By Katherine King, Pine Mountain community

Ballot Packet Inaccurate and Incomplete

I am appalled by what is and what is not in the ballot package that PMC members just received. If the board of directors of the Pine Mountain Club Property Owners Association wanted informed voters, they would have included accurate and complete information about the bylaw changes we are being asked to approve on Ballot #2 this year.

Instead, the information pamphlet offers only the changed language they want us to pass. The packet gives no hint about the original language of the bylaws being changed—nor does it show what voters will be giving up if they pass this amendment. No one can see what has been removed. No additions are marked.

It appears this ballot packet presentation is trying to get members to vote away their rights without knowing they are doing it.

As a former longtime member of the PMC Governing Documents Committee and a former member of the PMCPOA Board of Directors, I have expertise—and files—that allow me to see what most members cannot.

The 2017 ballot packet’s “analysis” page is supposed to fill in this gap, but it does not, especially when it comes to 10.02 and 10.03. This packet’s “analysis” of a major deletion at the end of 10.02 says only: “10.02 (I) This provision has been removed and is covered by 14.02.”

That’s it.

The “analysis” does not say, as it should, that the item that has been removed—10.02 (I)—required a supermajority vote of two-thirds (2/3) or more of the members to revise or repeal 10.02 and 10.03. I agree that is a very high standard! But why is it?

The reason for this high barrier to change is that these bylaws protect members’ access to detailed financial information and our right to due process during the budget cycle.

If 10.02 (I) is removed, 14.02 will by default govern the budget process as it does all other bylaws, changing the supermajority requirement to “a majority of a quorum at the annual members’ meeting”—that is a drop from a 66.6% supermajority to a 12.6% vote to change these special bylaws!

This ballot packet analysis of 10.03 is equally misleading: It makes no mention that the board has deleted nine lines of text that previously guaranteed members’ access to significant financial documents during the budget process. If we yote “yes,” we will lose the right to that guaranteed access.

Our Original Bylaws 10.02 and 10.03 Guarantee Members’ Access To Financial Information Before Budget Approval

The founding directors clearly intended that a detailed proposed line-item budget be made available to members early in the budget process. The original PMCPOA bylaws 10.02 and 10.03 guarantee members must have access to important financial information about seven (7) weeks before the board’s final vote on the new budget.
It says we should all receive (1) the current financial statement; (2) a statement of operations showing “Actuals” (the actual income and actual expenses to date for the fiscal year), compared to the budget’s projected income and expenses through the end of the current fiscal year; and (3) a proposed budget for the next fiscal year, with a statement of the proposed annual assessment which that budget would require.

Timing Is Everything

All three financial items were to be provided to members by the first day of the month in which the board will hold its first preliminary budget meeting (on the third Saturday). That gave members a headstart of two to three weeks to review the fiscal status of their association before the board’s first meeting on the subject.

Bylaw 10.04 specifies that although the board can mail members a summary of “a complete operating budget for the ensuing year,” they can do so only if it is stated (in large print) that members can pick up a copy of the complete budget (or request that it be mailed to them at the association’s expense).

•In other words, the same detailed comparison that directors use to help themselves judge the new budget’s merits was supposed to be made available to all members.

Rights to Information and Due Process Governing the Annual Fiscal Process Are Eliminated If You Vote “Yes” on this Amendment.

As mentioned, I’m a former member of the PMCPOA Board of Directors and a former longtime member of the PMC Governing Documents Committee. Most members will not have at-hand hard copies of the PMCPOA 2005 Bylaws, the 2015 Revised Bylaws (on which I worked as a member of the PMC Governing Documents Committee (or “governing docs”), the E-14 Business Policy that sets the current budget process (available only if you know what to ask for), the minutes for governing docs for November 2016 (which with some effort can be downloaded from the PMCPOA website), the November 19 PMC Board agenda and minutes at which the bylaw changes were approved (which can be found on the website), and the DVD of the meeting (available, as are DVDs of all meetings, at the front desk). In addition, I have seen the PMCPOA’s original bylaws from 1975 (which are archived in the business office). All of these are necessary to fully understand the problems with the bylaws that are on the ballot sent to the community last week!

The founding directors stipulated that the final board vote on the budget must take place at a second regular board meeting in the following month, thus giving the board time to adjust the draft budget after hearing from members. The total member-involved budget process, therefore, took place over six to seven (6-7) weeks.

The founding directors felt that this long process was so important for the community that in 1975 they protected Bylaws 10.02 and 10.03 (formerly numbered 3.06 and 5.07 G) with that supermajority shield of requiring 2/3 of the membership to amend these bylaws.

