ILLEGAL SECRET BOARD MEETING AND VOTE BY THE GANG OF FIVE RAISING VENDOR FIRSTSERVICE RESIDENTIAL’S EMPLOYEES’ SALARIES OUTSIDE THE TERMS OF THE CONTRACT: ISN’T THAT COZY?
This is about an illegal secret Board Meeting and vote that was attended by five Board members on June 20, 2022 in the clubhouse conference room (with one phoning it in). Sue and Arthur did not attend. Director Arthur worked with me on this report.
The other five Board members attended and secretly voted to raise the salaries of FirstService Residential’s personnel/employees in addition to the amounts already provided for in the contract the HOA has with this vendor (FSR) and outside the terms of that contract. This includes the property manager, office staff, and maintenance man.
Arthur voiced his objections to this loudly and clearly on multiple occasions and warned his fellow Board members not to do this. They didn’t listen and once again they ignored him.
Arthur intends to make a motion to rescind this illegal secret vote at the next Board meeting scheduled for July 20, 2022.
Arthur’s letter to his fellow Board members is reprinted below in its entirety; but first, here’s the background.
The HOA has a contract with FirstService Residential, a vendor, that runs through December 31, 2022, and yet these other Board members met privately and purportedly raised the salaries of this vendor’s employees (the office staff and maintenance man) in the middle of the term of the contract, and apparently this isn’t the first time they did so.
This was done notwithstanding the fact that the contract between the HOA and FirstService Residential sets forth the exact remuneration for these positions, and the fact that the HOA does not pay any of these positions directly; the HOA pays the vendor, FSR, only, and these are FSR employees, not HOA employees.
FSR hires, trains, and provides the staffing for the generic positions listed in the contract and this staff can be rotated out by FSR at any time. For example, the maintenance man position has been switched out multiple times over the course of the last few years and other office staff has changed as well (for example, Cicely is out; Darlene is in).
Those employee positions on the contract, however, did not change. Just the human beings occupying those positions were switched out, as they can be at any time by FSR, their employer.
They are specifically not HOA personnel: we don’t pay them directly. And the specific individuals who presently occupy these positions are not named in the contract between the HOA and FSR; only the positions are referenced. And these individuals report to FSR, not to the HOA.
Even their email addresses say their name and then fsresidential.com after the @ sign. Their boss is off site and an employee of FSR with the same email address protocol of fsresidential.com after the @ sign.
They get awards, if any, from FSR, not from the HOA.
All of their paperwork in connection with their employment comes from FSR, not the HOA.
Their federal tax W-9 forms are between them, the IRS, and FSR, not the HOA. FSR pays their employment taxes. On all of their tax forms, FSR is listed, not the HOA.
FSR has the right to fire them; the HOA does not. The HOA can ask for a replacement, but we cannot fire or terminate the individual employees of FSR who work here. Only FSR can terminate them.
Even the contract itself recognizes that these staff positions are not HOA personnel or employees but rather FSR’s personnel and employees. For example, paragraph 3.5 of the contract, dealing with payroll processing, last sentence, states:
“(This subparagraph relates only to those direct employees of the Association, if any, not to employees of FirstService who provide services to the Association under this Contract.”)
Paragraph 10.7 makes this point even clearer. The last sentence states:
“It is agreed by the parties hereto that all persons, personal and staff provided to Association by FirstService pursuant to this Contract will be deemed employees of FirstService and not employees of the Association.”
That paragraph also makes clear that the HOA is not FirstServices’ employer, partner, or principal and that this is not a joint venture or partnership.
These numerous examples are important to set forth because they establish unequivocally the relationships or lack thereof between the various parties and/or entities, and what is established is that the HOA is in privity with the vendor, FSR, only.
The staff is in privity with FSR only. The staff and the HOA are not in privity with each other. There is no legal relationship between them. The only legal relationship established by the contract is that between the HOA and FSR.
So why did five members of the HOA Board secretly and unilaterally raise the salaries for these generic positions listed on the FSR contract?
This contract is available to any member of the HOA who requests it; Arthur and I have had it for about two years, having requested it back in 2020. We can find nowhere in the contract where it provides for periodic salary increases or any salary increases for this vendor’s listed generic staff positions.
