July 2008

Board President's Report for July

  Board President Roz Berman makes her report to the Community on 24 July 2008. Topics included in include: Click here to view Roz Berman's Report

     The S&D Cafe V law suit.

     Rec. Center #3

     Trumpets

     Common area construction defects

      Other matters

    

Based on some of the agenda items, the July Board meeting came with a lot of anticipatory interest. Would board director Carl Weinstein apologize to the community for his brutish outburst at Kay Frank at last month’s meeting and what action would the Board take on Bob Frank’s request for legal fees incurred for attorney services rendered in responding to actions being taken by the Ombudsman’s office?
While Carl Weinstein’s outburst had offended all, he apparently decided that his behavior did not warrant a general apology. At least Carl can take some solace in knowing that he stands together with his fellow board bully and former president as prime examples of how board members should not behave when addressing or speaking to homeowners.

Attempting to calm board tempers down a notch, president Roz Berman made a welcomed announcement. In the future, board members will no longer interrupt homeowners during their allotted two-minute public comment period.

However if you are at all nervous, stutter a bit, repeat yourself, or waste precious seconds with introductory remarks, are speaking slowly, or, heaven forbid, miscalculate how long you will need, while exceeding the 120 second time constraint, expect to be interrupted and shouted down by our time intolerant Roz Berman. That’s exactly what happened to Norm McCullough as he was attempting to finish what he thought was his precisely timed comments, while also disputing the prominently displayed countdown clock with his raised pocket watch in hand.

A well timed two-minute speech at home can easily become a 132 second speech in the atmosphere of a public meeting. In that unlikely event, it appears that the wrath of our unrelenting board will rain down upon thee. Perhaps our slow delivery and slower thinking homeowners will need to employ the use of faster talking proxy speakers to get their message across.

The agenda item on Bob Frank’s request for payment of certain legal fees provided audience members with a unique experience of seeing the board attempting to deal with an ongoing hot-button issue on the fly. While some members of the board were not shy in displaying their unreceptive views to Frank’s request, it was evident that they lacked pertinent knowledge or interest in the issues, were overwhelmed by the complexity, were unconcerned by the implications, or simply refused to care, instead preferring to summarily dismiss Frank’s claim. However, at the end of a colloquy between the board and Frank, calmer thoughts prevailed with the board deciding to postpone any decision while seeking additional information from the Association’s D&O insurance carrier and their designated attorney, Joe Garin.

To read Bob Frank’s pre-Board meeting letter to the board on this issue, click on this Link: Frank's Letter to the Board. For related references, click on this Link from the Anthem Voice website: http://www.anthemvoice.org/violations.html. For Anthem Voice information on a range of other topics: http://www.anthemvoice.org.     
Construction Defects.

The Association’s construction defects attorney Charles Litt was a no-show at the July board meeting, meaning there was no progress report delivered on common element defects. Roz Berman provided the community with a copy of Litt's summary of his meeting with us in June. To read Litt's summary, click on this Link: Charles Litt's Summary.

Here are some additional thoughts to consider. Let’s assume two things: 1) that virtually all perimeter block walls are located on private, homeowner property, even those perimeter block walls that immediately adjoin common element areas or adjoin Troon-managed golf courses; and 2) the Association is responsible for maintaining certain perimeter walls pursuant to our CC&Rs.  While the CC&Rs are clear about Association responsibility for the “maintenance” of perimeter block walls responsibilities, what is less clear is whether that “maintenance” extends to the actual construction of the block wall. The term “maintenance,” after all, speaks to the periodic upkeep or appearance of an object that is subject to wear or deterioration due to exposure to the elements.

Construction, and necessarily construction defects, on the other hand, is an entirely different matter from the issue of maintenance. While it may be proper for the Association to assume liability for the appearance of a perimeter block wall (or fence) that adjoins the common area, assuming liability for the proper construction of that perimeter block wall is quite another matter. The CC&Rs does not speak to the issue of the Association assuming liability or responsibility for the proper construction of those perimeter block walls. On the contrary, the CC&Rs speak only to the issue of maintenance. In giving meaning to these terms, the law makes a clear and fundamental distinction between what constitutes “maintenance” and what constitutes “construction,” at least under Federal statutes. It is entirely possible that under my scenario, perimeter block wall liability for proper construction, regardless of location, may properly belong to the homeowner on whose property the wall sits rather than on the Association. If that is true, this could throw the entire issue of any alleged perimeter block wall construction defects onto the shoulders of the homeowners and off the shoulders of the Association. Just my thoughts on this matter.

In August of 2007, the SCA View addressed the status of plumbing problems in Sun City Anthem. In that report, I voiced the opinion that ALL Sun City homes were at risk of a plumbing defect problem due to dezincification. This included the approximately 1,900 homes that were originally plumbed by Pulte using WIRSBO’s C-360 brass fittings. These homes were built in Phase 2 and were not built using REHAU (which dezincification problem is currently being addressed by Pulte in 2,142 Sun City Anthem homes).

