Breaking the rules . . .

The July 23rd unanimous decision by the board (1a) to approve a revision to Board Policy and Procedure 105.2 (2) demonstrates either a lack of familiarity or a complete disregard of our governing documents and current policies and procedures.  This policy 105.2 deals with special and reserve assessments, but before delving into the specifics of the update authored  by the finance committee chair, one must first look at the obvious.

Big Canoe Policy No. 050 – “Policy and Procedure” . . . ignored

“Proposed revisions to Policies, Rules and Regulations must have a public reading at two formal meetings of the POA board to provide an opportunity for resident feedback and discussion before they can be voted upon at a subsequent meeting.” (3)

This was the first and only public reading of this revision to P&P 105.2.  The required three readings of this revision was suggested by this writer in a previous post on this subject. (4)

Big Canoe Procedure No. 104.1 – “POA Board Meetings” . . . ignored

“The meeting Agenda, such as it is at the time, will be published electronically to the membership during the week preceding the scheduled meeting.” (5)

The actual document along with the agenda for the July board meeting was not generated, to this property owner at least, until 12:22 pm on the day of the board meeting leaving little time to address this issue otherwise.

Instead, without any discussion by the board, the updated policy 105.2 was unanimously approved . . .

Was this revision reviewed and discussed at some previous closed session meeting or did the board blindly vote their approval without any thoughtful consideration?

Particularly problematic, the updated version of the policy introduces and defines an assessment (Board Designated Capital Assessment) that the Big Canoe restrictive covenants did not contemplate  nor authorize.  In fact, it must be noted that the covenants stipulate only special assessments which require property owner approval and annual (regular/general) assessments which do not.

Further . . .

Considering that  assessments constitute a “continuing lien on the real property and improvements thereon” (6) of the property owners, the term should not be used loosely or without authority from the governing documents.

And whereas, the board is given the latitude to utilize general assessment funds for a myriad of purposes including operational and capital expenditures, special assessments can not be used for any purpose other than capital and emergency expenditures.  For example, a special/reserve assessment was voted on and approved by the property  owners in 2010 (7) for the initial funding of the restricted Capital Reserve Fund.

The intent of this revision is both ambiguous and confusing     . . .

To paraphrase, it was explained that the update was done “to add a board designated $25 per month earmark” that began at the first of the year so that it would mirror the same procedures that were “always used on other assessments, not general assessments, things that are not general assessments”.  (1b)  Given this explanation, the $25 increase is clearly described as a “special assessment” and should have received a property owner vote for approval.

Rather than seeking to establish a new classification of assessments, perhaps this revision was intended to simply describe the mechanics of the newly created “Board Designated Cash – Capital Fund” as was originally discussed in the June 2020 board meeting.  (4) (8)  If so, the procedure should be clarified and documented in some other section of the P&P rather than 105.2 dealing with assessments.  However, it must also be remembered that policies and procedures are subordinate to the covenants, and unlike the covenants, these policies can be changed on a whim by this or any future board.  Unfortunately, the approval of this change is a clear example of that reality.

There is a valid solution to this dilemma . . . 

If the board, in fact, truly intends that these funds be restricted for capital purposes only, one of the two following enforceable solutions might be applied.

    • The board could choose to voluntarily transfer or allocate a portion of general assessments ($25/$16 or any other designated amount) to the restricted Capital Reserve Fund explicitly established by covenant for capital purposes and certain emergencies, or
    • Acknowledge the $25/$16 per month earmark as a special assessment and present to the property owners for a vote as mandated in the covenants.

(Note:  Considerable questions have been directed by this writer to members of the past and present board on the subject of special vs. regular assessments.)

Life in Big Canoe could be so much simpler if leadership just followed the rules . . .

In closing, it is hoped that the updated policy 105.2 will be rescinded and these or other appropriate solutions explored.

. . . . .

Please feel free to share your comments on this site regarding these suggestions or contact me at thepcrosses@gmail.com for questions or further discussion.  Likewise, should you like to see additional articles posted in the future, please subscribe for an email notification.    Meanwhile. . .  take care and stay safe.

Patricia Cross (10438 Big Canoe)

References:

  1. Meeting of the Board of Directors Video, July 23rd, 2020 at a) 41:30 b) 40:00 (POAwebsite>login>POA>Meetings>SubscribeToOurYouTube . . . >)

  2. Updated Board Policy No. 105.2 (POAwebsite>login>POA>CommunityOverview>EmailNotifications>7/23/2020BoardMtg)

  3. Big Canoe Policy No. 050, Revised April 20th, 2017 (POAwebsite>login>POA>GoverningDocuments>BoardDocuments>BoardofDirectorsPolicies&Procedures)

  4. “The Metamorphosis of our Capital Funding, July 7th, 2020, bcmatters.org

  5. Big Canoe Policy No. 104.1 – “POA Board Meetings”, Approved June 24th, 2015 (POAwebsite>login>POA>GoverningDocuments>BoardDocuments>BoardofDirectorsPolicies&Procedures)

  6. Covenants, March 1988, Article VI, Section One, pg. 21

(POAwebsite>login>POA>governingdocuments>covenants>covenants1988

  1. Second Amendment to the Covenants, dated August 21, 2010 –

(POAWebsite>login>POA>Governing Documents>Covenants>Capital Reserve2010)

  1. Meeting of the Board of Directors Video, June 18th, 2020, at 49:00 (POAwebsite>login>POA>Meetings>SubscribeToOurYouTube . . . >)