Illegal Board Member

Posted by Joe Bower

The current Somersett owner board member has illegitimately been serving since the November2010 Annual Meeting of the Members and his votes since then are invalid. His excellent service has obscured these facts.

His predecessor, Mr. Doug Browne, was elected to a two year term on September 12, 2008 and resigned during his term effective May 10, 2010.  The current board member was elected to the Board on August 10, 2010 to serve a two-year term erroneously scheduled to end on August 9, 2012. The length of that term is contrary to the Bylaws of the Association.

In accordance with the Bylaws, his term as director should have ended on September 12, 2010 and definitely no later than the November 2010 Annual Meeting of the Members. An election was not held at that meeting, or at any subsequent meeting, to elect a new director or to re-elect him. As a result, he has been serving as a director since November 2010 without having been elected to that office.

Section3.03 of the Bylaws of the Association provides:

“Upon the death, resignation, or removal of a director during his or her term, the Board may call a special meeting of the members to elect a new director to the unexpired portion of the term or the Board may leave the position vacant until the next annual meeting, at which time any unexpired director’s term shall be filled by election of a new director.”

Regardless of what the law firm for the Association has said implying that his first official meeting (October 2010) was the beginning of his term and expiring at the November 2012 Annual Meeting, a director’s actual term begins at time of election. In his case he did rise from the attendees at the August 10,2010 meeting after the elections results were announced and began his term immediately by sitting at the board table where he and Mr. Blake Smith semi-seriously talked about who would hold which officer position on the Board.

Following this August election and prior to the October board meeting, he was actively engaged performing such director duties as: attending an AGC meeting; reviewing the number of transactions that the Committee has been involved with in the past; working on a new fee schedule to be effective retroactively to January2010; preparing a recommendation for a re-organization of the AGC process; driving through the community to observe how violations are handled; reviewing financial statements; studying the renewal proposal with Philadelphia Insurance Company,  reviewing other Association documents previously unavailable to him; and working on the budget for 2011.

Although he needs step down at the June 7, 2012 open session board meeting, it might be very good for the community if Mr. Smith would appoint him as an owner member of the Finance Committee. The Association has numerous financial matters to be addressed, including preparation of the 2013 Budget, and his prior involvement and expertise in Association financial matters can serve the community well without his continuing as a board member.

Commentary for the SOA Board Transition Committee

Submitted by Geoffrey Brooks

Ask not what the SOA can do for you, ask what you can do to help the transition committee do their job and insure that the books, records and debts, we the homeowners OWN, are transferred in good shape.

Previous SU Blog posts indicate that the SGCC equity members (past and present) have “given/paid” over $10 million in equity payments and pay monthly dues  (over $400/month) to operate the club, one wonders what happened to the fancy club house their equity stake was supposed to build.

In contrast, according to the Club at Town Center (TCTC) Dedication Agreement, signed by Blake Smith in 2006 for both Somersett Development Ltd (SDL) and the Somersett Owners Association (SOA), construction costs for the TCTC and Canyon 9 amounted to $12,000,000 (includes water rights).  Via this agreement, the SDL will recapture $4,250,000 via homeowner assessments (See “TCTC Dedication Agreement” under the Reference Tab).

So, how much are the Somersett Residents paying SDL for these two facilities?  Roughly $5/month/unit over a 30 year period.  In addition to the repayment expense, we pay $15/month to maintain the C9.  At least the SOA owns these assets.  Whereas we are gifting $4 million over 10 years to the SGCC via the Lease Agreement, and will own nothing in return except garnering minimalistic rights and being treated as 2nd class owners in a first class entity.

In addition to the above, the SOA is paying SDL $375,000 via a Developer Subsidy Agreement. In the past, the auditor’s report has had issues in this area (no transparency on what is perceived to be an illegal agreement).  There are also the litigation issues regarding damages against Summit Engineering and Moana Nursery for defects in the rock wall entrance and mainline irrigation system, for which the SOA is paying all legal fees.  A Tolling Agreement with SDL calls for 27% of any recovered damages to be paid to the SDL.  It makes no sense that the SDL gets paid before the problems get fixed, and that legal fees are being paid for by homeowners rather than the SDL.

I would suggest that one looks at the SOA Financial statements; maybe you can figure it out!

The Transition Committee will have their work cut out to present a clear picture of the TRUE financial situation and the long term obligations of all community residents

Save the Somersett Golf Course

Per the Somersett Developer, homeowner money taken from SOA funds are not enough to “save” the Somersett Golf Course for the equity members.  Somersett United is working on plans to save the Golf Course for ALL Somersett Owners.

Scare tactics about the golf course going brown or the course reverting to the developer to be used to construct more homes have been most effective.   Somersett Owners have been conned into believing that the agreement entered into by the Developer Controlled Board and the private equity owned golf course, without first informing owners or allowing owners to vote on the issue, was a good one.

Somersett Homeowner Association funds are being disbursed to the Private 172 member owned golf course that will amount to SEVEN MILLION FIVE HUNDRED & THIRTY THOUSAND $7,530,000.00 over 10 years. (About $30 of your dues/month).

Many homeowners with financial expertise and SOA board members (including Blake Smith in the RGJ) have expressed the opinion that even with the current homeowner’s money the golf course cannot survive financially.  If the course fails, the Developer will end up owning the golf course, after ALL Somersett Homeowners have paid large amounts in maintenance and taxes for a number of years.

The 172 golf course private equity member owners seem to believe that they have the right to ask/demand that the rest of the 2,415 property owners bail them out so that their investment will be protected and they can maintain their status as private golf course members.

Most of the non golf course owners including the Somersett United folks, which the Golf course owners call “Kooks” and accuse of wanting to “split the community”, in reality want:

  1. The Golf Course to survive to the benefit of all Somersett Owners, and
  2. Value for their money in the form of an equity interest in the golf course for the entire community.

Another option, which results in a substantial reduction in expenditures, would be for the city to take over the Somersett course replacing the Rosewood course, which is losing nine holes to road construction.

If homeowner’s monies are going to pay for the course they should own it.

Furthermore many homeowners have expressed the opinion that in order to survive, the course needs to go 100% public, be 100% community or city owned. This is a plan which the entire community can support, rather than the present arrangement which supports the lifestyle and wishes of a small minority of 172 owners at the expense of the great majority of the owners in Somersett.

You be the judge, add your comments in the Somersett United Blog.