 Welcome to Condo Insider. I've said many times in the past that we estimate that 35 to 40 percent of our population lives in some form of an association. This show is all about board members and owners and association living and our challenges and our opportunities and how hopefully we can all get along. Today I have with my guest Steve Glanstein, professional registered parliamentarian. And we're going to talk about an issue that in some ways be one of the number one or two complaints with RICO and that is owners participation in board meetings. And this past legislative session, a bill came up called House Bill 832 that is passed and has not yet been signed by the governor so barring any veto, this should become law in the near future. But first I want to again welcome my guest of many years, a good friend of mine, Steve Glanstein. Welcome to the show and remind our viewers a little bit about your background. Sure Richard, thanks for having me on the show. I'm what's called a professional registered parliamentarian. I've gone through several sets of credentialing exams and I practice to help make meetings run smoother. I do a lot of business as a professional parliamentarian. I was originally licensed in 1983 by a national association of parliamentarians and I've been doing this ever since. I started out as a hobby turned into a profession and now it's a great retirement job, which I certainly enjoy going to several meetings throughout the year. And I assume that the primary cornerstone to what you do is Robert's Rules of Order, not Richard's Rules of Disorder. Well, we have Robert's Rules, but we also have Masons and we have Sturgis and there's several other different parliamentary authorities. But Robert's is by far the most commonly used one and certainly it's one that's mandated in our legislature for community associations and condominium associations. From my experience as a former management company executive, one of the complaints I always used to get was, I want to participate in a board meeting and talk about an owner and of course boards are elected to run the association. And it was my understanding that the current law allowed owners to participate. So what's the beef? Why did HB832 come about? Well, it's funny you say what's the beef? 832 had a companion bill, Senate Bill 627 and they came about because of a perception from several owners and complaints that boards were not allowing them to participate. Now the existing statute does not provide an absolute right to participate. It provides participation but the board can limit the participation if they wish. And the problem of course is that you had some boards on one extreme had no participation at all by owners and then you had the other extreme where they allowed owners to hijack the meeting. Essentially the board could not even conduct business in some cases they actually had to adjourn. So from these two extremes we needed to fashion some form of statute that would allow for a reasonable amount of participation by owners but also recognize at the end of the day those board members are responsible for conducting the business. Well, you like me in different ways have probably been to hundreds of thousands of board meetings that are like, do you think this is a good bill? Yeah, I do. I've got to thank the Senator Baker and Representative Takumi they really helped with this and they were able to work with us and we actually fashioned together some compromise legislation that would be very successful I hope in order to allow boards to one conduct their business and two don't disenfranchise owners from being valid information to the board. And kind of this so our viewers understand where this came from. Where did this bill originate from by the industry, by an individual? Where did it kind of begin from? It actually originated by individuals or individuals who went to the legislature they were complaining there was a group of them constantly complaining and then they held some hearings and the original extreme was to basically say that there was no way that a board could eliminate participation and then they backed off and several of us worked together over a three day weekend and came up with some compromise legislation that has come forth to the bill that you see today. I think it's important to recognize that a consumer advocate out there, a good friend of mine Tim, was really the catalyst behind this bill and what he did was come to the industry meaning CAI's and LAC committee as well as the White Council Community Association and they asked for our help so we all worked collaboratively together to put meaningful legislation together. And oftentimes these bills kind of come out of nowhere and they're properly thought through so I think this is a perfect example of individuals working with the industry to make meaningful legislation. And Tim was very helpful. Tim started out, he was literally shut down. That means he couldn't participate at all. And he came and he had a lot of passion and working with him it was great because we actually managed to fashion something that I think will do very good for our associations for our boards and provide them with an opportunity to have reasonable participation. Without hijacking the meeting and without being very dictatorial about it they will be able to establish reasonable rules and let owners know what those rules are. I think it's important to emphasize what you said earlier. The board meeting is a business meeting where you have elected representatives there to conduct business. And certainly they have a right to a life you know and so when you go to these meetings they have an agenda and they want to get through their business and certainly owners have a right to participate and make some comments. But at the end of the day the board needs to be able to conduct its business and be able