 Aloha. Welcome to Kondo Insider. This week's show is about democracy in a way. It's about proxies and proxy wars. Every time I go to the legislature during the year, I hear all these owners and all the people complaining for the reasons they couldn't get elected and they complained about the proxies. So I've invited my good friend, I promise not to call him out of order during the meeting, but anyway, my good friend Steve Glanstein, professional registered parliamentarian, to kind of review what the current law is, kind of what's going on the legislature and what that all means. And then we want to talk about the future, about voting and how to make it more efficient with new voting devices and another bill before the legislature and the Senate allowing for voting devices. But hi Steve, welcome to the show. Thank you Richard. Any right, proxies. Where did they come from? Where did the proxy originate from in the first place? Well you know they have these two houses in England. One's the House of Lords and the other's House Commons. And the House of Lords, it was real important that they have their ownership interests protected, their lands. So they had proxies in the 14th century in England. And they eventually came into the United States and proxies are an important part of American history when it comes to membership, which is transferable, corporate stock ownership. They're really incompatible with the parliamentary world where if you care enough, show up at the meeting. That's the parliamentary world. However, in the ownership world, you would have somebody represent your interests and that's where the proxies came about. It's interesting to say here in Hawaii, just to put a little footnote on that, you know, I hear all the time at the legislature, owners say, well you know those absentee owners, the ones that live on the mainland or the ones that don't go to the meetings, they're the problem because they don't pay attention to who they give their proxy to. Comments? Yes. We've done a lot in the legislative process. I'm not a legislator, obviously, but we've done a lot to make it very fair as far as the collection of proxies. And people who don't live in an association on site, they still have rights of ownership. If anything, they're using less water if they don't use the unit. So as far as the ownership interest is, their interest may be the same or slightly different than an owner who's living on site, but they still have rights and they've still purchased that unit and its bundle of rights. And to me, I think, I kind of got who and they say that because it's like no respect that they don't think through. They want to give their proxy to and how they want to be represented. And it's like because they're not there, the decisions are making are wrong. So that's called with new legislation to keep them from being able to give a proxy. That's kind of how I look at it. Well, I hear you and it really depends on the group because there's no one size that fits all when it comes to condominiums and proxies, community associations and proxies. You have groups such on Maui where there's a large percentage of owners who are investors and very few owner occupants. Should they be determining the character of that whole association when the real character is very different than one with a large number of owner occupants? So that character is decided pretty much by the majority. Where are the most of the people involved? Are they landlords? They single family residences? What are they doing? So it's a matter of fairness, but that ownership interest still exists and we still have to respect that ownership interest. So let's go through the current law. So if the board wants to solicit proxies, they have to do certain things. Do you remember what they are? Correct. Yes, there's the statute has been written quite carefully. It's gone through several changes over over the decades. But today, if the board wishes to use association funds for the solicitation of proxies, there's a notice requirement. We've got a post notice a certain number of days 21 days before the notice goes out with the proxy form. So they've got to actually post that notice. They get anything within seven days. Someone says, Hey, I want to run for the board. I want to be part of this process. Then they have to send out a statement, black and white text, no pictures, no color, eight and a half by 11. The legislature is very specific about the maximum amount of information that can go out and condominiums. Yeah, actually, I was amended because in the old old days, I remember clearly, they used to say you're allowed 100 words statement. And we'd be getting to an argument with owners whether the middle initial in your name was a word, and whether the phone number was one word or two words, and did the date count and the signature above the signature line count as a word. And they'd be saying, No, that's 102 words. That's only 98 words. And now it's, you get an eight and a half by 11 sheet of paper. Right, it's a lot simpler. Now, in those days, there were a lot of hyphenated words, they rewrote the dictionary with with the proxy statute, because people would hyphenate things to make it one word. Some property management say, if it's over 100 words, it's invalid, we won't send it out. Others would chop off the 101st word. Now, eight and a half by 11, the big education process is no color pictures, no nasty things on it. And it's supposed to relate to why that person wants proxies or to be elected to the board. It doesn't have to be the board. It can be I want proxies to defeat the bylaw amendment or to whatever it may be. It doesn't have to be just I want to run for the board. Yes, that's correct. You know, there's going to be lots of