Hix/Varner Internal Dispute Resolution (IDR) Meeting Summary

Date: June 30, 2026 – 9:00 a.m.

Participants:

 Wayne Guralnick – HOA Attorney

* Gary Burkel – Board President

* Carol Tasko – Board Member

* Robert Hix – Member Petitioner

* Ron Varner – Member Petitioner

* Diane Berley – Member Observer

Meeting Summary

Mr. Guralnick opened the meeting by describing his firm's experience representing homeowners associations, including Sun City Palm Desert and Sun City Shadow Hills. He explained that his firm's role is to advise HOA boards on governance matters, promote policy-driven decision-making, and facilitate dispute resolution. He also noted that his firm generally does not represent associations in litigation. He emphasized that his role is to advise boards on what they need to know from a governance perspective.

Early in the discussion, we asked whether the meeting was intended to be a formal Internal Dispute Resolution (IDR) proceeding or the informal meeting referenced in Mr. Burkel's May 7, 2026 letter denying our IDR request. Mr. Guralnick responded that, in his view, the distinction did not matter. We noted that the Board's May 7 letter expressly denied the IDR request and instead offered an informal meeting, and we indicated that we had been advised differently regarding the statutory IDR process. No definitive conclusion was reached regarding the meeting's formal status.

Mr. Guralnick then asked us to identify the issues we wished to discuss.

Mr. Hix explained that the original IDR request focused on two primary concerns:

1. The management company procurement process, including the adequacy of the Request for Proposal (RFP) and the role of the Ad Hoc Management Company Committee.

2. The process used to reconstitute the Procurement Advisory Committee (PAC), including the selection and vetting of committee members and the appropriate role of the Board liaison.

Mr. Hix acknowledged that circumstances had changed since the IDR request was submitted. Specifically, the Ad Hoc Committee had concluded its work and the Board had subsequently announced its decision to select Troon as the Association's management company.

Mr. Burkel stated that the Board has the authority to change management companies.

Mr. Hix responded that neither he nor Mr. Varner had ever disputed the Board's authority to select a different management company. Rather, our concern has consistently been the procurement process used to reach that decision. We explained that our position is based on our belief that the RFP lacked an adequate Statement of Work, measurable performance standards, and objective evaluation criteria. We also emphasized that our concerns would have been the same had the Board decided to retain FSR using the same procurement process.

The discussion then turned to legal standards versus procurement best practices.

Mr. Guralnick discussed the Board's authority under the Business Judgment Rule and the discretion generally afforded to boards when making governance decisions. We responded that our principal concern was not whether the Board met the minimum legal standard, but whether it followed recognized procurement best practices that would provide greater transparency, accountability, and protection for the Association. Mr. Hix commented that the Board’s standard should be “best practices” rather that Davis-Stirling legalese to defend their actions.

The discussion next shifted to the Procurement Advisory Committee.

Mr. Hix expressed concern regarding the process used to reconstitute the PAC in February 2026. He noted that seventeen members submitted applications, but only six applicants were interviewed before appointments were made, including no interviews of several former PAC members with significant procurement experience.

Mr. Hix also stated his opinion that Mr. Burkel exceeded the advisory role contemplated for a Board liaison by directing committee activities and communicating recommendations directly to the committee without prior Board authorization. Mr. Burkel disagreed with this characterization. Mr. Hix reminded Mr. Burkel that the primary role of the liaison was “Active Listening”.

We also explained that repeated attempts to discuss these concerns privately with the Board had not resulted in meaningful dialogue. Mr. Burkel initially stated that he was unaware of reports or requests for meetings. Later in the discussion, he indicated that the reports had not been ignored. We responded that, although reports had been submitted, we had received no substantive response or acknowledgment addressing the recommendations.

The conversation then turned to the Morrison/CCL Food & Beverage procurement process as an example of our broader concerns regarding procurement methodology.

Mr. Hix explained that the Morrison/CCL agreement illustrated the potential consequences of proceeding with an inadequate procurement process. He stated that operating results had been trending toward approximately $1 million above the projected amenity subsidy before subsequent amendments reduced those projected losses by approximately $700,000.

Mr. Guralnick stated that his firm's current role was to assist in revising the proposed Troon agreement so that it would function as an HOA management agreement rather than a golf and country club management agreement.

Mr. Hix then asked whether Mr. Guralnick's firm had previously reviewed the Morrison/CCL agreement. Mr. Guralnick confirmed that it had.

When asked to describe the scope of that review, Mr. Guralnick stated that his firm's review focused on legal form and contractual language rather than financial, operational, or business risk.

Mr. Hix observed that this raised broader questions regarding who had evaluated the financial and operational risks associated with the agreement, including questions concerning operational standards, Board oversight, allocation of financial risk, and reporting requirements.

