Feb
09
2023
From The Blog
Action Requested: Review and Provide Feedback on Draft Governing Documents
Dear Members,
Over the past several months, the Governance Task Force has been working to revise the KICA By-laws. During this process, the task force has also created a draft Governance Procedure Manual to assist board members in the performance of their duties. The draft documents, relevant history, goals and other commentary are included below, along with other essential reference documents, for your review. The task force is requesting your input on the proposed documents.
Below, you will also find a form link provide your feedback. The form will close to submissions on Friday, Feb. 24, but members are invited to have their feedback reviewed by the task force at its Feb. 20 meeting if they submit by Friday, Feb. 17.
The Governance Task Force consists of Kelly Sach, Phil Mancusi-Ungaro, Jim Jarosik, Brad McIlvain and Amanda Mole. KICA COO Shannon White also provided input to the task force. The task force has spent more than 30 hours in meetings working to revise the KICA By-laws. This task force worked incredibly hard and incredibly well, and we thank them for this contribution.
HISTORY
KICA’s By-laws, like many homeowners or community association (HOA/COA) by-laws in South Carolina, are based on the by-laws originally drafted for Sea Pines. The KICA By-laws have remained largely unchanged since they were drafted. In contrast, many communities which used Sea Pines as their original template have modified their by-laws over the years. The task force looked at numerous South Carolina HOA/COA by-laws and other applicable governing documents to evaluate (1) how other HOA/COA by-laws have developed over the course of years and (2) whether those HOA/COA changes were ones which could improve our by-laws.
GOALS
The task force had a number of goals including:
- Ensure that the by-laws complied with (1) the covenants, (2) applicable South Carolina law, including the South Carolina Nonprofit Corporation Act and (3) any applicable court opinions/decisions.
- Improve KICA’s by-laws including clarifying them to reduce ambiguity and possible disputes, and simplifying them to make them more easily readable – in other words, make them more “user friendly.”
- Provide procedures for actions allowed under the covenants and by-laws.
- Provide for greater board and KICA transparency by limiting private or executive session meetings.
While many of the goals listed are, hopefully, self-evident, the South Carolina Nonprofit Corporation Act sets a framework for any South Carolina HOA/COA by-laws. In executing this goal, the task force worked to ensure the draft by-laws conformed with that act which provides (1) some mandatory provisions/requirements (example: voting requirements to remove directors, see By-law Draft Article IV, Section 4), (2) some provisions which provide a default unless the covenants and by-laws provide otherwise (example: director vacancies, see By-law Draft, Article IV, Section 8 which modifies the by-laws to comply with the 2021 Court decision), and (3) some provisions which must be included in KICA’s Covenants and By-laws but which KICA can “add” to (example: conflicts, see By-law Draft Article IV, Section 11). Notably, in many instances our current by-laws do not comport with the act.
The task force also crafted improvements to KICA’s processes through some of the suggested by-law changes. An example of this is the recommendation that the by-laws be changed to provide that all officers are elected annually. (See By-law Draft Article VII, Section 3.) Under our current by-laws, all officers have one-year terms except the chair which has up to a two-year term. The recommendation to have all officers elected annually was reached after we studied whether other South Carolina HOA/COAs elected the board chair for a two-year term. We found no South Carolina HOA/COA where any board officer had more than a one-year term. The task force believes having all officers stand for annual reelection helps ensure productive, successful leaders hold officer positions.
The task force also endeavored to include in the draft by-laws procedures which were referenced, but not defined, in the by-laws or covenants. For example, the governing documents state that members may initiate a petition to KICA to require a referendum but they do not currently define how that is to be done, how the required number of signatories is to be calculated or whether KICA must disseminate the petition. In the past, this led to disputes and controversies including the 2021 member petition which was criticized by our members and the court in its 2021 decision. The petition/referendum process is set forth in By-law Draft Article III, Section 9.
The draft Governance Procedures Manual is also directed at attaining consensus at the board level and improving board function. The task force believes that because KICA is a community association, the board should reflect the entire community it serves.
FINAL OBSERVATIONS
You will note that the by-laws have largely been rewritten. We looked at making changes to the existing by-laws, but found that was unworkable. It only made them longer and more difficult to understand. We used the Hilton Head Plantation by-laws, which similarly derive from the Sea Pines by-laws, as a guide for simplicity and clarity. Kelly in particular pushed us to make the by-laws simple to understand and short. She said they should be no more than 20 pages long. Jim took the lead in drafting, and we met that goal.
As our last step in the process of drafting these revisions, we had the draft reviewed by legal counsel who has been assisting KICA on governance issues. They reviewed the draft to ensure that it complied with applicable law and followed best practices. We sought specific input on various issues, including conflicts.
We have drafted the by-laws understanding that we are moving from a developer led community to a member led community. The scope of the developer involvement is something the community must resolve. That will involve amendments to the covenants, which can be done, but was beyond the scope of this specific task.
DRAFT DOCUMENTS FOR REVIEW
REFERENCE MATERIALS
TIMELINE FOR MEMBER INPUT
The task force included community members with varied backgrounds. We are now in a position to share the work of the task force with the broader community and to seek your input on the draft by-laws and draft Governance Procedures Manual. The current timetable is:
- Feb. 8 – drafts to KICA membership
- Feb. 20 – Governance Task Force meets to discuss and consider community comments received to date
- End of February (Date TBD) – Community workshop with board to discuss drafts
In addition, we may prepare and circulate written responses to frequently asked questions.
Our goal is to have the board in a position to vote on the proposed drafts by the Monday, March 13 board meeting.
SUBMIT YOUR FEEDBACK
Once you’ve reviewed the draft documents, follow the link below to submit your feedback to the task force.