to make decisions. So there has to be some reasonable rules on participation to make sure that the business can get done and that's how I look at it anyway. Definitely. If you have a board of seven people and 35 owners try to get a budget done in an hour they have to make rules, they have to fashion some sort of policy. So that way they can get the information from owners as well as get the budget done especially when you're dealing with deadlines and maintenance fee increases, things like that. So the board does need to have some way that they can articulate a reasonable set of rules and stick to them. And this bill basically allows them to do that but at the same time it gives owners a right to participate, make comments, make suggestions, provide some information or writing if necessary. So that they feel a part of the process since in the end they live there and they have to pay the maintenance fees and live with the results of the board decisions. So it's kind of a balancing act the way I look at it, kind of balancing owners' rights and the boards need to make business decisions. Sure and it's important to remember that it's not just the owners participating who have to live with the decisions. Those board members don't get a discount on their management fees. They have to pay those fees too. And at the end of the day they're the ones who are charged with the responsibility of managing that property. So they've got to be very careful that they stay online and follow the statutes, follow their documents in doing that. In recognizing the end the bill has not been signed into law, has not become law yet. But my personal bet is that this doesn't rise to the level of veto by the governor. But we have to say in discussing this for our viewers that it's not yet law. Let's assume for a discussion it's going to become law. And to me there are four specific parts of HB 832 which affect association plus a minor technical correction on executive sessions, which I'll include in one of those four parts. So let's talk about part one is it basically says boards have to establish meeting rules that allow participation of owners. Tell us about that, what that means to you and how that comes about, what it means to you in practice. Well the participation has got to be available for any debatable motion for discussion, deliberation. So they have to, if they want to have ownership limited, I mean some boards don't even have a limit. Some boards they don't have any rules, owners can come, they can participate, there's no restriction. This won't affect them. They have owners there, they're very lucky to have them. When I talk with other property managers it's very common that boards are all alone with their property manager and their general manager. Most boards don't even have a large ownership presence. So many boards won't be affected by it. However, boards that do want to have some sort of limitation on participation have to recognize that owners have a right now to participate on any deliberation or discussion. And if the board wishes to limit them, limit that discussion or that participation, they need to take certain steps. But they do have to establish meeting rules, board meeting rules, right, in writing, correct? Right, and the statute does propose for two ways to do that. One is that the first regular meeting following the election, the board can adopt meeting rules and then they have to send them out to the owners or notify the owners. It doesn't say how, but notify the owners. The second is if they change them at a special meeting or any other meeting, they have to let the owners know. And that's basically what the board has to do to have the meeting rules implemented. Could the board establish a standing rule until otherwise change? That means that as the next year election, the meetings will just continue or do they have to redo it every year? Well, the statute doesn't address that issue. And I'm sure that it's going to become dependent upon which lawyer they have. Okay, so the board has to establish meeting rules to allow owner participation. So let me just share a philosophy I have about that because I've always believed that owners have a right to participate. Recognizing, boards may need to set some limits so they can get their business done. So I've always recommended, I want you to give me your thoughts about my recommendation. And I've always used the example of painting the building blue or pink. So the board says, okay, the next item on the agenda is the discussion about painting the building blue or pink. Our rules are as follows. The board discusses the matter first. Before we take any vote, we're going to open the floor to the owners for comments or discussion, and then we'll take the vote. How does that concept strike you? Well, that works with some boards. Some boards want to hear from the owners before the directors discuss it. That way they can get the owner's information first. So it really depends upon the board. We don't look to limit that. The board can establish their own style and certainly that's not a parliamentary issue. That's more of an organizational management issue. So when they adopt these rules, they might want to consider having flexibility that they can have the participation either before the board members speak or afterwards or even interspersed as in the case of something that really does require a back and forth among board members and owners. So let's take, I was recently a speaker at the Hawaii Council of Community Association seminar on the most recent laws that were passed but not yet signed by the governor. And the issue came up. An owner sent me a note and I didn't get a chance to answer at the meeting, but I want to get your answer. He basically said we allow owners to speak at the forum only. We consider that adequate. We're not going to allow them to