The office is closed thru the holidays and will reopen on 2 Jan to reply to emails. Hope you and your family enjoy your holidays with family and friends. Mahalo

June 15th response

Cover Letter sent out in regards to petition/ special BOD meeting false accusations.

Letter from President

Letter from BOD

Letter to membership and board

Clarifications to HRRMC Members

Based on Questions at the December Board of Directors Meeting

Questions asked about last election: 

1. Why did we amend an Article of Incorporation (AOI) with a ⅔ majority when our AOI says it must be ¾?
2. Why does HRRMC require a ballot to be signed and is it legal? 
3. Why were ballots rejected for not having a signature when our bylaws state that no ballot shall be revoked? 
4. Why do candidates running for the BOD need a minimum of 123 votes? 

Before I get into these specific questions I thought it would be helpful to clarify some misconceptions members might have about certain association documents and definitions of terms. 

Associations and Nonprofits Typical Governing Documents

1. Declarations of Covenants and Code Restrictions (CC+Rs)-This document is a legal contract which is recorded in each property owner or member’s deed. It governs the property owners (what they can and cannot do on their property) and is considered part of the real estate contract. HOVR has no Declarations or CC+Rs, so any reference in state statutes to them does not apply to HOVR or HRRMC. 

2. AOI- HRRMC is a nonprofit corporation and as such is required to have an AOI recorded with the state through a registered agent. This document governs the corporation and describes the Powers and Purposes thereof. 

3. Bylaws- This document also governs the corporation and is an adjunct to the AOIs. Its purpose is to give more specific rules as to how the corporation is to be run. 

4. HI state statute 414d- This document is the state’s governing document for nonprofit corporations. Since HRRMC is a nonprofit we are subject to its regulations. If in conflict with HRRMC’s  AOIs or Bylaws, these statutes supersede. 

5. Community Association Act 421j – HRRMC, in addition to being a nonprofit corporation, is also considered a community association. This is primarily because we have the legal authority to levy and collect assessments from members. As such, we are also governed by these statutes (when applicable) and also subject to a supremacy clause, which means it supersedes all previously mentioned documents. When 421j is in dispute with any other documents, 421j supersedes said documents. 

Revoke vs. Reject

These terms are not synonymous. To revoke is to terminate a legal contract or agreement as though it never existed. A similar term would be an annulment. HRRMC has no authority to revoke any property owners membership or the rights and privileges that come with said membership, including rights to ballot. HRRMC does, however, have the authority to temporarily suspend members eligibility to participate in things such as voting and can reject any ballots cast by members not entitled to have their vote counted. 

Record Date

1. What is it? The Record Date is the date certain by which “members not in good standing” officially lose their entitlement or eligibility to vote in any election cycle. 
2. Who determines it? The Bylaws (2.4) gives a default Record Date but also gives plenary power to the BOD’s to affix an alternate date if they wish. This can either be done by interpretation of statute or by an approved motion. No membership vote is needed. Only two rules apply. 1. The Record Date cannot be moved up any further than 70 days from a vote, on the front side, and cannot be too late as to not allow for the rejection of votes from members not entitled. 
3. What are its ramifications? The Record Date determines whether or not a ballot cast by a member will be accepted or rejected and can also affect the number needed for a quorum on an in person vote at a meeting. 

Answers to Questions

As was pointed out at the December BOD’s meeting, our AOI states that an AOI Amendment must be carried by a ¾ or 75% vote. So why did our ballot for measure 1 (which was an AOI amendment) state that only a ⅔ vote was necessary to pass? 

As mentioned earlier HRRMC is governed by more than just our own documents. The state statutes 414d and 421j override our documents and once a discrepancy is discovered gives us a process to correct them. 

414d-182 Procedure to Amend Articles of Incorporation states that AOI amendments shall be adopted upon receiving ⅔ of the votes cast…

421j-12 Amendments of Documents…also states that except for Declarations (of which HRRMC or HOVR has none) all other association documents can be amended by a ⅔ vote. 

