open vs closed meetings (IL): update re "special assessments when reserve fund is insufficient"

Hi,

UPDATE: my post dated 7/31/10, Special assessments when reserve fund is insufficient.

I had posted this asking for opinions/interpretations of the IL Condo Act requirements for a special assessment (in my case, this is being considered to pay for new roofs as the reserve fund is insufficient).

As I had mentioned, at the next Board meeting (8/11/10) there will be a report provided by a roofing consultant on the condition of our roofs and their recommendations. I was planning to attend the meeting as an interested HO, but have been informed by PM that HOs may not attend this part of the meeting, as it will be a closed session held prior to the start of the regular Board meeting which will be open to the HOs. The PM explained that this was a Board decision although the PM had advised the Board that this closed meeting with a quorum of the Board present would be in conflict with the IL Condo Act and our governing documents.

The Board President confirmed this and told me that a meeting will be held for the HOs later when they propose the special assessment for the roof replacement project.

I am disappointed to say the least because the Board does not share information with the HOs, and does not fund the reserve fund sufficiently. IMO, the sooner the HOs are made aware of this upcoming project, the better.

I have copied the pertinent section of the IL Condo Act below. Our By-Laws state basically the same.

My question: should this meeting, in your opinion based on the IL Condo Act, be open to the HOs?

Thanks for your input,
Bonnie

http://www.ksnlaw.com/E02E82/assets/files/Documents/Illinois%20Condominium%20Property%20Act.pdf

ILLINOIS CONDOMINIUM PROPERTY ACT
Updated through January 1, 2010

“Sec. 18. CONTENTS OF BYLAWS. The bylaws shall provide for at least the following:…

(9) that meetings of the board of managers shall be open to any unit owner, except for the portion of any meeting held

(i) to discuss litigation when an action against or on behalf of the particular association has been filed and is pending in a court or administrative tribunal, or when the board of managers finds that such an action is probable or imminent,
(ii) to consider information regarding appointment, employment or dismissal of an employee, or
(iii) to discuss violations of rules and regulations of the association or a unit owner's unpaid share of common expenses………….”

There should be a motion to go into Executive Session (including subject matter) - At that time, call a Point of Order and ask what criteria that subject matter fits in order for the Board to go into that session.

I meant to say 2007, not 2006.

Follow-up info I came across on the KSN website (IL law firm specializing in HOA law). IMO their advice seems to be contradictory to what is stated in the IL Condo Act. Any opinions?

First, as I included above, the IL Condo Act requires that meetings of the Board be open to the homeowners except in limited circumstances [see Section 18 (9)].

But, I have found that KSN has advised in their “A Handbook for New Directors…” located at:

http://www.ksnlaw.com/E02E82/assets/files/Documents/BoardHandbook2.pdf

on pg. 14 that the Board can hold closed sessions called workshops for issues requiring lengthy discussions:

“Consider that significant issues requiring more lengthy discussions being scheduled for more than one meeting (Villages sometimes have a workshop meeting before they go to a vote at an open meeting). Often an association board can have their workshops in closed session so the lengthy discussion can be disposed of and the vote at an open meeting will require only limited debate.”

KSN also wrote this Daily Herald article:
http://www.ksnlaw.com/?t=11&la=1146&format=xml&p=1672

where it states that Boards can meet in closed sessions where no business is conducted, such as when no votes are taken.

It states:

“Where there is confusion and often controversy is when the Board meets without owners being present. There are three statutory exceptions and one implied condition of when a Board meets in a closed session.
1) No notice to the owners is required;
2) No business can be conducted; i.e. no votes can be taken;
3) No minutes are kept;
4) The Board can discuss:
a) The hiring and firing of contractors and personnel;
b) Disciplinary action against an owner such as fines and delinquencies (and it is implied that a Board can also discipline its own members for violations as a director);
c) Confidential discussions with legal counsel about pending or threatened litigation;
d) Where no business is actually conducted.”

And:

“Sometimes Boards find it necessary to have planning sessions acting as a committee of the whole, such as developing a budget. For condominium associations, once the “proposed” budget is hammered out, then the statute has protections built in for the owners…”

I question their statement about the IL Condo Act having an implied condition of when the Board meets in a closed session.

