The three homeowners were frustrated as they peppered the Foothills Community Association board with questions.
By Sept. 25, it had become a ritual in some ways for Rafael deLuna III, David Randolph and Rob Doherty – and others – who had questions and concerns about why the board did, or didn’t, take action on a wide variety of issues.
On Sept. 25, the three men wanted to know why the board spent less than five minutes discussing its $2 million operating budget for the coming year before adopting it. Why board members met behind closed doors for nearly an hour by stating it was for legal consultation when their lawyer didn't arrive until about 38 minutes after the closed-door session began. Why it awarded a company a $30,000 contract to print a quarterly magazine without taking bids.
Their questions continued.
Their frustration mounted.
And after that meeting, they had enough.
Now, Randolph, a 16-year Foothills homeowner, and Doherty, a 22-year homeowner in the community, have launched a petition drive to get a special election on five bylaw reforms before the association holds its annual board election in April.
In October, it looked like a special election wouldn’t be necessary.
Board member Drew Porter had announced creation of a bylaws committee that would be made up of “two or three board members and five to seven” residents.
“A wonderful idea,” said board President Bill Fautsch, who joined the unanimous vote to approve the committee’s creation.
Board member Michael Owen told the audience: “We’re having to change our culture. We have done thing on behalf of the association, on behalf of the homeowners, without doing it by the book. You folks are now saying ‘we want to see it done by the book.’
“It’s taken a little longer than maybe we should have but we’re doing it now. We want to do it correctly. Let’s not doing it us against them. Let’s do it cooperatively.”
Randolph, one of the board’s most vocal critics in recent months, applauded the announcement and was asked to join the committee.
He wanted to avoid a fight and noted, “We can probably save the association $10,000” – the cost of a special election.
But all that good will apparently dissolved last month.
Last Saturday at the Festival of Lights Kick-Off party, Randolph and others were seeking signatures on a petition asking the board to approve the special bylaw election. Randolph declined to say what happened, noting he and the other non-board members had to sign non-disclosure agreements.
Whether the board will okay the special election even if Randolph and Doherty get signatures from 25 percent of the community’s 4,400 homeowners and business owners is uncertain. The seven-member board can legally ignore the petition.
But Randolph is hopeful. “Honorable men will do the honorable thing,” he said.
Reforms needed, critics say
The petition seeks bylaw amendments that would require a written policy on procurement that conforms with state and local law and “adheres to industry ‘best practices’ standards.”
It also seeks a bylaw to implement electronic voting to improve homeowner participation in elections. Some board members said they support electronic voting but that they are only studying it.
The petition also seeks bylaws that would establish an annual review of the HOA’s governing document and limit board members to two consecutive two-year terms.
It also seeks pre-election town halls for board candidates to explain their background and goals and a requirement that candidates disclose whether they actually live in the Foothills and whether they have had any past or current court actions against them.
The board adopted a procurement policy – though deLuna and others call it flawed. The board has not said anything about the town hall or term limits.
The petition drive comes in the wake of a bitter recall election earlier this year against Fautsch, who owns property in the Foothills but lives in Tempe, and board members Mark Moskal and Gary Walker.
Moskal and Walker were appointed by the other five when they to add two seats.The five members never sought input from the community on the move, which they said was necessary to ensure quorums at meetings so it could continue its work in managing the HOA.
Fautsch and the two new members fended off the recall with the help of two developers, Belkorp Holdings and Blandford Homes.
Ballots cast by individual homeowners favored recall by nearly a 4-1 margin.
But only about 700 of the 4,400 property owners voted – making Belkorp and Blandford the deciders in the election.
That’s because Belkorp had 268 ballots – one for each unit it owns at the San Riva Apartments. Blandford had 197 – one for each lot on which it plans to put a house in the new Palma Brisa development.
Both companies threw all their ballots in favor of Fautsch and the two other board members.
The results troubled Randolph, a retired Green Beret and State Department envoy with a long history of foreign service, and Doherty, a computer engineer General Dynamics Mission Systems in Scottsdale.
“I looked into how the recall was done and found out that there were some very peculiar things and I determined it was not conducted on a level playing field,” Randolph later told a group of residents.