Sun City Anthem homes with defective WIRSBO fittings are located in the villages of Shadow Canyon, Desert Sky, and portions of Black Mountain and should have a “WIRSBO” sticker on the inside door of the electrical panel in the garage. So, you may be asking, “What’s New?”

So, What’s New?

Apparently it takes time for Pulte to acknowledge there is a plumbing defect problem, in this instance with WIRSBO’s yellow brass fittings. In the case of WIRSBO’s yellow brass fittings, Pulte has taken their first steps. First, Pulte is no longer plumbing using WIRSBO’s C360 yellow brass fittings (35% zinc) in the last of the homes currently under construction. Instead, Pulte has switched to using WIRSBO’s C-314 bronze, low-zinc content fittings (9% zinc) since early this year. That decision will affect the hundred or so homes remaining of the 7,144 homes at final build out of the Community. Those C-314 bronze fittings, announced in February ‘07, first became available here for our use in May 2007.

Sadly, many homeowners could not wait a few months to re-plumb with the newer, low zinc C-314 bronze fittings, or they ignored or dismissed our advice on the need to use the C-314 fittings. Others that we could not reach were left to make a replumbing decision on their own. Those that went ahead and re-plumbed at Pulte’s expense ($7,800) with a contractor using WIRSBO pipe and WIRSBO’s yellow brass fittings will find that their plumbing system will soon be at risk for the second time around from dezincification.

While anything is possible, it is highly unlikely that Pulte will be sympathetic to the plight of these second-time-around homeowners and fund a second repair job. Fortunately, the cost of any such second repair would be mitigated somewhat by the replacement of only those fittings at risk, plus the cost of gaining access to those fittings, plus drywall, painting and stucco repairs all over again.

Secondly, to address homeowner concerns about their widespread use of WIRSBO fittings, on 1 August 2008, Pulte has sent their version of a “Dear John” letter, noting homeowner concerns and advising that they will study the matter further and may be back in touch at a later date “if any next steps are needed.” See Pulte’s letter to homeowners.

While Pulte may have some doubt about whether there will be any next steps, affected homeowners have little doubt and are preparing to respond. Part of that response will likely be based on a report filed on the Anthem Voice website. That report detailed the results from a metallurgical engineer who was tasked to conduct an examination of a WIRSBO fitting taken from the hot water side of a Phase 2 Sun City home. That engineer determined that the fitting exhibited signs of zinc corrosion, otherwise known as dezincification, noting that the zinc content of the fitting was about 35%.  That compares to a zinc content of 9% for C314 bronze.

Do You Have Salice Hinges in Your Cabinet Doors?

In addition to Blum hinges we previously reported as potentially defective and affecting only Phase 1 homes, there is another defective hinge we would like to address.

That is the Salice hinge. If you reside in a Phase 2 home and have a Salice hinge, please let me know and I'll publish information on how to obtain needed replacement hinges at no cost. Also, in transitioning from Phase 1 to Phase 2 homes, some Phase 1 homes constructed in 2003 contain Salice hinges. Salice hinges are unique. As shown in the picture, it has an anvil like protrusion or tab that as the hinge closes that anvil presses down on a spring, which when closed secures the hinge and keeps the door in a closed position. Also the word “SALICE” is stamped just above that little protrusion. Salice has acknowledged that due to their past use of some metal that was bad, that anvil like protrusion will snap off, leaving the hinge inoperative.

We have no negative information concerning the status of Grass hinges and presume that Grass hinges are OK and without a defect.

Trumpets.

The Trumpets problem poses a number of interesting issues, some of which are wrapped up in the board's response to the Briggs letter to Boulevard. Briggs' letter may be viewed here: Briggs Letter to Boulevard

Issue 1. Looking Behind the Briggs’ Letter.

The John Briggs letter to Boulevard. Of some significance is the issue raised by our now former resident, John Briggs, who has decided the grass in indeed greener back on his ranch in California. He noted a number of potential hurdles that our Board will need to overcome before they can let a contract (lease) for the operation of Trumpets. The central issue is whether state law mandates some level of homeowner approval before the board can enter into what ordinary folks will recognize as a long-term lease. While John appears to have the law on his side, our board has what appears to be but one rotting wooden leg to stand on. I’ll get back to this issue momentarily.

A Matter of Trust. Say you want to enter into a lease for restaurant operations, but hidden from view in the board’s negotiating closet of potential issues is a an unwelcome surprise, some might say a bombshell, that could adversely affect negotiations. In fact, that surprise, if it should become known well after the commencement of negotiations, has the potential of threatening the success of any potential deal. That would leave Sun City without a lease option or a restaurant operator. So under those circumstances, what should the board do? They have two options: 1) the board can fully disclose and deal with the matter up front, as some might reasonably expect; or 2) the board can remain tight lipped, hoping the issue of the unwelcome surprise will not arise. In so doing, however, the board is gambling and risking that all of their efforts to secure a restaurant operator will be for naught.  It would seem that our board decided to gamble that the Briggs issue would not arise and lost.

