Who are the corporate block voters?
Over the past year, we have frequently noted that two corporate members of our HOA have inordinate influence over who serves on the Board. Many of our neighbors have asked us “who are these large corporate members, and why do they have such influence?”
To answer these questions, let’s first look at how votes are allocated. Each property owner in the Foothills community has a vote in the homeowners association. The vast majority of properties in the HOA are homes (single family units, duplexes, etc.) which receive one vote per property, totaling 4,124 votes out of 4,865 (85%).
The remaining votes are held by commercial properties, which generally receive more than one vote per property. In all but two cases, each commercial property holds fewer than 30 votes, which is not enough to dominate the voting.
The Two Corporate Giants
The two exceptions are Belkorp Industries Inc., which has 268 votes, and Blandford Homes, which has 197 votes. Together, these two corporations have 465 votes, and they seem to vote in favor of whatever the current Board wants, even if that is unpopular with homeowners. These corporations of course have the right to vote anyway they wish, and clearly they believe that voting in support of the current Board serves their interests.
For example, during the May 2019 recall election, homeowners voted to remove three Board directors by a better than 3-1 margin. A mere 143 homeowners voted to retain the current President. But only 700 homeowners voted, and this allowed Belkorp and Blandford to decide the election with their large blocks of votes.
Belkorp owns the San Riva complex near 24th Street and Liberty Lane. Originally, this was an apartment complex with a few dozen votes. Then, in the mid-2000s, this complex was converted to condominiums, and each unit became a separate condominium property with one vote per property.
Presumably, the intent was to sell these separate condominiums to individual owners. However, this did not happen, perhaps due to the recession of 2009-10; most of these condominium units remained unsold, Now, the vast majority of these condominium units are owned en masse by Belkorp.
Ironically, the complex is still operated as an apartment complex, not a condominium complex. It is complete with a staff hired from a third-party management company that handles the work of renting units to tenants.
In essence, the San Riva complex went from having a few dozen votes to having 268 votes, even though the property effectively remained an apartment complex. It would be a different story if these 268 units were actually sold to individual condo owners, but there is no sign of that ever happening.
How closely is Belkorp connected to the Foothills HOA and the concerns of its neighbors who live here? First, the company is not located in Ahwatukee. It is not located in Phoenix, nor in Arizona, nor even in the United States. Belkorp is headquartered in Vancouver, Canada, with no employees in our community. It is a troubling reality that a company this far removed from our community and the concerns of those of us who live here always seems to vote in favor of whatever the current Board wants.
Blandford owns the Palm Brisa subdivision that is currently being built. Its situation is much different than that of Belkorp. Over time, Blandford’s block of votes will shrink as it sells the home sites in its development. Those votes will then transfer to the new homeowners. This will take some time, but the problem will eventually cure itself. In contrast, there is no end in sight for Belkorp’s block votes.
As powerful as these large blocks of votes make the two corporate giants, the situation is made much worse by a special procedure in our CC&Rs called “cumulative voting”. In essence, cumulative voting gives each property owner the ability to vote more than once for a candidate during a board director election. For example, if there are four board director positions up for election, a property can use all four of its votes for a single candidate, in essence voting for that candidate four times. Or it can divide its four votes in other ways, e.g., it can give two candidates two votes each, or it can give one candidate one vote and another candidate three votes.
This arcane procedure greatly amplifies the already outsized voting power of large corporate block voters. In our upcoming election for four board director positions, Belkorp and Blandford have a cumulative total of 1,860 votes! This is double the number of homeowners that normally vote in a board election, giving these two corporations disproportionate power to elect board members. If they split their votes, they could cast 930 votes for two candidates. This is more than any candidate has received in any recent election. In effect, these two corporations could put two members on the Board without those candidates receiving a single vote from us homeowners.
Cumulative voting is not an abstract concept. It was used to help elect two candidates in the 2019 election.
And cumulative voting is not unique to our HOA. Many other Arizona HOA face this same problem. There has been at least one bill introduced in the state legislature to outlaw cumulative voting. Since the requirements for amending the CC&Rs to eliminate cumulative voting are so strict (75% of the entire membership), legislative relief is the only viable option to end it.
Until that day comes, the only way to overcome cumulative voting--and to deal with the power of the large corporate blocks of votes in general--is an even larger homeowner turnout.
Please vote, and please spread the word to your neighbors to vote.