2012 HOA Annual Meeting

February 23, 2012 -- Salem Elementary School, Snohomish WA

7:00 – 9:00 PM

Agenda

I.      Welcome

II.      Roll Call and the establishment of a Quorum – Kenny Swope, Secretary

III.      Reports of Board Members

o        Approve the Minutes of 2011 Annual Meeting – Joe North, President

o        Review and approval of the 2012 Budget - Andy Ellis, Treasurer

o        HOA Insurance – Kenny Swope, Secretary

IV.      Reports of Committee Chairs

o        Architectural Control & Compliance- Jeremy Patten

o        New Construction Architecture – Monique Rounsavelle

o        Beatification Committee – Donna Clawson

o        Maintenance – Monique Rounsavelle

o        Newsletter / Social Committee:  Donna Clawson

o        Neighborhood Watch – Position not filled

o        Welcome Committee – Mary Swope

o        Trails and Master Plan – Joe North

o        Website – Kenny Swope

 V.      Unfinished Business

o        Internet service to Storm Lake Heights

VI.      New Business

o        Proposal on a quorum for holding a meeting of the HOA.

o        Proposal on a penalty structure for violations of the CC&R’s

o        Proposal on an increase of annual dues from $350 to $400

o        Committee Openings:

1.       Welcome Committee

2.       Others as Announced

o        Questions

VII.      Adjourn

Minutes

      I.    Welcome

The meeting was called to order at 7:08 pm by the Secretary.  The President welcomed those in attendance with a summary of events and observations from the past year.  He commented that this is the first year that the HOA Board does not have the voting block of the developer.  In previous years, that voting block of 13 votes was delegated to the HOA Board by the developer.  With the sale of those lots last year, that block is no longer available as the new owner has not expressed any interests in continuing that practice.  The President recognized outside visitors to the meeting, namely a potential buyer of a home in the development.  He then went on to comment that one of the challenges to the HOA in the recent past has been a certain level of apathy.  In order to address that, the President shared a suggestion by one of the homeowners to include a ballot process in addition to the current proxy process.  With this meeting, the HOA Board will utilize a ballot process to capture the maximum involvement possible.

Continuing his opening remarks, the President noted how the quorum of the meeting has changed over the time of the development.  In the early days of Storm Lake Heights, the developer owned a majority interest in the development and drove the majority of the decisions.  Today, as the majority of lots are independently owned, the decision making is now more distributed.  This is normal maturity process for a Homeowners Association.  With this, the Board has the responsibility to carry out fiduciary and legal responsibilities on behalf of the Association.  In order to carry on the business of the HOA, the Quorum rules need to be designed to support the diversity of the membership and the participation of the membership.

Volunteering has been an important component of the Association’s plans for several years.  That said, there has been a distinct trend recently where only certain homeowners contribute with their volunteer hours.  Each year, fewer homeowners volunteer and it has come to the point where a reliance on volunteers has reached its limits.  In planning the activities of the HOA, reliance on the volunteer is becoming more and more difficult.  Volunteering is a choice of the individual homeowner.  Future efforts to conduct the business of the HOA will rely less on the volunteer.

The Board has met with our Attorney to review new legal requirements that are being implemented in state laws.  The Board is staying abreast of current developments in the laws, ensuring that the HOA meets the requirements.  The Board follows the By Laws and the CCRs.  The Board does not have the ability to make radical changes and are compelled to follow those rules that have been set down.  Further, Storm Lake Heights does not employ property management third parties for the daily operation of the HOA.  Collectively, the community needs to come together and identify what we are and what we want so that we can mature the HOA.

To that end, the Board is going to be working hard to collect the feedback from the community in order to provide the services that the community is expecting.  There are multiple methods that the board is looking to for collecting feedback.  How to provide feedback will be one of the focus items for 2012.

    II.    Roll Call and the establishment of a Quorum

The Secretary reported that 31 lots were represented through in person and proxy.  (Note: This was modified at the conclusion of the meeting to reflect that 22 lots were represented.  There was a clerical error in the count on the night of the meeting.  Balloting will be used for those not in attendance to garner the necessary votes for conducting business.  The CCRs require a 50% representation to conduct business.  Based on the voting lots of the HOA, 29 voting members are required.)

