Funds frozen as groups grapple for control of Hawaiian Ranchos Road Maintenance Corporation

  • Image capture from Google Maps/Special to West Hawaii Today

KAILUA-KONA — “Caution. Road Work Ahead.”

Signs like these have been conspicuously absent for weeks throughout the Hawaiian Ranchos subdivision in Ka’u as a battle for control of the nonprofit corporation responsible for maintenance of the private road system plods toward what is likely to end up a legal conclusion.

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Any and all road maintenance has stalled in the community and the sitting Hawaiian Ranchos Road Maintenance Corporation (HRRMC) Board of Directors has been locked out of a bank account containing more than $200,000 for road work and repairs.

In turn, those board members have locked their would-be replacements out of the HRRMC headquarters, branding the group as “dissidents” and refusing to turn over the information and control necessary to bring road maintenance back to Ranchos.

Nancy Bondurant, a Ranchos resident and a leader in the attempt to replace the sitting HRRMC board in its entirety, said the catalyst for actions taken were several alleged violations by the board of bylaws and state statutes, as well as a lack of transparency that could indicate financial improprieties.

“When we started comparing the minutes and what was actually approved for spending versus what was spent, there are huge discrepancies,” Bondurant claimed.

Mats Fogelvik, former president of the HRRMC and a seven-year board member, responded that claims made by Bondurant’s group are irresponsible and unfounded.

“What they did is not going to stand up in court,” Fogelvik said. “We have to take them to court because this has to stop. It’s beyond ridiculous. We had to lay off three part-time workers and close our office because we don’t have any money.”

In the meantime, some Ranchos residents are concerned about the quality of their roads deteriorating while competing attorneys file motions and sift through bylaw interpretations on a case that falls under the jurisdiction of Hilo’s 3rd Circuit Court and Judge Greg Nakamura.

In an email to Keene Fujinaka, vice president and East Hawaii market manager at Bank of Hawaii, Ranchos resident Ann Bosted implored the bank to grant the original board access back into the road maintenance fund.

“The order that you ask for has not been made,” Bosted wrote to Fujinaka, referencing the bank’s request for a legal order in response to a motion for declaratory relief filed by an attorney representing the sitting HRRMC board.

“It may not be issued for several months, and maybe years, so waiting for that before unfreezing the HRRMC’s accounts would cause unnecessary delay and hardship,” Bosted continued.

How it happened

A group of Ranchos community members that included Bondurant executed a vote by Ranchos members at a special meeting convened in July to remove the sitting board immediately. Many of the ballots had to be mailed in, as several property owners spend time off island.

While there are over 1,200 lots in the subdivision that pay annual fees to the HRRMC, Bondurant said there are rarely more than 200 votes cast on any measure. The vote to remove the board on July 21 produced a 114-17 result in favor of the board’s removal, Bondurant said.

Immediately following the vote, the six interim board members went to the Bank of Hawaii with minutes from the special meeting along with other documentation and had the rights to the HRRMC account reassigned to them.

Based on bylaws, those interim members were chosen according to voting numbers from the previous year’s election. The six nominees who received the highest number of votes without actually being elected will comprise the interim board until the next election takes place.

Bank of Hawaii reviewed the documents and reassigned account privileges to the new members.

Fogelvik said the sitting board didn’t find out about the reassignment until a member called the bank for auditory purpose.

“I’m pretty shocked it happened, actually,” he said.

The resulting action taken by the sitting board was refusal to turn over management of HRRMC as well as refusal to recognize the results of the vote, citing procedural concerns its members say render the vote invalid.

According to bylaws, Bondurant needed 25 signatures to initiate the vote. She gathered 43. Fogelvik claims not all of those were legitimate, as some were duplicates and others came from nonpaying persons whose signatures shouldn’t count.

Beyond that, Fogelvik said while the group had a right to call the special meeting, it’s up to the sitting board to decide when the meeting is convened and what’s on the agenda.

Bondurant said it became clear soon after the vote that sitting board members never intended to convene the special meeting, namely in what she described as attempts made by those board members to stifle the vote and impede the process.

Thus, Bondurant and her group convened the meeting and called the vote themselves. Fogelvik said to do so was a clear violation of bylaws and is the basis for a lawsuit filed by the board to have access to the more than $200,000 returned to sitting members.

In response to Bosted’s inquiry with Bank of Hawaii, Fujinaka replied via email.