Arthur asked director Richard Greene, who is also the HOA treasurer, who was organizing and promoting this meeting, multiple times to show him where in the contract these intended raises are mentioned, and Richard told him that he would explain it all at the meeting.
Arthur refused to attend this illegal meeting and Richard never identified where in the contract these raises are provided for and indeed, upon review of the entire contract, there is no such clause therein that mentions periodic raises during the term of the contract.
Apparently, they went ahead with this, and thereafter, Arthur requested in writing to know what happened at this meeting, what was the vote, what was voted on, and any and all documents in connection with this meeting. He was again ignored.
And this Board meeting doesn’t show up anywhere in any records. All Board meeting packets are generally placed on FSR’s portal for all residents to review after the Board meeting. And there are no Minutes to reflect this meeting and secret vote, also in flagrant violation of the Florida statute.
Upon information and belief, this is not the first time that the Board has raised this vendor’s generic employees’ salaries outside the terms of the contract in force, although it is the first time since Arthur is on the Board that he is aware of it. And yet nowhere can we find any documentation to reflect these past extra-contractual raises or expenditures.
This illegal June 20, 2022 meeting has no such entry on the FSR site either; it’s as if it doesn’t exist, and yet apparently the HOA is now paying more than the contract price for this vendor’s employees/personnel. Why?
How is this additional debt incurred by the HOA, which every member pays, beneficial to the members, especially when it is extra-contractual (outside the terms of an existing contract) and not mentioned anywhere?
There is no documentation showing any amendment to the contract in force, and yet these five Board members voted to pay FSR sums in excess of the contract prices listed on the existing contract for these non-HOA-employees.
Was there an amendment to the existing contract? Who reviewed its language? Who signed it? Who countersigned it? Where is it? Why did these five Board members throw extra money at this vendor? What extra services did we get? None. Was there even negotiation about it with the vendor? No.
And don’t let them snooker you by telling you it’s in the budget. They just backed into the numbers. It’s made up. It appears nowhere. If they followed the contract, then the budget should reflect the contract price through the term of the contract, not these additional sums, whatever they are.
At least four of the Gang of Five have private keys to the property manager’s office (president, vice-president, treasurer, and secretary); that seems cozy.
These are the same four that secretly signed the May 3, 2022 resolution giving Richard access to FSR’s proprietary software based on the representation that he “is a CPA” which clearly he is not licensed in Florida nor active anywhere since January 2012. Again, that seems cozy.
And when exactly was he given access to the software for which this May 3, 2022 resolution memorialized that access? He’s been treasurer for over two years. He’s been on the Board for over two years. And he’s been claiming to be a CPA for over two years. So why was this resolution suddenly done behind closed doors, quietly and secretively, with the cozy people at FSR?
How nice of the Gang of Five (they’re back!) to have given raises after FSR granted him access to their proprietary software and all of them were given keys to the property manager’s private office.
I say all of them because previous to March, Bob was secretary so presumably he had a key then. Did he return it? Or are the only two Board members without keys to the kingdom Arthur and Sue?
So who exactly is costing the community money? The liars will tell you it’s Arthur; in fact, that’s just psychological projection because it’s them, not Arthur. Whatever they claim he is doing is what they are actually doing.
I’ll say this for them: they are very predictable. The next time they falsely accuse Arthur of something (and there will be a next time, because they can’t help themselves; it’s probably in the works already), I am going to research that topic and determine whose fingers are actually in the till or what nefarious things they’re actually doing.
In fact, what they did here is not beneficial to the members; it is beneficial to this vendor’s employees and to the cozy relationship between this vendor’s employees and the Gang of Five.
The HOA already has in effect a contract with this vendor which provides specifically for their employees’ salaries and for which the HOA pays the vendor for those particular positions, not the actual individuals who occupy those positions.
These vendor employees work hard, and this is not a reflection on them. This is simply a matter of the agreement this HOA has with this vendor, FSR, and what that contract says and what it doesn’t say.
This is about conducting yet another illegal Board meeting and incurring HOA debt contrary to the language of the contract that was already negotiated and in effect between the parties and is in effect through the end of 2022.
This is about the lack of maintaining professional boundaries by going outside the clear terms of the existing contract and making a side deal to favor the vendor’s employees over the HOA members and their money.
What, if anything, was the quid pro quo, the consideration, for this increase? What did the HOA get in return? Nothing.
