January 12, 2004
|LOCATION: Quince Orchard High School, Rooms 221, 224 TIME: 7:30 p.m.|
|QUORUM: 15 VOTING OWNERS SIGNED-IN: 32 ATTENDANCE: 41|
VP Detached Homes
VP Town Homes
ARCHITECTURAL REVIEW COMMITTEE (ARC) PRESENT:
GUEST SPEAKERS: None
CALL TO ORDER: (Questions and dialog from the floor is noted in italics).
President Richard Schinner introduced Board of Directors and President of Architectural Review Committee, noting that an election for 1 open board position was an agenda item tonight. Rick thanked all for their participation and effort this year.
1. HANDOUTS – The following handouts were made available on a table at the entrance door and picked up after each owner accomplished sign-in validation for obtaining a ballot to vote:
2004 Budget (With 2003 budget and variances)
Balance Sheet (
Asset Replacement Reserve Funds
Maximum Assessment Increase Allowed by Board of Directors (Income Analysis)
Unfunded Discretionary Projects List
Unfunded Repairs List
Annual Reserves Fund Requirements (Asset Replacement Needs)
Common Area Behavior Rule 2003-1
Ballot (Open BOD position)
2. ARC ACCOMPLISHMENTS: President Kathy Wyatt attends every board meeting to represent the community and ARC. She has improved turnaround time and feedback on change requests. She has a concern for maintaining standards while balancing the need for ongoing change. Rick reviewed the following accomplishments and thanked Kathy Wyatt for her volunteer effort.
New President – Kathy Wyatt
Reviewed and Processed over 50 Architectural Change Requests
Reviewed and Existing Chippendale Rail Standard for Townhomes (Affirmed)
Developed and Approved New Community Awnings Standard (Prohibited in Townhomes)
Developed and Approved New Community Storm Door Standard (Revised Glass Area)
Developed and Approved New Townhome Shed Standard (Allowed with Restrictions)
Added all Approved Changes Since 1998 to Master Architectural Guidelines Document
Added Architectural Guidelines to Community Web Page
3. BOD ACCOMPLISHMENTS: Rick reviewed the following accomplishments noting that all members of the board contributed to accomplishing many other less visible tasks. Answers to related questions from the floor are noted in italics.
a) Saved Trees Adjacent to
b) Resolved Significant Problems with SHA’s Dedicated Right Turn Lane – Early 2003, significant construction errors were evident. Board spent many hours meeting with SHA representatives to resolve a myriad of problems such as incorrect outlet location, incorrect traffic control signal location, incorrect traffic pattern, sidewalk adjustments, drain and berm adjustments, and foliage upgrades. SHA will be installing additional signs and large white turn arrows on the pavement in next few weeks. SHA declined to install pre-notification signs for Blackberry Drive, however we have engaged our attorney to insist we receive equal treatment to our sister communities. SHA is accumulating accident statistics to determine if further safety signage should be installed.
c) Upgraded SE Tot-Lot – After 2 years of research and much volunteer committee work, one of three Tot-Lots was upgraded with all new equipment in November. Board declined to pursue committee’s $44,000 recommendation to upgrade all three lots due to lack of funds.
d) Forced PGC to Cleanup and Screen Boundary - After several years of legal intervention and our threatened law suit, PGC finally cleaned up their eastern boundary to our HOA.
e) Conducted Spring and Fall Inspections; Mailed 59 Letters of Concern - Our community inspections are now conducted the weekends we adjust clocks. Exterior changes and problem areas were matched against ARC approvals (or lack of approvals). Fifty-nine owners were notified to restore non-approved changes and/or to resolve problem areas.
f) Engaged New Landscape and Lawn Care Contractor – Re-bid our specifications and selected a new contractor for 2003. Board is not pleased with performance and will re-bid contract for 2004.
g) Installed 25 MPH & Playground Signs on Blackberry Dr – After more than a year
h) Published 4-Page Comprehensive Newsletter – Owner/ neighbor Brian Zarchin donated his skills and time to work with BOD to develop and publish a professional, multi-page newsletter in July.
