STORY ARCHIVED: OpEd — Analysis of Amended PMCPOA Bylaws on Ballot for Ratification

Unlike the vast majority of POA and HOA boards in California, the Pine Mountain Club Property Owners Association (PMCPOA) board has created for itself the right to change bylaws just by themselves—9 people—despite the rule that all property owners (“members”) must approve amendments to PMCPOA’s governing documents by voting. This unique practice has given this board 11 months to operate according to their own rules, then—at the end of the fiscal year—the measures that the board has unilaterally changed have to go to the homeowners to vote whether to make the change/s permanent as part of the governing documents, or not. Here is an analysis of the current ballot bylaw proposals, and recommendations by a property owner who is a veteran of the governing documents committee and a former board member. —Editor

By Katherine King, 19-year PMC resident, 8-year veteran of PMC Governing Documents Committee and former PMC Director

2.24 “Task Forces” Definition and Renumbering– Yes, approve

5.05 Annual Meeting Agenda and Nominations– The first three sentences of 5.05A are not printed in the election packet. Printing error aside, the change in 5.05A puts a chill on the members’ right to put proposed changes to the bylaws on the ballot. The change in 5.05B is simple clarification. No, do not approve

5.06 Bylaw Amendments by Members– This amendment contains some good language making explicit the members’ right to submit proposed bylaws to the Governing Documents Committee so they can receive the same kind of help directors receive to phrase their own proposals correctly.

However, the language added in the second part of this amendment severely limits the members’ right to propose bylaw amendments at all, for it gives the board new power to deny placing a bylaw by members on the ballot.

It says that even if a proposed bylaw is legal, the board may deny members the right to vote on it, if it “stands in conflict with the existing governing documents.”

Although such a denial may sound logical, logic fades in the face of how the board used its newly self-granted power this year.

For instance, one bylaw was denied ballot status because it was said to be in conflict with CC&Rs and bylaws that give the board the authority to manage the association. That denial means that this general “authority to manage” can be interpreted as being in conflict with every member-proposed bylaw that seeks to guide that power in any way. No, do not approve *
[Editor’s Note: See important footnote explanation below for more in-depth version of King’s analysis of 5.06.]

10.02 Assessments– Changes are made to sections A, D, and I. Amendments to sections A and D clarify confusing language in the original 1973 document. (For example, “a period of 77 days” is clarified to “the period between July 1 and September 15.”)

The original bylaw 10.02 (I) required a 2/3 vote of members in order to ratify changes in the budget process (that is, to amend 10.02 and 10.03). This supermajority was built into the budget bylaws by the founding directors of the Association in order to protect members’ access to information necessary to understanding the budget process. Amended bylaw 10.02 retains a supermajority, but it is a more reasonable one (75% of voters, rather than members) that offers flexibility as well as protection. Yes, approve

10.03 Budget Formation– Amendments to Bylaw 10.03 change dates and one number in order to bring the budget process into conformity with state law. Amended bylaw 10.03 retains the right to information guaranteed by the original budget formation bylaw. That is, it guarantees the right to have an “operation statement of income and expense” provided during the budget process, together with “a comparison showing each item of income and expense budgeted by the board for the fiscal year ending June 30th.” Yes, approve

10.12 Disposition of Surplus– This new bylaw ensures that excess assessments must either be returned to members directly or be taken into account in the next year’s budget (either as bringing the capital reserve fund to the recommended level or as providing funding for the operation budget). Yes, approve

10.13 Special fund– This new bylaw creates a fund dedicated to funding the planned clubhouse renovation and construction. Discussion at the November 17, 2018 board meeting indicated it could be funded by a variety of means, including annual assessments, special assessments, donations etc. (Bylaw 10.12 indicates that budget surpluses should not be put into this fund.)

The last sentence says the bylaw “may not be amended unless the amendment is approved by two thirds of the members.” Bylaw 10.08 has been criticized because of its impossible requirement of “a majority of the membership.” How much more impossible is two-thirds of members? No, do not approve

11.04 Conduct of Meetings– The amendment says task force meetings, unlike committee meetings, need not be open to the public. No, do not approve

11.07 Election Committee– This adds a requirement that member volunteers be approved by the board. It turns their place on the Election Committee into an afterthought rather than an equal right.