things. So when a proxy goes out today, and association meaning the board solicits proxies by law, they have to give the owners four choices today. Yes, it's a very I call it a pro choice proxy. Very much pro choice. It means that that owner has a choice to give it to anybody they want to give it only for quorum only, which is the equivalent of showing up at the meeting but not being able to vote to give it to the board as an entity. The board decides based on the majority of the directors who are present at the meeting what to do with the with the votes that come out of it, or to give it to the board equally. So depending upon the number of directors who show up, they divide the vote to the proxy value equally. Now remember, proxies a power of attorney, it's not a vote. So that proxy is just giving a power to individuals to the board as a majority of the board equal to the right to vote. So I gave my proxy to you, for example, you went to the meeting. I said, I want you to vote for sue for board. And for some reason you decided after hearing all the evidence, or what was being said, you decided to vote for Charlie. That would be your right because they gave you the power of attorney to make the decision at the meeting. And it wouldn't be a challenge event that you have to go revoke the whole thing is Steve didn't do what I said. Well, normally it's not challengeable. But if you write in the proxy, Steve, you must vote for George, then I have a duty to vote for George. If I don't, then it's a legal issue between you, me, and possibly the association. And I wanted you to vote for Susan, not George. If you wanted Susan, but I thought George was younger and George might be a better candidate. Well, I appreciate that. So the thing I hit the legislature from owners and they say all the time is, before they hold the election, they never announced who's got what proxies? What about that? Well, the statute was amended several years ago, Richard, because what happened is when people found out that they were not getting proxies, some of them would start calling up owners and start saying, why did you give your proxy to somebody else? And they'd start going door to door. So as a result, what happened was they made a change in the statute many years ago to say that information is available after the meeting. And it was basically to protect the owner who just gave a proxy to who they felt was entitled to vote for them and really wanted to be left alone. Again, wanted to be the choice of being left alone. The more typical thing they say is they want to know the board majority, how many proxies the board has. With the same same concept applies. Yeah, it's the same principle. And when I looked at it and thought only applies if you have cumulative voting that a lot of people want to know so they can know how to stack their cumulative votes. If you gave the proxy information, how many the board has or doesn't have, you can start looking at how many you have and start figuring out mathematically your best odds to accomplish what you want. So it's back to me somewhat the secret ballot concept. You know, it shouldn't be announced until after the meeting people give their proxies as private information. And no one's violating a rule. They beat up on the management company to board like it's some secret conspiracy. The reason they don't give it out when to me it's more by statute. Yes. And the management company, especially the large ones, they have policies around as far as releasing that information. And they really have to be very careful not to release it to individuals and to not take sides in any sort of proxy war that might occur. So if I had the proxies and I walk in the day of the meeting with my proxy saying Steve gave me his proxy, here's my proxy on the day of the meeting, what should the management company say? Well, what they have to say is that the stature for the condominiums and the community associations requires that the proxies be turned down to business days prior, not later than 4 30 p.m. So they wouldn't be able to use them for that meeting itself. If the meeting got continued for a week or two, sure, but not for that meeting. And the reason that is that way is because one afternoon several decades ago, somebody showed up with 300 proxies about four o'clock in the afternoon for a 6 p.m. meeting. And what happened was we realized you can't handle it. We had to continue the meeting. It creates a nightmare to try to combine proxies. People have said proxies in prior to the meeting. They send proxies in right before the meeting. And it makes it very difficult to get the ballot squared away. You end up continuing the meeting like we ended up doing. And then people went to the legislature. We went to the legislature and said, give us a deadline that we can work with in 4 30 p.m. Second Business Day seems to have worked really well for small to large associations. I remember meeting you and I went to and I won't name the association, but it's a big Waikiki Association. And we had to quarrel and we had a meeting and it's going along. And this one group decided they didn't like what was going on. So they all stood up and walked out the door and said, you no longer have quarrel. What's your thoughts on that? Well, I haven't had somebody threaten that since Monday morning. So it's not uncommon and it does happen in that in Monday morning case. I asked at the minutes reflect the gentleman's intention to destroy the quarrel by leaving. So that way we had a record and the videographer was taking a video of it at the time. However, he decided to stay. Should somebody leave, you have four options that you can take. Should they leave, you know there's no quarrel, you can continue the meeting to another daytime