i) Added Declaration of Covenants, Architectural Guidelines, and HOA Rules to Web Site – Electronic versions were lost over the years. Eighty pages of original documents had to be scanned, OCR converted, edited and uploaded to our web page. Now everyone has free, easy access.
j) Completed Tot-Lot(s) Safety Fencing: Due to several years of complaints from
parents of Tot-Lot children wandering on to
k) Relocated Marble Benches: For several years, parents of children using Tot-Lots expressed concern that marble is a safety hazard to children at play in the lots. While investigating County playground permits, BOD discovered that stone benches are not allowed in any play areas. BOD contracted to relocate the three Tot-Lot marble benches to just outside existing lots. In 1997, 9 marble benches were installed to replace rotted wood benches. There were 6 in Cul-de-sacs, and 3 in Tot-Lots. They are much longer life than the wooden benches and were selected by a community survey.
l) Expanded Sprinkler System to
m) Added Underground Low-Voltage Uplighting to
n) Replaced Blackberry Terrace Cul-de-sacs(s) Fallen Trees with Flowering Crepe Myrtle - The storm damaged downed trees were replaced with Flowering Crepe Myrtle trees (choice of neighbors).
o) Successfully Negotiated SHA for Trees in Rt 28
Median - Due to budget
cuts, SHA eliminated trees in our Rt 28 median between
p) Collected All Delinquent Accounts. BOD initiated a law suit to collect delinquent accounts recovering $4000 in assessments, late fees and attorney costs.
q) Other BOD Significant Events: BOD was forced to initiate legal action in an unacceptable owner/ tenant behavior situation. This effort resulted in an unpleasant but necessary eviction. BOD was forced to spend funds to cleanup spray-paint foul language and vandalism on streets signs and sidewalks in the townhome areas. BOD was forced to commit resources to remove an abandoned large heavy treadmill deposited in the bushes and creek by anonymous owners or tenants.
$100,000 Permanent Solution Creek Erosion Control (Estimate by Erosion Control Contractor)
$ 23,000 5-10 Year Solution Limited Erosion Control (Quote by Erosion Control Contractor)
$ 18,000 10-20 Year Solution Longer span steel humpback bridge – ignore erosion
$ 12,000 4-8 Year Solution Raise bridge 6-ft, add catwalk, ramp steps – ignore erosion
$ 4,600 3-5 Year Solution Raise bridge 4-ft, relocate 8-ft, add end steps – ignore erosion
$ 2,500 Closure Remove and dispose of bridge – ignore erosion.
$ 350 / day + Materials: Stabilize limited but key erosion area immediately adjacent to the bridge. Contractor estimates about 3 days and $2,000 in wire mesh and boulder materials.
The $100,000 solution includes all permits. The $23,000 solution does not include permits. The $18,000 longer span solution is an estimate for a prefabricated steel span originally proposed in 1992. The bottom three are from local contractors focused on bridge stability that ignore creek erosion. None provide a guarantee against flood damage.
downside if we close off the split-rail fence connections between the two
Tot-Lots, remove the short pieces of paved walk and grass them over, then
remove and dispose of the bridge? The
answer is attractive, because the only downside is another 50 yards to walk -
to get to the SE Tot-Lot from
5. COMMON AREA BEHAVIOR RULE WITH ENFORCEMENT PROCEDURES – Rick reviewed need, history, development and approval process. He explained that over last few years there was a dramatic increase in many unacceptable behavior events on our common areas. At request of owners, BOD directed our attorney to provide common area behavior rules and enforcement procedures in use by other HOA’s. BOD edited them to relate to Orchard Knoll’s environment – then mailed a draft copy to all 150 owners in July asking for comments or acceptance. All comments and suggestions were incorporated into a final draft. Our attorney revised the final draft and provided legal approval. BOD unanimously approved the final document. There was no further comment or discussion from the floor.
6. UPGRADE LANDSCAPE IN TRAFFIC CIRCLES? – A BOD high priority project is to upgrade the landscape in five Cul-de-sac(s) in 2004. However, funds will have to be identified. There was considerable discussion from the floor including the request to at least replace the incorrect variety of azaleas. Item was deferred to discussions on “Unfunded Projects” below.
