a successful transition to self management, not be given the nearly 100% weight the Board has given it. 

What kind of HOA do we want SCA to be?

And what owners can do to make it that way

Taking a cue from Jim Mayfield’s article “Distinctions between Governance and Management” re-published below, here are a few action items.
In italics: how I see things are currently being done around here.

  1. Encourage owners to run for the Board who are willing to contribute to creating more transparent, competent and accountable governance, or volunteer to serve yourself.
    There is a battle for control of the Board between those who want a fair and open system created that’s good for all owners vs. those in power who want to keep centralized control by excluding anyone who has complained about this GM or who signed a recall petition. 
  2. Utilize the expertise of residents on a Personnel Committee to protect SCA against employer liability, to propose GM performance standards using customer ratings and  objective measures to prevent excessive executive compensation.
    These functions currently are done, if at all, by 1-2 Board members who don’t have the requisite skills, and the Board and GM have acted unlawfully to block necessary owner oversight.
  3. Require the GM to utilize an inclusive process and resident expertise to recommend goals and strategic plans to bring SCA back to be #1 Active Adult Community in USA.
    SCA had this #1 rating in 2011, but has slipped, and we currently have no adopted goals or shared vision about how to get SCA back on top.  Instead, the Board abdicates to a GM who has not evidenced any strategic approach to lessening owner dissatisfactions or community divisions.
  4. Demand that governance be completely transparent to owners.
    Right now, the Board pays lip service to improving owner communications, but allows the GM to use the attorney to conceal SCA records for reasons other than serving the best interests of the association. This secrecy allows SCA owners to be put at risk of being bilked by SCA agents, and it inhibits the SCA Board from being held fully accountable for its duty of care to owners.
  5. Get control of the budget out of the hands of the GM. Although the law prohibits the Board from delegating policy decisions about the budget and prohibits the GM from expending funds for unbudgeted purposes, the blurring of the lines of authority regularly occurs, and owners just have to pay the bill.
Former Director thinks SCA Board chose wrong path
Jim Mayfield served six years as an independent voice on the SCA Board. His experience with fractured governance in the last couple of years had some interesting parallels to what I  suffered during my short tenure:
  • President, GM, and attorney exerting excessive self-interested power;
  • Board rejecting any owner oversight and
  • punishing owners or individual Board members who complained.

Jim’s comments in his article, published in the November issue of the Community Association Institute magazine is re-published here with his permission.   – Nona

“Two and a half years ago, the Board was offered a clear choice between two forms of governance.
One form was the legal model embedded in NRS 116 and approved by CAI.  This form is based upon a model in which all elected Board members are considered equals and participate in a transparent, collaborative relationship, and the President (CEO) is directed by the Board and speaks only for the Board.  It also establishes the major responsibility is to protect homeowner rights and to establish processes for oversight of management.  This is the model described in the above article that was published in November.
The second form is a dictatorship that empowers the President (CEO) to exercise dictatorial powers, makes decisions, imposes his/her decisions on the Board (the Board reports to the President).  This model sees its primary responsibility to represent and protect management from the homeowners.  The model also expands the ability of the President, Board, and GM to operate in secret meetings and to empower its attorneys to use legal process to accomplish its objectives and those of the GM.
SCA is now reaping the fruits of this decision.  I hope all persons thinking about running for the Board in 2018 will read the article and commit to the principles outline therein.” -Jim Mayfield (see Page 10 in link below.)

Is SCA Board retaining lawful control of the budget?

Just saying that the Board acted “on the advice of counsel” doesn’t cut it

If the Board learned and followed these simple legal requirements, the GM and the attorney would be prevented from taking control of our budget and spending our money for something other than our benefit:

NRS 116.31151 (1)(a) requires the Board to prepare and distribute to owners a “budget for the daily operations of the association” which per CC&Rs 8.1(d) is deemed ratified “Unless 90% of all Owners reject the budget…”
The budget is distributed as required and is always ratified. No surprise. Hard to imagine 90% of all owners being mobilized to object to any budget the Board puts forward, but at least everybody knows what expenditures the Board has approved. 

NRS 116A.620 (1)(i) requires any management agreement to define spending limits for the GM.
Here’s the start of the slippery slope toward abdicationSCA Board and GM did not execute a management agreement nor have spending limits for the GM been defined. Pretty easy to rob Peter to pay Paul and then blame Peter for the missing money.

