Our initial impetus to revise the By-Laws was to ask the membership to allow the size of the Board to vary from 5 to 9 members. This request reflects the difficulty we have in finding qualified homeowners to serve on committees or on the Board. For example, only two homeowners responded to the call for nominations we made last fall, with the result that we have only two candidates for Director in this election. We also wanted the freedom to expand the number of Directors should we be so fortunate as to have more than seven candidates (as happened about ten years ago). Additionally, we wanted to change some sections to describe current practice.
Another concern was that in the years since the By-Laws were created, laws and regulations have changed. Statutes “trump” the By-Laws so anyone reading the By-Laws cannot take what is written as accurate, as statutes may have modified what is permitted, sometimes dramatically. Some provisions are no longer relevant. I suggest it would be fair to describe the existing By-Laws as a “mess.”
After discussion, counsel strongly recommended developing Amended and Restated By-Laws to replace our current By-Laws rather than attempting individual amendments. Too many changes were needed and they were too intertwined.
You can read the full text of the proposed Amended and Restated By-Laws in Exhibit A included in the Annual Membership Meeting mailing and on the website. We have also made a red-lined comparison of the current and proposed By-Laws, although we think it not too useful because the number of minor changes and re-ordering of text obscures rather than reveals the important changes. Click on the link below to read these files:
- Proposed Amended and Restated By-Laws (Exhibit A in Annual Meeting Packet)
- Red-line comparison between current and proposed By-Laws.
The following sections describe the changes, separating the important from the less important changes.
The Board requests that you approve the Amended and Restated By-Laws in the February 2016 election.
Key Amendments
The most important amendment to the By-Laws is to allow the size of the Board to vary. This change will offer the Board flexibility to adjust its size to reflect the availability of qualified Board members. In addition, the number of Board meetings per year is changed from 12 to at least 6. This brings the Board meeting schedule into compliance with the By-Laws, as the Board meets only nine times per year. Relaxation of the annual meeting date requirement allows the meeting date to more easily be changed if circumstances require (no change in meeting date has been suggested or is being considered). And finally, the revised Treasurer’s duties better match current practice and are compatible with moving towards a more online accounting process, thus reducing expense and volunteer time needed to manage HOA finances.
The proposed Amended and Restated By-Laws:
- Allow Board to have between 5 and 9 directors. Provide that reducing the size of the Board may not shorten the term of any serving director. Requires terms of office be staggered and allows Board to select which directors shall serve for different length terms to re-establish staggered terms.
- Specifies that regular board meetings are to be held at least 6 times per year rather than 12.
- Require that annual meeting be held in February instead of specifying it always be on the third Monday in February.
- Revise Treasurer’s duties to bring language into line with best practices: checks are written by accountants, then signed by Treasurer. Require annual audit, review, or compilation of financial books.
Housekeeping and Statute Compliance Changes
These changes update the By-Laws to reflect current federal and state statutes, to incorporate previously adopted amendments into the By-Laws cleanly, to remove obsolete material, and to clarify language. These changes do not affect the way the HOA functions.
- Change SMVE legal address to be the address reported to state corporations board and to which notifications of escrow and home sales are sent. (AME, at this address, handles all communications required during closing of a home sale.)
- Removed reference to “Declarant” (original builder) as they are no longer relevant.
- Re-order definitions and improve wording with no change in meaning.
- Require use of absentee ballot rather than proxy, as required by A.R.S. 33-1812.
- Specifies that removal of a director from the board shall be in conformance with A.R.S. 33-1813.
- Requires any foreclosure comply with A.R.S. 33-1807.
- Incorporate amendments approved at 2006 Annual Meeting: meetings can be on holidays and two signatures are required only on checks for $10,000 or more.
- Requires that officers be Members (homeowners).
- Clarifies language regarding special appointments.
- Removes reference to corporate seal (we don’t have one).
- Specifies that Architectural Committee be chaired by a director, as required by A.R.S. 33-1817.
- By-Laws Amendments require a vote of a majority of the Members or 2/3 of the Members voting, as required by statute.
- Clarified Open Meeting language to comply with A.R.S. 33-1804.
- Specifies that copying charges will conform to A.R.S. 33-1805.
- Assessments section removed; past due assessments are handled per A.R.S. 33-1803.
See Exhibit A for the complete By-Laws.