7. PUBLISH ANOTHER NEWSLETTER? Rick praised the skills and effort of neighbor and owner Brian Zarchin in our 2003 effort. Jerry noted that Brian had recently asked to be re-involved. BOD agreed to again publish an informative and pleasing newsletter in 2004.
8. UPDATE DIRECTORY? Rick and other committee members have kicked off an effort to publish an updated directory in 2004.
ADD TWO NEW COLONIAL STREETLIGHTS TO
11. AMEND RFQ AND RE-BID LANDSCAPE AND LAWN CARE CONTRACT FOR 2004 – BOD is not pleased with performance vs. contract items from the new contractor of 2003. BOD has already amended the 2003 contract to specify unmet expectations and clarify contract language on behalf of the contractor and HOA. The amended contract has been re-bid. Another contractor has already furnished a professional response, for less money. An analysis is underway. We expect to release the contract after next board meeting in February.
12. STUMP INVENTORY – REPLACE REMOVED TREES? Over many years, trees that died or were felled by storms were removed under least-cost conditions. The stumps were not removed and the trees were not replaced. BOD desires a program to inventory and remove the stumps and replace at minimum – the trees that would have the most beneficial visual impact on the community. There are no funds to accomplish this project. Discussion was deferred to later review of Unfunded Projects (below).
Regarding the stumps - an assertive comment from the floor charged that BOD “did not use enough volunteer resources in the community”. When questioned for specifics (the person making the charges is not a member of the HOA) they clarified that ”BOD should get Boy Scouts to remove all the stumps.” BOD asked if they would volunteer to head up such an effort. The response was no – that was a BOD responsibility. (Editorial Comment - It is always easy to spend someone else’s time).
13. CASH FLOW PROBLEMS - Twice in 2003, our bookkeeper notified BOD that there was not enough funds in our checking account to pay bills. Some payments were delayed until quarterly income arrived.
14. ASSESSMENT INCREASE / NEXT ANNUAL MEETING IN NOVEMBER, NOT JANUARY - Rick explained that our financial reviews tonight would likely conclude that an assessment increase was necessary. However BOD elected not to increase with this budget, in order to better understand the will of the membership after a detailed community review. The decision was deferred to later in the evening in order to review current financial condition and needs. Rick further explained that BOD would return all subsequent annual meetings to first week in November to more appropriately schedule budget adjustments into new calendar year.
15. FINANCIALLY SOUND - (2003 BALANCE SHEET & 2004 BUDGET) - Copies of 2003-2004 Budget, and End of year Balance Sheet, were handed out and reviewed from overheads. Rick noted that there was only $166 left over at year end. Rick and Jerry reviewed the new budget noting that BOD chose not to raise assessments at this time. An assessment increase may be needed shortly. Jerry provided relief in noting that the new budget was financially sound and adequate. Operating costs could be met as shown in the 2004 Budget and Reserve funds would hold - if no new projects were initiated.
16. ASSET REPLACEMENT RESERVES REQUIREMENT CHART– (Overhead and Handouts) Jerry felt there was benefit to be confident in the reserves accumulation system and process. However, we must dispel a misnomer that our reserve funds are an emergency source for purchasing new assets. They are not. Jerry provided a brief historical overview of the two reserve funds, and why and how the money is accumulated, and restricted. Handouts included details of each asset, funds accumulated against that asset, and annual requirements projection process approved by our auditors in 1996.
a) REQUIREMENT: Our bookkeeper (ABS) is not responsible for inventory of our capital assets or justification of reserve funds to support replacement of the assets. Maintenance of the assets comes from operating funds. ABS (and our auditors) depend on BOD to state a target for how much of the quarterly assessment income should go into reserves. Jerry noted that from 1990 to 1996, our HOA blindly accumulated thousands of dollars into two reserve funds (Townhome and General) knowing that covenants required a reserve fund. There was little tracking – the fund simply accumulated. In 1996 our auditors, noting we are a not-for-profit corporation, required HOA to justify our surplus reserves – or - return the surplus to owners. Because we had no justification for monies greater than that required for townhome streets and roads – the auditors wanted either a justification, or a return of the surplus. The auditors suggested that all community assets be identified with an aging value – similar to the reserves account for townhome streets and roads. The current system (chart) of reverse-depreciation over time (to annually allocate and accumulate funds against every asset) was developed for that purpose. The chart and method was approved by our auditors. An approval letter from the auditors is in our file.
