POLICY SCHMOLICY: Board Ignores/Tramples Annual Meeting Notice & Conflict of Interest Policy

UPDATE: The Board responded. According to this response, they do not believe that they are required to follow our policies if they can find a less restrictive Bylaw, CCR, or Statute. This logic means that homeowners do not have to follow any policies that have less restrictive statements in the CCRs. This creates chaos, and is somewhat lazy – if the Board wishes to change a policy, they may do so at an open meeting (with proper notice). But, ignoring the policy is not an option – particularly when it has been consistently followed for 15+ years.

———- Forwarded message ———
From: Poudre Overlook HOA at FtC <atftcpoudreoverlook@gmail.com>
Date: Mon, Dec 5, 2022 at 8:56 AM
Subject: Re: POHOA Annual Meeting Notice Policy
To: Andy Mowery
Cc: Clay Jones

“Andy – thank you for pointing this out. Please know that bylaws take precendence over policies; therefore, proper notice has occurred and we are good to go. Lora”

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Many POHOA Homeowners began receiving notice about the Annual Homeowner’s Meeting by USPS First Class this week. The notice is dated 11/28/22, which is only 16 days in advance of the 12/14/22 meeting. While the notice attempts to justify short notice, the actual requirement is 30 days – making any business conducted at the meeting ineffective and something that could be challenged in court.

Our Policy states clearly in Paragraph 3.5: “Notice for the Annual Meeting each year will be sent out by first class mail at least 30 days prior to the meeting date.”

The question is whether or not Directors Ballweber and Jones were aware they were ignoring the clearly-stated POHOA Policy, or whether this is a deliberate, wanton, and/or willful action for a purpose. For a Board that seeks to establish “at the board’s sole discretion” as a uniform approach to HOA matters, examination of their discretion is warranted.

But, we are also ignoring and violating our Policy for Handling Conflicts of Interest of Executive Board Members, and pushing the limits of reasonable interepretation of our Reserve Policy with a Treasurer who wants us to convert our Reserve Funds into gold/silver coins or bullion when he himself works at a coin shop and may financially benefit from Board actions! Instead of recusal, he’s leading the presentation per the agenda when he should not even vote!

Two minutes is insufficient for comments, so this article will attempt to raise the issue for discussion outside of the overly-restrictive arbitrary constraints imposed by Director Ballweber.

POHOA is required to have 9 Responsible Governance Policies per CCIOA, the Colorado Statutes that govern HOAs.

“As mentioned, the rules, regulations and policies of an association are intended to explain, clarify and define the broad protective standards and restrictions contained in the declaration, in greater detail. Section 38-33.3-209.5 of CCIOA requires associations to have policies regarding certain matters. They are collectively referred to as the responsible governance policies and they are as follows:

• Collection Policy
• Enforcement of Covenants Policy
• Conflict of Interest Policy
• Conduct of Meetings Policy
• Adoption of Rules and Policies Policy
• Investment of Reserves Policy
• Alternative Dispute Resolution Policy
• Inspection of Records Policy
• Reserve Study Policy

POHOA complies with Section 209.5 by having a “Policy For Conducting Association Meetings”, which is posted on the Frontsteps website (link only for POHOA homeowners with login access), and has been in continuous use without variation since 2006. We have consistently mailed out via USPS First Class Mail 30 or more days in advance, and this is the first year any Board has attempted to challenge that policy with non-compliance.

What is worth examination is the fact that Director Ballweber went out of her way to attempt to demonstrate that this late notice is compliant with CCIOA and the Non-Profit Act (both Colorado Statutes that governing HOAs), including citations and quotations. She also attempts to bless their actions with a citation of our own POHOA Bylaws. She does this in the enumerated paragraphs (#2) that are purported to be responsive to “homeowner questions/comments received”.

While it may be true that the Non-Profit Act (CRS 7-127-104.3) requires notice of “no fewer than ten (10) days”, the statute does not forbid any HOA from having a higher standard for notice. Every single homeowner who has purchased a home since February 4, 2006 (when the Policy for Conducting Association Meetings was signed) agreed to the terms of the governing documents, and that includes 30-days notice for Annual Meetings. There is zero wiggle room in this policy. See Paragraph 3.5:

But, Director Ballweber chose to cite the Bylaws Article VII Section 3 regarding BOARD Meetings. The problem is that the Annual HOMEOWNER’S Meeting is not a BOARD Meeting. This point was raised several times to Director Ballweber, both in writing and at the 11/8/22 Special Board Meeting (which itself had insufficient notice). Article VII is entirely the wrong reference, which is limited to and entirely about Board Meetings and nothing but Board Meetings. It has no relevance in notice about the Annual HOMEOWNER’S Meeting. At the very least, it demonstrates an attempt to justify violating our Policy with an irrelevant citation, which is poor discretion.

