Petition to Remove the LPCA Board
Petition Summary & Background:
The Board’s plan to special assess LPCA owners almost $600,000 was overwhelmingly defeated by Unit owners on July 11, 2019 with a vote of “DO NOTHING.” Despite a proper motion to remove the entire Board by authority of the LPCA Declarations, Section 2.5 Removal of Board, the LPCA Board refused to call for a vote and left the premises without adjourning the meeting. In the Board’s absence, Roberta Moreno (Unit 209) called for a vote on the motion for Board removal. The votes were subsequently counted. The motion to remove the Board was overwhelmingly affirmed by owners present. This second rejection vote demonstrates that Unit owners have “no confidence” in the Board and further indicates that the current Board is no longer supported by Unit owners.
To further support and uphold the Unit owners’ vote to remove the Board in its entirety, the following instances of a breach of duty, poor judgement and the overall dissatisfaction with the Board’s decisions are presented:
- The Board of Directors has a legal duty to operate in accordance with the organization's Bylaws. The Board operated outside of its scope of authority and exercised faulty judgement in the following instances:
- LPCA Declarations, Section 4.11 Association Agreements.
“Any agreement for professional management … must provide for termination by either party without cause and without payment of a termination fee or penalty upon thirty (30) days’ written notice.”
However, the Board entered into a contract with Sentry Management (“Sentry”) which specifically states there is:
(1) No mechanism for terminating without cause;
(2) A termination fee involved; and
(3) A total termination period of 90 days.
The Board’s action is and continues to be in direct violation of the LPCA Declarations. On a particularly disturbing note, the penalty fee to terminate the Sentry management contract is no less than $10,512.
In addition to the Board operating outside of its scope of authority when contracting with Sentry, the Board also had no authority to amend the previously ratified 2019 budget to include the related increase in management expenditure without informing the Unit owners. Over the 2-year contract period with Sentry, the added expense to the Association will be at least $34,000 and represents money the Association has not budgeted, has not approved and does not have. The Board’s unauthorized signing of the Sentry contract results in a 55% increase in management fees and an overall 11% increase in the 2019 Annual Budget. Along with the defeated plan to special assess owners $600,000, the Board’s action to change management companies, resulting in an 11% increase in its current operating budget, is another example of its fiscal irresponsibility.
2. Pursuant to C.R.S. §38-33.3-205(1)(0) and LPCA Declarations, Section 4.10 Right to Notice and Comment, before the Board amends the Bylaws or adopts or amends Rules and Regulations governing the Common Interest Community ... the Unit Owners have the right to receive notice of the proposed action and the right to comment orally or in writing.”
The Board adopted new Rules and Regulations, effective May 1, 2019, without allowing for any Right to Comment to be made by the Unit owners. Here again, the Board’s action is in direct violation of and contrary to the LPCA governing documents.
The Board seemingly has breached its fiduciary duties owed to the Unit owners.
Colorado Non Profit Act, 7-128-401. General standards of conduct for directors and officers.
3. Duty of good faith, duty of care and duty of loyalty/honesty.
(i) Colorado Common Interest Ownership Act 38-33.3-209.4. (1)(a-f). Public disclosures required. … if the management company changes, the association shall make updated information available within ninety days after the change. Many of the Colorado mandated disclosure requirements in subsections (a-f) still have not been made available to the owners despite a March 1, 2019 Sentry start date and despite several Unit owners repeatedly requesting them. The Board has not exercised reasonable care, loyalty or good faith by failing to direct and properly manage Sentry
(ii) At the July 11, 2019 meeting, certain Board members were publicly asked by Unit owners if they live at Lake Park Condos. The contrary is true: those Board members do not reside at Lake Park Condos.
(iii) LPCA Declarations, Section 8.14 Duty to Repair. Any portion of the Common Interest Community ... which is damaged or destroyed must be repaired or replaced promptly by the Association.
1. To date, the flooring on the first level common area and damage to four owner units on the sixth floor have not been replaced or repaired. The span of time for these unresolved maintenance issues is approximately two years, far from the required “prompt” timeframe mandated by the LPCA governing documents. As a result, the Board has not acted in good faith or loyalty and has not acted with careful duty.
2. Based upon good faith information and belief, a current Board member collects money from the LPCA owned, coin operated washers and dryers. No governing procedural mechanism is currently in place for collecting, validating and depositing these monies. According to the 2019 Annual Budget and factoring the recent 25% increase in cost of use, LPCA laundry income should represent approximately $1041 per month. Referring to supporting documents provided by Sentry, from March 1, 2019 to June 25, 2019, a single deposit in May of $2725 is reflected on the Balance Sheets. Further, no laundry income was reported in March or April and none was reported from June 1 through June 25th. It seems that approximately $3990 of laundry income should have been generated in that time frame. The Board’s lack of careful procedural due diligence and fiscal oversight, plus an obvious lack of accountability is highly disturbing and is dispositive of serious mismanagement by the Board.
3. The Board did not conduct an RFP/bid proposal for the $84,000, 2-year Sentry management contract. Other than Sentry, it seems no other management companies were considered. In addition, the Board has not proffered documentation that any due diligence was performed before contracting with Sentry. In fact, a Board member has expressed the following:
(i) Sentry has failed to execute proper communication with the owners and certain representatives from Sentry have demonstrated rude behavior;
(ii) Sentry has shown themselves to be scarcely any better than CMR was —notwithstanding, they are being paid considerably more money.
To summarize, the Board has repeatedly failed to carry out basic management obligations and on several occasions, has overstepped their governed authority. This is exemplified by the fact that the Board proposed a special assessment plan which would have placed an extreme financial burden on individual Unit owners in order to attain goals that were neither supported by the March 2019 Reserves Study nor by a majority of Unit owners.
Therefore, the Unit owners’ signing this Petition believe it is in the best interests of LPCA to remove the current LPCA Board and to elect a new Board.
A NEW BOARD HAS BEEN IDENTIFIED:
Eight LPCA owners have expressed a keen interest in either serving on the LPCA Board or on a committee to the Board. The owners will elect the new Board.