“I understand that the freezing of the HRRMC accounts has resulted in hardship; however, given the conflicting demands against this account, we cannot determine which persons are authorized to handle the Account and funds in question,” he wrote. “We also do not believe it appropriate for us to reach any legal conclusions based on the documentation presented to us.”

“Given the contested nature of control, we intend to communicate with the attorneys for both parties until the situation is resolved through the Court,” Fujinaka continued.

Bondurant said it’s her understanding that interim board members, who are currently locked out of HRRMC facilities, technically retain access to its monies. Thus, she believes they could tap into those funds and resume road work if they chose.

However, Bondurant said the interim board members’ decision has been to refrain from touching the money until the legal process has played out, based on the advice of legal counsel.

Effects of frozen funds

Both Bondurant and Fogelvik said at the moment, there are no large road projects or pending contracts in Ranchos, which has limited the impact of the power struggle for control of HRRMC.

Some uncashed checks remained in position of the sitting board, which they’ve used to pay utilities. However, part-time employees that mow easements and fix potholes have been temporarily laid off.

Things may get considerably more complicated in the next couple of weeks if the situation isn’t resolved.

Fogelvik said the sitting board tends to hold an election for three seats opening up at its annual meeting Dec. 15. But based on the July vote to remove the board that is currently being contested, all nine seats should be up for grabs.

Furthermore, fees will start flowing into HRRMC when the calender flips to 2019. Though not due until March, Bondurant said a significant number of the 1,227 paying lots will send their $150 payments in by January, likely creating a six-figure influx of cash that will eventually top out near $185,000.

Fogelvik said the sitting board plans to open another account at a separate bank with the money once it arrives, which could spur future lawsuits.

Back story

Bondurant and the rest of the group that initiated the removal process say a small number of residents have controlled the HRRMC board for years.

The group has alleged nepotism and cronyism, saying the board has awarded part-time, paid positions to family and has maneuvered to disqualify nominations of people for board seats of whom sitting members disapprove.

Bondurant also accused the board of obfuscation, saying it hasn’t conducted yearly audits as mandated and refused for months to make meeting minutes readily available to the public.

Fogelvik denied accusations of nepotism and any implications of financial misconduct, but did say the board wasn’t as forthcoming with meeting minutes initially.

“We gave them copies of all our minutes, but we were resisting doing it because we had a feeling that they were not operating in good faith and were going to try to use it against us,” he said. “And, sure enough, we were sued with a 250-page lawsuit six months later.”

Fogelvik added that the HRRMC board just conducted an audit and has posted it on the corporation’s website, ranchos-roads.org, which traces finances back to 1999.

Bondurant has also alleged over 200 bylaw violations, many of which Fogelvik dismissed out of hand.

“It was a lot of propaganda and false allegations, but they can’t prove anything,” asserted Fogelvik, while also admitting the possibility that the board may have made some mistakes. “Our bylaws are outdated and they need an upgrade. I don’t understand all the stuff. I am just volunteering to try and do a good job.”

The HRRMC board issues a yearly budget that lists annual income, operating expenses and administrative expenses. However, while the administrative expenses are itemized, operating expenses are only documented as lump sums spent on road maintenance and repairs. The budget does not specify what the money is being spent on or to whom it’s being paid.

“It could probably be formatted in a better way, but this is just how it’s always been done,” Fogelvik said. “It’s nothing criminal and nothing is missing and the books are open for inspection.”

Bondurant said she got a look at the books months back but was accompanied the entire time by a board member who restricted what she was allowed to see.

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She added tensions have risen in the aftermath of the vote and conditions have turned ugly.

“We have been called dissidents (and worse) because we’re not going to allow this behavior,” Bondurant said.

  1. Graystash December 2, 2018 3:21 am

    typical mess which is the norm in Hawaii ?????


  2. Old Man December 2, 2018 7:03 am

    This is why limiting terms of office whether in private or public office helps to prevent these kinds of problems.


  3. Michael Drutar December 2, 2018 7:17 am

    Fascinating read for people who serve on Boards. If either party had hired a Parlimentarian and legal counsel for the meetings, it could have all been averted. Someone who does not understand the Bylaws or Robert’s Rules should not have ever volunteered. That was foolish. They may now be personally liable and should probably contact an Attorney who works for them personally and not the organization.


    1. Frequent_Runner December 2, 2018 9:57 pm

      Fogelvik’s comments to this article will likely be an exhibit in the next motion.