Per SCA bylaws 3.20, the SCA Board is prohibited from delegating policy control over the budget or, for that matter, deciding the amount of assessments, or deciding who can open bank accounts or sign checks or enforce the governing documents.
Here’s where SCA is really careening down that slippery slope. SCA is unprotected by not the Board not defining GM spending limits or service-level expectations in the legally-mandated terms of a management agreement.
Of course, without an agreement, the GM is not legally protected either. She is just an “at-will” employee, meaning she can be fired for any reason or no reason, just not a discriminatory reason. Her terms & conditions of employment are defined in the SCA Personnel Handbook and nowhere else.
But, don’t feel sorry for her. Not only does the Board coddle her, the SCA attorney has
 magically , albeit unethically, created “rights” for the GM that do not exist in black letter law and which are in direct conflict to the interests of the membership.

SCA bylaws 4.6 requires two Board members must sign all checks for any amount, and bylaws 3.25 requires that directors act on an informed basis while carrying out this duty, i.e., sign a check only if it is for something that has been approved in the budget.
Two Board members do sign all checks, but they may as well let the GM use a rubber stamp.

SCA Board Policy Manual 4.10 limits authority to request legal opinions to the Board as a whole or, in narrowly defined circumstances, to the President for the purpose of “…assessing the legal risks on actions under consideration…”. This provision specifically limits the GM’s authority to “…contact legal counsel regarding NRS 116 or other compliance issues…” not to act only “on the advice of counsel”. The SCA-Clarkson Law Group legal services agreement ONLY allows the attorney to provide legal opinions in response to specific Board requests. The attorney has NO decision-making authority over SCA policies.
Previous Boards had enough common sense to govern SCA without having to spend four times the budget to get the attorney to bless every action before it’s taken.
But then, Clarkson is a bully who has, using tactics bordering on elder abuse, and in clear violation of his professional standards of conduct, convinced the Board that it is a violation of their fiduciary duty to act without consulting him even in areas outside his firm’s practice specialty.
As a result, the President and the GM blithely use the attorney far in excess of what is legally permissible for self-serving purposes and in defiance of all common sense.

In conclusion…

The GM’s takeover of the SCA budget is happening on a grand scale because the attorney has blessed it (thereby being unjustly enriched), and the Board (who thereby gets to stay in power) self-righteously allows such foolishness as:

  • Spending an unbudgeted $85,000 for a CPA to do the Election Committee’s normal job to mess up the recall election was allowed by the GM solely “upon the advice of counsel”, but absent the inconvenience of legal Board action.
  • Six months spending for legal services was approved in the budget to cap at $45,000, but four times that amount, $185,000, was spent by the GM without any formal Board action to approve it and without conforming to the laws governing civil actions (NRS 116.31088), or sanctions for violations of governing documents (NRS 116.31085, CC&Rs 7.4) or limits on authority of the Board (NRS 116.3103, NRS 116.31036, NRS 116.31084) or owners rights (NRS 116.1104, NRS 116.31083, NRS 116.31175), or good faith  (NRS 116.1113, NRS 116.1112), and prohibition against harassment and retaliation (NRS 116.31183, NRS 116.31184).

I’m as amazed as you are at their gall.

Who benefits from spending SCA homeowners’ money?

Assessments levied against the unit owners’ property can only be used for the sole and exclusive benefit of the membership of the Association, e.g., maintenance of the common areas, actions to protect the property values of all our homes, preserving amenities and high quality lifestyle.

It is not ever acceptable for the Board, the GM or the attorney to put their personal, financial or political interests ahead of the interests of owners AKA “the common good“.

Therefore, allowing SCA management or agents to spend owners’ money for highly controversial and unbudgeted purposes that provide no benefit to SCA membership should not be tolerated.

Board decisions must always be evaluated against the standard of “Who benefits by it?
If the answer is anybody or anything other than “the common good“, don’t do it.

Here are some examples where no benefit accrued to “the common good“, but they did it anyway.