   III.    Reports of Board Members

The minutes from 2011 Annual Meeting were reviewed, motioned and approved via a voice vote with no dissenters.

The Treasurer reported on the budget for 2012.  A handout was provided at the meeting outlining the end of year position from 2011 and proposed budget for 2012.  Section A: ASSETS noted an end of year cash position at $18,169.77 in checking, savings, reserves and allocations.  The 2012 estimate includes an increase in reserves and an increase in allocations.  However, at the current rate of expenses, a decrease in available cash is forecast.  Notable expense increases over previous years include legal fees and maintenance of common areas.  Section B reflects the income forecast for the HOA.  Income in this sense is solely sourced from the dues that homeowners pay and any interest payments received.  Nominally, the HOA should be collecting $21,000 annually.  In 2011, $20,388.68 was collected in dues and interest.  The difference is due to some properties not paying dues in 2011.  Moving on to Section C, the categorized expenses for 2011 were reported.  JP Landscaping incurred the largest expense for the year at $8,415.  The Maintenance expenses incurred $4,392 against a budgeted $3,500.  The forecast for this has been modified for 2012 to provide increased maintenance of the trails and machine cutting of the roadside brush.  This is a category that fluctuates year to year and is dependent upon the level of volunteer support.  Moving on to the Committee expenses, the legal fees of $1,1,71 was over budget for the year and prevented the use of the attorney for collection of dues toward the end of the year.  In the proposed forecast for 2012, this category is proposed for an increase.  Overall for the year (Section D), the HOA funds stood at -$2,380 between income and expenses.  This difference was made up by utilizing unallocated funds from 2010.  This trend is forecast to continue into 2012.

Moving on to the forecast, there were two proposals put forward for consideration.  Option A calls for holding the annual dues at $350 / year and increasing maintenance to $4,000 and legal to $1,000.  This option is forecast to create a shortfall of $1,826 for the 2012 year.  Option B calls for an increase of the annual dues to $400 annually with an increase in maintenance to $6,500 and legal to $1,500.  This option also results in a forecast shortfall of $1,826.  However, with this budget proposal, needed repairs to the trail and continued maintained of the roadsides are included.  In both proposals, the rates of building the reserve fund and allocations remain the same at $3,000 annually.

During the question and answer session, the following points were made:

·         The Reserve Fund is a requirement of the law for the Association to keep a certain level of funding in reserve in the event of a significant event that is not currently in the plan.  Examples include unanticipated expenses like emergency tree removal during an ice storm or emergent work on one of the storm retention ponds due to an inspection.

·         The question was asked whether or not the Board had considered raising the annual dues to $600 in order to provide funds for more projects and to cover emergent items.  The Treasurer responded that an increase in the budget was going to be proposed in New Business and that a motion to increase to $600 could be proposed at that time.

·         Questions regarding future projects were discussed.  On the budget, the park equipment replacement was noted as the first future looking investment in the plan.  Aside from that, the budget is a minimum necessary to operate the Association on a year to year basis.

·         The trail plan project was discussed.  The current plan calls for the trail to be repaired with a combination of large rock for deep wet spots, gravel and bark.  Of the length of the trail, approximately 2,800 feet will be addressed.  This project will depend on volunteer labor and the rental of earth moving equipment.  This project is included in Option B of the budget proposal.

·         Grass in the common areas at the entrance and the park need to be reseeded.  With respect to JP Landscaping, the contract calls for fertilizing and treatment with moss killer, but they are not overseeded nor aerated in the fall.

The new budget proposals were not voted on during this part of the agenda.  The vote will be taken up at new business

There were no changes in the insurance for the HOA for 2011.  Further the annual renewal as a non-profit corporation was submitted and approved by the state on schedule.

   IV.    Reports of Committee Chairs

Architectural Control & Compliance:  Nothing to report

New Construction Architecture:  Nothing to report

Beatification Committee:  Nothing to report

Maintenance Committee:  The maintenance committee reported on several tasks underway.  The fountain at the entrance will be quoted and assessed against the maintenance budget.  Several gates have entrance latches that are bent.  They will be replaced.  In the park, the GFCI outlets installed in the park lights have failed and need to be replaced.  The mailbox on 213th was damaged and requires a replacement of the front panel.

