WILL SCA EVER HAVE A FAIR BOARD ELECTION AGAIN?

[Rana Goodman]

By Forrest Quinn

WILL SCA EVER HAVE A FAIR BOARD ELECTION AGAIN?

The 2022-23 SCA Board election cycle presented a genuine threat that a new Board majority might remove SCA’s COO and terminate the Clarkson Law Group (CLG).   But CLG changed SCA’s Board candidate vetting process to use as a weapon against anti-Management candidates. What a coincidence!

NEVADA LAW REQUIRES ASSOCIATIONS TO PROHIBIT INELIGIBLE CANDIDATES FROM RUNNING FOR AND SERVING ON ASSOCIATION BOARDS AS FOLLOWS:

NRS 116.31034 (9) Each person who is nominated as a candidate for membership on the executive Board pursuant to subsection 4 must: (a) MAKE A GOOD FAITH EFFORT TO DISCLOSE ANY FINANCIAL, BUSINESS, PROFESSIONAL OR PERSONAL RELATIONSHIP OR INTEREST THAT WOULD RESULT OR WOULD APPEAR TO A REASONABLE PERSON TO RESULT IN A POTENTIAL CONFLICT OF INTEREST for the candidate if the candidate were to be elected to serve as a member of the executive Board

NRS 116.31034 (13) If a person is not eligible to be a candidate for or member of the Executive Board or an officer of the Association pursuant to any provision of this chapter, THE ASSOCIATION:

(A) MUST NOT PLACE HIS OR HER NAME ON THE BALLOT; and

(b) MUST PROHIBIT SUCH A PERSON FROM SERVING AS A MEMBER OF THE EXECUTIVE BOARD or an officer of the Association.

Conflicts of interest can be monetary gains, personal relationships, personal beliefs/history, or social factors that could compromise a Board member’s judgment, decisions, or actions. They include any favoritism or prejudice resulting from friendship or animosity with another person or group.

LOOKS LIKE THE CLARKSON LAW GROUP USES DIFFERENT STANDARDS TO APPROVE PRO-MANAGEMENT BOARD CANDIDATES VERSUS ANTI-MANAGEMENT BOARD CANDIDATES.

CLG told Board candidate Pamala Williams (who spoke out against Management) she was ineligible to run for the Board because she did not disclose the following:

1. The type of home she owned.
2. That she was a community volunteer acting as a Villa representative.
3. She objected to assessment increases, Villa turf replacement, and filed an NRED complaint regarding that issue (Evidently, having a different opinion than SCA’s lock-step, Soviet-style Politburo is a conflict of interest!).

In contrast, CLG didn’t require incumbent, pro-management Board candidates Wendy Linow, Paul Perlstein, and Barry Rubinson to disclose:

1. Their types of homes/neighborhoods.
2. Their current nor former SCA volunteer positions.
3. Their past disagreements with the Board’s majority.

A few, but not all, of the incumbent’s undisclosed potential conflicts are listed below. It only takes one miss disclosure to disqualify them from being a Board candidate or sitting on the Board.

THE THREE INCUMBENT’S FAILURE TO DISCLOSE POTENTIAL CONFLICTS OF INTEREST WITH CLARKSON LAW GROUP MAKES THEM INELIGIBLE TO BE BOARD CANDIDATES.

Note the law states that a Board candidate must disclose anything that “…would appear to a reasonable person to result in a potential conflict of interest.” CLG is not a reasonable person; CLG is an interested party and should NOT be involved in determining Board eligibility. By controlling the Board candidate vetting/admission process, CLG directly impacts who will be their future bosses/check signers.

The three incumbents have a long-term bond with CLG, including voting to renew CLG’s contract, raising CLG’s fees, and signing checks to CLG.    However, by not identifying their relationship with The Clarkson Law Group (CLG), the incumbents denied the Association’s membership their right to weigh any potential conflict of interests. For example: In 2022, the three incumbents approved some $217,000 for general counsel legal fees, about $87,000 (67%) over budget. Any thoughts on why CLG didn’t dispute the three incumbent’s “no potential conflict” declarations?

THE INCUMBENT’S FAILURE TO DISCLOSE THEIR POTENTIAL CONFLICTS OF INTEREST WHEN VIOLATING BOARD MEETING LAWS MAKES THE INCUMBENTS INELIGIBLE TO BE CANDIDATES.

Directors must act in good faith (honest dealings). But in April 2022, four Board members (including the three incumbents) announced at a Board workshop that they held a secret and unnoticed Board meeting. They decided to renew a contract in that meeting without getting competitive bids, consulting experts, or notifying SCA’s residents. The majority told the three excluded Board members they were not invited because their opinions and votes didn’t matter.  They are not the team players they profess to be.