  • The SCA membership lost when the Board vindictively evicted the Foundation Assisting Seniors after the GM failed to mediate a mutually-acceptable solution to CSG’s problems, blamed the Foundation President, and made up a silly story to justify forcing members to pay more after damaging a valued community resource.
  • Paying $85,000 for a CPA to conduct the recall election in a manner designed to keep the current Board majority from being recalled for cause provided no benefit to the association. It was more than a waste of owners’ money to keep those Board members in power. It allowed the attorney and the GM to keep their over-compensated jobs, too.
  • Paying untold thousands of dollars to make repeated threats of frivolous litigation of defamation against a Board member and unlawful orders for her to  cease & desist making inquiries regarding GM compensation clearly wasted owners’ money. It’s easy to see how using the attorney this way was protecting the GM and her fat paycheck. But, it’s impossible to see how such extreme action was protecting the association.
  • There is no benefit to the association for the Board to unlawfully remove an elected Board member on the false charge that she is making a profit from her Board position. It is simply a power trip and a nasty way of showing 2,000 voters that their votes don’t matter.

The cautionary tale of the City of Bell

What we can learn from The City of Bell Scandal

The Bell scandal involved the misappropriation of public funds in Bell, California, United States over a period of several years in the first decade of the 21st century. In July 2010, the Los Angeles Times published an investigative article on possible malfeasance in the neighboring city of Maywood, revealing that the city officials of Bell received salaries that were reported as the highest in the nation.[1] Subsequent investigations found atypically high property tax rates, allegations of voter fraud in municipal elections and other irregularities which heightened the ensuing scandal.[2] These and other reports led to widespread criticism and a demand for city officials to resign.[3][4]

In the end, seven Bell city officials, including former mayor Oscar Hernandez, former city administrator Robert Rizzo, assistant city administrator Angela Spaccia, and four city council members were convicted on graft and corruption charges, and were given sentences ranging from probation to twelve years in prison.[5] – Wikipedia City of Bell Scandal

In order to pull this scam off, step one was to conduct a fraudulent election to become a charter city so controls on salaries imposed by the state would no longer apply. The voters were poor and 90% Latino which made them easy marks. The City Council gave themselves salaries and so they turned a blind eye when the Manager authorized excessive compensation to the Attorney, Police Chief  and other top managers Manager Rizzo’s salary during the final year of the scam was $1.5 million, five times what the L.A. country executive earned.  Rizzo was unapologetic for years, falsely claiming he could have made that amount in the private sector.

Could that happen at SCA? Or does SCA have adequate internal controls to prevent such corruption?

Let’s see, how would we know if adequate protections are in place?

The Board, GM and attorney claim that unit owners cannot access information needed to evaluate the adequacy of internal fraud prevention controls.  They put lipstick on this pig by claiming it is their fiduciary duty to keep confidential whatever they say is confidential – even if there are specific provisions in the law that prohibit SCA records being withheld by SCA agents from owners or individual members of the Board.

It is an abuse of privilege to demand that routine business correspondence/emails or training sessions must be treated as “confidential”. To prevent owners from knowing about these Board or GM actions that are supposed to be exclusively for the benefit of the owners violates both the spirit and the letter of the law.

It’s particularly troubling when the attorney gives the bizarre interpretation of SCA bylaws 6.4c to falsely claim that the attorney has the authority to restrict an individual Board member from inspecting ANY SCA records. While I was a Board member, I was ORDERED to stop asking questions about GM compensation and denied access to ANY SCA documents until they were partially released a month after I was kicked off the Board on false charges.

It doesn’t take a genius to figure out why concealing records from a Board member who is trying to ascertain the adequacy of fraud prevention controls looks a little suspicious.

Excessive secrecy is a giant red flag.

Owners have a right to know:

  • Does SCA pay extraordinarily high executive salaries without using a process that would justify them as a rebuttable assumption?
  • Have there been failed attempts to remove elected officials followed by allegations of election interference by the highly compensated GM?
  • Are board actions taken in secret without tolerating any owner involvement?
  • Do SCA agents make policy decisions which NRS and SCA bylaws prohibit the Board from delegating?
  • Has the system for owner oversight been decimated under Self-Management?

My conclusions

Prior Boards should be congratulated for the excellent start toward a good governance system that they accomplished by the creation of the Board Policy Manual. It’s tragic that the current Board President led the Board away from the simple task of following it.

As a result, SCA is now swinging without a net. We do not have a fair and open system. Owners must be involved to strengthen the system so the rules apply equally to us all and the rules protect us all equally. And we certainly don’t need an attorney to charge us $325/hr to tell us how to do it wrong.