But, Director Ballweber attempts to cover all bases with the last sentence of enumerated Paragraph #2: “Electronic notice of meetings is under the calendar on our website”

Theoretically, the way CRS 7-127-104.3 is worded, there is an if/then compliance statement. If notice is not by USPS Mail (10 days in advance, but not more than 50 days), THEN you COULD satisfy the “fair and reasonable” statutory standards by posting the notice 30 days in advance via electronic means, which could be the HOA website. But, the problem here is that Director Ballweber didn’t even bother to post notice there since 11/8/22 (when they voted to have the meeting), and STILL HAS NOT POSTED NOTICE THERE as evidenced by this screenshot taken at the time of publishing this article:

Even if Director Ballweber’s excuse wasn’t itself a violation of the written POHOA policy, the claim made in the notice about it being on the calendar is patently false.

In a normal, mundane year, this is likely of little consequence. We used to have great participation in our Annual Homeowner’s Meetings, with 60-80 of the 87 homes represented at the meeting – mostly, in person. Recently, however, due to proxy solicitation and hoarding, we’ve seen significantly less members showing up at meetings. But, the agenda of this BOARD Meeting (because the Board is attempting to do business that is not the priority of all members) should be carefully examined due to significant concerns.

The Agenda, which the Board did not allow to be influenced or amended by homeowners at the 11/8/22 Meeting, slips in a curious item: The Treasurer, Director Jones, wishes to use our financial reserves to purchase “US Coinage or US bullion according to Reserve Policy 5.2 Types of Investment (b) an obligation of the US government.”

Sounds like a very official citation blessing such an arrangement. Here’s the actual Reserve Policy of POHOA:

While it is true that there is a section (b) of the last bullet point that perhaps technically allows our Board or Officers to take our Reserve Funds and buy coins or gold or silver that is an “obligation” of the US Government, the fact of the matter is that it is incongruent with the purpose of the rest of the policy – to guarantee the safety of our collective money from loss or theft. Turning such assets into something that could be physically misplaced, embezzled, or stolen offers no such guarantees – even if the US Government has some sort of obligation to honor demands for payment in exchange of such assets. It’s actually creating risk where none is necessary.

But, the fact that Director Jones is IN THE BUSINESS of selling such bullion and/or coins raises the concern of Conflict of Interest when HOA Reserves are part of a transaction for which he may personally benefit. Even the appearance of Conflict of Interest should be addressed, particularly in the context of Non-Profit Corporations.

Fortunately, we have a Policy for Handling Conflicts of Interest of Executive Board Members:

If you note at the bottom of the copy posted on Frontsteps, it has signatures from 5 former Directors in January and March of 2021. The reason is that they are following the policy – and signing it. Per Section 6, Paragraphs 1.1 through 1.4, there “shall” be several actions. The Secretary was supposed to distribute the policy to other Board members and obtain their signatures. This was not done during my term from 5/25/22 to 10/20/22. It remains incomplete for the remaining Directors.

The policy also states there there “shall” be, at least ANNUALLY, a discussion of this Policy and it’s requirements among its Board members. It appears this has not occurred since March of 2021, which is more than 1 year ago – yet another example of either being ignorant of our policies, or intentionally running ram-shod over them.

What’s the difference between ignorance and intention, in the eyes of the law?

Well, the Business Judgement Rule, which a recent 2022 Appellate Court decision in Colorado helps us further understand when there is liability created by non-compliant Board of Director actions.

“This is the most recent Colorado appellate discussion about the “business judgment rule”, which is an important legal protection for community associations and their board members.  The essence of the business judgment rule is that the good faith acts of directors of a nonprofit organization that are within their powers and made within the exercise of an honest business judgment are valid.  This decision cautions that the courts should not second-guess the decisions of an organization except in limited circumstances.

