Analysis/opinion of proposed bylaw amendments

I summarized the proposed bylaw amendments in my previous post, and by and large I agree with them. I would have preferred that the board discuss the amendments prior to involving legal counsel to write said amendments since it would have allowed any changes to be made without incurring a second pass through counsel and thus, a second expense, but that battle was lost a long time ago.

As I said, I agree with all of the proposed changes except two. I understand the rationale for each of them, but neither sits well with me.

Replacement of resigning directors

This isn't actually a change from the way resigning directors are currently replaced within the association. What led me to pick on this amendment, in particular, was the addition of the clause allowing a resigning director to participate in the selection of his/her successor. The addition of that clause made me uneasy. At first reading, it made no sense. Why would a resigning director be allowed to influence future board actions (via participating in the process of selecting a successor)?

As I tried to understand exactly why it is that this amendment makes me uneasy, I realized that my issue isn't so much that the resigning director is participating in the selection of his/her successor as much as that the new director is being elected via a different means than was his/her predecessor. That is, a position, duly filled by the members and now vacated, is being filled by the board.

Ultimately, though, that board, including the resigning director, was elected by the members. Viewed in that light, the board is acting with the membership's (tacit though it may be) approval to replace the resigning director. This course of action actually makes sense, since a full-blown election to fill the vacated position can be both costly and time-consuming, and none of this interferes with the board's ability to consult with the membership or the membership's right to recall any or all of the directors.

In the end, the amendment still doesn't sit well with me, but I don't believe I can articulate any substantive arguments against it.

Use of cumulative voting

This amendment didn't agree with me from the moment I heard the association's president announce it upon presenting the proposed changes to the board. Admittedly, my initial reaction was that this amendment was proposed as a means for the board president to enable himself to exert greater influence over future elections, and while that may not have been his intent, I believe it will be the end result.

The SEC's website has a fairly straightforward explanation of cumulative voting. Using the example from the SEC's website, each member of the association has one share in the association, and when an election occurs, each member has one vote per share per board vacancy. (1 share x 5 vacancies = 5 votes.) Under current association governance, i.e. cumulative voting, a member may cast any number of votes for any number of candidates so long as the total number of votes cast by that member does not exceed the allotted 5 votes. Under the proposed governance, i.e. statutory or straight voting, each member still has five votes; however, a member may not cast more than one vote for any single candidate.

In this newsletter from the Davis-Stirling newsletter archive, the author lists some of the pros and cons of cumulative voting. He describes how cumulative voting is used to give homeowners a voice in association governance while a developer still has control of said association. He further opines that cumulative voting is not necessary once the developer is out of the picture and can even be detrimental to the management of the association. This latter opinion is premised on the idea that cumulative voting can lead to the election of "disruptive, fringe, and single-issue candidates" that can be "almost impossible ... to remove." Furthermore, a "conventional voting system" requires candidates to "seek a broader base of support" which presumably leads to the election of "more moderate, business-like candidates."

While I'm not going to dispute the notion that cumulative voting can lead to the election of dysfunctional candidates, I do not believe that it has been responsible for it, in this association, yet. In fact, while I have no proof, I believe my election this past year to be a positive result of cumulative voting. (By the way, I think that last sentence should serve as proof that the labeling of candidates as "disruptive, fringe, and single-issue" is very subjective. Furthermore, "disruptive" does have its place.)

So, let me bring this home. It is my opinion that the removal of the cumulative voting option is not necessary and may be detrimental in the particular case of Park Lane, and here is why (all of which is entirely my opinion):

1. The majority of the members within Park Lane are largely oblivious or indifferent to the issues surrounding the management of the association beyond their narrow, specific problems/needs/desires (e.g. speeding, parking, landscaping, noise).
2. The majority of those members that do take an interest in association matters are predisposed to vote for the candidates who will cater to those desires.
3. The candidates, and subsequent directors, willing to cater to those desires have done so at the expense of the long-term health of the association, particularly financially.
4. In spite of this decline in the long-term health of the association, the majority of members will continue to vote for those same candidates because of a lack of transparency on the board's part and/or the aforementioned obliviousness and/or indifference on the members' part.

While I will admit to being a disruptive member of the board, I do not believe that my tenure can be described as dysfunctional. If anything, I believe it has had a net positive effect on the association. That is, the board is taking association finances far more seriously and acting to preserve them more vigorously than they have since I last served on the board. Furthermore, there is no specific problem that is currently being created by the use of cumulative voting. At this time and for this particular association, I believe that the move to statutory voting is a "solution" in search of a problem.

Proposed bylaw amendments

I mentioned in my last post that the association's president presented a set of amendments to the association's bylaws following last month's meeting. Here is a synopsis of the proposed changes:

• Section 4.01:
  
  • References to the Declarant have been removed.
  • The requirements for serving on the board are that the candidate be a member of the association and in good standing.
• Section 4.02
  
  • Two directors will be elected in even numbered years, and three directors will be elected in odd numbered years. All will serve two year terms (with the exception of directors elected in the first year after this amendment's adoption).
  • Terms limits are explicitly enjoined.
• Section 4.03
  
  • The need for and job of a Nominating Committee is removed.
  • Any member in good standing may be nominated by him/herself or anyone else.
• Section 4.04
  
  • References to the Declarant have been removed.
  • The use of cumulative voting is forbidden/removed.
• Section 4.05
  
  • Current rules for removal of a director are removed.
  • The board may, by majority vote, remove a director that it has appointed or declare vacant the office of a director who is of unsound mind, convicted of a felony, absent for three consecutive meetings, or no longer a member of the association. The board may replace this director. Members may replace this director if the board fails to do so.
  • Members may remove a board member by simple majority vote of an established quorum. Members may replace this board member.
  • A director may resign at any time, and that vacancy may be filled by the board. If resignation is to take effect in the future, the resigning director may participate in the appointment of the new director. Members may fill the empty board position if the board fails to do so.