It is a waste of time to keep bickering over whether the individuals on the Board are corrupt or not. It is enough to say that the Board is not exercising enough competent control over SCA’s agents to adequately protect owners from the negative consequences of their actions, intentional or not.

Make your vote count

We simply need to elect people who are willing to be trained to ensure that a governance system is established that is transparent, FAIR, and strong enough to protect owners no matter who is in charge. This process cannot simply be delegated to the GM for a “recommendation”.

But, even if it such delegation were appropriate, the GM has not demonstrated that she would have the necessary leadership or analytical skills to lead an inclusive, collaborative process to a satisfactory conclusion that meets the needs of the SCA membership.

Is SCA Board protecting owners from scams?

Owner oversight, the bedrock of good HOA governance, has been decimated by this Board

SCA Board has gone a step further than just emasculating owner oversight by committees. It has also developed a self-righteous strategy to delegitimize ALL owner complaints about Board members, the attorney, and the GM (performance, pay, and recall election interference).

Their claim,

“It’s just CAVE (Complainers About Virtually Everything) people”,

has worked well for the Board (kept the majority in power). But, there is a huge downside. Marginalizing a large segment of the community has not been good for SCA as a whole and has divided the community into factions.

SCA Board refuses to listen to both sides of the story and acts according to their own spin

The Board puts the entire SCA community at risk by arrogantly ignoring well-substantiated complaints simply because they don’t agree with the complaint, or don’t like the person who complained. They’re not doing their job if they don’t address these issues fairly:

  • Paying the GM $100,000+ over the market rate for the job without having done any due diligence;
  • Allowing the GM to compensate at least two other managers double the going rate for their jobs;
  • Refusing to allow ANY owner oversight of personnel matters;
  • Having no system for GM accountability – no management agreement, no performance standards, no salary survey or bonus criteria, no spending limits, no insurance requirements, no written terms & conditions of employment;
  • Allowing the GM & attorney to unfairly influence the recall election in their favor;
  • Abdicating control of the budget to highly compensated agents;
  • Blaming the recall proponents for the GM expending $85,000 for an incompetent execution of the petition counting and ballot distribution/collection which benefitted at least one Board member unfairly;
  • Making unbudgeted expenditures of more than $150,000 in six months over the normal budget for Legal Services which is in conflict with NRS and SCA bylaws provisions as well as defies good common sense.

The Board either has refused to respond AT ALL to these issues, or worse, has used SCA official communications (as well as its sympathetic blogger) to viciously attack whoever speaks up about these Board failures to properly govern.

Worse still, the attorney enables the Board’s dysfunctional (lack of) response to owner complaints by wrongly advising that the Board and the GM don’t have to answer.

Good governance = a fair and open system

Good governance depends on a fair and open system that SCA has yet to develop.

Good governance can best (and perhaps only) be guaranteed if there is a transparent system of checks and balances to prevent fraud, errors, and omissions.

Owner oversight is the bedrock of a good governance system in any public agency or in any non-profit corporation like SCA is.  Owners (like taxpayers or donors) are ultimately responsible for footing the bill.

Agents and elected officials are there to serve the owners and not the other way around.

SCA Board, GM and attorney have a lot to learn before they can claim SCA has a system of good governance. They act as if SCA agents and the Board are co-equal branches of the association/government and that the owners are like wards of the court. This is nuts.

What if you contracted with a Realtor to sell your house, and he refused a great offer without telling you? What if he failed to disclose a relationship with a different potential buyer that he was pushing? I imagine you’d fire him and get somebody that would work SOLELY to get you the best deal.

It’s the same with SCA agents. It is their duty work SOLELY and EXCLUSIVELY in the best interest of the SCA membership. It is unlawful for them to put their self-interest before the best interests of the owners, but it’s a little harder to see what’s going on if the Board is helping (even if unwittingly) the agents  to act in ways that are not the best for the owners.

It is a major failure of the Board’s duty of care to the membership to abdicate, i.e., just hand over to SCA agents independent authority, power and rights over SCA policy and our wallets that neither you nor I would so cavalierly hand over to agents in our personal lives.