    2. Melissa Fletcher December 4, 2018 8:10 am

      Exactly, Michael. Excellent.


  4. burned_out December 2, 2018 12:56 pm

    Having been president of a Homeowners road maintenance, I can tell you it is a thankless job. Filing leins against non-payers, collecting money in time to get repairs done before it gets much more worse. I moved out and swore to never move to an area with any kind of home owners assn, CCRs and restrictions. It is cheaper to buy 4wd trucks and deal with the bad roads.


  5. Ernest T Bass December 2, 2018 2:58 pm

    After having bought a lot and developed my home over twenty years,
    in a DIFFERENT PRIVATE SUB DIVISION on the island of Hawaii I can honestly recommend this following advice to ANYONE buying property :
    .
    DON”T DO IT! …. Private Sub Divisions are crazy.
    Buy your property on COUNTY ROADS….( you already pay taxes for that honor)
    Private sub divisions get NO/ZERO help from the county….period.
    Hawaii is the “wild west” eternally stuck between
    KINGDOM LAW
    TERRITORIAL LAW
    and PRESENT U S LAW.
    .
    You will thank me later….
    If you want to spend the rest of your days on this Earth litigating….by all means, a PRIVATE SUB DIVISION is for you.
    For any others that are sane and want to actually Enjoy the rest of their gifted days on this Green Earth.
    BUY ANYWHERE else Besides a Hawaii Private Sub Division.
    ( I wish I had)


  6. KonaDude December 3, 2018 3:52 am

    This is going to make a great mini series..


  7. Mats Fogelvik December 3, 2018 12:35 pm

    Unfortunately, a lot of factual error in this article. Firstly, Bondurant and her group never gained control of the HRRMC bank account, all they managed to do was to freeze it. Unfortunately, there is no way to unfreeze it without a Judge deciding. Secondly, being a board member has never been about control for me, just a responsibility. We have a good working board of volunteers, and I am proud of what we have achieved over the past years. Just look at the Roads in Ranchos, they are in good shape. The main reason why we are very weary about this group’s involvement in HRRMC is that we question their intention and good faith. Bondurant and her group are involved in several frivolous lawsuits in our neighborhood, including one from last year against HRRMC. Their involvement in our Community Association caused a Board meltdown, lawsuits and that bank account is still frozen since a couple of years. That is what is called a track record. Personally, I am ready to resign from this board, all I want to do is to hand it over to responsible individuals. We as a board has a responsibility to protect the corporation It is not fun to be a target of all these allegations, but that is just what they are, allegations. Bondurant’s lawsuit against us from last year has not been able to prove any wrongdoing, damages or financial losses, and now they are trying an unauthorized election instead? Unfortunately, now it will be up to the Court to decide who is the rightful board of HRRMC. Aloha.


  8. Mats Fogelvik December 3, 2018 12:53 pm

    I forgot to mention, Bank of Hawaii really made a big mistake here, they should never have considered changing ALL signors/officers on a corporate account without signed document from the current Secretary of the board and contacting our office. Major read flag and a flawed security routines.


  9. Bob Werner December 7, 2018 11:53 am

    As a long time resident of Hawaiian Ocean View Ranchos it saddens me to see the efforts of good and well meaning people demeaned and unappreciated. I am not, nor have I been, a HRRMC board member, but I have had occasional association and conversation with some of the current and past board members. The history of the Ranchos Road Maintenance board has by and large been one of local residents volunteering to help oversee the care and maintenance of the roads and lend a helping hand to their neighbors. They are unpaid volunteers that often use their own money and time for the benefit of their neighbors. The individuals attempting to oust the current board and purporting to be the newly elected board have on been an ongoing disruptive influence in our neighborhood. They go out of their way to find fault and sow dissension and have made little, if any, effort to actually be of benefit to the community.

    In my experience with volunteer boards, it is not unusual to find them in violation of their governing bylaws because of their lack of expertise regarding their meaning or ignorance of some of the sections. Oft times, they just manage their meetings and responsibilities in the manner in which it was done before. In this instance, the board was dealing with bylaws in serious need of revision and were taking steps to do so while attempting to follow the bylaws to the best of their understanding and ability. While I can appreciate Michael Drutar’s comments, many boards do not have the financial wherewithal to fund a Parliamentarian or Counsel for there meetings. That is certainly the case in this instance where the Board has taken great efforts to minimize the Road Maintenance fee and not create an excessive burden on the residents.