Mr. Guralnick was provided copies of the following documents developed by (Hix/Varner):

§  Food & Beverage RFP Review and Recommendation Report

§  Morrison/CCL Agreement Review and Recommendation Report

§  Management Company RFP Review and Recommendation Report

After briefly reviewing portions of the Management Company RFP Review and Recommendation Report, Mr. Guralnick stated that he believed many of the issues raised could be addressed and described procurement as an area in which he had extensive experience. Mr. Hix expressed the professional opinion that many of guarantees and performance standards probably cannot be negotiated, at this stage, if they were not a part of the RFP soliciting the Proposal that the agreement is supposed to reflect.  First of all there are likely to be cost implications which may warrant a reconsideration of other competitors.

Mr. Guralnick indicated that the deal the Board was willing to accept was up to them.

Mr. Hix responded that management companies likewise often describe their services as meeting the highest industry standards, but that objective performance standards and measurable Key Performance Indicators (KPIs) remain essential to meaningful accountability. He noted that, in his opinion, agreements lacking clearly defined performance measures inevitably require greater Board involvement in operational matters rather than allowing the Board to focus on governance.

Throughout the meeting, Mr. Guralnick repeatedly asked what steps might resolve our concerns. He suggested that an additional meeting with the Board might be productive.

Mr. Burkel expressed concern that some of Mr. Hix’ statements were presented as factual conclusions rather than opinions. Mr. Hix responded that he believed the circumstances required direct discussion of the issues and that the opinions expressed by him and Mr. Varner should be considered as expert.

Mr. Hix then described the events surrounding the original Food & Beverage RFP process. He explained that former Board liaison Bob Walter had originally requested that the PAC develop the RFP. Shortly thereafter, Mr. Burkel invited him, as PAC Chair, to participate in an Ad Hoc Committee developing the RFP. After attending the initial meeting, Mr. Hix questioned whether the committee's proposed approach had been formally authorized by the Board and requested documentation of that authorization. Mr. Burkel responded that he was a Board member and directed the work accordingly. The following day, Mr. Hix received an email stating that his participation on the committee was no longer needed. Mr. Hix stated that he believed he had been removed because he questioned the committee's authority rather than because he was unwilling to cooperate.

As the meeting concluded, Mr. Guralnick again suggested that another meeting with the Board might help resolve the remaining issues if the Board were willing to participate.

Mr. Hix responded that they would be willing to participate, if there were a reasonable expectation of an open and productive discussion. He also stated that, if the existing level of disagreement between himself and Mr. Burkel made such a meeting difficult, he would be comfortable having another qualified representative participate in his place.

Mr. Guralnick stated that he understood the importance of developing an adequate Statement of Work and noted that he had prepared numerous RFPs during his legal career. Mr. Hix observed that management company procurements are substantially more complex than many other types of procurement because of their operational and financial scope. Mr. Hix questioned the expertise his law firm had in the area of business risk.

Ms. Diane Berley then commented (speaking as a homeowner rather than in any professional capacity), that specialized expertise is often necessary when addressing complex matters. Using a medical analogy, she observed that even an outstanding cardiologist may not be the appropriate specialist for every medical condition.

As the discussion concluded, Mr. Hix suggested that the meeting be adjourned and that Mr. Guralnick continue discussions with Mr. Burkel and Ms. Tasko before advising us regarding any potential next steps. Mr. Burkel stated that he had placed the Troon agreement negotiation in Mr. Guralnick's capable hands as though his job was done.

Observations

Although the meeting allowed each participant to explain his or her respective position, no substantive resolution of the issues identified in the original IDR request was reached.

The discussion reinforced the differing perspectives regarding the management company procurement process. While Board representatives emphasized the Board's legal authority and discretion under the Business Judgment Rule, we continued to express concern that significant procurement decisions should be guided by recognized best practices, including comprehensive Statements of Work, measurable performance standards, objective evaluation criteria, and transparent procedures. Based upon what Mr. Guralnick stated, we question the actual skill level. Unfortunately, Mr. Burkel seems content and to let Mr. Guralnick run point with Troon without significant participation of the entire Board. It appears that Mr. Guralnick is taking his direction from Mr. Burkel and not the consent of the Board.

Mr. Guralnick’s suggestion that additional discussions between the parties may be beneficial appears to provide an opportunity for further dialogue, if the Board is willing to engage constructively. But this seemed more like a way to end the meeting on as positive a tone as possible.

After the meeting concluded, Mr. Varner approached Mr. Burkel and shared that he had attended a recent PAC meeting when Mr. Burkel was not in attendance. Mr. Varner told him he advised PAC members that they needed to take the initiative and get organized in order to effectively perform their duties as described in their charter. They were disorganized and overly focused on issues like making changes to their charter and the PAC Handbook. Mr. Burkel indicated that the Chair was ineffective, but took no responsibility for his role as the liaison.