Rebuttal of Open Session Statements on Morrison Agreement

Rebuttal to Don Day's Open Board Statement – June 24, 2026 r2

I attended the June 24, 2026, Open Board meeting during which Don Day addressed the audience during member comments. While his conduct attracted attention, the concern is not the length of his remarks, but the content of his presentation.

In my opinion, his comments were designed to present a distorted self-serving view of his and Burkel’s unsuccessful attempt to improve the performance of the Food & Beverage amenity during his abbreviated tenure on the Board and bolster support for selecting Troon to replace FSR as our management company. He misrepresented:

• the process through which Morrison/CCL was selected, 

• tried to gloss over the seriously flawed agreement he and Burkel negotiated,

• the extent of the excess losses resulting from it in 2025, and

• his attempt to attribute the operating losses experienced in 2023 and 2024 solely to First Service Residential (FSR).

There is no dispute that the food and beverage amenity incurred substantial operating losses during those years. However, those losses occurred largely due to the incessant attempts by various board members to micro-manage the amenity rather than establish appropriate standards and require FSR to manage the amenity to them. He also made no mention that our economy was experiencing the worst inflation in decades or that Burkel was the Treasurer and as a CPA should have been able to identify and mitigate the situation.

The remainder of this document presents details which correct and amplify his statement to afford you a better understanding.  It is lengthy, but necessary to shed light on important distortions and convenient omissions he made. For anyone interested in another side to his story the following relevant issues are addressed:

1. Facts Regarding the Morrison/CCL Agreement

2. Procurement Advisory Committee (PAC) Involvement

3. Events Preceding the Management Company Search 

1. Facts Regarding the Morrison/CCL Agreement

The documented record reflects the following:

• In the initial Morrison/CCL agreement the Board agreed to a baseline pro forma budget that exceeded the largest annual food and beverage loss experienced under FSR in 2024.

• Under the agreement was given complete contractual authority over food and beverage operations. This enabled the company to bill approximately $100,000 per month above the original budget.

• Four former members of the Procurement Advisory Committee (PAC) prepared an Agreement Review and Recommendation Report identifying 32 contractual flaws and ambiguities. The report was submitted to the Board on March 25, 2025. No action was taken until approximately seven months later, when Mr. Ganino negotiated an amendment limiting Morrison/CCL to the agreed baseline budget. That amendment limited the excess loss for the first to $700,000 which was on a run rate to exceed an annualized $1 million (April 1. 2025-March 31, 2026).

• Although the amendment limited the financial exposure, significant concerns remain.  Sun Lakes now operates with fewer dining hours; more limited menu options, and reduced service levels than residents experienced before the transition, with the exception of the COVID period. Morrison/CCL accepted the baseline budget while retaining substantial control over operating decisions that directly affect profitability. All because the board refuses to establish key performance indicators and metrics.

2. Procurement Advisory Committee (PAC) Involvement

Mr. Day also stated that the Procurement Advisory Committee participated in developing the Food & Beverage Request for Proposal (RFP) and reviewing the final agreement. The documented record indicates otherwise.

• Bob Walter initially requested that the PAC prepare the RFP for Food & Beverage. The committee agreed and developed a plan that would have completed the work within approximately 60 days, subject to Board authorization.

• Shortly thereafter, then-PAC Chair Bob Hix received an email from Board member Burkel announcing that an ad hoc committee had been established to develop the Food and Beverage RFP. The committee consisted of Randy Robbins, Gary Burkel, Bob Hix, and Steve von Rajcs.

• At the committee's initial meeting, Burkel presented a completed plan that had been prepared before the meeting. Mr. Hix expressed concerns that the proposed process was inadequate and requested a copy of the Board resolution establishing the committee and its authorized scope of work. Burkel refused to do so and stated that as a Board member Hix had to accept his word for it. 

• Hix subsequently submitted a letter outlining his concerns and included the PAC's proposed plan. The Board did not respond.

• The following day, Hix received notification from Burkel that his services on the committee were no longer required.

• Several months later, Day sent an email to Hix requesting the PAC to review the proposed Morrison/CCL agreement. Hix responded with an email indicating the PAC would, provided it received the RFP, supporting documents, and records of discussions with Morrison/CCL. Those materials were never provided, and no further contact with the PAC initiated by Day or Burkel occurred.

• 10/28/24 The PAC members unanimously requested the PAC be suspended until the Board addressed charter concerns and committee realignment recommended as part of the Governing Policy development approved by the Board. Day and Burkel repeatedly attempted to undermine the work of the PAC and Governing Policy. The letter clearly indicated that the PAC would remain available until the expiration of their terms in the event their services were requested. The PAC terms expired and no attempt was made by the board to reestablish the PAC until they were forced to do so under threat of recall at the end of 2025.  

3. Events Preceding the Management Company Search

In the spring of 2023, Mr. Day along with several other members of the Financial Advisory Committee (FAC) participated in a self-appointed effort to seek proposals from alternative management companies, without Board authorization.

During a meeting requested by Day with Varner and Hix in May, 2023, Mr. Day suggested that the PAC and FAC collaborate in order to force the Board to replace FSR with Troon.  Evidently, he had become enamored with what he had learned from Sun City Shadow Hills HOA and the fact that they used Troon for golf and food & beverage, but Desert Resort Management (Associa) for HOA management. Hix and Varner advised that such action would be inappropriate and violation of our respective charters. Especially since the Board had already announced its intention to attempt to negotiate a new agreement with FSR. Hix and Varner advised him that it was not his role and it was wrong to interfere in any way with those negotiations until they were concluded. 

Despite those discussions, Day and other FAC members (von Rajcs, Mc Elwain, Finigan) pursued Troon and also contacted several management companies, including Keystone, Management Trust, and PCM. At the June, 2023 Open Board meeting, he presented what he claimed to be “proposals” from Troon and another management company, urging the Board to consider them.

The Board subsequently requested the PAC review the submitted materials. After its review, the PAC concluded that the documents presented as “proposals” amounted to little more than marketing materials. The accompanying financial analysis prepared by the FAC was dubious at best lacking sufficient supporting information to justify the conclusions members of the FAC presented. That report remains available on the PAC website.

The Board also retained a consultant to determine how the companies had become involved without formal Board authorization and who they communicated with. According to the consultant's findings, each company indicated that Day represented himself as FAC Chair and stated that he was authorized by the Board authorization to seek proposals. When asked whether they had requested written evidence of that authorization, the companies acknowledged that they had not. One company initially threatened legal action against Sun Lakes, but withdrew that position after realizing their failure to request verification of Day’s claimed authorization.

Conclusion

The issues presented above extend well beyond Day's statement at an Open Board meeting. They raise the issue of Day's motivation for his presentation, particularly, at a time where the board’s motivation for changing management companies is in question. They also serve to raise broader questions regarding governance, transparency, documentation, adherence to established Board procedures, and inappropriate behavior as both a committee and Board member.

Note: Day and another member of the FAC were suspended from the FAC for their roles in the rogue attempt to seek a change in management company without authorization. Neither was reinstated. It is difficult to not consider that we have been faced with this same group of Sun Lakes' members working behind the scene with Burkel for almost 18 months attempting to do whatever necessary to remove FSR and install Troon as the new management company. This includes appointing a new PAC with members that were not properly vetted and are willing to be managed by Burkel to do his bidding. That is not the role of a committee liaison. All advisory committee charters clear state that the foremost function is “Active listening”.