All other bylaws can be amended by a simple majority of a quorum at the annual election. To recap, since a quorum is 25% of the membership, the percent required to achieve the majority to ratify most amendments is only 12.6% of the total memberships. Bylaws 10.02 and 10.03, however, require “yes” votes from 66.6% of the total memberships.[1]

Two Ways to Amend a Bylaw

There are two ways an amended bylaw can get on a ballot for ratification.

One is by member petition (75 memberships signing),[2] as occurred for the four ballot petitions on Ballot #3 this year. The other way is by a board majority vote as on Ballot #2.

“New bylaws may be adopted, or these bylaws may be amended or repealed, by a vote of a majority of directors; provided, however, that any bylaw change adopted by the directors shall automatically be placed on the agenda for the next scheduled [annual] meeting of the members for ratification or written assent of a majority of a quorum at said meeting, and such change, if not so ratified, shall be deemed rescinded.” [Bylaw 14.02]

What this means is: The board can amend a bylaw by the vote of just five directors. The amended bylaw goes into effect immediately, but must be put on the ballot for ratification by the members. If members refuse to ratify, the bylaw reverts to its original form.

This is what has happened with Bylaws 10.02 and 10.03. The PMCPOA Board amended them in a unanimous vote on November 19, 2016, then put the new versions on the website—“disappearing” the original versions, so members couldn’t see them—and then began the 2017 budget process.

Struggles and Stonewalling

In recent years, members have had to struggle to get the detailed proposed budget by the first day of the month in which the board’s preliminary budget meeting is held (on the third Saturday).

The board has stonewalled, using the excuse that since State Civil Code 5300 requires mailing the final assessment before the end of May,[3] they cannot follow the calendar set out in Bylaw 10.03. The stonewalling produced heated exchanges between the board and members, along with reports, OpEds and Editorials in The Mountain Enterprise, with members calling for enforcement of their rights under Bylaw 10.03—the very same bylaw rights that this board is now trying to eliminate once again, this time for good.

If Members Refuse to Ratify It on this Ballot, the Bylaw Reverts to its Original Form

Amending 10.03 by board vote in November 2016 let the board dispose of our rights for a short time: Our rights to timely and complete information no longer existed for the 2017 budget cycle.

Is this why both the PMC General Manager and the PMC Board Chair could so strongly reply “NO!” to requests by members, including Brenda Martin and Bryan Skelly, to see a detailed proposed budget on March 1? Is this why, even as late as March 16, members were refused access to the detailed draft? According to Bylaw 10.04, members insisted, they had a right to be given the complete proposed budget for the ensuing year within the time frame of 10.03. But, oops! the sentences that 10.04 had originally referred to were…gone…removed from the website. So General Manager Rory Worster told members they would have to wait to see details until the budget was approved at the April board meeting. Only then, he said, will we “have an ensuing fiscal year’s budget.” [4]

As it turned out, the existence of Business Policy E-14,[5] which seems to have briefly slipped the general manager’s mind, managed to force the release of details before April (but after the budget was essentially set). This year, members never got “an operation statement of actual income and expenses to date, compared to budgeted income and expense through the end of the current fiscal year” to which the founding documents for PMCPOA entitled them.

Policy E-14 marginally follows original Bylaw 10.03. It requires that a summary of the proposed budget be published on March 1 and a detailed proposed budget be made available on April 1. If the amended Bylaw 10.03 is ratified on this ballot, the board can, at its pleasure, remove even these diminished rights!

Keep To the Highest Standards

If the board truly wishes to amend Bylaws 10.02 and 10.03, let them find language supported by a vast majority of our members.

Do not remove rights under cover of a state civil code that draws a bottom line but explicitly allows a higher standard to associations that value democratic process.

Do not again ask members to vote away rights without knowing what is at stake. Let us hope the next board will show more regard for transparency and greater respect for the members’ right to know. If not, at least we will still have the original 10.02 and 10.03 to protect us—if members refuse to ratify these PMCPOA Board amendments on Ballot #2 this year.

Vote NO on the Board’s Amended 10.02-10.03 Bylaws on Ballot #2

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See an editorial about Ballot #1

[1] Bylaws 14.02, 5.04 govern. [2] Bylaw 5.06 governs.
[3] Civil Code §5300. Annual Budget Report. (a) …an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year. (b) Unless the governing documents impose more stringent standards, the annual budget report shall include all of the following information: (1) A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis. (2) A summary of the association’s reserves, prepared pursuant to Section 5565 (etc.).
[4] Email from gm@pmcpoa.com to Bryan Skelly, March 16, 2017.
[5] Business Policy E-14 was sculpted in Spring 2016 to satisfy member demands for a traditional weekend budget meeting a week before the first regular PMC board meeting in March.

This is part of the May 26, 2017 online edition of The Mountain Enterprise.

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