Anatomy Of A Cover Up

By Rick Mayer

At the January 2010 regular meeting of the Todd Creek Farms Board of directors I made the allegation that the Board had held an illegal executive session after the August 2008 meeting. The Board denied holding such a meeting. Even after I mentioned that I had an audio recording of the meeting they continued to deny holding this executive session. In the process of trying to explain how I must be mistaken Paula inadvertently mentioned that they had held an “informational meeting” the night before the August meeting. I say inadvertently because if she would have thought it through she never would have admitted holding this secret meeting, more on the use of informational meetings later. I have written about this before on this blog and have provided full audio recordings of both meetings.

My purpose for bringing this up in January was to simply point out the deficiency of the minutes of this Board and suggest we use audio recordings to supplement the minutes, little did I know the degree of corruption and the level this Board would stoop to cover up a simple mistake, or was it a simple mistake? Before the January meeting I had sent a link of my article to Jim who in turn shared it with each of the board members, they had a week to research my allegations. I fully expected them to come to the January meeting and simply say they had gone back in their files, found the minutes of the executive session (required by law) admit they had made an error in the August minutes, amend those minutes and move on. At this point I was still assuming that they were simply incompetent, that they didn’t understand the law, or had never bothered to read it. Then the minutes of the January meeting came out and all that was said of the exchange was:

NEW BUSINESS:
Rick Mayer
Mr. Mayer addressed the Board with his concerns regarding an executive session that the Board was to have held in August. The Board responded that the date that was in question was a Saturday and the Board did not meet at that time There was however, a meeting by the Board after the announcement of the resignation of the then Board President to educate themselves on issues before the Board that had been headed by the previous president. The other item Mr. Mayer discussed was the procedure of how the election results should have been announced at the Annual Meeting. The Board acknowledged that the chair should have announced the election results and not the manager. Mr. Mayer expressed concern that there was no way to track the historical evolution of resolutions.

So let’s break this down.

Mr. Mayer addressed the Board with his concerns regarding an executive session that the Board was to have held in August. The Board responded that the date that was in question was a Saturday and the Board did not meet at that time

Now I made some rather serious accusations and this is all that is in the official record? Jim uses the rather odd phrase “was to have held” what does that mean? They had the executive session, I have a recording of them announcing it. Paul brought up the fact that I had made a typographical error on my blog, and that is their official response? They broke state law and a typo somehow nullifies it? This is the second time Paul has used this tactic to counter one of my criticisms; he finds a minor point and uses it to divert the discussion in another direction. It is a cheap trick, maybe he has found it effective in the past but it certainly shouldn’t be used in the official record. What this does however, is set up the victim (me) to be marginalized in the future; the Board has admitted no wrong doing and has made me look as though my charges were baseless, so baseless that I didn’t even have the date of the meeting correct. But I have proof in the form of an audio recording.

Now to the second section:

There was however, a meeting by the Board after the announcement of the resignation of the then Board President to educate themselves on issues before the Board that had been headed by the previous president.

This seemed a good explanation to the board at the time I guess, I mentioned in our exchange at the January meeting that holding a meeting the night before the scheduled meeting should be classified as a special meeting, minutes should be taken and posted and filed. They were adamant that they have the right to hold educational meetings, they indeed do have that right, however, the subject matter of the educational meeting has to be general and pertain to Colorado law, not a local issue, following is the applicable statute:

38-33.3-209.6. Executive board member education.
The board may authorize, and account for as a common expense, reimbursement of board members for their actual and necessary expenses incurred in attending educational meetings and seminars on responsible governance of unit owners' associations. The course content of such educational meetings and seminars shall be specific to Colorado, and shall make reference to applicable sections of this article

As you can see, discussing Association business is not allowed in an educational meeting. Even if they had held a legitimate informational or educational meeting minutes should have been posted as they were in January 2008. It was now becoming more and more clear they were engaged in covering something up at this point. I stayed away from the next meeting to see if they would finish the white wash and was not disappointed. Right on cue they amended the August 2009 minutes in February with a brief “Tim moved to accept the corrected August 18, 2009 minutes. Paul seconded. Motion passed”. No mention of what was changed. Following is the change that was made to the August minutes.

Executive Session
The Board agreed by consensus to meet in executive session for the purpose of discussing information provided to the board by the attorney regarding the Counties remarks on the maintenance of the right-of- way along Yosemite. There were no decisions made by the Board during or after the conclusion of this session

There is no indication that this was inserted in the minutes, there is no date of a revision, nothing. Now of course the Board will simply say “this is the way we always do it!” or they will feign incompetence once again, but anyone that knows anything about document control would never let this stand. To complicate matters further many of the “last updated” dates on the Association’s web site, mostly minutes from the last two years, now have the same date. As an aside, the reasons given above for holding a legal executive session are marginal at best. The board has held many open meeting where the attorney’s and the counties remarks have been recited. There is also no reason for the last sentence, it is against the law to make a decision in executive session, this is just classic back pedaling and covering one’s behind.