place and seek to obtain a quarrel. Or you can call people up, you can recess. So you have several steps that you can do. Should somebody go out and deliberately try to destroy the quarrel? Is it feasible because I haven't looked at this for a while, but even though I'm old, my recollection is usually pretty good. Because the quarrel, the proxy says that if in fact your proxy holder doesn't show up, it's used for quarrel only. Is that right? Well, some of them have said that it's a legal question whether they can do that. Because if the owner and the proxy holder don't show up, they then, you have a proxy that's basically a useless piece of paper. Right. So you have to be very careful with the language and make sure the legal guys are okay with that. Because when an owner gives a proxy to an individual, if you turn around and say as an association we're going to use it for quarrel only. Even if it's signed, I don't know if the statute permits that. So that becomes a legal question that could end up having to be resolved within that two-day period prior to the meeting or worst case at the meeting. Yeah, I guess the issue also is you sign your proxy, he shows up. So he's there, now he walks out. It's like you can't revert back. It's not like the quarrel moments if he didn't show up, but he did show up and he walked out. And so he took the proxies. In that case, just so everybody knows, we took a German of the meeting, we had everybody re-sign in and we had a quorum. Yes. And we just had a smaller quorum. Yeah. But we had a quorum. We had a quorum as well, how that ended up. This can get very complicated. Yeah, and when you talk about electronic voting later, it's going to be rather simple to determine if you have a quorum. It only should take about 20 or 30 seconds. As you recall, signing in takes a lot longer. Yeah, let's take one step further. Someone gives me, 20 people give me their proxies. I have 20 proxies. And I know the meeting is tomorrow. And I have a 102-degree fever and I'm going to the hospital. Can I write a piece of paper right here by a sign my proxy to Steve and assign my proxies inside the 48-hour, the two business days? Yeah, if you've turned in a timely file proxy, and it contains the language of Steve gives Richard a proxy with full power substitution, you need the terminology, then Richard could substitute somebody else if he couldn't make it. So someone walked in, let's say my wife, and she had Richard assigned all of his proxies to me, and it had the right language in the proxy, then those proxies would be given to my wife or my friend or whoever it may be if full power of substitution is in the proxy. Correct. We've actually done an added meeting when somebody had to leave. We've actually had it signed off right at the meeting to protect the process. That doesn't fall within the 48-hour business requirement of the original proxy. Right, the original proxy is timely file within at least 48 hours, not 48 hours, 430 pm on the second business day, because if you have Cajillo Day or Cam Day, it could be a little different time frame, or President's Day, things like that. You kind of have to watch that 48 hour. It's really 430 pm, second business day. So, if the secretary has the proxy, but the managing agent doesn't have the proxy, in the applicable time, two business days in advance, does that still count? Does the secretary have to give it to the managing agent? No, the secretary can take it, too. And that creates some issues, because if the secretary is not sure when he or she received it, there's issues like that, it's usually better to get it into the managing agent. They're set up for proxy collection, but yes, it can be turned into the secretary also. So, if in fact, if in the mailbox was the proxy, and they didn't go to the post office until after 430, but it was dated before, without going to the Supreme Court, could they accept that proxy or not accept that proxy? Go back to the Supreme Court, let them decide. Creates an interesting legal issue. If the secretary have custody of the proxy, receive the proxy, at or before 430 pm on two business days. Yeah, because my recollection of business law was the post-smart kind of counted, but, you know, I guess elections are much more complicated. Well, and you know, sometimes that relates to notice rather than the proxy receives. It says received, not post-smart received. Okay, well, we're going to go to break. I have one more question about this when we get back, and then we're going to get into this year's legislature, a couple of bills, and we're going to talk about the future of voting. So, we'll be right back with kind of inside it. We hope you're enjoying our show. Aloha. I'm Wendy Lowe, and I'm coming to you every other Tuesday at 2 o'clock. Live from Think Tech, Hawaii, and on our show, we talk about taking your health back. And what does that mean? It means mind, body, and soul. Anything you can do that makes your body healthier and happier is what we're going to be talking about. Whether it's spiritual health, mental health, fascia health, beautiful smile health, whatever it means, let's take healthy back. Aloha. Hey, Stan, Energyman here on Think Tech, Hawaii, and they won't let me do political commentary, so I'm stuck doing energy stuff, but I really like energy stuff, so I'm going to keep on doing it. So, join me every Friday on Stan Energyman at lunchtime, at noon, on my lunch hour. We're going to talk about everything energy, especially if it begins with the word hydrogen. We're going to definitely be talking about it. We'll talk about how we can make Hawaii cleaner, how we can make the world a better place, just basically save the planet. Even Miss America can't even talk about stuff like that anymore. We