Both 414d and 421j are consistent at a ⅔ vote and as they supersede our AOIs, our measure 1 passes with a ⅔ vote as stated on the ballot. 

It was also brought up at the meeting the question of why HRRMC requires a signature on a ballot and is that legal? 

There are no state or association documents that prohibit a private corporation from requiring signatures on ballots. Each year several hundred ballots go unreturned. Years back, BODs, required signatures on ballots to prevent any nefarious attempts at voter fraud, especially with the unreturned ballots. 

That motion has never been rescinded. Statute 414d-116 even allows us to reject a ballot if the signature on the ballot or proxy cannot be verified. An unsigned ballot is by definition unverifiable and it is our policy to reject such ballots. 

Why do candidates running for the BOD need 123 votes? 

The answer to this question has to do with the Record Date (Bylaw 2.4 and 414d-107) the process for conducting a vote by mail in ballot (Bylaw 2.7, 414d-104.5) and the quorum that must be reached by candidates running for BOD (Bylaw 3.3, 414d-111). 

Bylaw 2.7 allows the HRRMC to conduct voting by mail. This is our preferred method as most members do not live on the island. When doing a mail vote we must follow HRS 414d-104.5 which gives specific instructions on what the ballot must contain in order to be legally valid. It also states that a ballot must be sent to every member entitled to vote, must state the numbers of responses needed to meet the quorum, (10%), state the percentage needed to approve a measure, and specify a date and time a ballot must be received. 

The Record Date comes into account as it is responsible for determining the member’s eligible to vote and as such determines the number of ballots to be sent out. Past boards and the BOD presiding over the 2022 vote interpreted Bylaw 2.4 and its statement, that a member can prove its good standing status “up to and including the time of any vote” to fix the Record Date at the time and day the ballots must be received. We consider the time of the vote to be analog to the time period between ballots being sent out and received. We believe that setting the record date at the time the ballots must be received allows the maximum time for the maximum number of members to get current on any assessments, fines, or liens so that they may have a voice in any election. We also know from experience that it motivates members to get current on assessments, so their vote will not be rejected. 

Because the Record Date is the day ballots are due all members at the time ballots are printed are still entitled to vote. Since no right to ballot can be revoked we sent out ballots to 1227 lots represented by members. State statutes and our bylaws require a 10% quorum for any measure approved to be legally binding. The quorum must also be stated on the ballot. Since the quorum is determined by the number of ballots sent out, not the number properly returned, 123 is the minimum number of responses needed to carry any measure voted upon as it is 10% of 1227. 10% is also the minimum number of votes a candidate must receive to qualify for a position on the board according to Bylaw 3.3.  Bylaw 3.3 states “In any election, those candidates receiving (a) a minimum of a majority of the required quorum in 2.14 (10% or 123), and (b) the most votes shall be elected. 

This whole process is best illustrated with the following example: You are a member that lives off island and you receive your ballot in the mail. Ballots, last year, were sent out September 7th, so it might be as late as September 20th. You also receive notice with your ballot that you are currently behind on your dues and that you will need  to pay them if you want your ballot counted. This is a surprise to you because you were pretty sure you had paid them back in March. This is why you ignored the part of the last newsletter encouraging members that know they are behind to please pay in September. Administration sends these out, not because they are a change of Record Date, but because it takes a considerable amount of time to keep updating the list of current vs. delinquent members. You check your bank statements, and sure enough the check you thought you sent was never cashed. You put a stop order on the check and send in a new one with the full amount with your filled out ballot. By now we are in October. Since the Record Date is November 10th your ballot is received in time and the member list of those in good standing gets updated to include you. On November 11th when the ballots are compared with the updated list you are good to go and your ballot is counted. 

As you can see many of the issues involved with producing a ballot for consideration by members requires a lot of thought, attention to detail and many applicable statutes, bylaws, AOIs, and documents. Every BOD is composed of members volunteering many hours of their time. They are truly unselfish and thoughtful members and I am proud to serve alongside them. 

Respectfully, 

Curtis Holyk