Is it legal to exclude snowbirds from being directors

The RCSC
The Bylaws of the Corporation shall prescribe the qualifications of Members and the terms of admission to membership, provided that the voting rights of all Members shall be equal and all Members shall have equal rights and privileges, and be subject to equal responsibilities. Such Bylaws shall also provide the method for determining assessments to be paid by the Members.

The RCSC specifically exclude snowbirds who are members in good standing from running for election to the board. Is this legal? What are your thoughts?

 

I'd say YES!

Arizona Revised Statutes:
10-3802. Qualifications of directors
The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a resident of this state or a member of the corporation unless the articles of incorporation or bylaws so prescribe.

 

If they garner the votes needed, absolutely! I mean here— if they run for the board and get the votes. I suppose a new by-law stating snowbirds can serve on the board might be more clear.

 

The documents also say must be able to get a liquor license, which the state says you must be an Arizona resident to obtain. Are most snowbirds usually a resident of another state or country?

 

Question: Do you have to be a resident of Arizona to apply for a liquor license if you are a Director on the Board of a non-profit corporation?

"No, serving on the board of a nonprofit corporation does not require you to be a resident of Arizona to apply for a liquor license if the corporation is applying for the license. The corporation itself, and any individuals directly associated with the application (like a designated agent), must meet Arizona residency requirements, but board members are not necessarily subject to those same residency requirements."

"Nonprofit Corporations and Special Event Licenses: Nonprofit organizations, such as 501(c)(3) charities, often apply for special event licenses to serve or auction alcohol at fundraising events. The Arizona Department of Liquor Licenses and Control does not specify that board directors of the nonprofit must be Arizona residents for these licenses. Instead, the focus is on the organization’s eligibility (e.g., being a registered nonprofit) and compliance with application requirements, such as submitting a list of officers and directors."



TYPE OF OWNERSHIPS AND REQUIRED DOCUMENTS TO SUBMIT:


INDIVIDUAL

The person applying must be a U.S. Citizen or Legal Resident Alien and a bona fide Arizona Resident. The forms required are Questionnaire, Arizona Statement of Citizenship, or Alien Status form, front and back copy of document showing proof of citizenship (current signed U.S. Passport, Birth Certificate or current Arizona Driver’s License), and Fingerprint Card.


CORPORATION

A Corporation must be qualified to Do Business in Arizona and be in Good Standing with the Arizona Corporation Commission. At least three Officers and all Stockholders owning 10% or more of the Corporation must be disclosed. Each person disclosed is required to submit a completed Questionnaire and Fingerprint Card.


NOTE:

The application for a Corporation liquor license does not require the applicant to be an Arizona Resident.


Seems to me this may be a loophole? I do believe however, that the requirement to hold a liquor license has more to do with the RCSC looking for those who were felons rather than needing to reside in Arizona? It is, after all, the corporation that holds the license and not any individual!

 

To serve on the Sun City RCSC Board of Directors, candidates must hold an Arizona liquor license. This requirement likely stems from the RCSC's role in overseeing alcohol sales and related activities within its facilities and events, according to the Sun City RCSC website.
Elaboration:
The RCSC, as an organization that may permit alcohol sales and handle related events, needs individuals with expertise and knowledge of alcohol regulations. The liquor license requirement ensures that board members are familiar with the legal and operational aspects of alcohol service, helping to ensure compliance and responsible alcohol management.
In simpler terms:
Imagine a club that allows alcohol sales. You need someone on the board who understands the rules, permits, and responsible service of alcohol to ensure everything is legal and safe. The liquor license requirement helps guarantee that the board member understands this.

 

IMHO the liquor license requirement is a ruse to keep snowbirds off the board. Many other similar communities (SCW) have liquor licenses and allow all members to run for the Board. Contrary to the website's explanation, Board members do not go through training on the Arizona liquor license laws. I argued that the bylaws conflicted with the Articles but to no avail. We need a broader pool of board candidates and should actively encourage all who are willing to serve to run! One man's opinion.

 

You have to qualify for an Arizona Liquor License. If you are gone six months of the year, how do you call that representing the members? Also Zoom calls or any other technological presence is useless as the RCSC’s tech is not up to snuff.
As ruled by the Court in the Anne Stewart action, we can make our own rules. You want to make an equal protection argument in Court, be my guest for protracted litigation which isn’t cheap.

 

FYI - It seems like we need a broader pool of candidates other than retreads and their proxies.

 

I don't disagree, that's why I believe anybody can run even husbands and wives should be able to run together. Running is entirely different than serving. You can restrict them from both serving together during the very slim chance that they both would be elected, but they both should be able to run.

Secondly, why do Members have to first pick-up a candidate packet to run? Why can't Joe or Jane Six-Pack simply go out and get their 100 signatures without jumping through the hoops of the RCSC? If they get their signatures and are still determine to run, their qualifications can be easily verified when they turn in their signatures!

As I have stated earlier, we are in violation of our parliamentary authority because we don't have any provisions for write-in candidates and we state nothing in our bylaws that says write-in candidates are not allowed!

