Filling a Vacancy on the Board Issues, Special Meetings vs. Regular Meetings, and Quorum Issues--Green Valley Ranch East Metro District No. 7

This is a situation that I suspect is pretty common to others in Oakwood Homes communities. I will say that although I am sharing my opinion today as a homeowner in this district, I am one of two homeowner directors on the GVRE MD No.7 board. Previously this board was comprised of three Oakwood Homes associates on the board with two vacancies. The Oakwood Home associates are also directors on many other metro district boards that are being developed by Clayton Properties Group, Inc. dba Oakwood Homes. In fact, I've already seen their names in some of these Stories.

Due to the fact that the makeup of the GVRE MD No. 7 board consists of two Oakwood Homes associates and two homeowner directors, the homeowner directors immediately set out to outline a protocol for filling the 5th seat. At our first official metro district meeting we had this on our Agenda. When it came time for this topic to be addressed we were told by district counsel that there is no set procedure for filling a vacancy. It can be as simple as holding a hand vote, us appointing someone with no process, or we could go through an entire submission process. We presented our ideas and wanted to hold a vote on the process for filling the vacancy. Approximately a 10 minute discussion of timeframes and dates and times for the process of filling the vacancy was hashed out. When we attempted to make a motion to approve the process we were then advised by one of the Oakwood Homes directors that this was only a Discussion item and not an Approval item; we could not make a motion to vote on the process. This was frustrating and a bit confounding that we were new directors and neither district counsel nor any of the Oakwood Homes directors advised us upfront that we would not be able to hold a vote on the matter. They allowed us to spend valuable time and resources on this topic and only advised us of the semantic difference when we attempted to make a motion. Chalk it up to our naivete.

In the ensuing month or so, district counsel and two board members worked out the written process for how to fill the board vacancy and what to present at our next board meeting for a vote. The Oakwood directors wanted to use the longest possible timeframe and the homeowner directors wanted to use a much more expedient timeframe so we could have the board completely filled before the budget approval process. When it came time for a vote at our board meeting it was dead-locked two to two. Eventually both sides compromised for a timeframe in the middle. In the interim time before our next meeting on October 16, 2023, the vacancy candidate process ensued. On the last day for candidates to self-nominate for the vacancy another Oakwood Homes associate self-nominated for the position by virtue of holding a contract for purchase of 1/5 of a Directors Parcel. This made four self-nominated candidates for the one vacancy on the GVRE MD No. 7 board. Three homeowner candidates who live in the district and one Oakwood Homes associate who does not reside in the district but who serves on several other metro district boards in Oakwood Homes communities. The GVRE MD No. 7 homeowner directors requested to see this contract for purchase as proof of eligibility to serve on the board. Hold this thought--

Fast forward to our next educational moment--the Special meeting vs. Regular meeting issue. As the October date approached and we were sent Notices of Study Sessions for our district for the upcoming budget approval process, the homeowner directors inquired as to why we hadn't received a director packet or agenda for our October GVREMD No. 7 board meeting. We were then advised there was no Regular meeting scheduled. We did not know that the monthly dates discussed for meetings were not voted on and scheduled. They were only discussed. Apparently, prior to our election to the board, when the board was comprised of all Oakwood Homes associates, all of our metro district board meetings were set as Special meetings with only the December meeting scheduled as a Regular meeting for the purpose of approving the next year's budget. When we requested a Special meeting be set for the same October 16 date of the Study Session because we wanted discussion to fill the vacancy on the board among other items. We were advised that the Oakwood Homes associate director who is also the President of our metro district board did not see a need for the meeting. The other Oakwood Homes associate director never responded to the request in any way at all.

This began our education regarding a Quorum to even call a board meeting for GVRE MD No. 7. Since our board is comprised of two homeowner directors and two Oakwood Homes associate directors we were unable to agree about even holding a meeting. District counsel advised she could not provide direction. In the end the board meeting was held with the two homeowner directors and community members as well as a representative of District Counsel's office, CLA, etc.; however, the meeting could not be called to order or any votes held on anything. Neither Oakwood Homes associates directors of the board attended. The community was advised of the status of filling the board vacancy and of the number of candidates and that there were three homeowner candidates and one Oakwood Homes candidate. Updates were also provided regarded community manager reporting, and other issues of interest to the community.

At the Regular meeting of GVRE MD No. 7 on December 5, 2023, all four directors went into Executive Session with District Counsel for legal advice regarding the filling of the board vacancy and eligibility to be a candidate. After reconvening the board meeting, the two homeowner directors made a motion for election of the homeowner candidate (who lives in the district) to fill the vacancy. I'm sure you can guess how this went down. The Oakwood Homes associate directors made a motion for election of their Oakwood Homes associate candidate. The vote was dead-locked. Discussion among board directors ensued repeatedly. Pointed questions were asked by homeowner board directors. Non-answers to many questions were given by Oakwood Homes associates directors. There were several motions made for the vote on the homeowner candidate. All dead-locked. At one point the President of the board attempted to adjourn the meeting and pick up his belongings and leave but the homeowner directors refused to vote for adjournment. What happened in this meeting that ended 2 1/2 hours after its scheduled end? Dead-lock 2-2. To date we have no 5th director on the GVRE MD No. 7 board. The residents of the community we represent were witness to this meeting and well-aware of the dynamic and are not happy. In spite of three well-qualified, interested, experienced homeowner candidates we have a board that is two homeowner district board directors and two Oakwood Homes associate district board directors. What a great use of the thousands of dollars it costs to hold each of these meetings that are paid by developer advances from bond funds. But that is a whole other issue.

I understand (somewhat) the reasons that metro districts may have a place in the very beginning of development for economic reasons for cities; however, the original intention has now morphed into a fiscally irresponsible and non-constructive situation for future homeowners in these communities. By the time homeowners understand the implications of the past actions by developers the train has not only left the station--it is on the other side of the country. This is where we need this Task Force to create a recommendation to legislators for more legislated protections of homeowners in metro district communities for oversight and transparency and intervention over developers doing whatever they please before homeowners even become a part of it. Rather than a cohesive and team approach to transferring responsibility from the developers to the community over time, the developer directors on the board take advantage of homeowner directors who accomplish getting on these boards and attempting to serve their communities in this capacity. The developers plan and premeditatedly thwart the wishes of the communities they develop. As a homeowner or a board member if you don't know the questions to ask or the specific right way to ask the questions the information is not offered to you.

To state the obvious, it almost seems like the developers are only interested in saddling our communities in bond debt and subordinate bond debt and the huge sums of interest that is generated. Those bonds are bought up by LLCs and then the developers spend the rest of their time until they are built out protecting that debt and the interest it creates. This is not an occasional occurrence by developers; it is a formula and is being done all over this state to many of your constituents. Please address this in your report to our legislature. Feel free to contact me if you need more information. Thank you.