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Subject: Number of Directors - 5 or 7?
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GeorgeS21
(Florida)

Posts:3105


09/03/2020 5:30 AM  
Hi All,

Topic relates to a previous professionally managed (CAM) community of 314 SFHs and about 10 commercial properties (they pay assessments for roads and as part of the original development). "Previous" because we moved from that community, but kept the property as a rental.

Our annual meeting was in May. As I had already moved, I resigned as President because I felt it wasn't appropriate to be President. I was asked by the incoming President to remain as VP, which I did. The new President abruptly quit four days ago, after a bit over three months. Said he didn't have time. Sigh.

So, trying to clean up a bunch of planning and actions not accomplished per plan since the annual meeting (next Board meeting will elect a new president, and appoint replacement board member if there is a volunteer). One bit of unfinished business is the restatement of our Bylaws, combining the original and four amendments made over the years, beginning in 1995. The original Bylaws allow for a majority vote of the Board to approve changes. As part of the last cycle, I obtained approval from the Board to engage our attorney to integrate the original and four amendments, and to remove anything no longer aligned with Florida Statute 720. This was accomplished just after the annual meeting. The incoming Board president took over the responsibility to review, but like most of the other pending activities, never completed the review.

Like many HOAs, this one is pretty darn apathetic.

That was a long explanation which provides background to the casual reader.

First Question: Given the original Bylaws called for three (3) Directors, and one of the amendments changed this to seven (7) Directors, can a "restatement" change it back to five (5) if the Board believes this is a more appropriate number?

Second Question: Given that most Boards rarely have seven (7) contributing directors, and it is difficult to even come up with seven (7) volunteers, is five (5) a more efficient number to get business done? Note - at times we have found ourselves unable to field a Fines Committee when we had seven (7) Board members, because the Fines Committee membership cannot be Board members, and there were only a total of about 8-9 members of community involved (7 Board + 3 FC = 10).

Thoughts?
ND
(PA)

Posts:491


09/03/2020 6:00 AM  
Perhaps consider making it an allowable range of Directors (e.g., no fewer than 3 and no more than 7), allowing the current and future Boards flexibility to do what they feel is best and necessary (without having to amend docs each time). Current BOD may desire 5 Members and try to maintain that. Further, if it drops to 4 Members for a while, you are still in compliance w/ your docs and able to function, not entering that gray area where it's questionable as to whether you can function/operate/meet with a BOD of 4 when docs say it must be 5.
ND
(PA)

Posts:491


09/03/2020 6:07 AM  
To answer your actual questions:
1) If I understand correctly, you are essentially re-writing your by-laws . . . taking the base document, deleting old stuff that no longer applies, and incorporating amendments that had been written. In the end, you will have an entirely new document. I see no reason as to why you cannot make any adjustments you see fit to the bylaws similarly to what would have been done via an amendment anyway.

2) I personally prefer a smaller Board with members who actually contribute and do work. A Board of 7 with 4 of them doing nothing but filling a seat and the other 3 doing all the work is actually less productive and efficient than a Board of only the 3 who actually do the work. Further, from a simply logistical standpoint and having meetings, it's simpler to align 5 schedules rather than 7 and even simpler to align 3 rather than 5.
CathyA3
(Ohio)

Posts:1231


09/03/2020 6:44 AM  
I agree with everything ND said: flexibility and efficiency! It seems like that community would be more challenging than others due to its size and the commercial properties (although businesses may be more money-savvy than many homeowners and more interested in maintaining the area).
AugustinD


Posts:3889


09/03/2020 6:55 AM  
Posted By GeorgeS21 on 09/03/2020 5:30 AM
[snipped much for brevity of response]One bit of unfinished business is the restatement of our Bylaws, combining the original and four amendments made over the years, beginning in 1995. The original Bylaws allow for a majority vote of the Board to approve changes.
[snip]
First Question: Given the original Bylaws called for three (3) Directors, and one of the amendments changed this to seven (7) Directors, can a "restatement" change it back to five (5) if the Board believes this is a more appropriate number?
You indicated the current Bylaws allow the Board to amend the Bylaws, correct? Is there some reason that makes you think the Board cannot amend the Bylaws to reduce the number to five?

Posted By GeorgeS21 on 09/03/2020 5:30 AM
Second Question: Given that most Boards rarely have seven (7) contributing directors, and it is difficult to even come up with seven (7) volunteers, is five (5) a more efficient number to get business done?
In my experience, three results in too much concentration of power, such that a mere two can push around a minority director. Else I agree with what the others posted: Five seems right to me.
GeorgeS21
(Florida)

Posts:3105


09/03/2020 6:59 AM  
No issue with the Board being able to approve rewritten Bylaws - I was addressing the possible distinction between rewritten and restated.
AugustinD


Posts:3889


09/03/2020 7:30 AM  
Posted By GeorgeS21 on 09/03/2020 6:59 AM
No issue with the Board being able to approve rewritten Bylaws - I was addressing the possible distinction between rewritten and restated.
I see a lot of nonprofits do "restatements" of their bylaws. The Florida HOA statute (FS 720) has nothing on the topic. The Florida Not For Profit Corporation statute has a lot on restating the articles of incorporation, and one reference to restated Bylaws. See http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0617/0617.html

In my opinion, changing the number of directors goes beyond a restatement. It is an amendment. Hence the Bylaws procedures for amending must be followed. Support for this position appears at
https://bizfluent.com/info-8462696-difference-between-amended-restated-bylaws.html
and
https://legalbeagle.com/12723042-difference-between-amended-restated-bylaws.html

Legally I believe the amendment requires a formal vote by the Board, properly noticed on a board meeting agenda and documented in the Minutes.