 

Dave, I respectfully and completely disagree with you. I have heard you argue against technology expanding the gene pool, but this makes no sense to me. I am wondering who you are referring to when you say "we" can make our own rules. Do we include me or only you? As you are well aware Sun City did not win the ARS action in the conventional sense. "Sun City" lobbied the legislature to get the law changed so Sun City was excluded from the planned community act. I am not proposing to sue RCSC on the equal protection claim as I assume the bylaw committee will rectify this anomaly. If the committee does not rectify this anomaly, would you agree that the bylaws statement that all members have the right to be a director is a material misrepresentation? I am interested in your legal opinion on that one.

 

Retread was a term I coined many years ago in response to the number of former board members being placed, several times, in an open board position.
When a former board member volunteers to staff an open board position, in my case, it was to try to find a way to assist to the best of my ability for the short period of time needed.
I know of know reason for a reference to proxies was mentioned. Using proxies will not garner a position on the board.
Take it one step further and state such action is a “ruse” to benefit, in some way, former board members is a personal affront John.
I have done nothing but be up front about my position and desires for the community and its members. I have made my position and vision clear. I have not done anything to perpetuate a ruse of any kind.

 

CM - You have misconstrued my words. I don't know you personally, but I know from your writing that you are well qualified to be on the board. My comments were not directed at you. But the question remains, why does RCSC treat snowbirds differently even though the AOI states every member has equal rights? Do you think that is fair or justifiable? I don't. Moreover, if that is truly the way RCSC is going to be governed, we should have a disclosure in every real estate contract that non-residents are not allowed to be directors (even though they pay the same amounts as full time residents.)

 

There should be several disclosures sent to every prospective buyer considering a purchase of property in Sun City.
They should be advised they have no members rights to fair and equitable access to membership representation. The RCSC documents clearly favor the corporate structure and afford no protection from the board of directors and its actions.
The potential buyer should be advised the corporate documents are not in accordance with Arizona Revised Statutes on several aspects and those differences could have implications for the buyer.
The potential buyer should also be informed about the long standing need to revise the bylaws and return member benefits for the benefit of the homeowner, but the chance of any of those benefits being restored are nil.
Yes, living here can be nirvana, until you have a need to challenge the status quo and have the desire to make it better. That’s when you realize that the status quo is entrenched and there exists little hope of ever changing things for the better for the membership.
We could talk about the great things we could offer the members of the community, but I also believe there is value in knowledge and experience from being a seasoned member of the community governance process. Tell prospective homeowners that the board of directors needs to get out of its own way to see a better focus to benefit the community.
Disclose away, if potential Sun City members/residents receive full disclosure of everything they really need to know, they will receive several volumes of printed information. And be very informed. BTW , are you indicating non-residents, such as real estate developers, corporate owners, and other investors as well? How far down in the weeds do we take the definition of non-resident?

 

CM - I view every member as an investor. All should have the same rights and responsibilities.

 

I agree, John, that RCSC homeowners should be able to serve on the Board even if they are not Arizona residents. (Thanks, Tom, for enlightening us to the fact that the Directors do not have to be AZ residents to be eligible for a liquor license.) However, I do believe it would be difficult to serve as a Director from afar under the current structure. If the Board becomes more of a governing board, rather than a working board, it would be more feasible. For instance, I know several people who serve on bank and corporate boards who do not live in the community where the bank or corporation exists. They make it work and these banks and corporations have much greater assets than RCSC.

 

Thank you John. As we all know, we live in a litigious society and whenever, wherever written documents can be found to offer even the slightest chance of a differing opinion amongst it’s own pages, there in lies a great potential for a lawsuit. There are several possibilities that exists right now in our documents. There have been a few attempts made to rewrite the RCSC governing documents and each time, the efforts have fallen short due to poor process.
I feel we need to clean up the current governance documentation before trying to look to include additional groups or classification of other members. There are some items with loopholes you can drive a Mack truck through.
As long as the documentation is being reviewed, reclaim members rights. Restore the glory days of Sun City and take it beyond just the RCSC.
Until such time the RCSC is in not in such a disparate state of need for electronic and digital communication, the ability to discuss adding or amending those who can be included in the government system is moot. This includes those who could be considered as “non-members”. The RCSC is in a very sad position in regards to having non-members be able to participate effectively with the current governing body. Is there effective two way communication between the RCSC board and its directors if it were to be implemented electronically? How about the RCSC board members and the board? Video conferencing requires additional bandwidth and hardware capacity. Does the RCSC board have this capability?
So, is it practical to offer the opportunity to serve on the government and then tie everyone’s hands in the ability to effectively serve?
So sorry, but until we fix what we know is currently broken, adding more to the plate feels so very wrong. Expanding non-members abilities without the extensive improvement of the communication protocols in place seems like setting up a system to fail.

 

To the original question, see FYI’s response and quote from the ARS.

 

Carole, What is your definition of "non-member" here? Are you talking about privilege cardholders, nonresident homeowners, or people who are guests? Thanks

 

Janet,
I made a mistake when speaking of non-member and non-resident. Every person who purchases a home is a member. There is no classification or definition for a nonmember. My apologies.