Foothills Resident: Our HOA is in Trouble
Reprinted from The Ahwatukee Foothills New, August 28, 2019
This is an open letter to all the Members of the Foothills Community Association.
Neighbors, our HOA is in trouble.
I have been a resident of Ahwatukee since 2003. Like many of you, I paid little attention to the affairs of our HOA, the Foothills Community Association (FCA). In the past few months, I have been shaken out of my apathy by a series of troubling events, and I have come to the realization that the FCA has deep-seated problems. I have been working with a team of concerned homeowners on an initiative intended to deal with these problems and to strengthen our HOA.
One critical problem is that the FCA has no procurement policy. It has no rules in place to ensure that the nearly $2 million dollars of our dues it collects every year are spent wisely. Our Board of Directors has free rein to award contracts without competitive bids and without any regard to industry ‘best practices’ designed to prevent waste, fraud and abuse.
Then there is the Board itself.
In May there was an effort to recall its President, Bill Fautsch, and two other members whom the Board had handpicked. After more than a decade on the Board, Fautsch was able to muster only 3% of the FCA’s homeowners (143 to be precise) to vote to retain him. It was only because of his association with two corporate members who control large blocks of votes that was he able to keep his seat.
What can be done about this? The team I am working with will soon be circulating a petition to FCA members proposing a specific package of reforms to the FCA’s Bylaws. We believe the reforms will be a crucial first step in addressing our HOA’s problems.
We promote common-sense reforms focused on five areas:
1) Establish a written policy on procurement that conforms with all relevant regulations of Arizona State and local governmental authorities and adheres to industry ‘best practices’ standards.
As noted above, the FCA has no procurement policy now, and this leaves it highly vulnerable.
2) Establish a written policy on elections that includes: i) a meeting of the Members at least 30 days before the election at which the candidates may appear and explain their background and goals; and ii) specific criteria for candidates, including that they reside within the Foothills Community Association, and that they disclose any prior bankruptcies, judgments, or felony convictions.
Just as it has no rules for procurement, the FCA has no rules to govern elections, other that the most general provisions in Arizona statutes and the Bylaws.
The recent recall election highlighted the need to create a formal, transparent set of rules. Put briefly, the recall election was not conducted on a level playing field.
Administrative decisions were made that had the effect of suppressing the votes of homeowners (who favored the recall more than 3:1).
At the same time, preferential treatment was given to one of the corporate members who controlled a large block of votes; in the end, this corporate member’s block of votes was crucial to defeating the recall. The FCA needs to fix this and establish rules that ensure free and fair elections in which all members are treated equally.
These rules need to include an opportunity for us homeowners to get to know the candidates before we vote them on the Board.
And we need to require candidates to reveal up front the types of information that must be included in the FCA’s annual reports to the Arizona Corporation Commission.
3) Institute electronic voting for all elections.
The Arizona statues have been amended to permit electronic voting, and dozens of HOAs already have adopted this new technology.
Electronic voting makes it easier for homeowners to cast their ballots, and this can significantly increase the level of participation in elections. Since tabulating ballots is done electronically, human error is eliminated from the vote counting process.
Of course, instituting electronic voting does not preclude anyone who wishes to submit a paper ballot ‘the old-fashioned way’ from doing so.
4) Annually review the Bylaws and amend them as needed to delete any obsolete text and to ensure that they conform with all relevant regulations of Arizona State and local governmental authorities.
The Bylaws are replete with passages that are obsolete or have been rendered inoperative by changes in the Arizona Statutes.
For example, the Statues have banned proxy voting for years, but there are frequent references to it in the Bylaws. The Board should be required to keep the Bylaws current, so that they properly explain the rules for the FCA.
5) Implement term limits, so that no Member of the Board may serve more than two consecutive terms.
The fact that the FCA has these problems and that the current Board members—some of whom have been there for more than a decade—have done nothing about them underscores the urgent need for new blood.
Our goal is to present a petition to the FCA in the Fall. This would lead to a special election, in which all the FCA’s Members could vote on this reform package. If we are successful, these reforms can all be in place by the end of this year or early 2020, in time for the next Board election cycle.
We expect the Board to fight this reform effort with everything it has. It announced at the June Board meeting that it would not consider term limits. At that meeting, the Board insisted that reforming the Bylaws was virtually impossible, as it required approval by a majority of the total membership. We had other lawyers looks at this, and they were puzzled how anyone could interpret the Bylaws this way; the text of the Bylaws is quite clear that they can be amended by a majority of the members voting in an election. We have tried to deal with the Board and its attorneys about this in good faith, but they have stonewalled us. Sadly, it appears that we will need to take legal action to force the issue. Of course, the Board would use FCA funds to pay for an effort to fight the reforms.
Since the recall election, there has been a remarkable increase in the attendance at the monthly Board meetings. Many homeowners are making their deep concerns know to the Board.
I invite all the members of the FCA—both homeowners and commercial/developer members—to join us in this effort to strengthen our HOA. We have a website that provides additional information about our initiative: www.TheFoothillsInfo.com. We also are creating a grassroot network of homeowners who will help gather signatures on the petition. When they come to your door, I hope you will give them a few minutes of your time to discuss our reform package and to answer any questions that you might have.
We are fortunate to live in a lovely neighborhood. Together we can make it even better.