SLR's Attorney Says My Ballot is A "Poll"

Here is the portion of the 4-page letter response from SLohA attorney: 

111 N. Orange Ave., Suite 2000
P.O. Box 2873
Orlando, Florida 32802-2873
Phone (407) 425-9566
Fax (407) 425-9596
February 10, 2014
William E. Riceman Jr.
Partner
wRiceman@orlandolaw.net


Via email stambaughinc@verizon.net
Board of Directors
S-bag Lake Owners Association, Inc.
c/o Toneesha Shrodr, Executive Administrator
Sxxxxxxxx Ixx, Inc.

RE: Response to Owner Correspondence

Dear Board of Directors and Toneesha,

Per your request, we have reviewed the two letters from Lot Owners that the Board provided to our office. The letters express the Owners' concerns relating to balloting and assessments for internet services. The specific letters are attached for reference purposes. Please find our office's responses to each allegation contained in the letters.

1. Response to the January 20,2014 Letter to SLohA Board of Directors and Sxxxxxxxx Ixx, from James & Jew-D Ath (5099 S-bag Lake Road).

Allegation I: "The complex dual ballot proposal to ratify one of TWO alternate proposed budgets is confusing and is not in accordance with our [Association's] Bylaws, which require a proposed budget (as amended ) to members for ratification."

Response: Article VII, Section 4. of the Bylaws provides:

The Board of Directors sH all adopt a budget each year for the following fiscal year, which sH all contain estimates of the costs of operating and maintaining the corporation, including the following terms:

a. General expenses to be incurred in connection with the operation of the properties owned by the corporation.
b. Capital Expenditures (major replacements, additions, and new facilities).
c. A breakdown showing proposed assessments against each owner for the above purpose.
Copies of the proposed budget and assessments sH all be transmitted to each member on or before December 20, of the year for which the budget is made. If the budget is subsequently amended, before or after the assessments are made, a copy of the amended budget sH all be furnished to each member concerned The proposed budget and any amendments thereto sH all be subject to ratification by members at the annual or a special meeting of members.

The express language of the provisions provides a two step process: (1) that a budget sH all be prepared and adopted by the Board; and (2) the budget sH all be submitted to the membership for ratification.

However, there is no definition as to what ratification includes, and what percentage of the membership is needed to "ratify" the budget. The "ratification" provision was adopted in the 1972 Amendment to the Bylaws, and has remained since (even through the 2003 Amendment). Note the original provisions of Article VII, Section 5, did not require ratification of the membership. There is no reference or defined term of ratification within the 1972 Amendment.

We understand that the Board did propose a budget, and submitted it for review and ratification by the membership. The proposed budget included an increase in assessments to further carry out the responsibilities, maintenance and operation of the Association in its current state.

However, the Board also submitted an alternative proposed budget to the membership, which included an increase in assessments (as provided above), and also an escalation in assessments to cover the proposed costs incurred by the Association to provide internet service throughout the Association. (As is explained in further detail below, pursuant to Chapter 720, Florida Statutes, such internet service costs can be included within the operating costs of the Association and can be assessed to all members on a per-parcel basis.)

Section 720.303(6), Florida Statutes, provides that the Association sH all prepare an annual budget that sets out the annual operating expenses.

Thus, pursuant to a strict reading of both Article VII, Section 4, of the Bylaws and Section 720.303(6), Florida Statutes, the Board did not adopt one budget and submit it to the membership for ratification. Instead, the Board proposed two alternative budgets and essentially took a poll of the membership.

In order to remedy this matter and strictly comply with the Association's governing documents, and Florida Statutes, the Board should adopt a budget, and then submit the final budget for ratification by the membership. (The Board can take into consideration the polling results received from the membership in determining which budget to adopt.) 

Ft. Lauderdale (954) 670-1979 • Kissimmee (321) 402-0144 • Cocoa (866) 425-9566
Website: www.orlandolaw.net • Email: firm@orlandolaw.net

Here is the remainder of the 4 page letter from SLohA attorney.  There has been much written already about this issue and the attorney has not given it the depth that will need to be paid in the future.  This is sort of the "Tell 'em this and they'll probably give up and go away" response.  I'll post some more comments later when owners' attorneys have weighed in.

Allegation 2: "The content of the budget ratification item unlawfully purposes to levy an assessment upon parcels which is not in accordance with the powers and duty of the board, i.e., to propose a budget necessary to manage expenses in connection 'with the operation of the properties OWNED by the Corporation."