It is my contention that this is all very purposeful, if this were to go to court they would simply say that I’m some crazy guy that can’t even get my dates right, they will further contend that the August minutes clearly show that they did everything properly. If the fact that there was a revision approved in February were brought up they could just play dumb and somehow not remember what change was made or simply point to some other item. The cover up is now complete. But remember none of this would have happened if I had not recorded these meetings, the matter would have been dropped in January, it would have been my word against theirs.

Why Is This Important

The reason this is important is deeper than just the injustice of an elected board going to these levels to silence a legitimate complaint from one of their citizens. On a more practical level Ms Ganzhorn, or the people that have houses that back to Yosemite will eventually take this Board to court over the maintenance of the right of way, when that happens this Board has now admitted to have held two illegal meetings regarding the subject they are in court for. The obvious question will be how many other illegal meetings did they hold? Of course at that point it won’t matter if they say they only held the two, no one will believe them since they went to the extents they did to cover them up. The judge will ask for minutes, there are none. If there had been minutes taken they could have found them in the week I gave them to do research before the January meeting. After locating the minutes in their files they would have realized they had indeed held the session, and simply admitted a minor clerical error. So we have one completely secret meeting and an executive session with no minutes, (they have now admitted to both in their official documents) the lawyers will eat them up.

So now no matter how legitimate their claims and arguments, they will likely lose the case because of these secret meetings and the Association will pay for the loss, all because of ineptitude and arrogance.

What Can Be Done

Currently there is really no agency to report abuse by boards of homeowners associations, but help is on the way, sort of. Currently House Bill 1278 is making its way through the Colorado legislature, this bill will establish a state ombudsman for HOAs, in the senate version the name was changed to Information Office but the role is the same. This office will still have limited power, it will be used primarily as a clearing house to distribute information to homeowners as to agencies that can help with their complaints, but there are really very few agencies available, this is just a first step. Probably the most important mission of this office will be to catalog complaints and report to the legislature the frequency and nature of those complaints, presumably so future legislation can be written to limit the power of these boards.

This is a similar path that Nevada took a decade ago, since then they have put some real teeth in their law, board members can be removed by a 5 member panel, it is a felony to tamper with elections, and audio recordings of all meetings are required, homeowners also must be allowed to make their own recordings. But it has taken a decade for the legislature to regain control of out of control HOA boards in Nevada, I see no reason to think it will take less time in Colorado. I asked Representative Ryden to include the audio recording aspect in the bill but it had already made its way too far into the process and she didn’t want to tamper with the progress it was making, a wise move, but it shows how slowly this will likely progress. So, heavily document any interaction you have with this board including audio recordings, at some point in the near future you will have someone to take them to.

Just because we have to wait for the congress to get control of the situation doesn’t mean we can’t make changes to our bylaws and get ahead of the curve, it seems only a matter of time before those changes will have to be made anyway. I would suggest we start now, a simple change would be the audio recording of meetings, this can be done with a majority vote of the Board to change the Conduct of Meeting resolution, however it eventually should be changed in the bylaws so future boards can’t override it, but that can wait until November when we have a quorum. Open government is necessary for good government.

Secret Meetings

At the January 2010 Director’s meeting I made the assertion that an illegal executive session was held in August 2009. I wrote about it here. The board categorically denied that such a session had been held. Understand, my complaint was that the session had been held, but no mention was made in the minutes of that meeting. It became a little surreal when they started using the minutes to prove the session hadn’t happened. At the end of the meeting in August the president of the HOA board of Directors said “since I have talked to the lawyer I would like to hold a briefly go into executive session um, to discuss that”. I know that is what she said because I recorded the meeting, at least that is as close as I can transcribe from the recording. You can hear it here , the statement of the President is at the 1:23:20 mark.

Now recording meetings of the HOA is against the rules, thank goodness I decided to break that rule or there would be no way to prove that the statement I made was correct and the statements the board made were not correct. It would have been my word against theirs and the matter would have ended there. There are only a couple explanations for this discrepancy. We now know for a fact that the President did indeed announce an Executive session several minutes before that session took place, it is reasonable to believe that session did take place. So why was I told the session didn’t take place? The most obvious answer is that I was simply lied to at the January meeting. The next logical scenario is that I wasn’t lied to but that it is such common practice for the board to hold secret meetings that no one remembers holding that session, quite frankly I find that more troubling than I was lied to.