What did the Gang of Five get in return? An even nicer, cozier relationship with the staff, a staff that will perhaps favor them over everyone else, regardless of the Gang of Five’s errant behavior? I’m just asking the question because for the life of me I cannot fathom another rational reason.
Will they meet secretly to raise the salaries of PBB’s employees? Never mind the million-dollar contract with the landscaping company; under this precedent, your money might be going to pay them more than the contract price because it’s easy to be generous with other people’s money.
How about the pool guy’s contract? Will they do a side deal and slip him another few thousand dollars of HOA money above and beyond his contract?
How about the security people at the guard shack? Are they going to funnel more money to them outside of that vendor’s contract?
How about Hotwire’s employees? Is their next secret and illegal Board meeting going to give HOA money to them, too?
What about the lawyers? Are they getting raises, too, above and beyond their retainer agreement? They seem to be getting a lot of work from the HOA and it’s not because of me or Arthur: don’t believe that lie. We have the legal invoices.
I’m just asking because this illegal Board meeting did just that with a vendor contract that is presently in effect through the end of the year that already covers the remuneration for these positions.
And how is this business savvy or even ethical? They changed the terms of the contract to benefit the vendor to the detriment of the people to whom they owe a fiduciary and fiscal responsibility, i.e., the HOA members.
And that’s why they’re talking smack about Arthur and Sue, because those two Board members are the only ones voicing their objections to this unethical behavior.
On July 9, 2022, Arthur sent the Board the following email in response to various emails from certain Board members, each one more insulting and condescending than the next.
It seems as if they were trying to outdo themselves in being insulting and condescending to Arthur.
Pat, in addition to her condescending behavior and writings, also tried to set Sue up by falsely claiming that Sue attended this illegal Board meeting, which Sue most certainly did not. Pat’s manipulative lies are accumulating; is this pathological? Again, I’m just asking because this lying and manipulative behavior pattern is repetitive and persistent with her.
Here is Arthur’s unedited letter to the rest of the Board and the property manager:
July 9, 2022
Directors Bob, Pat, and Richard, All Other Board members, and Deborah, Property Manager:
Bob and Pat, contrary to your false claims, Sue did not attend your secret meeting. It was not a secret meeting to the Board, but it was clearly secretive and kept from the members who were deprived of their statutory right of input before you voted. I warned you all not to do this more than once. As usual, you ignored me and instead hurled insulting emails toward me.
I refused to attend this meeting because it was an illegal meeting as I previously wrote to all of you and as I will again explain below.
I refused to go even though Director/Treasurer Richard tried to manipulate me into attending by stating that he would not give me the information I requested in an email about the intended FSR staff raises unless I attended the meeting in person. I refused to attend this illegal meeting.
Your claim, Bob, that it involved “sensitive information” is completely contrary to what the statute states about the subject matter of this illegal meeting, which was to increase the salaries of non-HOA employees.
This is proven by the red highlighted section of the statute I have copied below which specifically states that such compensation is public and subject to inspection and copying by any HOA member. In fact, before I was on the Board, I had a copy of the FSR contract with the specific amounts each position paid back in 2020 when my wife and I first requested it.
This disclosure is part of the Board’s fiscal and fiduciary responsibilities to the community.
Section 720.303 subsection (5) states in pertinent part:
(5) INSPECTION AND COPYING OF RECORDS.—The official records shall be maintained within the state for at least 7 years and shall be made available to a parcel owner for inspection or photocopying … within 10 business days after receipt by the board or its designee of a written request...
(a) The failure of an association to provide access to the records within 10 business days after receipt of a written request submitted by certified mail, return receipt requested, creates a rebuttable presumption that the association willfully failed to comply with this subsection.
(b) A member who is denied access to official records is entitled to the actual damages or minimum damages for the association’s willful failure to comply with this subsection. The minimum damages are to be $50 per calendar day up to 10 days, the calculation to begin on the 11th business day after receipt of the written request.”
Subsection (4) of Statute 720.303 subsection (5) states the following in pertinent part:
“…Notwithstanding this paragraph, the following records are not accessible to members or parcel owners:
“4. Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records. For purposes of this subparagraph, the term “personnel records” does not include written employment agreements with an association or management company employee or budgetary or financial records that indicate the compensation paid to an association or management company employee.”