got it nailed down here. So, we'll see you on Friday at noon with Stan Energyman. Aloha. We're back at Condo Insider with Steve Glanstein, professional registered parliamentarian. We're talking about proxies and the legality and where they came from, and I want to ask you one more question before we get into the legislature. What are the rights of people to inspect ballots and proxies? When can they do it and do they have that right? Yeah, currently, after the meeting, they have a 30-day right to inspect. They've got to call it make an appointment, et cetera, et cetera, and the proxy is supposed to be kept for 30 days unless there's a request and that will change the date. But that's when they need to do it. And my advice is, if you want to inspect them, get to the management company as soon after the meeting, follow it up in writing, make an appointment, and go in and see them. That's interesting. Before the legislature this year, on another topic, there's a bill to extend that to 90 days. But as you said, from my experience, most management companies keep them a year or longer. If they want to inspect them, send the management company a note saying, I want to inspect these within my 30-day, 90-day right, whatever the legislature does this year, and put them on notice that a proxy is in the voting is not destroyed. But what happens if there's an error in the voting? Well, we've had this happen before where there's an error on inspection. The parliamentary world says you call a special meeting for the purpose of authorizing a recount. Special means got to be held within a quarterly time period, and the members there have got to basically authorize it. If they authorize a recount, you do the recount. If they don't, then you're done. That's how the parliamentary process works. And there's no new voting, it's just a recount of the prior votes. That's correct. Voting was closed, you're recounting what was already turned in. So briefly, like I said, I've been going to the legislature every week listening to hearings. And there's a group that believes that the proxy bill has currently stated that we have four choices should be amended to eliminate the board majority proxy. So you can have the board equal. You just can't have the board majority anymore. And their argument is they can't get elected or they don't ever say it that way because the board majority controls all of the proxies. What's your experience with that? My experience with that is that they need to be careful what they ask for because if they eliminate the board majority then we go back to the way historically it was done when I first got into this practice before they put in board majority. People would just give the proxy to the president and the president of the association would vote on behalf of the board. And that's what would happen. And that's what used to happen until we came up in about 83 or 84 I believe it was with the board majority board equal. So you've got to be careful when you go to the legislature because you may be surprised if you get what you asked for. And so those people who are actually looking for board majority may find that the solution to their problem makes it even more difficult to get elected because it vests the power in one person. And that's what happened historically. People would give proxies to the association president. Well I get a little angry because they certainly make the same arguments I made earlier in the show that the board won't tell us who has the proxies before we vote for obvious secret ballot reasons. They I can't get elected because the board majority I've always said well you know these people you're talking disrespectfully about them people make a decision who they want to give their proxies to and that absentee owner may not know who voted for what because they don't live here but they like the way their association is being run and how it's going and they say well I trust the current board to make that decision and that's just their right. Yeah I mean when people don't trust the current board they don't give them proxies. There are occasional times when I'm in the audience or I'm advising people who are homeowners and they walk in two weeks ago they walked in with 50 and a half percent of a 385 unit condo the board had very little but the owners in the audience had over 50 percent and they removed the entire board. So people know and it's their choice I don't see interfering with their choice to give it to a board as a majority board equal individual owners the only area where there's exceptions is I don't want to see a proxy given to a property manager for the association is a clear conflict or a resident manager for the association but that's really where I'm at my position. And just to summarize I want to make sure we have enough time to talk about the future. Currently before our legislature we have two bills House Bill 347 which has passed out which basically the leaps from the standard proxy choice number three or four the board majority and leaves the other three and that's passed out and it will cross over to the Senate at crossover and then there was Senate Bill 121 which was the identical language that never got a hearing that as I understand it that they don't have it out of committee by tomorrow and of course it's too late to have notice for a hearing that that bill would be dead Senate Bill 121 it would it's going to die tomorrow and that's I've missed something along the way and all these notices I get but with no hearing scheduled I don't see how they can legally pass SB 121 out and it will be left with House Bill 347 and if you out there want to exercise your right send go into the Hawaii legislature set up an account takes two minutes and type in hb347 and