On March 19, 2024, the POHOA Board continued on its controversial path to fill two Director seats that were open going into the December 5, 2023 Annual Homeowners Meeting. The results of that election are disputed, with one seat being filled by a vote of affirmation with a spouse of the sitting President of POHOA, Jeff Ballweber. The other seat is alleged to be filled by a Directed Proxy Ballot submitted by Andy Mowery (author of this article) which President Ballweber does not believe should be counted.
The pattern repeated and expanded in the 3/19 election, with Mr. Mowery once again submitting a Directed Proxy, along with at least one other homeowner. The issue is whether or not Colorado Revised Statutes 7-127-203 and 7-127-204 are required to be followed, or whether the POHOA Board is allowed to make up new unwritten rules or policies to reject to the Directed Proxy votes.
According to CRS 7-127-204(2)(f), if the POHOA Board creates rules “inconsistent” with provisions of the same section 2, they are improper (and unenforceable).
And, once again, the Non-Profit Act appears to be crystal clear with plainly written language stating that proxies do not have to be given to a fellow homeowner to be physically walked into a meeting room. That’s how the POHOA Board responded in an email leading up to the 3/19 election:
It is worth noting that the POHOA Board is making an error in assuming that a proxy must be given to another “owner/member”. As Altitude Law explains in this article, ANYONE can be sent to a meeting to represent a homeowner – not just other owner/members:
The POHOA Bylaws have no such restrictions. The question is only whether or not the Owner Proxy Policy which says “may” in conjunction with a reference to other owner/members is, in fact, such a restriction. Given that CRS 7-128-204 declares such policies improper if they conflict with the Nonprofit Act, it is unlikely that such a restriction would be found proper (see below).
The problem here is that the actual POHOA Bylaws (which supersede any Policy) also mimics the language of CRS 7-127-203 in allowing a proxy to be sent TO THE CORPORATION/ASSOCIATION:
The POHOA Bylaws are nearly identical simply replacing “to the nonprofit corporation” with “to the Association”:
But, what the POHOA Board referenced is neither of these superseding citations, but rather the Policy that they themselves wrote without an attorney review in September of 2022.
It is important to note that the “Proxy Policy” does not bar Undirected or Directed Proxies that are submitted directly to the nonprofit corporation or Assocation. It simply states that a homeowner “may grant another owner/member a proxy to vote on their behalf”. In fact, this policy is incomplete, in that there is no mention whatsoever of a Directed Proxy, nor is there a mention of even a type of proxy that allows the homeowner to ensure that the vote is prescribed, not open to the proxy-holder’s discretion.
That’s a very important distinction.
It is simply not possible to enforce the “Proxy Policy” as a means to refuse to accept a Directed Proxy sent to the nonprofit corporation, the Association. In fact, Colorado State Law says explicitly that is improper.
POTENTIAL CONFLICT OF INTEREST
So, in order to prevent Mr. Mowery from having his vote counted (or the vote of another homeowner who submitted a directed proxy by email to the association as well), the POHOA Board, which appears desperate to prevent the open seat from including Mr. Mowery, decided it would be a good idea to allow the election of Ms. Jennifer Hutchinson at the 3/19 election.
It is important to note that Ms. Hutchinson was a Director from August of 2019 through May of 2022 who also served as Treasurer of POHOA during that period. During that period, she volunteered to keep the POHOA books using Quickbooks online.
After her resignation in May of 2022, POHOA, the new Treasurer, Clay Jones, demonstrated a lack of competency regarding the use of the cloud-based accounting software. The books were not updated in a timely manner, and, subsequently, reports were delayed.
In January of 2023, The POHOA Board saw fit to then hire Ms. Hutchinson as a contractor to perform the same duties she did for free from 2019-2022. While the POHOA Board has denied multiple document requests to see a copy of that contract, we can infer from the POHOA Monthly Reports that the value of Ms. Hutchinson’s contract is approximately $500 per month, or $6,000 per year – which is more than 10% of the annual POHOA Revenue.
While her competency is not in question, in 2021, we saw a delay in posting of over $9,000 in legal fees until after the Annual Meeting, which had the appearance of a political consideration. That money was not budgeted, and represented a significant overspending of the budget for 2021. Questions have never been answered, and calls for disclosure of the copies of those invoices have never been honored.