 

December 7 Board meeting: Part 2 Self-management and the GM

Self-management Status Report

Tom Nissen described the management company’s (FSR) deficiencies that motivated the Board in 2015 to decide to go to self-management. He said the decision was not primarily to save money, it was to “get better information to manage the business more effectively”.

True, FSR dropped the ball on maintenance projects and bungled the reserve study. True, FSR allowed IT, the phone system, and financial reporting to become obsolete. These were all good reasons for converting to self-management everyone agrees on. Tom also gave a detailed report on his personal study of how SCA compares to other highly-rated HOAs. He came to the obvious conclusion that the transition to self-management was the right decision for SCA.

No argument here.

True, FSR had to go and SCA should be self-managed. Good points and totally true, but his praise was like Nancy Pelosi praising Senator John Conyers as an icon of the Senate before she said he had to go amid sexual harassment allegations.  

Tom described the research he did, as an individual Board member, and it was great. What he didn’t mention was that when another Board member tried to review the transition plans, the Board unlawfully held an unnoticed, “emergency executive session” to order her to cease & desist and paid the attorney to block all of her document requests.

However, Tom didn’t mention any of the things that are areas of disagreement, like excessive compensation for the GM and several top managers, or how the GM conceals association records or how the GM has not developed written transition plans or timetables since she got here in 2015, and does not have adequate personnel management systems needed to protect SCA from “employer liability”. 

Below is an excerpt from one of the many “legal letters” Clarkson graced me with (and you paid for) to explain why they would not let a Board member examine any SCA records. This one says SCA doesn’t have to produce the transition plans because SCA doesn’t have any. Then, to fake the Ombudsman out, they submitted 184 pages of powerpoint slides done by Tom Nissen in 2015 before the GM was hired.

It is simply wrong for certain individual Board members to “get better information to manage the business more effectively” and at the same time, tolerate the GM concealing that same management information from other Board members and the unit owners.

GM’s Performance Appraisal
(as reported in President’s report)

Rex stated simply that the GM’s performance appraisal was completed and will be put in her personnel file. The end.

Seriously. Not another word about it.

Unless you uncharitably interpret the self-management status report Tom gave later in the meeting as a surreptitious justification for giving her a raise/bonus without telling owners.

Here’s why I say the Board is not protecting owners if they don’t hold the GM accountable for customer satisfaction as much as for facilities maintenance:

  1. Board refused to put the petitions for vote of no confidence in her file as requested. Petitions signed by 836 owners called for a vote of no confidence in the GM were turned in during this performance rating period. This is more than 10% of ALL owners (and probably more than 50% of the owners who even knew there was a petition or how to sign it) who gave the GM a customer service rating of “F”. That is extraordinary, and yet the Board vehemently refused to honor the simple request to put the petitions in the GM’s personnel file. Board members, notably Bob Burch, expressed outrage and castigated the owners for even signing the petition.
  2. The Board did not respect owners’ right to express their dissatisfaction with the GM’s performance. Instead, a lot of time at meetings is spent with them droning on and on about how much they love her because she answers all the Board’s questions and she is way better at not deferring maintenance than the prior managing agent (that we fired).  It is the Board’s job to treat customer service concerns as legitimate and attempt to address them even if they don’t agree or even if they think that any owner who doesn’t agree with them is a worthless malcontent.
  3.  Rex didn’t say what the Board did about her bonus. Is she getting a bonus when she didn’t meet any objectives (No restaurant or even a recommendation about whether to have one. Poor job dealing with the Foundation. Springing surprise changes on Clubs. Lots of unhappy owners) If not, her pay should drop by $20,000. The 2016 bonus cannot be considered a part of her base compensation. I wish somebody other than me would make an information request to find out if they are letting her keep the $20,000. I can do it, but the GM slow-walks my requests and uses the attorney to write me “legal letters” manufacturing bogus reasons why information legally available to any unit owner should be withheld from me.
  4. Rex didn’t say what the Board going to do to fix the significant problem of the GM’s excessive salary.

No Recommendation on the Restaurant

“The SCA Board earlier this year directed the GM to make a restaurant space recommendation to the Board.”

