Scottsdale East Homes co-op Matt Stobs

Scottsdale East Homes co-op residents like Matt Stobs continue to complain of poor management and board decisions related to millions of dollars worth of plumbing and preventative maintenance work that is ongoing in the community.

Issues with management continue to plague residents at the Scottsdale East Homes co-op community in southern Scottsdale, with members alleging they are assessed phantom late fees.

Resident Betty Story said she has four late fees on her account even though she pays her member dues on time each month. 

In one instance, Story checked her account and found late fees for September dues on Aug. 30 – two days before her payment was due.

Story said HOAMCO, the management company hired by the coop’s board, does not regularly notify members about outstanding fees.

The only way someone like her could find out about fees is by checking accounts online – something not all residents, many of whom are elderly, do with regularity.

She is not alone.

A Scottsdale East Homes community Facebook page includes accounts from other residents with similar experiences.

Resident Kyle Solomon wrote, “I was on my account 2 days ago and everything was fine and I just checked this morning and I suddenly have 6 late fees?!”

When asked how many residents have discovered erroneous late fees, Story said, “Nearly everyone who checks their account.” 

HOAMCO did not respond to multiple requests for comment submitted to the Scottsdale East community manager about the errors and how the company is going to fix the problem.

The problem of poor notice and little to no documentation for late fees is not new.

Resident Bryan Williamson said HOAMCO sent him a letter on April 2018, notifying him he had outstanding dues predated the       management of the community.

HOAMCO took over the community around April 2017 – meaning the company did not notify Williamson of the outstanding dues for a year.

HOAMCO went through five on-site managers since it took over and Williamson said the amount of the outstanding charges they say he owes has fluctuated from $150 to $484.

“They still can’t tell me what I owe it for,” Williamson said.

HOAMCO attempted to charge Williamson a $10-a-day late fee for the outstanding dues it said he owed despite waiting nearly 12 months to notify him of the outstanding charges.

Williamson said he showed HOAMCO representatives receipts proving his payments were not late. They still cannot tell him why he has outstanding payments on his account.

Another resident wrote on the Facebook page how her account had accrued $1,200 worth of erroneous late fees.

“They never sent me any notices until one day they sent a bunch of notices out to members and I was told I was in violation of Occupancy Agreement and would face eviction,” according to the Facebook post.

That resident had to submit old receipts to HOAMCO to get the charges cleared.

Story said HOAMCO reversed her late fees when she brought it to management’s attention, but provided little explanation for the cause of the errors.

 “We’re tired of it, just so tired of it,” Story said.

Even when HOAMCO ultimately reverses the erroneous fees, the original error could have significant implications for residents of the co-op. Anyone with outstanding fees is considered ineligible to vote on official community business.  

An August petition to recall co-op board President Linda Shannon recently failed after 11 of 65 signatures were disqualified by the board due to a determination they came from ineligible voters

According to Scottsdale East Homes Inc. bylaws “No member shall be eligible to vote or to be elected to the Board of Directors who is shown on the accounting books of the Corporation to be more than thirty (30) days delinquent in payments due.”

Those 11 signatures brought the petition total to 54 signatures or 19 percent of the total members.

According to the bylaws, a petition needs to collect signatures from 20 percent to initiate recall proceedings for a board member.

According to an email from HOAMCO to members, the petition needed a minimum of 57 “legitimate” signatures.

Neither the co-op board nor HOAMCO responded to questions about how many, if any, of the 11 signatures were disqualified due to outstanding late fees or how they determined those late fees were legitimate.

A second recall petition is currently circulating throughout the community.

The recall movement against Shannon and other board members is connected to allegations by some members the board overstepped its authority in authorizing sewer-line repair work and other preventative maintenance, which has drained the co-op’s reserve fund.

The board characterized the sewer line replacement project as an emergency, allowing it to spend over $700,000 from the community’s reserves between December 2017 and May 2019 and take out a $4-million loan.

According to the community’s bylaws, payments from the reserve over 30 percent "of the total balance in both reserve accounts” require approval of a simple majority of all voting members, not just the board approval, except in emergencies.

Residents like Story and Matt Stobs argue the board did not provide proper proof to residents the sewer line project constituted an emergency.

Thus, they assert, the board violated the bylaws by draining the reserve fund.

Stobs said if the sewer lines required    repair, the board should have accounted for it during its annual budget process.

Though the sewer project is now in full swing, concerned community members were able to put a stop to a proposed waterline replacement after finding out the board or management had misled the community about the need for the project.

A letter to members dated May 14, 2019, stated the City of Scottsdale required the co-op to replace its waterlines.

“We have, however, received notice from the City of Scottsdale additional expense will be incurred to replace waterlines in addition to the sewer system,” according to the letter.

However, a public records request filed by a member in September reveals the city gave no such directive.

That same day, HOAMCO community manager Rhonda Harding sent an email to residents notifying them the waterline project was canceled.

“Several members pointed to the waterline decision as proof the board should take their concerns more seriously.

However, the board treats members who speak up with hostility.

“These are just people who are concerned about the waterlines,” said a resident who asked to remain anonymous for fear of retribution. “But (the board) just wants to save face at all costs, and they don’t want to answer hard questions.”

A board meeting on Aug. 22 abruptly shut down early after residents brought forth concerns over the sewer and water projects.

One board member referred to previous reports in the Progress as “propaganda” according to members who attended the meeting.

In addition to the board’s spending, members have also taken issue with its chosen contractor, Tempe-based Peterson Plumbing.

Peterson Plumbing was chastised by the City of Scottsdale for attempting to begin work on the sewer project without obtaining proper permits.

Peterson and an attorney for the board both told residents Peterson had permits for the work and  the city asked residents stop filing complaints, earning a rebuke from Eric Anderson, a senior assistant attorney with the City of Scottsdale.

Anderson wrote the city never discouraged residents from filing complaints and “city inspection officials determined construction was occurring without the required permit which is a violation of City Code.”

In response, Edward O’Brien, an attorney for the board, alleged those city representatives on three occasions asked the board to stop residents from making “meritless” complaints to the city.

It is not the first time Peterson performed work without a permit.

Story filed a complaint with the Arizona Registrar of Contractors, which cited Peterson Plumbing on Sept. 6 for incomplete work on a water heater installed in Story’s unit in April.

“After investigation, the Registrar verified your work fails to meet minimum workmanship standards,” according to a letter from AZROC to Peterson Plumbing.

The letter noted when Peterson installed the new water hearter, it cut and capped the old pressure valve drain pipe and left the new drain pipe open above the floor.

The inspector also found Peterson did not obtain a permit for the water heater replacement until Aug. 30 – over two months after it replaced the unit – and the city did not inspect or approve the work.

Peterson Plumbing has 15 days from Sept. 6 to fix the issue in Story’s unit, and must obtain a new permit and approval from the city.

Before the sewer project, Peterson was responsible for inspecting members’ units and performing preventive maintenance.

Like Story, Williamson also saw work go unfinished in his unit.

Williamson, who had his leg amputated in February, said Peterson entered his unit for an inspection in March before he was even home from the hospital.

The company replaced a water heater, which was less than two years old and removed the plumbing underneath his bathroom sink due to the possibility of a leak.

“They took it out and have not replaced it,” Williamson said.

Over seven months have passed and Peterson still has not replaced the plumbing, rendering the sink useless.

Williamson said he plans to file a complaint with the Registrar of Contractors.