It is obvious the term “executive session” was used, it is also obvious that the President knew she was using it in the correct context since she mentions speaking to the lawyer, speaking to a lawyer could be a legitimate reason for holding an executive session. What makes me think they held the session and didn’t know they were supposed to keep minutes or announce the purpose of the meeting or worse knew but didn’t care is that in the course of discussing this matter in the January meeting they mentioned that they had “gotten together” the night before the August meeting.

This is serious people, we have a board of directors and a community manager with twenty years experience that hold secret meetings and don't even know they did it. Paula said they got together (I had to be careful to not use the word "met") to discuss issues pertaining to the HOA "to get our act together" as she said (50:40 mark).
None of us were invited, minutes were not kept and no homeowners knew about it, but it wasn't a secret meeting. If meeting (oops, "getting together") to discuss HOA business without anyone knowing about it then or now isn't a secret meeting I don't know what is. Just because no decisions were made doesn't mean that a meeting wasn't held, I've been to far too many business meetings where no decisions were made, they were still meetings. We as citizens not only have the right to know what the final decision was, we have the right to know how that decision was reached, what were the discussions, what documents were shown, the debates, who was for or against an issue or solution at the outset and what argument was used to persuade them to change their minds if they did.

Why do you think most of the decisions made by this board are unanimous? They held the meeting days before we all got together, the monthly meeting is just a formality. The problem is these are good people, they aren't doing this maliciously, they think this is the way they are supposed to act, this isn't good government, good government is open government.

This also isn’t the first time our minutes have been poorly lacking, in the July meeting Paula mentioned to Jim that she and someone else in the community had received letters for the same violation but one was afforded a grace period and the other wasn’t, He said that that was “Hildegard’s shorthand and that is all I can say about that” I was shocked that someone under the indirect employ of the board would be allowed to have “shorthand” and that Jim would be allowed to not give an explanation, these documents are sent under signature of the board of Directors for crying out loud. The board seemed to gloss over that remark, odd I thought, I wonder how that will be handled in the minutes, it simply wasn’t, absolutely no mention of that entire section of the meeting was included in the minutes.

This leads me to the conclusion that all meetings of this board need to be tape recorded and published on the website within a reasonable amount of time, say 48 hours. These recordings should be considered official documents. It should also be made clear to this board that any time any three or more of them are in the same location whether it is in person or electronic it is a meeting and should be recorded and minutes taken, no exceptions. Personal recording equipment should also be allowed to be used by citizens of Todd Creek Farms. As long as it is against the rules of TCF HOA to record meetings it could be problematic to use a recording of the meetings in a court of law if needed.

In the February meeting I will ask that the meetings be officially recorded and that private recording equipment be allowed, I know there are two board members that will not be present for this meeting this will give them time to give a proxy vote to another member of the board.

Procedure for Changing Policies, Procedures, Rules and Regulations, Resolutions and Guidelines

Since I am going to attempt to make changes to the procedures, resolutions, and bylaws of Todd Creek Farms HOA in the next few years to make the Association more closely resemble the government entity it is, we should have an organized system for tracking these changes. I can’t find where we have any tracking system similar to that used at any other level of government. Perhaps there is a procedure and it is housed in the Policy Book, but since that Policy Book is not found on the web site it is difficult to tell.
 
All bylaws and resolutions should be numbered with a consistent form. Footnotes at the end of each bylaw, policy, procedure, rule and regulation, resolution and guideline should give the reader a logical and consistent path with which to follow the history of the document.
 
I haven’t seen in the bylaws where policies, procedures, rules and regulations, resolutions and guidelines are mentioned, they seem have been created in the Adopting Policy Resolution. So a resolution was used to create resolutions? It seems this should be in the bylaws.

I also have not seen a description of what these various categories are used for. Does a rule override a resolution? Does a resolution have the weight of law or is it just a statement with no lawful implications. All these terms should be defined along with the process of amending each. For instance how is a resolution initiated, does a board member have to propose it or can it be initiated by a resident of the community, if a resident can initiate the process does there need to be a petition.

