HOA Pandemic Playbook Planning
Outside Contributor - Melissa M. Garcia
Well that was a strange year. And, while we may have all become experts at bobbing and weaving through the many unprecedented challenges of 2020, it’s time to dust off (or draft, if you never even got that far) your Pandemic Playbook and get it ready for 2021. Here are some things to consider for your HOA.
Social distancing requirements will likely prevent in-person meetings well into 2021. When tackling the complexities of how to conduct meetings in a pandemic world, here is what should be in your plan.
First, understand the law. With respect to annual meetings the ColoradoRevised Nonprofit Corporation Act (“ Nonprofit Act”) allows participation in both Owner and Board meetings through the use of “any means of communication by which all persons participating in the meeting may hear each other during the meeting.” This allowance is subject to your Bylaws. So, assuming your Bylaws do not prohibit meetings to be conducted using a virtual method, you may use Zoom, WebEx, GoToMeeting, and similar platforms, as long as everyone can hear each other during the meeting.
Second, follow standard operating procedures for calling meetings. Even though a meeting may be conducted wholly through some virtual method, it is still a meeting and you must still follow meeting requirements under Colorado law and your governing documents. For example, for Owner meetings:
Notice must be provided by mail or personal delivery no less than 10 and no more than 50 days prior to the meeting. If your Bylaws provide stricter timeframes, such as being required to provide at least 30 days’ notice of the meeting, then follow your Bylaws.
Physical posting of meeting is required if practicable and feasible.
If the Association is able to provide electronic notice (i.e., email), then provide such electronic notice upon the request of an Owner.
Proxies must still be allowed.
Also, Owners must still be allowed to attend Board meetings even when conducted virtually (other than when in executive session) and provide input prior to the Board voting at the Board meeting.
Third, make sure you send clear instructions to all Owners prior to a virtual annual meeting. For example:
Provide log-in instructions. Do they need to install an App? Will they need a password? Can they call in vs. having to sign on through their computer? If available, provide resources so they can practice (Zoom has a ton of quick tutorials!).
You should instruct them to name themselves correctly on the display screen, with the first and last name displayed. Phone numbers, first names only, or “My Ipad” as display names will cause problems with check-in, voting and any homeowner comment period.
How will proxies be handled, submitted, and verified? You should encourage them to submit proxies early. Proxies submitted at the last minute will create delays during the check-in process.
Fourth, make sure you have virtual ground rules for the meeting itself, and go over them at the beginning of the meeting. Chances are your standard conduct of meetings policy does not cover procedural issues related to the virtual aspects of the meeting. For example:
How do homeowners ask a question? Will participants be muted until the chair recognizes them? How does the chair recognize them? Will they be permitted to submit questions using the chat box?
How much time will be allotted to individuals for questions or comments? Given virtual meetings are easier to attend than in-person meetings, your attendance numbers may increase drastically. You may need to adjust the time typically allotted for everyone to speak at an annual meeting.
How are votes to be handled? It may be possible for roll-call votes to be taken for smaller meetings, but what if you have 200 participants? Does your virtual platform provide an electronic voting option?
What if there is a contested election? Colorado law (and some governing documents) require contested elections to be conducted by secret ballot. Unless you are using a virtual platform that allows for secret ballot voting, or a third-party company such as electionbuddy.com or voteHOANow.com is handling the secret voting process, you will not be able to conduct the election virtually. You can solicit nominees and meet the candidates online, but the voting process will have to occur after the meeting as a separate action through the mail ballot process.
Minutes must still be taken, and votes must still be documented. Keep in mind that C.R.S. §38-33.3-317 of the Colorado Common Interest Ownership Act (“CCIOA”) requires you to keep any ballots, proxies, and other records related to voting by Owners for one year after the election, action, or vote to which they relate. If your virtual platform itself provides the tools for voting, it may also be able to produce a report regarding the results.
Fifth, if you are not having a professional third party run the virtual annual meeting, make sure you are familiar with the platform well before the meeting. Specifically, whoever will be running the meeting behind-the-scenes, such as a Board member, manager, assistant, etc., should know the various controls/features very well, such as how to mute/unmute people, how to share the screen, how to raise your hand for questions, how use the chat feature, and how to remove constant rule violators to the virtual lobby. Make sure the plan includes a test-run, so you are prepared for glitches.
Sixth, if you do have to conduct the contested election by mail ballot, make sure you know the specific procedures required at C.R.S. §7-127-109 of the Nonprofit Act for conducting a vote by written ballot. And, since it will need to be done by secret ballot, make sure you employ a double envelope process to preserve secrecy.
Finally, it would be wise to have a virtual meeting policy in place that encompasses all the above.
Your Best Defense is Complying with Your Fiduciary Duty
Keep in mind that HOA Board members owe a fiduciary duty to the Association, and that duty is impacted by COVID-19. So how do you adhere to your fiduciary duty?
First and foremost, you need to know the standard of care for compliance with your fiduciary duty, which is to make decisions: (i) in good faith, (ii) prudently, and (iii) in the best interest of the Association. In pandemic times, being prudent is key to minimizing and hopefully eliminating liability for COVID-19 related decisions. Being prudent means making informed decisions. You wouldn’t decide on a complicated legal issue without consulting your HOA attorney, would you? Similarly, you shouldn’t decide on whether to hold in-person meetings, or whether to re-open your amenities, or whether to eliminate social distancing protocols altogether without relying on expert advice regarding such measures.