say I'm a supporter I'm opposed and read a little note to the legislator they're very moved by this but you know the thing you and I've talked about before is what I'm going to call the large association and the problems and how long it takes to count ballots in a large association complicated by cumulative voting and quorum changes and whatever there's a bill Senate Bill 1288 I believe is the right number yes I got that right talks about allowing electronic voting devices and this is in a way your bill you've been promoting this for last year and as well as this year what's that all about well basically it's to have an electronic device that owners get when they check in and they get a device similar to one of these guys on the table here and they vote and based on the proxies they work the numbers out on on these just hold that up a little device like that and they give their ID to the check-in clerk or something to make sure that they get the device back and the management companies would do this they'd have a communications device like this it's a self-contained system so there's no internet interference anything like that and they basically would vote that way you get your results in a minute or so and I saw it work with over 900 people before and it worked and they had the results in less than a minute right up on the screen so it will change my practice and it will certainly make it a lot easier to determine if there's a quorum to determine who gets elected things like that the question obviously comes up it's going to be security I'm going to call it the hanging chad you know how is the security protected in this would there be an audit trail I mean where someone could go in and look at how the numbers were calculated or added up well Richard in my former life people don't usually know but I did consult and teach security in 24 cities in about two and a half months about 22 years ago and I know a little about security and the security of today's paper is nothing like the security could be with an electronic voting device so they'll have an audit trail they'll be able to say what time somebody voted they have the option of showing who voted we're looking at securing that so that way they can't tell it's key escrow you won't know who voted so we can preserve the secrecy of the ballot and those would be rules that the board would have to say yes on this is not a mandatory process where it's just enabling it should a board decide that they want to use this for these associations that's typically you know for an old 20 30-year condo you can count those ballots faster than electronic voting probably yeah by the time you passed out the device that you'd have the results so with a small condominium it's not much of a problem but when you're dealing with the one I had last night with 485 homes you know that's that's going to take a long long time and this this would have been done in a lot shorter time than the hour and a half that it did take last night would they be able if you had that device and they we've checked in they've registered they've proved there's this audit trail would they be able to handle yes and no motions from the floor yes and no motions election with or without a cumulative voting they'd be able to handle that and this would get rid of a lot of the mistakes that get made when they juggle numbers when they use the manual spreadsheet things like that this this would eliminate all of that process but it's probably true if we had this in place and it was working and all of a sudden I picked up my device and I voted and I wanted to change my mind I'm probably like when I got into city hall once you've submitted your your vote you're done you can't undo your vote these are more flexible than that until you close the voting you can do some changes you can change things so these are these are more flexible this is not a city and county state election this is a little different because they needed to use these for surveys they needed to use it for electronic voting when people could change their mind and what do you think they think it's gonna pass I think this time it's got a better than equal chance of passing I'm hoping that it gets through the house it's been passed by the senate there's very little opposition and the opposition that that I've seen appears to not really understand the principle of it or for that matter that it's not a mandatory process it's one that some some boards may decide not to do others may decide to do it yeah just gives them an option because the thing I've been to these hearings and I haven't heard anybody orally give testimony in opposition there may be a couple of people but there's a couple of people out there that they just oppose everything the industry recommends no matter what it is you know but when you look at the 380,000 people that live in associations in Hawaii you have one or two people saying no it doesn't really rise to the level that gets me all excited to be honest with you oh true and when I looked at the the debate arguments on the other side they really didn't cover didn't show an understanding of the entire process well you know this industry is a fascinating industry I have to say I've enjoyed it for 25 plus years and I want to thank you for being on this show you're one of the leading experts in Hawaii in all of these issues and we appreciate your volunteer time to come down and share this with us and I encourage all of our people watching this show who want to get involved in legislative activities please sign up for the Hawaii legislature express your opinion get involved it's important the legislators want to hear from you and we thank you for being here today and we look forward to see you on Kondo Insider next week Aloha