The Board has proposed a very complex set of new documents to define our Association. After a detailed review of these documents, they appear to only do three things:
- They remove references to being a charity and thus could be used to change our IRS status and remove a potential (but unproven) problem with IRS compliance.
- These documents remove the Board’s accountability to you, the member, and give the Board nearly unlimited power unchecked by the members.
- The documents muddle the relationship among the covenants (CCRs), Articles of Incorporation (AoI), and Bylaws, making them difficult to maintain in the future.
This complex set of documents, 24 pages in all, represent a massive, confusing, and unnecessary change to our governance, and it only partially addresses the “IRS problem” because, although it modifies the documents, it does not take direct action to modify our IRS status.
A much simpler option is possible by placing the following proposal for a vote by the membership.
- Simply amend the existing Bylaws, removing all references to charity and stating the purpose as that of an HOA.
- Rescind the status with the IRS at the same time. (The Board must actually contact the IRS!)
This change would even be simpler to pass, requiring only 66 signed votes, as opposed to 75 for the document change proposed by the Board.
Here is a sample proposal:
SAEPOA proposes the following action to modify official purpose of the organization from a charity to a pure HOA: (1) modification of Bylaws as stated below, (2) authorization of the Board to rescind our IRS 501(c)(3) status.
- Modification of Bylaws:
Remove the second paragraph of Section I, which currently reads as follows:
The Association is organized exclusively for charitable, religious, education, and scientific purposes, including for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of Internal Revenue Code, or corresponding section of any future federal tax code.
- Authorization of Removal of IRS Tax Exempt Status
The SAEPOA Board of Directors is hereby authorized to rescind the organization’s 501(c)(3) status and operate as an HOA under the amended Restrictive Covenants, Articles of Incorporation, and Bylaws.
___________ FOR proposed change – i.e., rescind SAEPOA IRS tax exempt status
___________ AGAINST proposed change – i.e., keep SAEPOA IRS tax exempt status
Member(s) __________________ Lot(s) ________________
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