There is so little defined that it makes all sort of mischief possible and probable. One of the things that should be considered in any discussion of the proper role of these various classifications is who is allowed to modify them. The bylaws for instance can only be modified by a majority vote of a quorum of homeowners. This would seem to be the proper place to put any restrictions on the powers of the board of directors since future boards can't change the bylaws unilaterally. Since a quorum is required and there are papers that need to filed with the county and letters sent to mortgage companies the logical time to make these changes is at the owner's meeting each November. Missing from the bylaws and state laws, or at least missing to my eyes, is how a change to a bylaw is initiated. It would seem counterproductive for a change to a bylaw to have to be initiated by the Board since this would give the board control of restrictions placed on it. Conversely if a single individual homeowner can put anything he wants on the ballot it would seem it could get a little anarchical. I would think a petition process would be the best balance with only a few signatures needed. But this still leaves all the other classifications in question.


It appears to me that several items that should have been put in the bylaws were tacked on in the form of a resolution. The applicable definition of a resolution is "4 : a formal expression of opinion, will, or intent voted by an official body or assembled group". This gives the impression the Board simply intends to abide by these resolutions, many of which are required by state law, from what I have seen recently that is probably accurate, they intend to follow the law, but if they don't, oh well.

August Executive Session

An executive session was called at the August 18, 2009 meeting. According to Colorado state law (38-33.3-308) the Chair must give notice that an executive session is about to commence and the general subject matter of what is about to be discussed must be announced.

(5) Prior to the time the members of the executive board or any committee thereof convene in executive session, the chair of the body shall announce the general matter of discussion as enumerated in paragraphs (a) to (f) of subsection (4) of this section.
(6) No rule or regulation of the board or any committee thereof shall be adopted during an executive session. A rule or regulation may be validly adopted only during a regular or special meeting or after the body goes back into regular session following an executive session.
(7) The minutes of all meetings at which an executive session was held shall indicate that an executive session was held and the general subject matter of the executive session.

The subject matter is also to be noted in the minutes of the meeting the executive session was held. In this case the subject matter was not announced and the August minutes don’t even show an executive session was held so obviously the subject matter is not mentioned in the minutes.

Since this meeting didn’t meet even the most rudimentary test of an executive session in terms of protection of citizens it should be declared a special meeting, the minutes of August 2009 should be amended to include the minutes of this special meeting.

Correction: the meeting was held on the 18th, not the 15, the change has been made to the text

Vote Count At Owner’s Meeting

A vote for Board of directors was held at the annual Owner’s meeting in November, after the votes were tallied the winner was announced but the vote count was not given. This is in violation of Conduct of Meetings 1 (c) (4)

(4) The individual(s) counting the ballots shall report the results of the vote to the Chair by indicating how many votes were cast for each individual or how many votes were cast in favor and against any issue.

This is just one of a few problems I noticed in our voting process. The most glaring is that we do not include the questionnaire that the candidates fill out in the packet sent to homeowners a few weeks before the meeting. Not including this document increases the number of homeowners that vote “present” for quorum purposes without voting for a specific candidate. Now it is important that a voter have the right to not vote for a specific issue if he or she is not comfortable with their knowledge of that issue or candidate. The solution to this problem is to simply make the deadline for entering the board of directors race early enough to have these questionnaires included in the package that contains the financials. Write in votes would still be allowed and candidates would be allowed to give a small speech and answer questions from the floor but someone who is voting and not present at the meeting should have some idea of who they are voting for.

All these procedures should be discussed and included in a written document before the owner’s meeting takes place. Items that should be discussed include; who will count the vote, how the vote will be collected, how homeownership is verified, etc.

One item that needs to be discussed is how the votes are announced. The bylaws only state that they be announced. What should be discussed is if the breakdown of what votes for each candidate came from proxy or attending members should be announced. In addition vote counters should be instructed to not discuss the vote outcome.

Admittedly I have been remiss in attending these homeowner’s meetings in the past. I was however somewhat shocked at the unprofessionalism and chaos during the process. Todd Creek Farms has been in existence for over a decade now and the whole event seemed as if it were the first election ever held. I think part of this problem is there is no written procedure. There is a constant influx of new directors so the whole process is somewhat new each time, this is unacceptable. A procedure needs to be formalized and put into effect, the presiding president should follow it to the letter every year, and changes to the process should be made and documented at least one month in advance of the vote.

One last minor point, after the vote was taken, Jim announced the winner, he is not supposed to make that announcement, one of the homeowners should make that announcement.

From Conduct of Meetings

(3) Written ballots shall be counted by a neutral third party (which excludes the Association’s manager and legal counsel) or by an Owner(s), who is not a candidate, selected randomly from a pool of two or more Owners.

This says who should count the votes, specifically excluding the property manager, then from the quote above “The individual(s) counting the ballots shall report the results of the vote to the Chair” since the manager can’t count the votes, this leaves the homeowners to make the announcement, or at least inform the Chair, and the Chair make the announcement.