Landscaper who is also a member....

Quick overview on the situation....

We are a small development of around 40 homes. Our budget is only around $7000 for the entire year. Part of that budget goes towards our landscaping expenses. The development is about 5 years old, and since the association has been turned over to the board, a homeowner has been doing the landscaping. Granted he did give us a break on cost, it has become a problem, including that we have felt that we were unable to approach the person with issues, because he was also our neighbor. So now that the development is establised, and our account has reached a years worth of operating expenses the baord has decided not to allow members of the association to bid on the landscaping. This has resulted in an increase of $100 per month in landscaping fees. And that is even a deal, we recieved several bids. The homeowner who will no longer be doing the landscaping is upset and wants to keep the contract. And has even gone so far as to write up his own budget, even dropping his costs $150 less a month then the other company and is going around showing other homeowners. My question to everyone on the panel is, do we need to approach the entire community before deciding not to hire members to do contract work? Or can the board hold a vote on their own? Is it not better business practice not to hire a member to do contracted work? Do you feel it is a conflict of interest?

Sorry, I tried to be short!

I appreciate your feedback. Just want to be fair to everyone.

It is not IMO a conflict of interest and our documents specifically allow it. The problem comes from separating the neighbor part from the contractor part which can be difficult to do. While I understand your dilemma I think it was wrong for the BOD to not to sit down with the person and explain the problems as the BOD saw them and give him a chance to rectify them.

Mindy,

I totally agree with Glen -- this is definitely NOT a conflict of interest. A conflict of interest would only arise if this h/o was a member of the board. I see no reason why a h/o cannot contract with the assn for certain services. However, the board should not be afraid to treat this h/o/contractor the same way they would treat a non-h/o/contractor. Glen promotes a good idea by suggesting the board have a chat with this individual -- all parties need to put their cards on the table and discuss the situation.

No reason why this issue needs to be discussed with the whole membership. This is something that can, and should, be handled by the BOD. However, if the board is adamant about their decision not to hire any h/o as contractors, then the members need to be informed of this decision.

Mindy:

To answer your questions...no, I do not feel it is a conflict of interest...it is debatable whether it is good business practice to hire members, your board needs to tread water carefully, however, if this person is qualified and is treated like any other contractor in both good and bad times I don't see it as a bad decision.

I think it was Brian who hit upon this, the bid process needs to be fair...in other words the scope of the work the HOA wants done needs to be released so that this homeowner and other companies are bidding on the same work. In my opinion if this homeowner is the low bid and does good work I would use him. I would also have a contract as I would with any contractor and require them to have their own insurance, etc, and also provide a termination clause if either party isn't satisfied.

As to him going around showing all the homeowners his budget, as a business owner I think that borders on unethical, but he is also playing the part of a member of the community and is like all of us, if you can get the same job done at a signicant savings without sacrificing quality why not?

Conflict of interest or not, this is a case where one person has used his position (member of the association in this particular instance) for personal gain.

I don't see any reason the board has to inform the owners they are not for hire unless the gov. docs. state they can be hired. To me it's a working policy of the Board, not subject to community approval.

BradP - This particular vendor may save $150.00 but has obviously inflated the bid $150.00 or more don't you think? Less in this case is not more and is costing the Board time and energy to defend their decisions to the rest of the community. Not worth it if you ask me.

IF THE DOCS. dont prevent it than you can't say NO simply because he is also member.

Often times what you would like to do and what you can do are two vastly separate things.

A conflict only arises if he has access to the other bids. Now he can underbid and the other contractors may have a problem with that. But how would they know?

Depending on your docs. and state laws you MAY not even be required to obtain multiple bids.

There is no law that says you have to award the contract to the lowest bidder.

Correct, but you better have great reasons for not accepting it when you are spending other peoples money, i.e...poor work performanc, inferior products, etc.

First, I think that the BOD created a problem in allowing a contractor to get by because said contractor was a neighbor. Then the tried to fix this problem by substitution with another one and exclude members from bidding.

Second, I think that taking an unfair bid to your neighbors is unethical. I disagree with the poster that the person should only discuss with the BOD. But I do think it unethical to tell people how much cheaper you are when you didn't compete in a bid process that was closed bidding to the others.

As a note, we are rebidding our contract. And at least one resident is bidding. To keep the playing field level I am open to other services about what we are currently paying. Then I follow with that we are asking for sealed bids sent to the PM office. Everyone then knows that it just won't do to simply beat the current contract by a few bucks. And the current contractor knows they will have to compete against other bids. (Previously the contractor received three properties from the declarant. I also believe that they bid our HOA based on expansion that has not happened and possibly providing mowing of a field that doesn't belong to us.)

EllenS1 - Wasn't there a deadline for the quotes to be submitted?

No deadline was set. We would prefer someone who had the initiative to submit a bid promptly. I called a company we had used for other landscape matters in the past and they are coming out tommorow and will give us a bid.

Ellen - how big of a job is this?

Do you have ANY idea of your budget? You can call any landscaping company and over the phone they should be able to give you an estimate of materials and labor AND a schedule, if you know the size of the area needing the sodding.

You could ask the board to approve a motion for X amount and just get the job done.