Actually, when the restaurant was discussed at various Board meetings, Rex reported that in her last year performance evaluation, the Board instructed her to have the recommendation completed by this December. A rejected 6/22/17 information request was fulfilled by the attorney through the Ombudsman on 9/13/17, in which was the actual  wording of the performance expectation about the restaurant:

“2017 GM Criteria for Bonus Consideration
Prepare a recommendation for the use of the restaurant space. The recommendation should result from a detailed analysis of the possible uses of the space. If not used as a restaurant, the analysis will include costs for each option to include those costs associated with the modification of the space.”

I have argued for the past six months that allowing the GM a year to come up with just a recommendation is an extremely low standard, particularly since the CC&Rs require the continuous operation of the restaurant without the written authorization of 75% of the owners to close it. Is it too much to hope that the Board will hold her accountable for not having accomplished ANY “detailed analysis of the possible uses of the space”. After she refused to consider any analysis I submitted or let me see anything she was working on, I certainly don’t want to see her getting a bonus if Tom Nissen or Forrest Quinn whip something up for her.

Most recently the Board asked that I send RFPs to restaurant consultants to produce an opinion on the restaurant option. Some directors were reluctant to proceed without a definitive expert opinion on the viability of another restaurant at our location. And if viable, in what likely format.

Really? When did the Board ask her to get a consultant? I remember objecting to her reporting that she was going to do it because a) there was no money budgeted for that purpose, and b) she is costing homeowners over $300,000/year in salary and benefits, she ought to have the skills to  put together a competent analysis. Also, why is she holding back because “some directors were reluctant to proceed”? Why isn’t she dealing with the Board as a whole and treating all directors equally?

On January 25, the GM will recommend to the Board whether SCAshould have a restaurant or repurpose the space.

“That recommendation only awaits one clarifying legal point connected with repurposing the space.

SCA already has a legal opinion about owners getting an opportunity to vote if they don’t like what the Board wants to change it to, IF 10% petition for it. I’m mystified about why the attorney has to be brought in over and over. I’m also surprised that this important sentence is on the audio, but was left out of the written version of the GM’s report that David Berman posted.

In the interim, I will also prepare an RFP for possible restaurant tenant response. Then the Board will have all the information needed to concur or disagree with whichever recommendation I make.

I don’t know if you noticed, but the recommendation I made six months to have a local commercial broker specializing in restaurants, bars and gaming handle the process was ignored even though the GM’s approach is doomed to be a repeat of past failures. There needs to be an independent expert to develop a lease that is fair to, and protects, both parties, allows a vendor to deliver a product the residents want, and keeps the GM’s and the Board’s fingers out of the pie.

Missing in Action

Stuff that should be on the Board agenda, but is not…

GM performance and compensation is not on the open agenda but it is on the Dec. 7 @ 9 AM executive session agenda

Here is what I predict will happen tomorrow. The Board will:

  1.  continue to overpay the GM, including possibly another unjustifiable $20,000 bonus, without transparency or accountability to the owners
  2. fall prey to the Halo effect to give excessively high ratings by giving her a pass on failing to adequately perform significant aspects of her job.
  3. refuse to consider that customer service ratings might diverge greatly from their assessment of the job she is doing.
  4. continue to ignore that there have been multiple incidents of actions on her part which would be just cause for her termination as a violation of her duty to the membership and violations of the standards of practice of her license.
  5. fail to hold themselves accountable for paying her over $100,000 over the value of that job and allowing her to  pay other SCA managers at excessive rates.
  6. continue to refuse to allow appropriate owner oversight over the personnel system in favor of less qualified “Board work groups” controlling policy or abdicating too much authority to the GM.
  7. continue to dismiss and trivialize the concerns of the 836 residents who gave the GM  an “F” for owner relations and signed a petition of no confidence against the GM. The Board did not seriously evaluate one single criticism by owners to attempt to improve the division in the community. Instead, the petitioners were insulted and marginalized as if they were not  members of the community of equal value. The Board treated them like just a bunch of whiners and malcontents and discarded the petition was if it was just unwarranted “negativity from small vocal elements“.

I hope I’m wrong.

Not even a recommendation regarding the restaurant space

SCA CC&Rs 7.2(b) requires that the restaurant (or any other amenity) shall not be discontinued without the written authorization of 75% of the owners. CC&Rs 7.9 define the process by which the Board can change the use of the space. Neither of these provisions have been followed.