b) FUNDS ACCUMULATION REVIEW: Jerry reviewed the summary chart using the overhead, and identified details in supporting sub charts which make up summary line items. Jerry explained and demonstrated the reverse-amortization method of fund accumulation required by the auditors to justify the two reserve funds. Jerry noted that the townhome fund was required but that the general fund was optional. The chart identifies the appropriate Covenant Article and Section for each fund.
c) ASSET REPLACEMENT RESERVES - NOT SAVINGS FUNDS - Jerry pointed out that both reserve funds are for replacement of existing assets at end of their useful life – not for maintenance, and not for purchasing new assets. He explained and demonstrated the reverse-depreciation accumulation process for all our assets since 1990. Jerry further explained that the Townhome Replacement Reserve Fund is required by covenants (covenant is identified on the handout) and is secured by the covenants from any spending other than replacement of the assets associated with the townhome streets and roads. He further noted that our General Replacement Reserve Fund is optional, but the accumulation of funds must be assigned to other than townhome streets and road assets, and they must be identified in their useful life cycle. Several examples were noted as membership related to details within the handout. One member countered that the covenants allowed borrowing funds from reserves for “non-recurring” asset purchases. Jerry agreed, but noted that by doing so – there is risk in not having an adequate reserve fund to meet unplanned replacements. A typical example is the recent Tot-Lot play equipment… it failed early, did not meet it’s useful life, had to be replaced early in the cycle and it’s cost was four times greater than the amount in the fund.
d) NO SURPLUS OR RESERVE FROM WHICH TO BORROW - HOA income is applied to operating funds and two existing asset replacement reserve funds which no longer have any community enhancement capability. He cautioned that unfortunately, and contrary to popular belief – there has never been a reserve fund for future projects, and no savings fund. Jerry noted that a 3rd reserve fund for future projects could be developed but must be restricted to content with identified specific projects with specific costs and specific end dates.
17. REPLACEMENT RESERVES HAVE A $9,775 SHORTFALL - A graphic comparing end-of-year 2003 actual amounts off the Balance Sheet vs. Equivalent requirement amounts from the Asset Replacement Reserves Chart, was presented on overhead and with handouts for both Townhome Reserves and General Reserves . The shortfall is due to our $12,600 playground equipment purchase, less $3,000 credit for amounts accumulated in the fund (to-date) for replacement of the old equipment in the SE lot as it reached end of life. There is insufficient money in the fund because:
a) Our old play equipment failed in fewer years than expected. (Should have lasted longer)
b) New play equipment cost rose faster than inflation.
c) BOD elected to retain replacement funds for other two Tot-Lots in the fund.
18. 2004 AND SUCCESSIVE YEARS, WILL HAVE A $2,000 / YEAR SHORTFALL IN REPLACEMENT RESERVES - Using same overhead and handout – it was demonstrated that as new assets are installed (Tot-Lot equipment, center island sprinklers and lighting, fencing etc), replacement funds must be set aside in General Reserves for their eventual replacement (not maintenance) at the end of their useful life. Using reverse depreciation method (first Cost / Useful Life) an annual Replacement Reserves funding amount is identified. That straight-line amount is $1,950 per year excluding inflation. Current income does not support that need.