participate in other discussions and deliberations on the agenda. Is that legal? Well, legal is for lawyers. However, frankly, under the new statute, I don't believe it complies with the statute. Today the board can do that. Today the board can have an owner's concerns. It's usually called an owner's concerns at the beginning of their session and limit it. But with the new statute, if the governor signs it, then that is not being addressed by the statute. What the statute would require is that that particular board, if they want to limit the participation during the actual discussion of agenda items, they're going to need to make rules. Otherwise, owners will have the right to participate. So in essence, they're saying to the owners and to the board, look, we want you to set up rules to allow owners reasonable participation at a board meeting during any discussion or deliberation. They can set reasonable rules. And how does that affect executive session? So I know there's a technical amendment that came out of this law. Maybe you can address that at the same time. Sure. Well, I can address it. Executive session was different. We didn't want this to apply to executive session. So when they go into executive session, it's an entirely different animal. They're not changed. Owners don't have the right to be there unless the board decides to allow them to be there. The vote to go into executive session was changed because the term majority of the quorum has some mathematical inconsistencies. If it's a nine-member board, it's a five is the quorum. A majority of the quorum is three. Well, if three say yes and six say no, how can you force executive session? So we convinced the legislature to use a majority vote, which has been around for hundreds of years. There's a technical correction that in theoretical terms, the way the language was, three of the five, of the nine, could outvote the six. And so this just corrected it that the majority in attendance can vote to go to executive session, not go to executive session. Majority votes easy. Is it more yeses than noes? Also, if there's somebody who's conflicted out and doesn't want to vote, the majority vote means that their vote, their abstention doesn't affect the result. Whereas the majority of quorum and majority present, majority of the entire board, an abstention has a negative effect. So we wanted to preserve the right to... And final question before we go to a break. You said something that I wanted to emphasize. And that was, even though the board goes into executive session, it's my belief that the board can invite an owner or another person to the executive session. If they're deemed for that portion that's appropriate to them, they're not prevented from inviting someone to executive session if they want to. That's correct. But it's got to be the board that decides to do that. So it's entirely up to the board who they want to invite and who they wish to excuse. But the executive session, anybody there, is duty bound to keep that information confidential. So if they're dealing with an owner in a private matter, delinquency or health issue, they have the right to discuss it in private with that owner, that particular portion. And there's nothing wrong with that. I think that's the message I was trying to get out to all of our viewers today that they do do that. Yeah, that's an important message, Richard. And I thank you for bringing that out because once you start putting things into statute, you can really handicap the entire association. So we had to use a lot of care when we looked at executive session. We had to leave the boards with flexibility to manage their executive session as needed for legal, for personnel, for contract matters. Okay, on that note, we're going to take a short one minute break and we have three more parts of HBA32 to discuss. And we'll be right back. Hi, I'm Carol Cox. I'm the new host on Eyes on Hawaii. Make sure you stay in the know on Hawaii. Join us on Tuesdays at 12 noon. We will see you then. Aloha. You're watching Think Tech Hawaii, 25 talk shows by 25 dedicated hosts every week, helping us to explore and understand the issues and events in and affecting our state. Great content for Hawaii from Think Tech. Well, welcome back to Kondo Insider. We're sitting here with Steve Glanceen, professional registered parliamentarian, who I'm surprised you don't have more bruises and gunshot wounds from having handled so many meetings over all these years. But I know from experience that not only are you an expert in martial arts, you're also very good at running meetings. So that's probably a good thing. We talked about HBA32, they have to establish meeting rules. Let's talk about the other three components. Agenda, what's the new rule on agendas? Okay, the agenda's got to be posted. So when they post a notice of meeting, they have to post an agenda that contains the items that they expect to come up at the board meeting. And what the word expect means, it doesn't sound like it's locked in, that things could change. No, it's not really a parliamentary question. It can become a legal question. But when you look at a board's activities over a year, whether they need monthly or quarterly, look at what they reasonably expect to come up at the meeting and put it on the agenda so that way, owners know what's coming up. So the notice that's posted on the property wouldn't just have the date and the time anymore. It would have the expected agenda items. So they have an idea of what's going to be discussed at that meeting. So can a board change that expected agenda that they post, or are they locked into it? Well, at the board meeting, they can still conduct business in accordance with their own meeting rules. For example, if it's a regular meeting, they can still do new business. They can still take care of any other business that may come