The POHOA Conflict of Interest Policy (COI Policy) is required to be signed “promptly” after new Directors are elected. President Ballweber confirmed today that the COI document will not be signed until the next Board Meeting, which is not currently scheduled on the POHOA Frontsteps website calendar. It may be as far off as July, as the POHOA Board has not held a Regular Board Meeting since 1/19/24, and made no statement about following the 6-meeting bi-monthly pattern used in 2023. As March closes, it appears that the Board may simply not have any “regular” meetings scheduled this year, and may simply give us 2-10 days notice and hold them during M-F work hours, as the last meeting was on 3/11/24.
The problem for the POHOA Board is that there is Colorado State Law that governs such conflicts of interest. There are three ways to handle the situation of a Director being paid according to CRS 7-128-501 Section 3 Paragraphs a through b:
Now, options a & b outline votes – either by the POHOA Board or the Homeowners (members). But, the third option is just a vague standard of fairness.
We know that no vote has occurred among the homeowners. And, a predicate to a vote is that the “material facts” are “known to the members” – which is partly the point of a document request asking to see Ms. Hutchinson’s contract. Does she get to hold off for a few months collecting $500/mo until she returns to a strictly volunteer position? Or, is the Board intending to extend her contract by having a vote from the other 3 “disinterested directors”?
Would Director Clay Jones be disinterested when it is the fact that he lacks the skill sets to fully perform the duties of Treasurer by directly operating Quickbooks also allows him to relieve himself of that pressure and burden (as the SOLE party handling contracts and contractors) by giving the contract to Ms. Hutchinson when there is no evidence whatsoever that any bids were sought to compare the cost of similar bookkeeping services – even from other homeowners who might do the job for less?
But, going back to option C in CRS 7-128-501 Section 3, there’s also the question of fairness to the association. Certainly in such analysis, finding someone who has done the job for free for 3 years getting paid to do the identical job for 10% of the HOA’s revenue vs. any other volunteer or other contractor who might do it for less is a reasonable question.
Prior to 2011, such contracts would be void and unenforceable. Then HB11-1124 was passed that aligned CCIOA with the Nonprofit Act.
There are several HOA Attorney websites that discuss the topic:
Board Member Duties and Liabilities in Colorado Owner Associations
“In the event of litigation, a non-disclosing director, and possibly the disinterested directors supporting the action, will have the burden of proving that the transaction was fair.
As a practical matter, a non-disclosing director exposes himself and the board to substantial risks, including political risks, in such an undisclosed conflict.”
CAN I GET PAID FOR SERVING ON THE BOARD?
“Compensation for Board members is not prohibited by Colorado law (See Section 7-128-111 of the Colorado Revised Nonprofit Corporation Act). However, the bylaws for your community may prohibit compensation. If so, your bylaws would need to be amended to allow Board members to be paid for their valuable time. If Board members are to be paid, be aware that negative political consequences may result based on an appearance or perception of impropriety to the owners. To counter this perception, provide notice of the compensation plan to all owners well in advance of implementation and explain why the plan was created.”
It is extremely important to note that Directors and Officers are TWO DIFFERENT THINGS. While many think that the Officers are ranking of Directors, it is untrue. They can be completely different people – and, according to the POHOA governing documents, the Officers CAN BE PAID.
So, while Ms. Hutchison was actually recommended by then Director Mowery in January of 2023 to serve as Treasurer (without being on the Board of Directors), the path taken was to be a paid contractor. By accepting a nomination and the rumored election on 3/19, we land directly into this Conflict of Interest situation.
While some might reason that the easiest path to resolution would be to have a vote on the matter on the same night as the election (adding it to the agenda after Ms. Hutchinson was elected), it does appear that this was considered – in spite of a homeowner noting that the whole election appeared “pre-orchestrated”.
And, while a homeowner-vote is not necessary, the POHOA Board should at least have a vote themselves before authorizing any new checks to Ms. Hutchinson to avoid even the slightest perception of impropriety. Disclosure of the contract, and perhaps any bids taken at the time when she was hired would go a long way to dispel any sense of unfairness. The only thing we are paying more money to do than our accounting is what we spend growing 2+ acres of bluegrass lawn, including landscaping and water.
Given the broader context of the POHOA Board desperately attempting to keep Mr. Mowery (or anyone else that disagrees with them on any issue) from joining the Board, having to rely upon electing a Director-spouse, and then elect a paid contractor just underlines exactly how desperate these maneuvers really are.
The POHOA Board has been contacted prior to publishing for 1 week without a response to relevant questions, other than to confirm that the Conflict of Interest Policy will not be signed until the next Board Meeting, whenever that may be planned. We will update this article, or publish a new article of any substantial response is received. If there are any factual errors in this article, we welcome any comments demonstrating a need to edit.