As you all know we had the annual meeting on 4/9/19.
There was a measure on the ballot to change the By-laws for ‘Member Approval Requirements’. This measure did not pass even though 80% of those voting on the measure were in favor of the change. For those that remember, this outcome was like the election on 1/11/19 when eliminating Cumulative Voting did not pass even though 70% of those voting on the measure were in favor of the change.
Let’s look at the current rules for changing the By-laws: The current By-laws require 51% affirmative votes of all the homes in the HOA to change a By-law. We have 3,450 homes in the HOA. Therefore, 51% of 3,450 homes means we need 1,760 votes in favor of a change, no matter how many people vote. If only 1,759 people voted, the measure would be defeated no matter how many of these people voted in favor of the change.
The problem is voter turnout. We have never had more than 63% voter turnout in the last 4 years. Given the largest voter turnout in the last 5 elections was 62.49%, or 2,174 ballots, it would take an 80.96% conversion rate to pass any By-law change. In this last election we only had 1,823 ballots submitted, which is a voter turnout of 53.30%. In this last election to change the By-laws it would have taken a conversion rate of 95.70% to pass. Even though 80% did vote to pass, it was not enough because no matter how many people submit a ballot, it takes 1,760 affirmative votes to pass any change.
We have now tried twice to make changes to the By-laws and were unsuccessful even though 70% to 80% of those people voting wanted to make the change. So, what is the alternative?
California Corporations Code Section 7515 allows for the HOA to Petition the Court to approve a change to the By-laws if rules are too restrictive and unduly difficult. Clearly the Civil Code understands and has provided for a process to implement a change in the By-laws given that trying to pass such changes might be unduly difficult, perhaps impossible for the HOA with the current voting requirements. If you Internet search on ‘Corp. Code 7515’ you can read the sections that describe this process.
At the April 29th Board meeting the Board passed a resolution to petition the court on the following items:
- From Election 1/11/19, Change the By-laws, Section 4.4.5 to Eliminate Cumulative Voting.
- From Election 4/9/19, Change the By-laws, Section 14.4.1 for Member Approval Requirements.
If the court were to grant the petition, it would mean cumulative voting would be eliminated in the future. It would also mean that to change the By-laws it would take two-thirds of the votes cast on a measure when ballots are received from at least a majority of the Voting Power of the Members. If this proposed rule had been in place in the last two elections, the two measures would have passed.
The court has set a hearing date on that Petition for August 16, 2019 at 8:30 AM in Department PS2 of the Superior Court located at 3225 E. Tahquitz Canyon Way, Palm Springs, California 92262. The Court has directed that all homeowners be notified by mail, at their official mailing address for HOA business, and that any papers opposing the Petition must be filed with the court and a copy be served on counsel for the HOA, Pejman D.Kharrazian of Epsten Grinnell and Howell APC , 10200 Willow Creek Rd , Suite 100, San Diego, California 92131 on or before August 5, 2019. Any papers should reference Case NO PSC 1903711.
Consequently, and following the court’s specific instructions, documents relating to this Petition will be mailed out to you beginning Thursday June 27, 2019. The exhibits in support of the Petition, some 305 pages, will not be mailed to you but will be made available for review at the HOA office and can be found on the official SCSHCA web site along with the other documents relating to the Petition. The referenced exhibits are merely copies of all the documents which have been previously furnished to you in connection with past ballots, along with the reports from HOA Elections tabulating the voting results of the two elections. You have seen these documents before either in hard copy or on a flash drive, and as a result the court did not require the HOA to go to the substantial expense of copying them and mailing them out once again. The materials being mailed to you are for notice purposes, and the Petition does not require you to vote, to appear, or do or file anything unless you wish to oppose the Petition of the HOA. Since this matter is a public hearing, any homeowner has the right to attend the hearing.
Should you have any questions please let me know.