SOA Board of Directors Election Results

Congratulations to the following residents who were elected to serve on the new all homeowner SOA Board of Directors.   They will take office on Janurary 1, 2012.Terms indicated are based on number of votes received.

Ray Lee – 2 years,

Tony Fakonas -2 years

Curtis Chan – 2 years

David Hughes – 1 year

Danielle Kirby.- 1 year

We wish the new Board well and assume that they will endeavor to put the Association first in all their decisions.

Town Center Lot Purchase – The Real Story

Submitted by Geoffrey Brooks  –  SOA Board candidate

At “Meet the Candidates Night”, one of the candidates, Tony Fakonas, made a highly inaccurate statement by saying that we (Geoffrey and Patricia Brooks) prevented the SOA from buying the lot adjacent to TCTC, this is not true.

I am sure that Mr. Fakonas, as a member of the transition committee, was well aware of these developments (see below) and of the subsequent offer made to NvSB by the SOA, which was lower than their original offer and rejected by the bank.

Early in 2012 my wife and I wanted to do something to help our community. We thought that we could help by purchasing a lot and commissioning the construction of a decent sized indoor pool, 50 m x 25 m (12500 sq. ft.).  Realizing that this was best done working with SOA, we sought out a meeting with Blake Smith (via Melissa), unfortunately, Blake refused to meet.

We were unhappy about the SOA board spending hundreds of thousands of dollars without presenting clear plans and then not allowing the community, once informed of the details and the costs, to have the final say via a vote. We thought that if an independent party, Pat and I,  acquired it for Somersett, this could then be “gifted” at cost in some way to be used for building the pool.

In early March we approached the realtor and asked what the price of the lot was, we were told $220K, but the bank would take less, and there were no offers, he suggested $212K. We put in an offer, only to be told a week later that we “were second”. So, we assumed that the SOA offer was accepted. We left Reno for 10 days or so, and whilst returning to the west coast on Monday (March 19), we had a phone call from the realtor saying that our offer had now been accepted and we had to close tomorrow, please bring cash. I called the bank and asked for time to look at the lot, we had no paperwork, that we were logistically challenged.  They did not want to extend the deadline, implying that the SOA had priority. The Title Co. paperwork (received Monday night) said that they had to have the money yesterday!  On Tuesday morning, March 20th, I wrote to the bank and said that we could not comply with their conditions and did not wish to pursue the purchase, and, that the lot should be sold to the SOA. On Wednesday I walked the lot and discovered from the realtor that the easement would make building a pool of the size envisioned difficult, if not impossible. I had a ballpark cost estimate to construct a pool (Olympic size) of about $1,000,000.

Just prior to the March 27th Finance Meeting, Pat noticed a nasty posting about this lot on the MySomersett community website.

At the meeting we were attacked by Blake Smith for using confidential information, which we did not.  My wife offered a verbal rebuttal. After intercession from Ray Lee and some transition committee members, the rebuttal was posted to MySomersett. I discussed the situation with Ray Lee, who suggested that I abandon any approach to Blake to offer to work on a “pool project” or enhancements to TCTC, until a homeowner board was in place. Ray’s main concern was making sure that Blake kept his promise to turn over control. Subsequently both posts were taken down from MySomersett.

My wife told Blake after the meeting, that he would be able to buy the lot for less money, and I believe that an offer was put in at $190K by the SOA which was rejected by the bank.

So what happened?

  1. The SOA did not spend $200K+ on buying a lot which would have building challenges.
  2. Our effort to act altruistically would have saved homeowners money.
  3. If this lot is so important for the future development of TCTC why did not Somersett Development include it in the dedication agreement?
  4. Even though the lot is available/not available, there is still no plan and no dollar requirement on how to effectively use the land or to install amenities, a job for the new board.
  5. Maybe altruism and HOA’s are not destined to be together

Why did the Blake Smith Board want to buy the lot? Well, it is there, unused and maybe useful, and this is the normal desire for property developers (I have thought and acted like this in the past). However, the SOA is not in the property development business.