19. ASSESSMENT INCREASE? UNFUNDED REPAIRS AND DISCRETIONARY PROJECTS LIST – (Overhead and Handout) – A list of 12 unfunded repair requirements and 22 unfunded projects requested by the community over the last few years was reviewed. Each item had a brief description and an estimated or quoted cost. Rick and Jerry emphasized that with a few exceptions, none of them could be accomplished – there is no money. Jerry noted that some of the smaller repair items could be accomplished from within operating funds of the current year budget.
a) PRIORITIZE : A straw vote was taken to identify which items the community was most interested in accomplishing. There was mixed participation and lots of discussion on each item – results were inconclusive. The membership decided they would prefer to prioritize the items and ask BOD to do an analysis. Results would then guide BOD in identifying which items to address first, and, provide a justification for size of any necessary assessment increase. The membership ranked the items and turned the lists in to Eileen Solomon. Eileen will do the analysis and present findings at next board meeting. Results will be also be communicated to the community.
b) ALTERNATIVE METHODS TO INCREASE ASSESSMENT: Using an overhead and handout, Rick and Jerry explained that there are several covenant approved methods to increase assessments:
1) UNILATERAL: Covenants allow BOD to unilaterally invoke a maximum 10% increase (plus cost of living) without vote of membership. If adder was 2-1/2% (total 12-1/2%), maximum additional income yield would be only $9,637. BOD felt 12-1/2% was insufficient to meet expressed near-term needs, and, would result in a succession of assessment increases. Therefore BOD elected not to invoke a unilateral increase, choosing instead to alert and ask membership for their direction and size of increase.
2) SPECIAL MEMBERSHIP MEETING: Rick and Jerry noted that another method allowed by covenants is for BOD at any time to call for a “Special Assessment Membership Meeting”. Like an Annual Membership Meeting – the meeting could be called at any time during the year. A review of financial needs is conducted, a vote is taken and the assessment is raised by the membership. This method can also be achieved at anytime by petition of the membership itself.
3) NEXT YEAR BUDGET: The most common method (BOD is recommending this approach) is for BOD to assess financial needs, and include a recommended assessment increase at time of new year budget submission in November. Multiple budgets may be submitted for membership review. One must be selected. However, in order for this to be implemented properly on January 1 of the new year, annual meeting time must be restored to 1st week in November. Rick advised that BOD had already decided to conduct next annual meeting in November 2004 to accommodate this approach for the 2005 calendar year.
c) ASSESSMENT WILL BE INCREASED: A motion from the floor was made: BOD should immediately invoke a unilateral maximum 10% assessment increase. After Jerry advised membership that parliamentary procedure does not automatically require seconding a motion (unless another is in agreement with the motion and also desires it to be placed on the table for vote) … N o second to the motion was made. Therefore it did not come to a vote. Another motion was made: BOD will attempt to live within current year budget, unless a financial emergency appears imminent, until next budget submission to 2005 Annual Meeting to be held first week in November 2004 this year. Fort that submission, BOD will prepare an updated budget INCLUDING AN ASSESSMENT INCREASE predicated upon membership’s spending priorities identified by membership’s ranking of unfunded repairs and projects accomplished tonight. If a financial emergency appears imminent, BOD will call a Special Membership Meeting for Assessment Increase. Motion was seconded and unanimously approved without any objections.
20. EILEEN SOLOMON RE-ELECTED TO BOARD: One position on the board of directors was open for membership election, or re-election of Eileen Solomon due to expiration of term of service. Pre-printed ballots were handed out after sign-in. Owners were pre-screened for delinquencies from a listing provided by ABS. Nominations were requested from the floor. After several minutes of no-nominations forthcoming, a floor motion was made to close nominations and reelect Eileen Solomon. The motion was seconded. With a show of hands, Eileen was unanimously re-elected, none opposed. Eileen was re-elected for a 3 year term ending in November 2007.
21. TRASH COMPLAINT: A member asked BOD to contact Titus Trash regarding poor service. Apparently there is an increasing problem of left over trash at curbside and inside containers after pickup. Other members agreed they are having similar problems. Rick recommended the owner call Titus directly, and that he would also call on behalf of the community. Other members can contact Titus directly (Robert Fowler) at 301-428-8990.
22. ADJOURNMENT: A motion from the floor to adjourn was made at . President allowed the floor motion to stand. Motion was seconded. There were no opposed. The Fourteenth Annual Meeting of the Membership of Orchard Knolls Homeowner Association was adjourned by membership at