Questions regarding the GFCI outlets indicated a desire to cap the outlets and remove them from service.  Discussion included the repair history of the lights and their current state.  The motion was made and seconded to cap the outlets provided that no electrical codes would be violated.  The motion was approved on a voice vote with no dissenters.

Newsletter / Social Committee:  There was nothing to report.  With the current use of the email list, Facebook tools, and the website, the chair of the committee proposed that this committee be dissolved.  The Board agreed to take the recommendation under advisement and examine the methods by which the HOA communicates to the development.

Neighborhood Watch:  Nothing to report.  This committee is not currently active

Welcome Committee:  The welcome committee introduced two new homeowners to the development in the year.  In addition, the chair of the welcome committee announced that she would be stepping down.

Trails and Master Plan:  The green space of the common property has been examined and there are opportunities to expand the current trails.  The focus right now is to repair the current trail and then consider an expansion.  Two options are being researched.

Website:  The current website is hosted by Office Live.  Aside from domain name that we pay for, the service is free.  It provides for the website, document management and the email accounts used for the HOA.  Microsoft has announced that they will be ending this service in April 2012.  Toward this end, Microsoft has offered a pay service called Office 365.  There is a conversion process available to take the site from its current environment to the new one.  The current pricing plan for the use of Office 365 calls for $6 / user / month.  With our current situation, that amounts to $24 / month for the newly hosted service.  Prior to migrating to this service, the webmaster is examining alternative solutions that provide the functionality and meet our affordability requirements.  There will be more communication regarding the website conversion once the plan is developed and implemented.

    V.    Unfinished Business

Internet Service to Storm Lake Heights:  The President provided several talking points to the homeowners to bring the Association current on what has been underway over the past 6 months on the internet service to Storm Lake Heights.  To begin, the Board has been in contact with field engineering at Comcast.  The information from the engineering department at Comcast is that Storm Lake Heights is at least 4 miles away from their nearest service connection. To extend to Storm Lake Heights would require a new fiber from Monroe.  The current Comcast line ends at 215th and 99th.  Comcast utilizes a five year return on any investments that they make.  In their estimating, there is not enough homes on the balance of that fiber from Monroe to fulfill the payback.  Frontier (formerly Verizon) is too far away from their “plant” to offer DSL.  There was a report from those attending that Frontier is planning some activity in 2012, but that is not confirmed.  With regard to the company that previously intended on coming into the neighborhood, Millennium Cable, they have been purchased by Broadstripe who, in turn, was purchased by Wave Communications.  From this company, there is an unfinished project that runs down Mero Road.  There is an existing cable that is installed on the poles on Mero beginning with the pole at the entrance and running to the north on Mero.  This run of cable is “dark” and not energized with equipment.    Further, Comcast has a policy not to “overbuild” onto someone else’s network.  Comcast field engineers did survey the development and validated that Wave communications does have equipment on the poles (the cable mentioned above) that would service Storm Lake Heights.  The current status from Comcast is that they will package up the research they have conducted per our request and coordinate the handoff of this request to the project manager currently responsible for the Wave network in Snohomish County.  The two companies have a professional relationship regarding these boundaries and are in communication with each other on a consistent basis.  Additional dialogue will be taken once the Wave project manager is identified.

The HOA has an as-built configuration of the facility in the ground from PUD.  These construction prints indicate that there is a 2” conduit and a cable nominally placed in the utility trench for “cable TV” as indicated on the prints.  The Board is researching the project records with the county to determine if there is any additional detail that has been documented on the configuration of the cable installation.  That said, the current situation consists of two problems.  First, the development has to have a company willing to provide the facility and programming to our development and we have to be able to give them the facility inside the development to connect to.  In the coming days, we will be documenting the configuration of the current facility.

The original developer is claiming ownership the cable and conduit that is in the trench.  The HOA Board believes that the HOA has ownership of this conduit and cable facility inside the development but lack the legal basis for this claim.  In the communications the Board has had with the developer to date, the developer as asserted a $50,000 price to resolve the ownership issue with the cable facility.  The Board needs to seek legal counsel on this in order to clearly understand the next steps.  Accel Net does not claim ownership of the conduit and cable.  They have asserted that they provide a service on behalf of the developer.  This relationship demonstrates that Accel Net is not the issue.  To summarize, we have limited options for internet at this time, dial up, satellite and Accel Net.