Those limited circumstances include: fraud, self-dealing, unconscionable contracts, bad faith, arbitrary conduct, and a failure to follow mandatory procedures.  If there is a true justification and provable evidence for those claims, a legal remedy may be available for members against the organization.  On the other hand, if somebody challenges the valid interpretation of an authorized rule, no legal liability to the board should result because of the protection afforded by the business judgment rule.”

Source: Altitude Law

So, we have Director Ballweber ignoring the clear-stated Policy that requires 30-days notice for the Annual Homeowner’s Meeting and using it, effectively, as just a Special BOARD Meeting in order to slip through questionable actions such as taking HOA funds and letting our Treasurer, who works at a coin shop, buy up coins or bullion on the premise that the financial and currency markets are on the verge of collapse – a very extreme view espoused by fringe political groups and their advocacy networks.

Meanwhile, we have ignored our required policies regarding Conflicts of Interest, and appear to be bending our Reserve Policy by trying to convert our money stored in FDIC-protected banks into . . . coins and/or bullion.

I’ve asked Director Jones for the sources of his information. He’s provided none thus far, and both Directors did not respond to requests for comment.

But, a simple google search, to be fair to Director Jones, reveals sources that agree with Director Jones. We can agree there’s a cacophony of voices that echo his doom and gloom predictions. I think homeowners in POHOA should take the time to consider the sources of such information, and whether persons who thumb their nose at our policies should be given clearance to engage in these financial transactions without at least disclosing the conflict of interest and letting homeowners directly VOTE on such matters.

Page 1 Google Search results:

The U.S. Dollar Could Collapse in Next 4 Months; Here’s How You Can Protect Your Finances
“Will the American dollar adopt the British pound sterling? It will, I think. After the Fed changes course, I think the US currency will collapse by January 2023. I purchased many more U.S. silver Buffalo rounds in order to profit from the collapse of the US dollar. Silver is affordable, said  Kiyosaki.”

When Will the Dollar Collapse?
“This shocking forecast is not just based on present financial conditions. It is also based on Bible prophecy. In his landmark book The United States and Britain in Prophecy, Mr. Armstrong explained that the Anglo-Saxon peoples who settled Britain and the United States are actually descendants of the ancient Israelites. This astonishing truth means that all end-time prophecies in the Bible concerning Israel are primarily directed at the United States and Britain. A series of prophecies in Deuteronomy reveals the specific curses that will descend on end-time Israel after it turns from God’s law.”

But, if you google “is the us currency about to collapse” there’s 1.4 MILLION YouTube videos on the subject – dating back YEARS. It’s a perpetual doom and gloom prediction that renews itself every political cycle for a purpose. Well, a few purposes. One of them is to denigrate the political party in power, which at this time, is the Democratic Party which controls the White House. The other is to SELL GOLD AND SILVER.

So, when a person who profits from the sales of gold and silver (and is always talking about this subject before, during, and after POHOA meetings) suggests that we should act on these far-fetched doom and gloom predictions, it would be most prudent for us to follow our Conflicts of Interest policies – including the potential for a vote by homeowners directly – not just the Directors who are all apparently either ignorant of these policies, but potentially taking such actions with wanton and willful disregard for these policies. And, it matters whether it is wanton or willful or just plain ignorant – if our money disappears and we want to hold parties accountable.

The fact that Director Ballweber went through the bother of finding citations to justify her decisions, but conveniently innocently missed one of the 9 REQUIRED policies (of which one REQUIRES her, as Secretary to have all other Directors SIGN, but did not), indicates that she is acting on a premise repeated by Mr. Flanary at meetings: That State and Federal law supersedes governing documents. Because she can find a lower standard in statutes is interpreted to mean she can willfully ignore our policies!

That’s not how any of this works!

An informal survey of homeowners who are aware of this potential issue deem purchasing gold and silver unwise. But, when asked if they will take action, including running for any of the open Board seats, so far, there’s no one publicly stating their intentions to contest elections. This means, more than likely, Director Ballweber (and Mr. Flanary, who directs nearly all of her actions from the wings) already has lined up candidates who will rubber-stamp what they plan to do – including moving our money into coins and bullion.

A real agenda would allow homeowners more than 2 weeks to review these budget and financial matters, and more than 2 minutes to speak on such complex subjects. It appears intentional to give token time to speak, without any intention for it to influence outcomes. Technical Compliance was ruled by Colorado Appellate Courts in April to be insufficient on important HOA matters. If any of this is ever challenged in court, it would be a predictable disaster for the HOA.