I have put in red the part of the statute that states clearly that these individuals’ remuneration as set forth in the contract is public information, and specifically not private or sensitive or confidential. It is subject to disclosure upon demand by any HOA member. And that’s why I said that you gave the attorney the wrong information to go ahead with this secret meeting.
And the attorney should have known better and asked better questions in my opinion because the statute is crystal clear, and he is supposed to be an HOA expert.
This is a very interesting section of the statute because it also clearly makes the distinction between association personnel and management company employees. These employees are not HOA employees or personnel.
The HOA pays FSR (FirstService Residential) for the services of FSR’s employees. FSR issues the paychecks directly to their employees who are the office staff and the maintenance man.
The statute also states that their remuneration is not to be private but is subject to inspection and copying by the members whom the Board represents. This was required to have been at an open board meeting for mandatory residents’ input. I imagine the residents would have gone ballistic if they knew you five did this, and they will because I will tell them.
Bob, referring to me as you did in your email as a “tabloid writer” about this serious issue at a secret board meeting which you and your cronies on the Board illegally participated in is not tabloid writing; it’s called transparency. This is not making a small question large as you, Bob, falsely claimed.
Now, Pat, as to your failure to provide Minutes to this illegal meeting, Section 720.303 (4) (f) states:
“(4) OFFICIAL RECORDS.—The association shall maintain each of the following items, when applicable, which constitute the official records of the association:
…(f) The minutes of all meetings of the board of directors and of the members, which minutes must be retained for at least 7 years.”
I have highlighted in red the word “all” which necessarily includes secret or closed board meetings and illegal board meetings, because the statute does not carve out any exception for non-public board meetings, regardless of the proprietary of having them or not.
So, Pat, where are the Minutes from the June 20, 2022 secret Board meeting that five of you attended (four in the clubhouse and Bob on the telephone)? What was the precise motion that was made? Who seconded it? What was the vote? Where is the Board packet on this matter? Where are the Minutes?
What is the financial cost/debt to the community that you five just illegally voted for?
Furthermore, as I have repeatedly questioned, where in the vendor’s contract does it provide for increases to the salaries of the vendor’s employees? It doesn’t. You just made it up. What you’ve done is you have changed a material term of the contract which is in effect through the end of the year, and you did so unilaterally, and without notice to the community.
This has also now compromised the HOA’s negotiation position moving forward, it has incurred unnecessary HOA debt, and you have just set the bar higher when the contract comes up for renewal because the 2023 increases will now be based on the increased salaries you just illegally approved outside of the contract terms, instead of the 2020-2022 contract amounts.
That is completely fiscally irresponsible. Per Richard’s June 16, 2022 email to me, you increased the salaries of FSR’s employees by 4 percent. Here is what he wrote to me, in pertinent part:
“I met with Jeff to discuss increasing the staff’s hourly wage rates. In the recent past we have increased hourly rate every six months and this year with the inflation rate almost 10%, we feel it would be proper. We are proposing an overall increase of approximately 4%.”
Where is that in the contract? Answer: nowhere.
So if you do this every six months as Richard’s email states, then you’ve increased their salaries over the course of this contract, which runs from January 1, 2020 through December 31, 2022, a total of 4% six times. This is a huge contract (one of the largest the community has with a vendor), so 4% raises six times during the term of the contract is a lot of money.
Richard, your excuse that it’s within the budget is nonsense and a manipulation because the maintenance fees the members pay are increasing every year to accommodate the budget numbers that you as the liaison and your Budget and Audit committees set. You are essentially backing into the numbers that you preemptively set outside of the terms of the contract.
So now you’ve increased their remuneration outside the contract on the financial backs of the members and it’s ultimately reflected in increased quarterly maintenance fees. You did this secretly, without the members’ knowledge, and without their rightful opportunity to object in the strongest terms.
You have a fiscal responsibility to the community which in my opinion the five of you utterly and blatantly breached.
If FSR employees feel they are not being paid enough, that’s between FSR and their employees and those employees can be transferred elsewhere to another community which is larger, richer, and pays more, at which point FSR would be obliged pursuant to the contract to provide replacement workers. It is not our responsibility to keep FSR employees financially happy to the detriment of the HOA members.