The Board continues to work with providers like Comcast and Wave.  This is a work in process.  Wave Communications is a new owner to the Broadstripe network and it is not known if there are plans for them to complete the project run down Mero Road.  As more information becomes available, this will be communicated.  Further, the Board has approached other solutions like Clear Wire.  Currently, Clear Wire is not expanding their network any further to the north at this time.

Based on questions from new homeowners, the President presented a brief history of the current configuration.  In the past year, there have been several significant outages that have damaged the network and created a situation where components are failing.  Further, this equipment is obsolete and spares are no longer built.  Accel Net has purchased spares to the extent possible in order to maintain the network and believes that they have on hand a sufficient number of spares to keep the network operational.  Accel Net continues to monitor and adjust the network to recover from the recent outages.

Storm Lake Heights needs to secure the long term ownership of the cable facility and the Board needs the authority to pursue that ownership question and get this resolved.  However, it is noted that the Board does not have the authority to negotiate on behalf of the homeowner.  The Board is working to enable access for providers.  If the facility is acceptable and Wave wants to provide service, the Board can’t turn off Accel Net as Accel Net has contract with individual consumers in the development.  We would need to come back to the homeowners to move forward.

There were risks associated with this approach:

·         The costs associated to confirm ownership of the facility could be high.  It is relatively certain that legal research and some form of legal action will be required in order to completely resolve the ownership question.

·         There is a possibility that, regardless of what action the Board takes, there will be some form of legal action against the HOA.  From the perspective of protecting the interests of the HOA, this could be a risk.

·         The current provider could determine that this service is not worth providing and pull out of the development.

The Board will continue to work with Wave or other alternatives that may present themselves to understand what it would take to have them offer service to Storm Lake Heights.

The motion was put forward that the Board seeks the authority from the Homeowners to allocate up to $5,000 from the HOA Reserve Funds to work with Legal counsel to understand our rights and take steps necessary to protect those rights and see our options to create a situation that the HOA has the ability to grant access to alternate providers, now and in the future.  The motion was seconded and voted upon.  Of those present, 17 approved and 2 dissented.  Voting ballots will be utilized to capture the vote from those not in attendance.

      I.    New Business

Quorum for holding a meeting of the HOA:  In the last review with the attorney, he was concerned that our CCR’s require a 50% representation in order to conduct business.  A change to the CCR’s requires a 60% approval.  His recommendation was that we amend the quorum requirement to 30% in order to hold a meeting of the HOA.  The Board will continue to work on the wording for this proposal for bringing to a vote of the Homeowners.

Penalty structure for violations of the CC&R’s:  The board has the authority to assess fines for violations of the CCR’s.  The Board would like the inclusion of the homeowners in creating the fee structure for fines.  The current thinking is to create a small, medium, large fine structure.  For example, small violations like unkempt lawns would cost $25 for each occurrence.  Large violations like unapproved structures could be charged a $500 fine or have the structure removed by the HOA.  Continued violations that are not paid can result in liens and possible foreclosure of the property.  While this is an extreme example, the Board believes that appropriate guidance in the course of action regarding violations will encourage higher adherence to the CCR’s.  The Board will finalize the fines structure and post to the homeowners for input.  It was noted that this Board is not intending to revisit the decisions of past Boards.  The Board will be seeking feedback on this item and not implementing unilaterally.

Increase of annual dues from $350 to $400:  The material covered in the budget review is the option voted upon.  The vote to increase the annual dues from $350 to $400 beginning in 2012 received 13 yes votes and 7 no votes.

Committee Openings:

Donna Clawson volunteered to lead the Welcome Committee.  She was approved on a voice vote of the Board.

Michelle Riske volunteered to lead the ACC Committee via a note to the Board.  Michelle was unable to attend due to other commitments.  She was approved on a voice vote of the Board.

The meeting ended at 9:10 pm.

Respectfully submitted.

Kenneth Swope

Secretary, Storm Lake Heights HOA