THE THREE INCUMBENT’S FAILURE TO DISCLOSE THEIR POTENTIAL CONFLICTS OF INTEREST BY RENEWING A CONTRACT MAKES THEM INELIGIBLE TO BE BOARD CANDIDATES.

Directors must act in good faith (obey the law). Yet, four Board members (including the three Board incumbents) who boast of their transparency renewed a $900,000+ contract in Executive Session despite NRS 116 forbidding contract renewals in Executive Session. This lack of conflict disclosure denied SCA’s voters the right to determine the severity of their conflict.

THE THREE INCUMBENT’S FAILURE TO DISCLOSE THAT THEY VOTED TO PASS A 2023 BUDGET THAT VIOLATED NEVADA LAW IS A POTENTIAL CONFLICT OF INTEREST THAT MAKES THEM INELIGIBLE TO BE BOARD CANDIDATES

Despite having advanced knowledge of the problem, the three incumbents did not disclose they voted to approve a 2023 budget that did not comply with Nevada law regarding funding adequate reserves. Their desire for expediency trumped the Board’s fiduciary duty to comply with NRS 116.

THE THREE INCUMBENTS FAILED TO DISCLOSE THAT THEY PASSED AN “ADDITIONAL RESERVE ASSESSMENT” TO CORRECT THEIR 2023 BUDGET ERROR.

One month after passing SCA’s noncompliant 2023 budget, SCA’s Board passed an “additional reserve assessment” for SCA’s four Villa communities. An “additional reserve assessment” is not defined in NRS 116. Nevertheless, the three incumbent Board members didn’t disclose that this “additional reserve assessment” was required due to their failure to comply with NRS 116 a month earlier.

WILL SCA’S BOARD DO THEIR FIDUARY DUTY AND REMOVE THE INCUMBENTS FROM THE BALLOT AND THE BOARD?

Nevada law requires associations to prohibit ineligible candidates from running for and serving on the association’s Board.   Consequently, SCA’s Board must remove Wendy Linow, Paul Perlstein, and Barry Rubinson as Board candidates and sitting Board members.

Will SCA’s remaining Board members do their fiduciary duty, or will they choose to end fair Board elections?

[MARCIA KOSTERKA]

I want to thank Forrest Quinn for taking the time to research and write a very concise editorial regarding incumbents asking to be retained for the new board of directors.   I have personally witnessed one of them lash out publicly to a homeowner who questioned him and demonstrated unacceptable behavior for a board member.  Another incumbent candidate seeking re-election, continually leaks information and board decisions to the other blogger.

Homeowners are often treated with disdain and are treated as just a source for the spending of money for projects which are questionable.

I urge all homeowners to think long and hard before retaining the same members of the board for another term.  

[2287 Otter Rock Ave. Henderson NV 89044]

Forrest has done an incredible job laying out the bind our community is in with the unholy alliance between Seddon, The Clarkson Law Group and the bad actors now serving on the board. There is a lot to unpack here but at a minimum it appears what Forrest laid out is actionable under the Intervention Affidavit rules with the Department of Real Estate( NRED). But getting NRED to do its job is an uphill slog. That benefits those that support the wrong doing. The best way to fix this is to get a board majority that will throw the bums out and that includes the three board members up for reelection, Clarkson and Seddon.
But that cannot happen unless voters in SCA start in 2023 and finish the task in 2024 with likeminded board members.
The financial irresponsibility of the current board is well documented. The weaponized legal counsel is well documented. The overpaid COO who condones the upward delegation to board members to be worker bees is well documented. And the other blogger touts that as a good thing as he clearly has no concept of division of labor and oversight. Is the board suppose to be worker bees as their oversight responsibilities both financially and administratively are absent. NO! Spending hundreds of hours by a board member to write documents is a good thing? With SCA payroll bloating past $5million and board members acting as worker bees fulfilling middle management aspirations rather than true functional oversight it is no wonder our financial house is a mess. They couldn’t even grasp the importance of competent monthly financial statements with variance analysis to assist their oversight. It’s not their priority. Their tasks are.
Your assessments and keeping them low ought to be a priority. They screwed that up.
Elections are the only way to fix this in the long run. If the system worked, filing an action would be appropriate and maybe it should be filed anyway because Forrest clearly laid out the case as to why the three incumbents seeking reelection ought to be removed from the ballot. Don’t hold your breath.
The electorate is going to have to be diligent in 2023 and 2024 to have any hope of fixing this.
Voting for Pamela Williams( Ballot Position #1) and Rick Ernest( Ballot position #2) is a start.

[Author]

Posts