Would that late disclosure of a potential problem engender a feeling of mutual trust? Say, for example, you are a potential lessee for Trumpets and were confronted by this surprise late in the process, how might that new and troubling knowledge affect your trust in the people you are dealing with? I think the answer is obvious. 

So, Did the Board Gamble? Even more interesting is whether the board actually gambled on the so called surprise issue? Said another way, did the board know in advance that the position taken by Briggs was actually correct and the only option available when subsequently confronted with the Briggs’ problem was to bluff their way around the issue. That might be accomplished by asking John Leach to write a letter saying the board has the authority to enter into a lease, thereby avoiding altogether the “conveyance” issue and NRS 116.3112 implied by Briggs in his letter.

On the other hand, say the board seriously believed there was nothing to the issue that Briggs subsequently raised. What might the board have done in that instance? The board could merely ignore Briggs in the belief there was no issue, unless and until the surprise issue was raised. In this scenario, the board would be potentially vulnerable to a charge of breaching their fiduciary duty in the event negotiations fell apart for their failure to properly handle the Briggs issue.

However, for board members to “believe” there was no potential problem with an issue so legally challenging while having serious ramifications, it would have been imperative for them to seek and obtain the advice of competent legal counsel, preferrably in writing.

Was Legal Counsel Sought? Did the board seek legal counsel and if so, what was that advice? One must note that in reponse to the failed negotiations, Roz Berman already provided the community with a report and copies of certain documents relating to the lease issue, but did not include a copy of Leach’s written advice to the board on this critical issue. If such advice exists, why was it omitted? Also noted is the fact that Berman’s earlier email blast on 5 June to issues being circulated in the community concerning the restaurant lease matter did not incorporate any reference to a copy of Leach’s response on the Association’s website. Why? The obvious reason is that there is no such posting on the Association's website.

If the Association’s legal counsel actually rendered an opinion on this matter, are we not entitled to know what that opinion says and not what Roz Berman tells us it says?

Back to that Briggs Letter.  The underlying issue raised by Briggs rests on the definition of the term “conveyance” or “convey” as those terms are used by the legislature in crafting the laws that govern common interest communities, more specifically at NRS 116.3112. If Briggs’ understanding of the law is correct, namely that the term “conveyance” incorporates the term “lease” as but one type of legal instrument that conveys property rights from one person or entity to another, the Association may indeed have a leasing problem and hurdle to overcome if it wants to enter into a lease for restaurant operations.

While it is true that the term “conveyance” may refer to the transfer of property, i.e., ownership or title, the scope of its meaning under law is not limited to just the transfer of property as some folks believe. Conveyance is also defined to mean the transfer of a property right from one person to another. And, according to Black’s Law Dictionary, a lease is “a contract by which a rightful possessor of real property conveys the right to use and occupy that property in exchange for consideration, usually rent.”

Briggs’ position, if sustained, would mandate a numbers count of all Sun City homeowner units to determine whether or not they approve of a proposed lease of the type being considered by the board. While not impossible to achieve, that obstacle is one of securing required homeowner approval prior to entering into a lease with any prospective restaurant operator, a requirement that appears to be mandated by the language at NRS 116.3112, whether that be a simple majority or potentially a larger majority that may be required by our own CC&Rs.

On President Roz Berman.  Has president Roz Berman been forthright and told us everything we should know on this matter of utmost community interest and concern?

That, of course, would be “Chef” Michael Dixon. Faced with an idle restaurant, alleged former restaurateur Mike Dixon proposed to open the doors and begin serving food and drinks. This would be an interim remedy only until the board finalized their options. Mike said he envisaged a minimal staff of at most three employees on RMI’s payroll while providing a limited menu (drinks and sandwiches). He said he understood the City would be receptive to issuing us an operating license as a private club (members only) and based on our nonprofit status. Depending on the community’s reception, Mike said the menu and staff could be increased based on need.

It’s unknown whether Mr. Dixon is aware that the Association actually ran the restaurant prior to the lease with S&D Café V, LLC. During the height of that period, I understand we were incurring an operating loss of around $20,000 a month. It was the magnitude of that loss that prompted the then board to seek an operator to lease the restaurant. At that time, we went from a net operating loss of $20,000 a month to a net income of $10,000 a month. How much different would that be if we now decided to run (through RMI), or contracted the management to another, the restaurant?

Some have written to suggest that Dixon has an interest in directing or overseeing Trumpets future operations. If true, that may explain in part what I understand to have been Dixon’s apparent hostile attitude in the Boulevard negotiations.

One has to consider whether Dixon's vision for Trumpets is compatible with what the residents were expecting from our Board.