CC&R Amendment Impact on Country Club Lease Agreement

Somersett United
Somersett United

At the recent Aspen Lodge Meeting, the BOD president refused to answer a question as to what would be the homeowner approval number required for passage of the re-negotiated Country Club Lease Agreement.  We suspect that this was a deliberate evasion so as not to have to address the following provision that is part of the proposed amendments the CC&R’s:

“The Association, by majority vote of the Board, may lease real property if the Association can fund the lease payments out of the operating budget without increasing annual assessments more than the Board of Directors has the authority to increase regular assessments on an annual basis without the vote of the Owners. If the Board has to levy annual assessments in excess of the amount which the Board can increase assessments without the vote of the Owners to pay the rent under any lease, then the Owners must approve such lease and assessment increase by a Majority percentage vote.”

Read the above carefully and then consider the following facts:

  1.  There is no limit established as to the dollar value of any lease
  2. The BOD’s current authority to increase assessments is 15% annually and $25% for a special assessment.
  3. Majority Percentage Vote is defined simply as the majority vote of a homeowner quorum, which is currently established in the CC&R’s  as 20% of Homeowners or approximately 500 owners

How could this Amendment relate to the Country Club Lease Agreement?

  1. The BOD could enter into a long term  multi-million dollar Lease Agreement  with the SGCC , increase owner assessments to cover costs by the percentages indicated above, without a vote of homeowners
  2. If the costs are such that they cannot be accounted for by the increased assessments, then the Lease Agreement can be approved by as little as 250 owners based on the 20% quorum figure.
  3. If one considers the Lease Agreement concept presented by the BOD at the May “Information” meeting (I.e., 8.5 years, ~4.6 million dollars), then under the proposed CC&R Amendment, the BOD could enter into this agreement (or even longer and larger ones), without consideration or approval of Somersett homeowners.

Why did not the BOD discuss the preceding as an example of what could be accomplished by passage of the CC&R Amendment?  Rather they used examples like buying the lot adjacent to the TCTC for increased parking space, (~$200K) and leasing the LOFT space for activities.  By using simple examples they downplayed the significance of this provision.

In their ballot mailing, they also misrepresented that the proposed amendments would “limit their authority”. Nothing could be farther than the truth.  It actually increases their authority with regard to the purchase, lease or annexation of real property.

Do you really trust the BOD with this increased authority? If not, you need to vote no on the proposed CC&R Amendment.

2 thoughts on “CC&R Amendment Impact on Country Club Lease Agreement

  1. I agree- vote no on the CCR changes.
    I oppose the CCR changes as written because:
    1) The definitions of quorum and majority are not explicitly defined.
    2)The $500,000 limit is way to high for the BOD to act without homeowner oversight.
    3)The BOD appears to be rushing through the changes.
    What’s the urgency? There are no major capital decisions waiting for a decision. The only future vote will be on a new SGCC agreement but that appears months away.

    Moving forward, I propose the BOD task a committee of homeowners to review the CCRs and make recommended changes. The Committee could benchmark against other model CCRs. Input from other homeowners would solicited as well. Then the Committee would recommend CCR changes to the BOD for a vote by the homeowners.
    Let’s take the time to do this right.

    1. Who ever wrote the reasons for the no vote does not have the facts correct.
      (1) It is very clear that the quorum and majority are defined. Specifically, a quorum for a homeowner vote would require 20% of all homeowners must vote. If you have at least that many homeowners voting, a Majority would be 50% of those votes plus 1.
      (2) There is nothing in the proposed changes to the CC&R’s that would affect anything to do with a golf course agreement. How many times does the BOD have to state that fact and explain how any agreement with the golf course would be handled. It could affect whether the HOA acquire the land north of the Town Center,
      (3) If $500,000 limit is too high, what in your opinion should it be. If we are not is agreement with an issue or amount, we should, in a positive manner, give a better solution.
      (4) The proposed change to the CC&R’s Is relatively straight forward, When we moved here and left our last HOA, they were still working on rewriting the entire CC&R’s for the association which had been started almost 5 years before. What a waste of time. Lets solve small problems one at a time, rather than creating a big problem that never gets solved.

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