What happens if FSR decides to rotate out the property manager or any of FSR’s staff and replace them with different employees of FSR? They have every right to do that because these people are their employees, not the HOA’s. You just gave them, the new workers, a pay raise outside of the parameters of the contract and behind the backs of the HOA members.
So I don’t want to hear and read your comments about how I’m a “tabloid writer” or how I am making a big deal out of a nothing-burger when this financially affects the entire community and when they were deprived of their statutory right to tell you to go pound sand and to wait for the renewal of the contract.
It seems as if you care more about FSR’s employees than you do about the HOA members to whom you owe a fiscal and fiduciary duty.
Finally, Bob, Pat, and Richard, in your communications with Sue and me, both in writing and verbally, you each have been inappropriately condescending. To me, this is a poor attempt to cover up your own lack of understanding and failures to appreciate the importance of knowing and following the rules.
Rather than focusing on inappropriately denigrating your fellow Board members, you should focus on doing your due diligence and brush up on the Florida statutes and our governing documents rather than relying on each other’s cluelessness as I have noticed in your voting patterns.
Not surprisingly, as of press time, none of them responded.
Contrary to Richard’s claim, this has nothing to do with inflation because that’s already built into the negotiation process when the contract was initially negotiated and signed.
Both parties were fully aware of inflation because they built an increase into the additional management fee to FSR (separate from the staff positions) after the term of the contract has run. Here is that clause under the management fee section in the current contract:
“Post term – 4% annual increase if Contract is extended after Initial Term (rounded to nearest dollar).”
That is for FSR’s separate management fee only, not for the staff. And yet the Gang of Five applied that post-term clause to the current term for the staff positions, which is specifically not in the contract, and they’re doing it every six months, not annually.
If any of this were in the contract, it would be automatic and there would be no need for a separate board meeting and vote every six months which apparently they have been secretly doing according to Richard’s email. We could find no Minutes for any of these secret meetings which would reflect these secret payments.
They did this secretly in a closed meeting and then failed to generate any Minutes for their illegal meeting, motion, and vote, thus hiding any paper trail from Directors Arthur and Sue and from the HOA membership at large. They’re spending your money in secret.
The contract under section 12.4 does allow for “bonuses” at the Association’s discretion, but that is different from salary increases and in any even must be done at an open board meeting.
We understand that the staff are given holiday bonuses, but again, there’s no record of this. Where are the Minutes? Why is this done secretly? And this is not the same as bi-annual salary increases which specifically are not part of the contract.
Paragraph 12.11 of the contract states:
“The terms and provisions of this Contract represent the entire agreement between the parties. There will be no change in any of the provisions of the Contract without the prior written approval of the parties hereto.”
Where are all the written agreements between the parties for all of the six-month raises the Board secretly gave these non-HOA employees outside of the contract?
Arthur intends to move to rescind this illegal vote. These are not HOA employees or personnel; they are FSR’s employees/personnel and are covered by the contract in effect between Cascade Lakes Residents’ Association, Inc. and FirstService Residential, the independent vendor for which the contract was supposedly negotiated at arm’s length.
This secret Board meeting was outrageous and illegal. Arthur warned his fellow Board members in writing multiple times not to go forward with this illegal closed Board meeting and of course they ignored him and did it anyway.
They engaged in an illegal closed Board meeting and purportedly raised a vendor’s employees’ salaries in direct breach of the contract between the HOA and the vendor. They unilaterally changed the terms of an enforceable contract.
Don’t let them tell you that the HOA’s lawyer said it was ok; I believe he was not given all of the information necessary to even make an informed opinion about it.
And frankly, his opinions have been contrary to the opinions of other Florida HOA specialist attorneys we have consulted and, on some occasions, have been contrary to the clear language of the statutes which we can all read and understand.
And the statutes Arthur cited in his letter are in plain English and are clear. And let’s not forget the cozy relationship the lawyer has with the president, the vice-president, and the property manager.
And please don’t let director Richard tell you to disregard my opinion or that of others simply because we don’t possess a Florida law license. That’s hogwash. We know how to read statutes and contract language just like he knows how to add two plus two as an inactive CPA in New York (not Florida).
Finally, again I will remind the haters that my report is not the cause of divisiveness in the community: that falls squarely on the shoulders of those people in positions of authority who continue to engage in what I believe to be completely unethical conduct and their elitist friends who support such unethical behavior. Transparency is the best disinfectant.