Else as I am sure you know, your attorney would have the final word on how to proceed to change the number of directors.

I oppose offering a range of directors. A range is popular among nonprofits where directors are not elected by members/shareholders. But a range has negative practical value with a nonprofit where the directors are elected.

GeorgeS21
(Florida)

Posts:3105


09/03/2020 7:58 AM  
Last first - yes, agree range has a series of downsides - just more complicated to manage - even the election process.

No distinction re our board approving restatement - or amendment. The attorney had called it a restatement (does not yet have a change in number of directors), but from my past reading, this typically meant zero changes, just alignment with law, and those previously approved amendments.
GenoS
(Florida)

Posts:4062


09/03/2020 10:33 AM  
Isn't a "restatement" technically one big Amendment anyway?

Lots of good reasons here why a board of 5 is prefereable to a board of 7. My HOA's board size is set in the Articles of Incorporation: "... no less than 3." That's the only place in our governing documents where the size of the board is referenced. So a few years ago the board changed the working number from 7 to 5 by unanimous vote. A group of about 10 homeowners complained, naturally, but their stated objection was that they thought the effect would be for a smaller group to "control" everything and shut everyone else up. At the next election with 3 board seats open we only got 2 candidates willing to run. So much for peoples' voices being silenced. The disgruntled group quietly went away.
SheliaH
(Indiana)

Posts:3456


09/03/2020 12:56 PM  
Our community originally had 9 directors, but around the time I moved in, there was talk of reducing it to 7, which we did. Unfortunately, the apathy has worsened and now we're down to three - it varied between 5 and 7 when I was on the board.

Depending on how much stuff the board has to do (that is how much in the way of common areas you need to keep track of), you may be able to get away with three, but personally, I'd set it at 7. If another four homeowners step up, that's fine, but you will need an odd number so there won't be any ties. You'll have to ask your attorney as to how that would be written in the documents.

As you've seen from looking at this website, people are apathetic regardless of how many board members serve, so I think the key is to make sure the board members aren't taking on more than what they can handle (you do have a life outside the association, you know). If you have a property manager, that should take at least half of the load off your shoulders, and you can and should set priorities for the rest. If people bark about the board not doing this or that, simply tell them the board needs volunteers - are they stepping up? If not, the homeowners either learn to do without X or the Association has to pay for those things to get done and that cost will be reflected in the amount of their assessments.
JohnC77
(Washington)

Posts:136


09/03/2020 1:27 PM  
Posted By GenoS on 09/03/2020 10:33 AM
Isn't a "restatement" technically one big Amendment anyway?



Amend/Restate Defined. An amendment revises or replaces one or more paragraphs in a set of CC&Rs. A restatement revises and/or replaces, and reorganizes everything in the document. The operative language “amend and restate, in their entirety” or the equivalent phrase “amended and restated in its entirety” are industry standard used in CC&R restatements and is general found on the first page of a restated document.
GenoS
(Florida)

Posts:4062


09/03/2020 1:41 PM  
From my personal experience, having an odd number of directors is not something we've ever needed. There has never been a "close" vote in my HOA in the last 6 years, so not having an odd number of directors has never been a problem.

I can see where it's preferable to have an odd number, but it's not always necessary.
JohnC46
(South Carolina)

Posts:9870


09/03/2020 3:51 PM  
Our docs say 3 to 7 and do not designate who makes the decision. We have operated with 5 since transition to we owners. We have have gotten as low as 3 (presently 4 of 5). Anyone we appoint fills the vacant persons term no matter how much time left on the term. We can easily run our HOA with 3 and if the vacancy expires at the end of the year, we always wait until election time to fill it. I doubt we would appoint anyone to any vacancy.

He!!..we have to go begging for people to run. Some might call it apathy. I call it happy owners.
TimB4
(Virginia)

Posts:16953


09/03/2020 11:00 PM  
My suggestion, expecting the Board is allowed to change the bylaws without a membership vote, would be to make it a range.

Number of Directors: 5 to 7 (meaning you must have 5 but, if there is enough interest, you can have up to seven.
GenoS
(Florida)

Posts:4062


09/04/2020 11:14 AM  
Posted By TimB4 on 09/03/2020 11:00 PM
My suggestion, expecting the Board is allowed to change the bylaws without a membership vote, would be to make it a range.

Number of Directors: 5 to 7 (meaning you must have 5 but, if there is enough interest, you can have up to seven.

In 2005 my HOA increased the size of the board to "distribute the load" since there were a lot of projects going on in the self-managed association. Subsequent boards left it at 7 even after all of the large reserve-spending post-hurricane projects were over. By 2010 the Board was effectively 4 people doing the work and 3 seat-fillers who weren't doing anything at all. We changed the size back to 5 only recently because after a while we couldn't even find people willing to occupy all 7 director seats.
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