The Town Hall meeting on 9/26/17 was held to inform residents about the proposed revision of CC&R and By Law Changes and the 2018 Budget. The comments and questions during the meeting made it very clear that our community is well aware of the fact that the CC&R and Bylaw changes and the budget affect every home owner as attendees wanted to know and understand exactly what they would be voting on. Below are what I believe to be some of the key points of discussion.
CC&R and Bylaw Changes
Comments repeatedly touched on the proposed added HOA purpose and its implications. This added purpose was not part of the briefing and states:
When such action would benefit the community and the purposes of the Association, the Association may take such action to cooperate with Nonresidential Area Owner for any purposes detailed in this Declaration or NRS 116. (Article II, Section 1.e)
- The Nonresidential Area Owner is The Friends of ArrowCreek (FOA), owners of The Club of ArrowCreek (TCAC). Supporting the FOA, and with it all its members, residential, and nonresidential, by entering a contractual agreement is already allowed by the NRS 116.3102 and 3103. 3102.1. (e), and appears to be limited only by the CC&Rs’ dictated limit of a 15% annual dues increase and a 15% limit on a Special Assessment, without a community vote, as long as it would “benefit the community” and be consistent with the HOA’s purposes as defined in the CC&Rs and NRS. Based on the budget briefing, there is no item in the 2018 budget to cover any financial contractual agreement with TCAC, which would imply any such agreement would be an additional cost to the HOA.
Otherwise, there was no quantification or qualification of the scope of “cooperation” provided, nor what would be considered a quantifiable quid pro quo for the “benefit” to the community. The briefing let the audience also know that ACHOA Board over ruled Governing Documents Committee limiting a combined increase to 20% without a community vote.
- The added purpose could possibly also allow the HOA board to support TCAC by opening community amenities, including an expanded Residents’ Center, to non–owner members of TCAC. The answer given was that 60%-70% of the currently around 600 club members are residents. So why is this additional ‘purpose’ necessary?
The 2018 Budget
The budget briefing informed the audience of the proposed 14% ($30) increase in HOA monthly dues to $248/mo equal to a $390K/yr increase in operating revenues.
The biggest increases in operating expenses and capital project fund expenses include:
$250K for architect & engineering expenses for the proposed expansion of the Residents’ Center
$230K increase for payroll and benefit expenses
$40K for professional services
$51K for repair and maintenance
Grand total revenue deficit: $450K.
Conflict of Interest
A home owner brought up the concern of conflict of interest (COI). The HOA president, Bob Kirtley, stated that since none of the board members are equity members of TCAC, none of the board members have a conflict of interest. No further discussion ensued.
The Administrative Committee, of which I am a member, was tasked by the board to draft a COI policy for the community. The draft was approved by board counsel and is now in the hands of the board for final review and approval.
The COI policy draft was written based on the NRS, and in the spirit of the Stockton vs. Wheeler principle:
…no person can, at one and the same time, faithfully serve two masters representing diverse or inconsistent interests with respect to the service to be performed.
Based on the COI policy draft, any board or committee member would have to declare any conflict between any commitment in a private (financial or personal) capacity, and his/her official responsibilities, including any ongoing commitment in a private capacity through family members or through any other related parties, such as businesses, groups or associations.
The question I did not get to ask during the meeting is if the COI policy is approved and if the amended CC&Rs are approved, since some of our Board members are golf club members, and as such have a commitment in a private capacity, how would the board intend to handle decisions allowed by the open ended commitment they are making in the CC&R amendment to cooperate with TCAC?
Summary of the Town Hall Meeting discussion points:
- If approved, the existing and amended new CC&Rs will without a vote of the owner:
- Grant the board the power to “cooperate” with the owners of TCAC (Article II, Section 1.e).
- Maintain the ACHOA Board’s authority to:
- implement a budget, but expand the authority to include costs related to “cooperation” with TCAC (Article II, Section 5).
- raise monthly dues by 15% and implement a special assessment of 15% for any purpose of the HOA year after year, but expand the authority to include the purpose of “cooperation” with TCAC (Article III, Sections 4 and 5)
as long as it is deemed to “benefit” the community.
Thinking ahead, this could mean:
- HOA dues increase in 2018 from currently $218/mo to $248/mo per 2018 budget.
- Special assessment of another 15% in 2018 to cover the budget’s underfunding of $450K, bringing our HOA dues up to $285/mo (equal to a $480K/yr increase in operating revenues).
- In 2019, to cover any additional expenses such as the expansion of the Residents Center, additional increases in HOA dues would be necessary. Another 15% x2 increases would raise dues to $376/mo.
I left the meeting with more questions than answers. I am pleased that the board decided to provide homeowners with a redlined version of the CC&R and Bylaw changes and it has been made available for review via email blast to homeowners.
I am submitting this summary to the AC 411 website to invite helpful commentary and information and to continue the discussion.
From one neighbor to another,