Why did the bank not want to sell the lot to the SOA? This lot was owned by Blake Smith prior to being turned over to FNvB, likely at a loss to the bank.  When this happened there was an agreement saying that he could not buy it back. I suspect that the bank would verbally use the SOA as a “straw buyer” to get the price up, but was actually conflicted and unhappy that Blake Smith, as the SOA Board President, was trying to “buy back” the lot.

Status of Somersett Owners Association Reserves

Prepared by:  Cornelius (Ed) Hardy  – SOA Board candidate

Following is additional information on the financial status of the SOA reserves not included in the Nevada Member Summary of the 2012 Update prepared for the 2013 fiscal year by Browning Reserve Group (BRG).  It should be noted this reserve study, dated September 11, 2012, was an Update Without Site-Visit of the study completed for the fiscal year ending December 31, 2012, dated November 30, 2011.  Such a reserve study is an update with no on-site visual observation.

This information should be considered in connection with the planning for the transition from developer control of the board of directors to the homeowners, scheduled for January 1, 2013.

A summary of the Fully Funded Balances and Estimated Reserve Balances for the year ending December 31, 2012, included in this report prepared for the year 2013, is as follows:

2012 Fully            2012 Est.
Funded                 Reserve             Percent
Balance                Balance              Funded   

General Common Area            $1,305,434         $ 848,086             65.0%

The Club at Town Center          1,226,028             710,646               58.0

Streets and Gates                        1,694,241           1,597,928               94.3 

Total                                        $4,225,703     $3.156.660           74.7%

The SOA reserves are segregated into these three separate funds and the homeowner assessments include designated amounts for these funds.  Accordingly, these designated funds in the separate reserve accounts can only be spent on components included in the respective reserve accounts.  Also, the reserves are not allocated to the specific components included in the separate funds.

The scale used by BRG in measuring the financial picture of the reserves is 30% to 70% is FAIR and above 70% is STRONG.  Based on the above, the General Common (65.0%) and The Club at Town Center (58.0%) are not adequately funded!  The new Homeowners Board should address this problem  at transition, and develop a plan to increase the funding of these two reserve accounts.

With regard to Developer responsibility for reserves to be turned over to the homeowners, following are excerpts related to Developer Transition included in an article “Clearing up the Confusion,” Revised – May 2012, prepared by Don Barry RS PCAM Nevada RSS 0003.  Mr. Barry, a Nevada certified reserve analyst, is currently a faculty member for the CAM (Community Association Manager) certification courses and has been a regular presenter at the Nevada State Ombudsman Training Seminars for Board Members.

“It seems reasonable to assume that whatever the reserve study report depicts as a fund balance at the point of transition is what the developer should turnover to the homeowners. Whether those funds are comprised of money from the developer or is a combination of funds contributed by owners to that point along with ‘Capital Contributions’ is not relevant at this time.  What is relevant is that the reserve fund passed to the owners is adequately funded as determined by the projections of the reserve analysis.

So … What is ‘adequate funding’?

If considering the following:  One way to interpret Adequate Funding (and the way the author interprets it) is to look at the following:

  1.  The statute requires that the association (whether developer or homeowner controlled) establish an adequate reserve.
  2. The statute requires that the developer deliver to the association a complete study of the reserves of the association.
  3. The reserve study, through analysis of the maintenance requirements of the association and the reserve component inventory, provides the required funding levels for the association at any point in time, within the 30 year window.
  4. These funding levels provided by the reserve study provide for the ongoing long term maintenance of the reserve components in order to maintain the value of the community.

Therefore, if the above is factual, ‘adequate funding’ should mean funding to the levels established in the reserve study.  If the study establishes a reserve fund requirement of $45,000 at the point of transition, the developer should be turning over a reserve account funded to that level.”

Based on this conclusion by Mr. Barry, the amount due from the Developer at the time of transition would be $1,069,043,  (December 31, 2012), which is the amount required to fund the total cash reserves necessary to repair, replace, restore or maintain the major components (in the aggregate) during and at the end of their first remaining useful life, which totaled $4,225,703 as of that date.  The estimated ending balance of the reserves totaled $3,156,660 at that date.   

For a more complete report on The Status of SOA Reserves, click here.