from a committee, a last-minute committee report, a last-minute contract. They're not precluded from that. The key is what do you expect to come up at that meeting, put it on the agenda. And can you just give us a little parliamentary lesson, a difference between the agenda adopted agenda? Yes. If an agenda has not been formally adopted or set up by special meeting rules or mandated by the bylaws, then that agenda is just for guidance only. It doesn't control what happens. It's just to assist the chair and others. So for example, if a motion comes up relating to a president's report, it can actually come up under the president's report. Other new business that's not on the agenda can come up at a regular board meeting generally. Unless it's an adopted agenda. If an agenda is adopted, then it will restrict the consideration to what's on the agenda unless the board decides otherwise. So if you had an adopted agenda, the board could vote to amend the agenda by board majority if it was necessary. Sure. They could amend it by two-thirds vote later. It's a little higher vote, amending the agenda after they've adopted it. However, it's important to recognize this relates to condominium boards. Make sure our viewers know that government boards are completely different with their governance when it comes to an agenda. And how about a time agenda? How about the differences in that? A time agenda is an interesting way of using an agenda because if you have a time agenda that's adopted, then when that time comes, if there's any business pending, debate stops and then it goes to an immediate vote. And in order to suspend that time agenda, it takes that higher two-thirds vote. So having a time agenda is one way that a majority can actually impose time limits on a minority. And the good news is that most board is very informal. They have an agenda and they roll with it. That's not an adopted agenda and they adjust it as necessary. And it seems to work just fine. But I wanted the viewers to know, technically speaking, that when you get into this and particularly when you have controversies among board members, whether you adopt your agenda and have a time agenda, technically have an impact on all of this, although it usually works out pretty good among themselves, in my opinion. Yeah, well, time agendas usually find their use in conventions that have a lot of work to get done. They're not common with boards, especially small boards. So, so far we've said number one, they have to set meeting rules. Owners can participate. Number two, they have to post the agenda, ask to include the expected items, although that can change. And then number three, they hold a board meeting and they have to issue minutes or draft minutes. How does the law change past the present? Minutes used to have to go out 60 days after is an unapproved draft or unapproved final draft. Now that date has been reduced to 30 days. So they've got to get those minutes out in 30 days. Now 30 days, does this impose any obligation for them to mail it to all the owners? Does that mean they have to be available in 30 days or how do you interpret that? They have to be available. They can mail them, they can email them, but they have to be available to owners. I believe the intent was to not hold those minutes up for months until boards got a chance for improvements to get them out to owners so they can know quickly what their board had decided and what was done, even if it was an unapproved draft. Let's just say they get the draft minutes out and they haven't been to the board meeting yet because usually they're 30, 60 to 90 days at a time. Does that preclude them from amending the draft minutes after they've been issued? No, the draft minutes are not official minutes until they're approved by the board so they can not only approve them at the next board meeting but even years later if they discover a problem they can amend those minutes. What if the board's different years later? Doesn't matter, the board still can do it even though the board has changed. Ideally boards would want to get their minutes approved as part of concluding all of their business before an election. But the reality of it is that that doesn't always happen so the next board meeting they would approve them in. So therefore an annual meeting of all the owners where oftentimes at the meeting you put on the agenda the board has the right to approve these minutes, that when the actual assembly met a year later they could amend the minutes even though the board approved them? Yes, now that's speaking towards the minutes of the assembly where the assembly by meeting ruled has authorized the board to approve the minutes so they don't stay open for a whole year. And yes, I've had it this year at least three times where the assembly has amended minutes even though the board has approved them we found errors a year later and the assembly went right along with correcting them even though they were still approved. I think part of the reason is to have these minutes approved is you have people buying and selling property during the year and you want to be able to give them at least a current set of draft minutes so they have something to look at because it's only every year typically boards or annual meetings can occur with the owner so they're not like a board meeting there every month so it probably makes sense to do it that way. Yeah, owners meeting minutes on the average are two to three pages at most but the 70 meetings I've done this year they're annual meetings are two to three pages they're not very long as far as associations annual meeting minutes. And I know the answer to the question but I want the viewers to hear it in these annual meeting minutes the complaints always are too short do you include discussion and debate in the in the minutes, the annual meeting minutes? The answer, simple