Any thoughts? Thanks!
Bonnie

Susan – I was not told they are having a workshop.

I was told that the contractor will report out on the condition of the roofs at the Board meeting on 8/11. The contractor told me this when he inspected my building a few weeks ago. The President also told me this. When I recently said to the President I planned to attend the Board meeting to hear the report, I was told that it is closed to the homeowners and would be held prior to the regular meeting. Which prompted my posting this thread.

I am concluding that you apparently agree with the KSN interpretation of the IL Condo Act regarding meetings of the Board. I thank you for your feedback.

My interest is that I am a homeowner (former BOD member & President; on BOD from ~1995/6 at turnover through 2006) who is concerned for the following:

1. The most recent reserve study is flawed, IMO (see #4 below).
2. The reserve fund is under-funded, IMO.
3. The annual assessments have remained basically flat since 2005 (decreased for 2010).
4. The reserve fund was significantly depleted by 2 projects in ~2005 (neither project was anticipated in the previous reserve reports, nor considered as a deduction from the reserve fund in the current reserve report when it provided a funding plan).
5. The Board has not increased the reserve fund to make up for the unanticipated projects nor to prepare for the upcoming roofing project. We have known for several years that the roofs would not likely make it beyond 20 years (buildings are 16 years old). When I was on the Board, we began annual roof inspections and did repairs as needed to extend their life as long as possible.
6. This recent more in-depth roof inspection (than the usual) was requested due to problems with the roofs.

I have been told by the current Board president (and was a previous Director) that s/he believes that special assessments are the way these types of projects (roofs, gutters etc., siding) should be funded (we have had numerous discussions on reserve funds vs special assessments going back to when I was on the Board). I conclude that a majority of the Board members agree as they have voted in annual budgets that do not provide sufficiently to the reserve fund.

Also, this Board does not write requests for proposals. The PM brings proposals to the Board to consider anmd vote on.

For today’s session, the Board will receive the results of the roof inspection, recommendations and ask questions. They will have follow-up sessions (closed) to discuss next steps, based on the results and recommendations. I am less concerned for these types of sessions as I would consider them to be the "workshop" type KSN talks about.

Bonnie

Mary - the exact wording is provided at the top. I think what the IL law states and what you indicate AZ law states are very similar. Do you still think what you stated in your prior response?

Thanks,
Bonnie

Bonnie,

Here is the applicable section from the IL Condo Act:

"Section 18(a)(9) that meetings of the board of managers shall be open to any unit owner, except for the portion of any meeting held (i) to discuss litigation when an action against or on behalf of the particular association has been filed and is pending in a court or administrative tribunal, or when the board of managers finds that such an action is probable or imminent, (ii) to consider information regarding appointment, employment or dismissal of an employee, or (iii) to discuss violations of rules and regulations of the association or a unit owner’s unpaid share of common expenses; . . ."

It appears the state law is worded the same as your bylaws. So, to answer your question about workshops; I would say it depends upon whether the BOD considers a workshop a meeting. Several AZ Attorneys General have written opinions on the OML and all have been very clear in defining what constitutes a meeting: a gathering of a quorum of the board to discuss assn business whether any action or vote is taken or not. Because the IL OML does not define a meeting and if you don't know of any AG opinions, then I guess it's pretty much up for grabs.

Frankly I do not agree with the opinion you posted from the Attorney. Remember that is only his opinion; what he says is not contained in the law. Regarding closed sessions of the board, IMO, a closed session can only be held to discuss one of the 3 topics specifically stated in the statute.

Bonnie,

Kudos to your PM! It's the same with legal advice from an attorney. Many BODs always say they are acting on the advice of their attorney but they never tell you when they didn't take his advice! I know of one HOA BOD that lost a big court case that they insisted on pursuing against the advice of their attorney.

With regard to your BOD going against the advice of the PM, if a member were to take them to court for violating the IL OML, their D&O ins would NOT cover their court costs because they knew they were violating the law. If I was a member of that BOD I would not have attended that meeting and I would have put a statement in the record stating why. If the BOD didn't believe the PM all they had to do was read the law!