Synthesis of Operations, Governance, and Legal Compliance for The Village at Rio Paseo Condominium Association

This briefing document provides a comprehensive analysis of the operational, financial, and legal landscape of The Village at Rio Paseo Condominium Association, based on internal board communications, meeting transcripts, financial reports, and regulatory guidelines.

Executive Summary

The Association is currently navigating a complex transition in management and governance, characterized by significant administrative cleanup and internal conflict. Key takeaways include:

• Management Transition Hurdles: The shift from previous management to AAM, LLC has revealed substantial “messes,” including unorganized contracts, utility billing errors, and a lack of transparency regarding vendor relationships.

• Financial Discrepancies: Audits of recent financials have identified over $7,000 in misallocated electrical payments for individual units and highly inconsistent fire monitoring fees across different buildings.

• Infrastructure Priorities: Critical focus is required for fire safety inspections to prevent insurance lapses, addressing recurring sewage backups in specific units, and resolving community-wide issues such as pigeon infestations and parking shortages.

• Governance and Conduct: The Board has formally adopted a Code of Conduct to address professional lapses during meetings. Legal mediation is currently underway between a resident/board member and the Association through the Office of Administrative Hearings.

• Legal Compliance: Adherence to the Fair Housing Act (FHA) regarding reasonable accommodations is a core requirement, emphasizing the Association’s duty to provide equal opportunity for residents with disabilities without imposing undue financial burdens.

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I. Governance and Internal Conflict

Adoption of the Code of Conduct

On December 14, 2020, the Board of Directors unanimously adopted a formal Code of Conduct pursuant to Section 15.4 of the CC&Rs and Arizona Revised Statutes Section 10-3821. This resolution aims to:

• Govern the personal conduct of Members, Board Members, and invitees at all Association meetings.

• Establish reasonable rules for expediting Association business.

• Ensure participants treat others with courtesy and respect and behave in a professional, businesslike manner.

Allegations of Misconduct

Immediately following the adoption of the Code of Conduct, the Board President, Charlotte Morgan, issued a verbal warning via email to a fellow board member, Michelle. The warning cited several violations during a Zoom meeting held on December 14, 2020:

• Lack of Engagement: The member was observed texting, speaking with others in her home while on mute, and appearing uninterested during a Reserve Study vote.

• Disruptive Behavior: Recurring interruptions of other speakers and a condescending tone toward the Board during parking discussions.

• Potential Sanctions: The President noted that failure to correct this behavior would lead to formal fines and noted the member’s right to appeal as established in the Code.

Ongoing Litigation

As of August 2024, the matter of Michele Beauchamp v. The Villages at Rio Paseo Condominium Association (No. 24F-H051-REL) is pending before the Arizona Office of Administrative Hearings. The parties have requested mediation, and a previously scheduled status update for November 2024 has been vacated pending those results.

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II. Operational and Financial Management

Transition from Previous Management

The Board has expressed significant frustration with the “mess” left by previous property management (specifically citing an individual named “Sam”). Critical issues identified during the transition to AAM, LLC include:

• Missing Documentation: The Board lacked copies of active vendor contracts, forcing them to conduct an “email blast” to vendors to identify existing agreements and account codes.

• Inconsistent Monitoring Fees: Board members discovered that one building was being charged $236 for monitoring while others ranged from $26 to $42. There were also concerns about being billed for a building that was no longer being constructed.

Financial Audits and Utility Errors

In-depth reviews of invoices revealed substantial financial mismanagement:

• Electrical Overpayments: The Association paid over $7,000 for electricity for two individual units because the accounts were mistakenly left in the Association’s name and categorized as “street lights.”

• Billing Delays: Previous management reportedly failed to pay bills on time or in full, leading to deficits in certain months.

• Budgetary Surpluses: Despite these errors, the November 2020 Budget Comparison Statement showed a Year-to-Date (YTD) surplus of $42,635.54 in the operating fund and $54,714.84 in the reserve fund.

Reserve Study Analysis

The Association evaluated multiple proposals for a required Reserve Study update in late 2020/early 2021:

Vendor

Proposed Fee

Association Reserves

$2,230

Recommended by AAM; 15-week turnaround; specialized in HOAs.

Reserve Advisors

$3,950

Includes a cloud-based software solution (ForeSite).

Advanced Reserve Solutions

$1,400 – $3,000

Previous vendor; AAM warned of potential errors/missing components in their work.

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III. Infrastructure, Maintenance, and Safety

Fire Safety and Insurance

A critical deadline was identified for September 24 (likely 2021), by which fire safety inspections must be completed to prevent Farmers Insurance from dropping the fire hazard policy. The Board is working to ensure they do not pay for “re-inspections” of systems that already have valid certificates.

Plumbing and Sewer Issues

A November 2020 inspection by Schroeder Plumbing LLC revealed systemic issues following a sewage backup in a unit. Key findings included:

• Design Flaws: All units in the building share a common sewer line.

• Physical Obstructions: A “major lip on fittings” just outside the building was identified as a likely cause of backups.

• Damage: Evidence showed water and sewage backing up through kitchen sinks and into dishwashers, causing dried water stains and debris.

Pigeons and Community Feedback

A community survey revealed that residents consider the pigeon infestation a major issue, with some describing it as “beyond reflectors and spikes.” Residents have reported that pigeon droppings make outdoor spaces unusable. The Board is considering various control methods, including shock strips and nest removal.

Parking and Striping

The Fire Marshal for the City of Goodyear clarified that all streets within the community are considered “fire apparatus access roads.” Because the streets are 26 feet wide or less, parking must be restricted on both sides at all times.

• Enforcement: Since the streets are private, the HOA is responsible for enforcement.

• Maintenance: The Association received bids for parking re-striping ranging from $750 (Cactus Asphalt) to $3,900 (Associated Contracting Resources).

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IV. Legal Frameworks: Reasonable Accommodations

The Association is bound by the Fair Housing Act regarding “Reasonable Accommodations” for persons with disabilities. According to joint statements from the DOJ and HUD:

• Definition: A reasonable accommodation is a change or adjustment to a rule, policy, or service necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling.

• The Interactive Process: When a request is made, providers should engage in an interactive process to discuss the need and potential alternatives if the initial request is deemed an “undue financial and administrative burden” or a “fundamental alteration” of operations.

• Verification: If a disability is not obvious, providers may request reliable disability-related information to verify the need for the accommodation but may not inquire into the specific nature or severity of the disability.

• No Extra Fees: Associations may not charge extra fees or deposits as a condition of granting a reasonable accommodation (e.g., waiving a “no pets” policy for an assistance animal).

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V. Key Perspectives and Insights

“I want what I asked for back in October. I want to see the contracts… because it’s going to be a learning experience on what a mess this association is in.” — Michelle, Board Member

“Our community has been really hurt very bad… they were sold a bill of goods that wasn’t true. Our assessments were supposed to be at 236 and now they’re at 310 and our property doesn’t look like it.” — Monique, Board President

“A current, reliable Reserve Study is a hallmark of well-managed associations, and an important part of a homeowner board’s fiduciary duty to act in the best interest of their association members.” — Association Reserves Proposal