HOA where you can win with only 3% of owners
Updated: Aug 30, 2019
Reprinted from The Arizona Republic, Tempe-Ahwatukee section, August 21, 2019
I reside in the Foothills Community Association in Ahwatukee. Like many FCA members, I lived in apathy about the management of my HOA. That changed in April, when I learned that the FCA Board had expanded itself and handpicked two new members. When I looked into this, I was troubled by how flawed this action was…both in terms of the decision-making process and of the execution.
This expansion was one motivation for a special election on May 24 to recall the Board President, Bill Fautsch, and the two handpicked Board members. I tallied the ballots, and I was surprised by how lopsided the results were: 500 homeowners voted to recall Fautsch, while only 143 voted to retain him. I was even more surprised when blocs of votes were then added—particularly those of Belkorp Industries Inc. (San Riva) and Blandford Homes LLC (Palma Brisa) with a combined 465 votes—and these bloc votes reversed the outcome. I do not criticize these companies; they have every right to vote for someone who promotes their interests. But I was shocked that my homeowners association could have an election that allowed someone supported by only 3% its 4,392 homeowners to retain his seat on the Board.
I asked how this happened, and what I found was even more troubling. Administrative decisions were made that—intentionally or not—had the effect of suppressing homeowners’ turnout. For example, notices of the election were not all mailed to members at least 15 days in advance (as required by the Bylaws), and it is highly likely that at least some were not delivered to members 7 days before the election (as required by Arizona statues). The most consequential decision was to give one ‘large bloc’ entity—Belkorp—preferential treatment.
When I raised this at the July Board meeting, the FCA’s attorney insisted that there were no written rules about this, and therefore it was permissible. He emphasized that the recall was conducted in accordance with the Board’s guidance, which I interpreted to mean that the Board condoned these problematic decisions.
As I started attending Board meetings, I discovered other troubling issues. The most concerning was that, amazingly, the FCA has no procurement policy. This leaves the Association highly vulnerable. At the July Board meeting, I watched Fautsch recommend a sole-source contract. When I asked if there had been any assessment done to see if this project was even necessary, the reply was ‘no’. Fortunately, other Board members deferred action in this instance.
I don’t wish to criticize the Board members personally; they are unpaid volunteers who give us their time. However I would be remiss if I did not mention troubling issues about Fautsch: he does not reside in the FCA; he filed for bankruptcy about the time he joined the Board [Editor's note: Fautsch was a shareholder and served as the President/CEO and a director of a company, Impressa, Inc., that filed for Chapter 7 bankruptcy]; he is shown on the Better Business Bureau’s website as the principal of company with an “F” rating; and he had multiple judgments against him totaling hundreds of thousands of dollars. This last point is directly connected to the FCA, as Fautsch repeatedly concealed this derogatory information on the FCA’s annual reports to the Arizona Corporation Commission.
Since I shook off my apathy and got involved, I have been flooded by stories of homeowners who are very critical of the FCA. I don’t know how much merit each story carries, but taken together they create a very troubling pattern. I understand why Fautsch received the support of only 3% of the FCA’s homeowners.
I am collaborating with other concerned homeowners on an initiative that will include a package of reforms to address the structural changes the FCA badly needs. We hope other FCA members—homeowners and commercial/developer members as well—will support this effort to strengthen our troubled HOA. Working together, we can make our community an even better place to live.
David Randolph is a resident of the Foothills Community Association in Ahwatukee.