New law impacts HOAs on how to select bids for jobs

Q: I sit on a self-governed homeowners association board. During a meeting, we opened three sealed bids for a capital expenditure for more than $50,000. According to how the new rules were interpreted, we were told the options were to vote immediately to choose one bid, or reject the bids. If the board rejected all of the bids, new bids would have to be submitted for consideration. I cannot believe that this rule was enacted to have boards make quick decisions. I believe the law changed so bids would be opened in a public forum to stop boards from doing anything unethical (such as a bribe), not to force quick decisions on major expenses.

As an example, the board spent three hours looking at the purchase of a replacement computer to be sure we were getting the best product for the amount of money we wished to spend. We were allowed to do this because we did not have to solicit bids. However, due to the new rules, the board chose an unknown company to fix our streets because his bid was the easiest to read. One bid was nine pages and difficult to understand, so it was passed over. This is not good business. Mistakes will be made and money will be wasted if the choice of who will perform a bided job must be made at a meeting before any of the board members can have the opportunity to study the paperwork before reaching a decision. Did we misunderstand and could have gone back to a closed session to further evaluate the three bids?

A: This new law is one of the worst new laws in a series of bad laws that were passed this last legislative session. It has caused more delays and problems for boards and management companies in procuring the contracts for needed work or equipment for their communities. The law presupposes that board members and/or community managers have the expertise to even prepare specifications to be submitted first to vendors and contractors. You want to slurry seal your community, what kind of emulsion product is the best for your community? You will receive bids from contractors who use different materials. You want to purchase a security camera system. Do you realize the technical difficulty for the average layman as to what is the best product to buy? Contractors and vendors use different materials and methods to complete a job or provide a product or service.

So now, you, as part of the board, is in a meeting; you open the bids and then try to prepare a spread sheet to help compare the bids, at the same time of having enough time to have two homeowner forums, conduct normal board business, conduct executive meeting and then have the library or other facility (if you have no clubhouse) tell you it's 9 p.m. and you have to leave.

Now, you have to review the bids after the meeting. You then have the contractors attend either a committee meeting or a new board meeting, to explain their products or procedures to you. Questions are asked and answers are obtained. You then have to either make a decision to contact the same companies and ask them to rebid the work based on some criteria that you now have established as a result of the second meeting and or either wait for another board meeting or call for a special board meeting in order to make the final decision.

When I received this e-mail, I had just received a call from an owner of an asphalt company who was asking me why is it taking so long for associations to make decisions in selecting their contractors? This new law is actually having a negative impact upon businesses in Southern Nevada, as if we need more layoffs and closing of businesses. This company and others like this company (from past history) would already have a number of work contracts in order and their people working at various association communities. Instead, workers are on standby waiting for contracts to be signed.

Who else suffers? The homeowners. They want to know why it is taking so much time for work to be done at the community.

This is nuts. The law was passed as a knee-jerk reaction because of the investigation of a management company, a construction defect attorney, a construction defect company and two or three board members who sat on different association boards by the Federal Bureau of Investigation.

This micromanagement by the Legislature often backfires. Many managers sat at the Sawyer Building waiting for hours to discuss the various proposed laws with the Senate and Assembly Judicial Committees only to be denied an opportunity to talk. It was a joke. Instead of alternating comments from the members of the public in Carson City with those in Las Vegas, the Committee Chairmen only recognized first members of the public that were in Carson City. By the time, they allowed these people to speak, there was little time left for only a couple of people to speak from Southern Nevada (where the bulk of the associations exist). In addition, the committee chairmen knew that a number of the proposed bills were controversial and did not even allow adequate time for the public forum. It was if they had already made their decision as to how they wanted the bills to be passed out of their committees.

And the sadder fact is that when the legislative representatives met in secret to iron out the differences of the many bills, there were even amendments passed of law that were not ever discussed during the open hearings with the members of the public.

It is amazing how legislators can even ask the question, why are so many citizens so upset with the legislative process?

So what is the final answer to the reader's questions. No you did not have to make a decision at that board meeting and especially if you all felt uncomfortable or pressured to make a fast decision. The community manager should have been given the task to create a proper spread sheet for the board to review. Based upon the spread sheet, both the board members and community manager could prepare written questions for each of the contractors. The questions would be sent to the contractors. The board would have to call for another board meeting for the primary purpose and only purpose of interviewing the contractors and reviewing the bids and making a final decision. In the past, this kind of leg work would have been done prior to the board meeting so that the board could make an intelligent decision in a timely manner. The law as it stands needs to be modified. It is just unworkable.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com.