answer is no you know if you want your minutes to be involved in plaintiff's lawsuits if you want to see minutes used against you years ago I saw an ADA line in the minutes a few months ago if you want to see that by two years later start putting that in the minutes but if you look at the July 2015 article real estate commission about minutes you'll see minutes are supposed to be official actions and can't emphasize that enough it's not a transcript it's not what everybody had to say So it's just a record of what you decided to do or not to do and that's it That's pretty much it, yes Okay, so the last issue which is probably the most interesting one to me they added this provision in there that it may be a breach of fiduciary duty of the board to fail to go to the required mediation and or non-binding arbitration that's called specified currently in 514b What's that all about? Well that started from something called per se that started from one extreme if you violate anything at all in chapter 514b even the slightest sentence where it come you are per se guaranteed breach of fiduciary duty so it started from there and there was a big uproar then it came back to saying hey we want these people to mediate we want them to arbitrate and I think Richard you have worked with a lot of mediations so you'd probably be able to better comment on what the legislature has specifically done but there is a clause in there regarding a failure to mediate or arbitrate Well I think the short answer of that is that under the original statute we had this facilitated mediation which the mediator kind of could kind of tell you how do you feel, how do you feel let's kumbaya and all get together which didn't have much teeth to it because you had people hard head at two different sides of the issue when the Act 187 was adopted in 2013 I think it was and became actual practice in September of 2015 provided for this new form of a value of mediation where we have a retired judge and the gloves came off and he could say if I was a judge I'd make you pay all the illegal fees almost like a settlement conference judge he has the ability to exert more pressure and tell him what he was thinking as a retired judge if he heard this case in a court of law and the success ratio of that is very very high and the benefit to it is that either side pays half of the first hour of the judge's time or about $175 a person and the balance of that mediation is paid for the real estate education fund which all associations pay into so I think this was a way because a statistic showed that if facilitated mediation anyway 40% of the parties refused to show up for mediation even though the statute says shell but if you go there with a bad attitude probably nothing is going to happen anyway but we decided as an industry if we can get them before a retired judge someone with some teeth and some independence with some respect that the chances now show that those were almost 100% satisfied so that was the whole goal behind it as the force boards it was very easy not to breach your fiduciary duty just go to mediation or arbitration so that's a pretty simple thing to how do you feel about that provision well I've not done a lot of mediation I was involved in evaluating the value of mediation and the egos were just too big so they ended up going from mediation to arbitration then one side lost and then they went to court and then the court completely overturned the arbitration so I've seen it used and I've seen where the original evaluation from the mediate turned out to be correct it just took an extra couple of years and hundreds of thousands of dollars so it looks like it does have a pattern that could be used and you've got to get boards though to come to the table when it comes to mediate sometimes some of my clients have run into problems the owners are the ones they begin to realize that it takes time they have to prepare for mediation and then they start delaying it and then boards run into that but this statute I think if it becomes law which I would hope that it does it's going to provide at least a little push for those boards who may not want to mediate may not want to arbitrate yeah we don't have time we're down to our last minute but I know I've seen it where a board says why should we go to mediation because the fire marshal doesn't want to do it but we don't have a choice either and then I've seen the other side where owners have said I'm being intentionally fine to get me out of the unit because the board doesn't like me which is the other side of the story so I think getting this before a neutral party at a very nominal cost gives us the best chance to eliminate these from problems in the association and so I think as an industry we support the value of mediation but quick summary we expect it to become law essentially number one you have to establish meeting rules and allow owner participation in all deliberations and discussions number two the agenda posted at the property must contain the expected agenda that can be changed number three you need to have your draft minutes out within 30 days although it can be amended later maybe even years later and number four it shall be considered a potential breach of your fiduciary duty if you don't go to a mediation requested or an arbitration requested under the current statute which will play out heavily on your director and officer liability insurance so anyway at that moment I want to thank Steve for being here at the show today you're always a wonderful host and have taught me a lot over the years on parliamentary procedure he's the greatest guy when it comes to that smartest guy I know in that area and I'd like to thank all of you for watching our show today and we look forward to next week but we'll have another co-host Scott Shirley who's going to be talking about reserve studies aloha