The Board locked up the restaurant right about the time the GM was hired. Ignoring the owner vote needed per 7.2(b) to lawfully discontinue operation of the restaurant and giving the GM over a year to just come up with a recommendation for the space was bad enough. Then, Rex made it worse by paying the attorney to opine in yet another no-good-for-owners violation of Board Policy Manual 4.10 that a temporary use of the space would require a vote of the owners. Then, the Board made it worse by letting her hire an unbudgeted consultant for an unknown amount of money to do the one job, by the one deadline the Board actually gave her.

So, what are we waiting for? How many excuses do we have to listen to? And how many people are we going to pay to not get the job done?

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.

SCA’s Wasteful Loss of Foundation Assisting Seniors

The recent open letter attorney Clarkson wrote attempted to justify the SCA’s Board’s actions against the Foundation Assisting Seniors (FAS). It was very disheartening. It shows SCA is lacking a system that guarantees Board decisions actually will serve the best interests of the community. It also shows how the Board does not hold the GM accountable for ensuring mutually-beneficial and cost-effective resolutions to community disputes.

The GM did not do a competent job to collaborate with FAS on a solution beneficial to SCA owners.

The Board delegated the dispute to the GM for resolution, but she was incapable of developing a collaborative solution or to avoid escalating the conflict. Why doesn’t the Board hold her accountable for that failure? Why doesn’t the Board hold itself accountable for achieving a negotiated settlement that would maximize benefits of both organizations to the SCA membership?

Instead, the Board followed the unhealthy pattern of power politics where they forgot who they are representing and who they and the GM are supposed to be serving. Their “Board/GM must win/be right and Favil West must lose” strategy made the Foundation Assisting Seniors and all of SCA’s members and residents just collateral damage to their “fight fire with Napalm” approach.

We all lose when the Board and the GM don’t do their job

In the end, we all lose when the Board does not hold the GM accountable for preventing or minimizing disputes.

When neither the Board nor the GM hold themselves accountable for bringing the community together or for maximizing “neighbor-helping-neighbor” strategies, we all lose.

When the Board picks a side to throw their weight and our money into waging a war against owners perceived to be on the other “side”.

We all lose when the Board does not hold the GM accountable for the owner relations and “people” parts of the General Manager job as much as for the property management aspects of the GM job.

WHY are we paying her so much if she doesn’t exhibit sufficient leadership or collaboration skills to bring the community together synergistically or to negotiate mutually-beneficial arrangements that allow diverse groups to thrive here?
Evicting FAS was the unnecessary destruction of a community treasure

Escalation of this conflict should never have happened. Consider for a moment how Favil West described as the FAS’ beginnings:

In 2003 the Foundation submitted a grant proposal to Pulte for a community service building.  Pulte accepted the proposal.  The Foundation President negotiated the design of the building, a building worth more than $550,000, to house the Foundation and the services it started; SCA TV, Community Service, and Emergency Preparedness (all originally part of the Foundation). The end result was that the building would be provided to SCA in addition to Independence Center, with Pulte’s condition that space would be dedicated to FAS so long as it serves SCA seniors.  This was evidenced by the original plans showing and referencing the Foundation space allocation. This term was accepted by SCA and was documented by a board resolution at the SCA April 2007 board meeting.

 

These statements were presented as documented facts so they should have been easy to verify. Why was there no simple, fair internal cost-effective process to ascertain their veracity?

Instead of collaboratively evaluating the facts where both sides were given an equal opportunity to present their side of the story, those in power wastefully decided to disregard these assertions, to ignore the good that was being done by FAS, and to dismantle a 15-year-old community service and destroy community relationships for no good purpose.

Attorney added cost, but no value in achieving a good solution

SCA Board spent a huge amount of money on attorneys to evict FAS, and yet they still managed to break a few laws while taking this completely disproportionate action that benefitted the community not one whit.

For example, NRS 116.31088 requires a member vote before initiating a civil action, but the Board ignored that and filed case A-17-760014-C to evict FAS. Please note that attorney Clarkson’s was paid both to file the civil action against the FAS AFTER Clarkson was paid to give the Board the self-serving advice that SCA did not have to follow NRS 116.31088 in this case.

Another example is the violation of NRS 116.31085 (executive session) where FAS was repeatedly discussed in secret long before SCA board decided to take legal action.  Perhaps, had the Board allowed the community to listen to their deliberations, it might have been harder for the Board to settle on the most expensive and least beneficial final solution.

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.