Response: As we provided to the Board in our January 30, 2014 letter, Section 720.309, Florida Statutes, specifically authorizes an Association to contract and provide for interne service, pursuant to a bulk service contract, as such costs can be deemed an operating expense of the Association to be allocated on a per-parcel basis. Specifically:

(2) If the governing documents provide for the cost of communications services as defined in s. 202.11, information services or Internet services obtained pursuant to a bulk contract sH all be deemed an operating expense of the association. If the governing documents do not provide for such services, the board may contract for the services, and the cost sH all be deemed an operating expense of the association but must be allocated on a per-parcel basis rather than a percentage basis notwithstanding that the governing documents provide for other than an equal sharing of operating expenses. Any contract entered into before July 1, 2011, in which the cost of the service is not equally divided among all parcel owners may be changed by a majority of the voting interests present at a regular or special meeting of the association in order to allocate the cost equally among all parcels.

Section 720.309(2), Florida Statutes (emphasis added).

Therefore, the Association does have the legal authority to contract and provide for Internet service, and any such costs will be a part of the Association's operating expenses, which sH all be paid through the funds collected by member assessments.

Allegation 3: "SLohA proposes to unlawfully distribute to one of its members, revenue received from other members, contrary to Articles of Incorporation, Article X and FS617."

Response: Our office in unaware of any information provided to the Association's members purporting to distribute revenues received to a certain member of the Association. However, we can only assume that the Homeowner is referring to the hypothetical scenario of an Association member's business providing service to the Association and the member's business receiving payment for such services. While Section 617.0505, Florida Statutes, does prohibit a corporation from making distributions to its members, directors or officers, Section 617.0505(2), Florida Statutes, expressly authorizes a corporation to pay compensation in a reasonable amount to its members for services rendered. See Section 617.0505(2), Florida Statutes, copy attached. (Article X of the Association's Articles of Incorporation mirrors this statutory provision and the same analysis applies.)

Further, while payment for services to a member may be authorized, the scenario as contemplated is not of the like, as payment would not be to the individual member, but rather a corporation providing service to the Association.

Allegation 4: Confusion of the ballot in that there is no option for the "owners who FAVOR the internet part and wish to reject the proposed Budget do not have a choice to vote accordingly, thereby corrupting the budget choice and forcing the budget approval on the basis of desire for an interne fee option."

Response: There is no express provision in any of the Association's governing documents which would require the Board of Directors to submit all possible budget scenarios to the membership for vote and ratification. The Board is acting within its powers if desires to only offer two options for vote of the membership versus three or four options.  Interestingly, the Homeowners' argument is in direct conflict with Allegation 1, in which the Homeowners allege that the Board cannot provide more than one option for ratification.

Miscellaneous Allegations: (1.) Absence of underlying authority to amend Declaration and assuming false authority to make changes to Covenants; (2.) Substantive mistakes in the text of previously-disseminated information about the proposed change on voting thresholds (numerical representations false; (3.) Unlawful addition of NEW provisions in the Covenants misrepresented as a change (liens and mortgage foreclosures); (4.) Attempt to 'change' language which serves to impair the contract rights of members regarding commercial activity; (5.) Absence of full text of proposed Rules & Regulations and Covenants on the Ballot itself:

Response: At this time, our office is unable to respond to the aforementioned miscellaneous allegations due to the incoherent nature of the allegations. We have been provided no basis for the "unlawful or inappropriate act of the Association." We can research these allegations if further specific information can be provided of what action (or omission) was taken and what legal authority was breached.

2. Response to the January 28, 2014 Letter to SLohA Board of Directors and Sxxxxxxxx Ixx, from James & Carol Grnt (36 S-bag Trail North)

Allegation 1: The Association did not conduct its corporate business in a lawful manner, as set forth in the governing documents, with regard to a proposed assessments on parcels for internet service.

Response: As set forth above, Section 720.309(2), Florida Statutes, provides the Association with the legal authority to contract and provide for internet service to the Association and assess such costs as part of the Association's operating expenses, to be paid through member assessments. The allegation is misplaced.

Allegation 2: Violation of the Association's Standard Operating Procedures ("SOP"), i.e., Board sH all respond within thirty (30) days of receipt of correspondence.

Response: Our office does not have a copy of the Association's SOP; however, we will need to review the exact protocol for requests for response from the Board. Is the Board required to provide written responsive correspondence to the request? Or, can the Board address the correspondence at a meeting of the Board? Our office has been informed that the Board did advise the Association membership that the Board's attorneys were reviewing the correspondence. Please provide copies of the Association's SOP for our review if the Board desires our response to this allegation. Or, this issue may be moot pending this response.

Should the Board desire for our office to address the specific homeowners' concerns and respond to the letters that were provided to our office individually, on behalf of the Board, please let us know. Otherwise, this correspondence can serve as a general response to the letters which have been provided to our office for review. We are privileged to continue to represent the Association in this matter. Should the Board desire further correspondence from our office, or to set a telephone conference with regard to this matter, please let us know.

so the way I read this below is that WE have been lied to AGAIN ?

we're lied to more than you know...