This means making sure you keep up to date with state orders and local orders, which will either require you to take certain actions/comply with certain restrictions or provide guidance so that you can adopt prudent rules and regulations that are consistent with such orders. You should, for example, be reviewing the following on a regular basis:
The Colorado Department of Public Health & Environment (“CDPHE”) website for the latest up-to-date Public Health Orders and Executive Orders issued in response to COVID-19;
The COVID-19 Dial, which provides six color levels based on number of new cases, percent positivity of COVID-19 tests, and impact on hospitals, in which color level your county is currently listed (which fluctuates), and guidance based on such level;
The latest Colorado Personal Recreational guidelines, which list the current guidelines for pools, gyms, and other recreational facilities, which are listed according to the county’s Dial level;
The Centers for Disease Control and Prevention (“CDC”) website, which provides guidance recommended cleaning protocol, tips on wearing masks, what to do if someone gets sick, and other helpful tips; and
Local health authority orders and recommendations.
Keeping up with the latest health orders does not mean you have a legal duty to keep your community members healthy. Homeowners and residents are responsible for their own health and safety. An association cannot prevent someone from getting ill no matter what preventative steps you take, and the board should not look to assume this role.
Staying informed also means consulting with other experts such as your attorneys, insurance representatives, accountants, rec facility vendors, etc., and relying on their recommendations when making decisions within their expertise.
Second, your prudent decisions must be made according to the best interest of the association, and not the Board or the Owners. Key decision-making areas that can sometimes run afoul of this principle concern assessment collection and budgeting practices. Due to the pandemic many homeowners are likely experiencing, and will continue to experience, financial difficulties. A decision to cease collection of assessments to help people catch up would be a decision that is in the best interest of the Owners who are having financial difficulty, not the Association.
Assessments are the lifeblood of the association; it needs them to function appropriately. Whatever assessment action you take today, in reaction to the pandemic, may have a severe impact on the association months from now. You need to make a reasoned decision and look not only at today’s financial circumstances, but tomorrow’s financial health.
Additionally, with respect to the 2021 budget a shortfall in revenue may be inevitable given ongoing homeowner financial difficulties. And, associations may continue to experience heightened expenses given the need to comply with enhanced cleaning measures, increases in administrative and management expenses, and other COVID-19 related expenses.
Given the above, while you might be tempted to see 2021 as a brand new year free to pursue projects that have been placed on the backburner, … don’t be fooled. The residue of COVID-19 will continue to coat your plans for the foreseeable future. Boards need to be mindful of their short and long-term budget goals. Now would be a good time to review the following:
Are there any nonessential expenditures that can be curtailed for 2021?
Are there planned projects that can be deferred safely until 2022? You should not be ignoring leaky roofs but maybe the landscape beautification project can be delayed.
Should the Association be considering an increase in assessments? A loan?
Should the Association be reviewing and re-evaluating its reserves?
Keep Your Standard Operating Procedures (SOPs) in Shape
Yes, the vaccine is coming and for some, it is already here, but that doesn’t mean you can drop all your standard COVID-19 operating procedures. Those SOPs helped you in 2020 and should stay in place until restrictions are lifted. For example:
Continue your maintenance protocol of regularly cleaning, disinfecting, or wiping down of common areas and common area surfaces;
Do not conduct in-person meetings or other events until restrictions are lifted, or ensure you adhere to any social distancing requirements currently in place for such events;
Continue to monitor and enforce the rules and regulations you put in place for COVID-19;
Keep your recreational facilities such as gyms, clubhouses, and pools closed until restrictions are lifted, or ensure you adhere to any social distancing requirements currently in place for such facilities.
Speaking of recreational facilities, although pool season may be months away, it would still be wise to review and re-evaluate your plan for re-opening. You might still be required to maintain certain social distancing protocols regardless of the availability of the vaccine. Consider the following questions and put your answers in your plan:
What is your disinfection plan? How regularly will you wipe down the pool gate, tables, handrails, and other frequently touched areas? Are you going to provide wipes for people to wipe down their furniture? Will you require people to bring their own furniture and towels?
If you have staff/employees do they have a policy/protocol for regularly washing their hands and otherwise complying with social distancing protocols?
What is your plan with the restrooms? Are they going to be closed? If not, how often are you going to clean and disinfect them?
Will you put a registration system in place to ensure the maximum capacity, if one is required or if you choose to have one even if not required, is controlled? Will you place time restrictions on pool users?
Are you going to only allow residents and not guests? If no guests, how will you verify this?
Are you eliminating pool lessons, swim meets, etc.? If so, how will this be clearly communicated?
Will you require residents to sign a waiver for use, and do you have a waiver form in place?
Do you have appropriate rules and regulations in place to address all of the above? Have you revised your signage?
Have you discussed with your pool vendors what needs to be done to comply with their standards?
Have you spoken to your insurance carrier about potential coverage?
Have you reviewed the CDC Guidelines on pools?
Finally, be ready to revise/tweak any such plan to make sure it complies with applicable state and local health requirements in place on re-opening.
Your 2021 Pandemic Playbook should include, at a minimum, the above strategies for success. Be sure to reach out to your HOA attorney and other industry professionals, for more tips to make 2021 a winning year!
Melissa M. Garcia
About the Author
Melissa Garcia is a shareholder at Altitude Community Law P.C. and an HOA enthusiast! With over 20 years of experience, Melissa loves the community association law arena because it allows her to work with a variety of people to develop real solutions to challenging problems. Her practice emphasizes transactional law, including amending governing documents, issuing opinion letters, and assisting with general counsel representation of HOAs. Melissa heads the business development department and actively posts on social media to help develop, foster and promote successful associations. A frequent lecturer and participant in seminars on community associations, Melissa speaks nationally as well as locally on all issues facing associations.