The board allowed both companies to cast a single ballot with all the votes to which they were entitled. To do otherwise, the board said, would suppress their rights because whoever would be filling out of hundreds of single ballots could get tired and simply stop filling out ballots.
“That’s exactly the point,” Randolph countered. “If they had to fill out 268 ballots and they got tired at about 130 and said, ‘I’ve had enough of this, I’m not going to do it,’ the election would have gone the other way. I mean. That’s how important this is because that administrative decision, whether it’s right or wrong, could determine the outcome of the recall election.”
From apathy to activisim
Doherty and Randolph readily admit that in the many years they’ve lived in the Foothills, they rarely, if ever, voted in board elections – let alone attended a board meeting.
But Randolph said the board’s unilateral decision to expand with no community input reminded him of the elections in Central American hotspots that the State Department would send him to oversee.
“I thought that was just kind of strange because that’s the way they do things in Nicaragua or Paraguay or someplace like that,” Randolph told residents at a meeting he and Doherty called in October. “That’s just not the way we do things in the U. S. It was legal, but it was just not done right.”
Randolph recalled that as he helped count the recall votes, “I was really startled by the number of people who were voting for the recall.”
For example, the vast majority of individuals who voted cast ballots to oust Fautsch as opposed to fewer than 100 voting to retain him. But once Belkorp and Blandford cast their ballots, Fautsch won retention.
Similar margins were recorded in the votes on the two appointed members, who must run for a full term as Fautsch seeks another term term next April.
Both Doherty and Randolph began attending board meetings and dug deeper into the way it conducted business.
The deeper they dug, they said, the more disturbed they became.
Doherty and Randolph are not the only residents who have expressed their dissatisfaction with the way the Foothills board runs its affairs.
People have complained that the board has been dismissive of some residents’ concerns over board actions.
At times during meetings over the last four months – the board meets at 6 p.m. tonight, Dec. 4 – heated arguments broke out between members of the audience and board members.
In September, Doherty and Randolph asked the board why it had met behind closed doors for legal consultation when its attorney didn't arrive until nearly 40 minutes after the meeting began. Board members said the were discussing a letter they had received from their lawyer and that they were in compliance with the limited number of reasons the law allows for executive sessions.
At other times in the same meetings, however, the board seemed conciliatory.
In October, for example, it announced it would be looking into the purchase of audio-visual equipment so its meetings could be taped and posted on the HOA’s website. Salvo also indicated the board would look into a sound system for the meeting room since residents complained that the noisy air conditioner and the overall acoustics make it difficult to hear what everyone has to say.
Still, arguments such as one in September over the board’s process for spending hundreds of thousands of dollars on things like landscaping and irrigation system repairs underscored a tension between the board and some residents.
For several months prior to the September meeting, Randolph, Doherty and deLuna had pressed for a written procurement process that included requests for proposals, or bids, on goods and services that homeowners could be assured the HOA got the best bang for its bucks.
Without a written procurement policy that requires vendors to compete for the HOA’s business, the three men argued, the system is too open to abuse – although they stressed they were not accusing the board members of any impropriety.
DeLuna is director of the Capital Programs Management Group at Arizona State University. A relative newcomer to Arizona and the Foothills, he had been handling multimillion-dollar purchasing contracts for projects at the University of Pennsylvania since 2012, before ASU hired him earlier this year to do the same kind of work.
Randolph and Doherty also have been involved in making purchases for their respective employers, and believe procurement requires a detailed, written policy.
At the Sept. 25 meeting, the board voted to adopt a procurement policy – sparking immediate criticism by the three men and others over the board’s failure to seek input from the community in its formulation had created what they considered was a flawed document.
Their reaction frustrated Treasurer Sandi Salvo, who noted the policy could be amended at a later time.
“We weren’t developing a policy for procurement. We were just documenting what we do,” Salvo said.
“We told you we had one,” she said. “All we did was document what we had and then we adopted it.”
She referred to the shortcomings deLuna had cited and said, “I want you to know right now that the things you said before that were missing, I made notes. I want you to know that and the fact that this is also amendable, it’s not cast in concrete.”
Salvo said the board put together a written procurement policy quickly was “because there was a sense of urgency because you guys wanted it last month and we said, ‘Okay fine. We’ll put it together. We have it, we know what it is. We’ll just put it on paper and here you have it.’ Now if you’ve got some suggestions to make, then send them in and we’ll take a look.”
