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Grand Haven Newsletter(s)

GRAND HAVEN COMMUNITY NEWSLETTER

December 2006

Sponsored by the Grand Haven Master HOA Board of Directors

FINANCIAL STATUS OF GRAND HAVEN HOA

As mentioned in the October Newsletter, HOA’s use Fund Balance to determine their financial net worth. We project our Fund Balance at the end of 2006 for the Master Account as $52K. With Reserves it’s $54K. The comparable numbers for the Chastain Account are $35K and $46K, respectively. This is shown on the attached “Where We Will Be at the End of 2006”.

For a month prior to its November 15 meeting, the Board worked on developing the HOA’s 2007 budget. At that meeting, following an open discussion with the over 30 homeowners who attended, the budget for next year was approved by the Board. Included in the budget are five identified Reserve accounts totaling $29K. These reserves cover items that vary significantly from year to year (e.g. Hurricane damage) and those that occur periodically (e.g. remulching and ball field reclaying). The 2007 budget subtotal combining the Operating Expenses Budget of $186K and the Reserves of $29K is $215K. The average for the past four years for these expenses was $214K. A line item of $20K was also included for potential Capital Improvements. Possible improvements are: fountains, playground expansion, locking mechanism for the new fence, etc.. Which items will be approved will be determined after we get inputs from the members and a further review of our finances. The total 2007 budget, including potential Capital Improvements, is $235K. The average total expenses for the past four years, including Capital Improvements, was $242K.

The total income from assessments at the 2006 rate is $214K, which would result in a shortfall of $21K. The financially responsible and prudent approach requires a 10% increase in total income. This was approved by the Board. To provide this increase in total income, the assessment amount for each community has been increased by 10%.

EQUALIZATION OF ASSESSMENTS

Three questions need to be addressed on the issue of Equalization of Assessments.1) Are our assessments legal, 2) Are our assessments fair and 3) How do we change the assessments?

LEGALITY OF CURRENT ASSESSMENTS

Contrary to information that has been disseminated to the homeowners, the assessments as charged by the HOA are not illegal. Members of the Board sought the legal opinion of four separate law firms specializing in governance of Homeowner's Associations, including Becker and Poliakoff who represent over 5000 associations in Florida, regarding Florida Statute 720 and Grand Haven’s differing assessments. None were able to give the opinion that our current assessments are illegal. The cited Florida Statute states:
"720.308 Assessments and Charges.--For any community created after October 1, 1995, the governing documents must describe the manner in which expenses are shared and specify the member's proportional share thereof. Assessments levied pursuant to the annual budget or special assessment must be in the member's proportional share of expenses as described in the governing document, which share may be different among classes of parcels based upon the state of development thereof, levels of services received by the applicable members, or other relevant factors."

The cited statute identifies three categories that can justify differing assessments. Only if ours did not meet any of the three would our assessments be illegal. Assessments may be different based upon 1) the state of development, 2) level of services received or 3) "other relevant factors". Since almost all of Grand Haven is essentially developed (from community to community) the first category doesn't appear to be a deciding factor. As the majority of all of the services rendered to the community are essentially the same (i.e., general landscaping, access to park & pavilion etc.) the initial impression is that this does not constitute a differing level of service justifying the varying assessment charges. The third category "other relevant factors" is the more ambiguous category. The current assessment setup was determined based upon lot size, size of house and/or other "relevant" factors by the developer. This can follow the same train of thought that property taxes follow, i.e. those with more expensive properties contribute more in taxes to the community. Multiple law firms have agreed that due to the ambiguity of the law that our current assessments are in fact "legal" as they currently stand based upon how they were initially setup by the developer based upon the "relevant factors" determined by the Developer.

FAIRNESS OF CURRENT ASSESSMENTS

Fairness is where the problem arises as it, like beauty, is in the eye of the beholder. All around us are examples of the two ways we are charged for the services we buy or use. On the one hand are hundreds of instances where everyone is charged the same amount for identical services (e.g. a gallon of milk at the store). On the other hand, there are obvious situations where charges are based on the value of the individual’s property, not the service provided. Property taxes that pay for city and county services (libraries, parks, fire and police, etc.) are based, not on the service provided that specific owner, but on the value of his property (size of house and lot, etc.). Which is the “fairest” approach? Which approach should we use to base our assessment? It’s up to you, the homeowners to decide.

How do we change the assessments?

The way to accomplish a change is by amending the Master Declaration of the CC&R’s (where assessments are addressed). There had been some talk of using a By-Laws Special Meeting as described in the By-Laws, Section 9.2, which only requires 50% of the membership to vote. However, this can be used only to amend the By-Laws, not the Master or Supplemental Declarations.

Attorney John Christensen of Becker and Poliakoff has read our Section 10.5 of the Master Declarations and says that to change the Master Declaration 2/3 of the total membership must APPROVE the issue. This can happen by:

25% of members submit a petition for a special meeting to amend the Master Declaration.
Include the proposed amendment in the annual meeting election.

In either meeting, 2/3 of the membership must cast a vote or vote by proxy to approve the amendment. The equalization of assessments would take effect commencing with the 2008 annual assessments.

Because every Director on this Board has a financial conflict of interest in this issue, the Board cannot actively work for or against a change to the CC&R’s of this nature. However, the Board can provide information on the amendment process. To this end, the Board has set up an informational meeting on Equalization at Pineda Presbyterian Church on Tuesday, Dec 5 at 7PM in the Fellowship Hall (it's just down the corridor from where we usually meet). The primary intent of the meeting is to clarify exactly what the process is to amend the By-Laws via the Petition process. There will be no vote taken by the Board at this meeting. At the regular BOD meeting the following night, Wednesday Dec 6, the Board will vote on a motion to include an Equalization amendment in the Annual Meeting election material. The exact wording of the amendment will be established at other BOD meetings.

VOTING CERTIFICATES

A Voting Certificate was included in the 2007 Assessment mailing. If a lot is owned by more than one person, the By-Laws require a Voting Certificate designating who is entitled to cast the vote for that lot to be signed by all record owners and returned to the HOA. However,
NO VOTING CERTIFICATE IS REQUIRED IF THE LOT IS OWNED JOINTLY BY AND RECORDED AS HUSBAND AND WIFE or a couple living together as a single housekeeping unit.

VIOLATION SWEEP

the next sweep will be done in January with the emphasis on fencing. Thompson water seal both lengthens the life of your wooden fences and improves their appearance. Rust remover works on the white PVC fences.

KUDOS

Our Kudos this month go to Brenda Vezina for her dedicated volunteer service for over a year as web master and Patty Young and Jodi Rozycki Neighborhood Watch volunteers, who contributed to the identification and apprehension of the individuals that vandalized the Pavilion restroom.