“Volunteers consisting of members” was dropped out after “should consist of” (and the stricken “and/or”). This revision increases board power, creates internal inconsistency and is presented incompletely on the ballot. No, do not approve

13.04 Contributions– Yes, approve

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FOOTNOTE:

* 5.06: This is the longer version of King’s analysis of 5.06 “Bylaw Amendments by members.This amendment contains some good language making explicit that all members’ have a right to submit proposed bylaws to the PMC Governing Documents Committee and receive the same kind of help that board directors receive to phrase their proposals correctly in the context of the CC&Rs and other bylaws.

However, the language added in the second part of this amendment severely limits the members’ right to propose bylaw amendments at all, for it gives the board new power to deny placing a bylaw by members on the ballot.

It says that even if a proposed bylaw is legal, the board may deny members the right to vote on it, if it “stands in conflict with the existing governing documents.”

Although such a denial may sound logical, logic fades in the face of how the board used its newly self-granted power this year.

For instance, one bylaw was denied ballot status because it was said to be in conflict with CC&Rs and bylaws that give the board the authority to manage the association. That denial implies that this general “authority to manage” can be interpreted as being in conflict with every member-proposed bylaw that seeks to guide that aspect of the board’s power in any way.

Another bylaw (a member-amended version of 5.05) was denied ballot status after PMC counsel said it “could be illegal” for the board to include both “pro” and “con” statements in the election packet.  Their practice in the past has been to include synopses that functioned mainly as “pro” statements for board-generated bylaws.

However, similar language already exists in bylaw 5.05: “the pros and/or cons may be included…” (the member-proposed amendment would have changed “may” to “shall” and “and/or” to “and”—[which  means that it should be routine practice to include both “pro” and “con” explanations in ballots— Editor], and the board’s own amended 5.05 does not bother to remove the “pros and/or cons” from its own language “that could be illegal” also (see p.2 in the election packet).

In fact, board discussion at the April 20 meeting indicated to me that potential illegality was not high on the directors’ reasons for rejecting the member-proposed bylaw. Nor was conflict with other governing documents. The major concern seemed to be procedural: how difficult would it be to do this? In other words, the directors were deciding whether or not it was a good bylaw instead of allowing the members to decide.

It is important to understand how important is the members’ right to change bylaws by petition. From 1973 to 1986, the PMCPOA board met and deliberated in private. That year, a group of members wrote an amendment to the bylaw about board meetings that created open meetings. It said: “Board action and deliberation, except for (1) litigation, matters that relate to the formation of contracts with third parties or personnel matters or (2) as otherwise specifically provided for in these Bylaws, shall be taken at meetings open to the Members.” A second member-amended bylaw created a yearly audit. According to letters then written by the members, the chair of the BOD (Jack Draper) fought these member-amended bylaws, refusing to print supportive letters in the Condor. Despite board opposition, the petitioned member-amended bylaws were approved by the membership to the benefit of all. If the board-proposed amendment to 5.06 (and a recently passed amendment to 5.05) had been in place in 1986, PMC would not have had open board meetings until the California Legislature forced this requirement on all POA/HOA boards in 2012. Nor would they have had audits of  this $5 million operation!

This year the board denied ballot status to a member-proposed bylaw that would have removed the board’s right to enforce amendments to bylaws before the members have voted to ratify them. The attorney advised that it was “internally inconsistent,” not that it was illegal or in conflict with other bylaws. In discussion, one director complained that the amendment would “take away power from the board.” Others talked about convoluted writing. The policy change seemed to be the main concern, for if the intent is clear (as it was) the writing (which needed only minor tweaks) could be clarified by the governing documents committee for approval at the next year’s election. Recommendation: No, Do Not Approve

[P.S. For all four rejected bylaws and attorney responses, see “April 20, 2019 Updated Open Board Meeting” under Agendas on the PMCPOA website.]

This is part of the June 7, 2019 online edition of The Mountain Enterprise.

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