“We understand that there are people in the community that have knowledge of this stuff,” she continued. “And if you want them to get involved and you want to send us the information, now you see what we have. We have adopted it so that we can move forward as we use this and I don’t have to hear about the fact that we don’t have one because we do have one.
“All we’re saying is that we work as a board to help manage this community the best way we can and that does not involve all 4,400 homes every time we try to do something. You’re saying we need to go out, we need to go out. We’ll never get anything done. You can’t manage this by being out there with the entire community, everybody sending in stuff – How do you do that?” Salvo said.
DeLuna countered, “How many of you have experience in supply chain or purchasing? I did all of that. My point is, or if you don’t have an expert on board, why don’t you go ahead and reach out and try to get one?”
That provoked board member Drew Porter, who told deLuna, “Look, you’re not the only guy. Okay? But I want to listen to you. I want you to send your ideas in so we can talk about it and incorporate it if it looks like a viable change.
“We asked you to do that when we placed the vote for adoption of this document. We asked you for your input. You guys are creating a situation where they’re damned if they do and they’re damned if we don’t. I have a problem with you defining yourself as the only expert.”
A surprise magazine
Less than an hour after the board adopted its procurement policy, the board surprised residents by announcing it had agreed to pay Valhalla Community Magazines about $3,700 a quarter for the next two years to put together, print and mail to residents a magazine about Foothills and board activities.
Walker said the board decided that even though the HOA has a website for sharing news about HOA happenings, the magazine would enhance communications.
He said Valhalla – which is under contract in other Arizona HOAs to publish similar magazines – handled virtually everything, including selling advertising.
“This is not going to be just an advertising rag,” he added. “It’s going to be a community newsletter. And some of the local businesses we hope are going to choose to advertise there to reach all of our homes.”
DeLuna asked the board if it had sought bids before hiring Valhalla.
“No,” Walker replied, “because we did the research, as I said, and there are not any providers out there in this area that provide this type of services.”
DeLuna countered, “What’s your procurement policy? Does it say that if you do research that you don’t have to prepare an RFP (request for proposals)?”
He never got an answer. Fautsch called the meeting to a close.
The experience left deLuna frustrated.
He spoke the next month at a residents meeting that Randolph and Doherty called to explain their petition drive and announce the creation of their own website, thefoothillsinfo.com, to provide information on the petition drive.
During that meeting, deLuna said the board’s handling of the procurement policy typified the problem.
“I’ve been through a number of these board meetings where people volunteer to work with the board –or however they would like their help. It’s been turned down. It’s been pushed away and I don’t understand it,” deLuna said.
Added Randolph: “Our board has never had a formal procurement policy. They just do whatever they want to do. They say they have some internal underwritten guidelines that they follow but they’ve never been written down.”
He noted how the board spent only a few minutes talking about its $2 million budget for the coming year, which included a 29 percent increase in the HOA’s annual payment to Premier Management Company, which handles day-to-day matters for the board.
That increase took the HOA’s payment from $180,792 a year to $232,392.
All Fautsch said about the budget was that homeowners’ dues would remain unchanged for the fourth consecutive year.
Randolph and Doherty stressed during their own meeting with residents that they saw a lot of good will by some board members, but insisted that things like term limits were still necessary.
Salvo, a Foothills resident for 30 years and a board member for the last 12, told the audience at the same meeting that she hadn’t given thought to the proposal for a two-term limit with a year off before she could run again..
“I enjoy being on board,” she said. “I know a lot of people and I enjoy that outward contact. I’m retired. I have the time to do it. … I love the challenge. I love the community. I think I do a good job. We were on a rocky road starting out when I first got on the board. Now, we’re in very good position.”
But some at that meeting said Salvo missed the point about the reforms they are seeking.
While applauding her for “your willingness to meet with somebody,” one resident noted, “there’s not a willingness of the board to answer hardly any questions that was asked them at the meetings. You’re allowed to get up and speak for three minutes.”
“I guess my point is if you’re so willing to meet with any of us, why won’t the board specifically answer questions if it’s not a legal matter? I’ve been to three and four board meetings where the people stood up and asked the same question and it’s never answered.”