    For sake of brevity, let me make just one point to the residents of the Ranchos that might be confused or questioning the motives and activities of the current and past boards; Our roads are by and large well maintained…certainly some of the best maintained private roads on the Island. The road maintenance fees in 1991 (when the HRRMC was created) was $95 per year. Our current fees are $150 per year; an increase of 60% over the last 27 years. That does not even keep up with inflation…does that sound like the result of boards that were practicing financial malfeasance or fraud?

    It is my hope that the members of the Ranchos community affirm through election the current legitimate board members and send a resounding message to those disruptive community members that their efforts are neither appreciated nor wanted.


  10. Bob Werner December 15, 2018 2:35 pm

    Interesting that someone reported my post as spam and it was never posted…here goes again

    As a long time resident of Hawaiian Ocean View Ranchos it saddens me to see the efforts of good and well meaning people demeaned and unappreciated. I am not, nor have I been, a HRRMC board member, but I have had occasional association and conversation with some of the current and past board members. The history of the Ranchos Road Maintenance board has by and large been one of local residents volunteering to help oversee the care and maintenance of the roads and lend a helping hand to their neighbors. They are unpaid volunteers that often use their own money and time for the benefit of their neighbors. The individuals attempting to oust the current board and purporting to be the newly elected board have on been an ongoing disruptive influence in our neighborhood. They go out of their way to find fault and sow dissension and have made little, if any, effort to actually be of benefit to the community.

    In my experience with volunteer boards, it is not unusual to find them in violation of their governing bylaws because of their lack of expertise regarding their meaning or ignorance of some of the sections. Oft times, they just manage their meetings and responsibilities in the manner in which it was done before. In this instance, the board was dealing with bylaws in serious need of revision and were taking steps to do so while attempting to follow the bylaws to the best of their understanding and ability. While I can appreciate Michael Drutar’s comments, many boards do not have the financial wherewithal to fund a Parliamentarian or Counsel for there meetings. That is certainly the case in this instance where the Board has taken great efforts to minimize the Road Maintenance fee and not create an excessive burden on the residents.

    For sake of brevity, let me make just one point to the residents of the Ranchos that might be confused or questioning the motives and activities of the current and past boards; Our roads are by and large well maintained…certainly some of the best maintained private roads on the Island. The road maintenance fees in 1991 (when the HRRMC was created) was $95 per year. Our current fees are $150 per year; an increase of 60% over the last 27 years. That does not even keep up with inflation…does that sound like the result of boards that were practicing financial malfeasance or fraud?

    It is my hope that the members of the Ranchos community affirm through election the current legitimate board members and send a resounding message to those disruptive community members that their efforts are neither appreciated nor wanted.


  11. Bob Werner December 16, 2018 11:53 am

    It is interesting to note that Nancy Bondurant was one of the individuals on the ballot for one of the 3 open seats on the board. In yesterdays election, overseen by an independent agency in accordance with the bylaws, she received only 7 votes in support of her candidacy and over 200 votes in specific opposition to her candidacy… I wonder who has the support of the community…?


  12. Bob Werner December 16, 2018 12:03 pm

    As a long time resident of Hawaiian Ocean View Ranchos it saddens me to see the efforts of good and well meaning people demeaned and unappreciated. I am not, nor have I been, a HRRMC board member, but I have had occasional association and conversation with some of the current and past board members. The history of the Ranchos Road Maintenance board has by and large been one of local residents volunteering to help oversee the care and maintenance of the roads and lend a helping hand to their neighbors. They are unpaid volunteers that often use their own money and time for the benefit of their neighbors. The individuals attempting to oust the current board and purporting to be the newly elected board have on been an ongoing disruptive influence in our neighborhood. They go out of their way to find fault and sow dissension and have made little, if any, effort to actually be of benefit to the community.

    In my experience with volunteer boards, it is not unusual to find them in violation of their governing bylaws because of their lack of expertise regarding their meaning or ignorance of some of the sections. Oft times, they just manage their meetings and responsibilities in the manner in which it was done before. In this instance, the board was dealing with bylaws in serious need of revision and were taking steps to do so while attempting to follow the bylaws to the best of their understanding and ability. While I can appreciate Michael Drutar’s comments, many boards do not have the financial wherewithal to fund a Parliamentarian or Counsel for there meetings. That is certainly the case in this instance where the Board has taken great efforts to minimize the Road Maintenance fee and not create an excessive burden on the residents.


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