CC&R Amendments – Setting the Record Straight

Somersett UnitedUnit owners who did not submit their previous ballots on the proposed CC&R amendments have recently received a new ballot to submit. In these ballot mailings, the BOD chose to include supplemental information understandingly biased toward obtaining an approval vote. In this supplemental information, it is not so much what was said, but what was not said.  Let’s perform a Reality Check on some of the BOD Statements contained therein.

BOD Statements: 1) “The purpose of the proposed changes is to clarify and set limits on the authority of the current and future Boards of Directors”. 2) “This proposed change defines stricter limits on the powers of the Board of Directors than the Current CC&R’s require”. 3) The current CC&R’s have “no limit specified” regarding “Maximum value of property purchase or acquisition before homeowner vote is required”. 4) “Approval of these changes will not change your assessments”.

Reality Check: 1) The current CC&R’s contain no provision granting the BOD the authority to purchase, annex or lease real property into the common area, therefore the real purpose is to grant such authority. 2) The proposed amendments do not change any wording in the Current CC&R’s, rather they simply add provisions related to the purchase, annexation or lease of real property. 3) The no specified limits comment regarding property purchase is a moot point, since the current CC&R’s do not grant the BOD such authority, there is no need to mention limits. 4) The no assessment change is also a misleading statement, whereas approving the amendments in itself will not affect assessments, the downstream purchase, annexation or leasing of expensive property certainly will.

The BOD statements would imply that, to the benefit of homeowners, they simply want to limit the BOD’s authority to enter into purchase. annexation or lease agreements. This is really a stretch as both the current CC&R’s and the proposed amendments do not support this premise.  However, putting all the rhetoric aside, simply put, the proposed amendments (additions) to the CC&R’s clearly grants the following authority to the BOD:

  1. To purchase or annex real property into the SOA up to $500K without homeowner approval.
  2. To purchase or annex real property into the SOA greater than $500K with no upper limit subject to a simple majority vote from at least 20% of all unit owners (Note: currently this would represent 496 unit owners, a simple majority of which would be 249).
  3. To lease real property into the SOA with no upper limit and without homeowner approval.
  4. To increase annual assessments and/or levy special assessments above currently specified limits to fund the purchase, annexation or lease of property subject to a simple majority vote from at least 20% of all unit owners.  (Note: the current CC&R’s limit annual assessment increases to 15% per year and special assessments to 25% of the annual assessment amount. Per the current CC&R’s increases above these limits require the “approval by vote or written consent of Owners holding a majority of the voting rights”).

Bottom line:

If you want to grant the BOD the authority to: 1) purchase, annex or lease property into the association with unspecified dollar limits, 2) increase annual or levy special assessments above currently specified limits to fund such, 3) the preceding based on a unit owner vote representing as little as 20% of total homeowners and 4) you trust that the current and future BOD’s will not abuse such authority, then you may wish to vote to APPROVE.

If however, you: 1) do not wish to grant the proposed purchase, annexation or lease authority parameters, 2) believe that homeowner approval levels are set too low (they could have been set higher if so desired), or 3) do not completely understand the amendment ramifications, then you should vote to DISAPPROVE.

11 thoughts on “CC&R Amendments – Setting the Record Straight

  1. My neighbor was singled out as an owner who had not cast a ballot in the CC&R amendment vote, so received one of the “new” ballots. The only envelope supplied to my neighbor included a member number so the association would know who has voted and ensure that no owner voted more than once. Written ballots must be sealed in a second envelop that is placed inside the outer envelop, but omits the identity of whoever cast the ballot. Since these “new” ballots will not be secret and must be disallowed, one wonders why they were sent – surely another dirty trick like declaring that the initial vote was not valid simply because not enough owners voted to establish a quorum. The lack of a quorum should not invalidate the first ballot – rather it meant amendment to the CC&RS could not pass, and thus failed. Extending the deadline in order to try to achieve the result desired by the association board was more than a dirty trick – it violated election procedures. Is the board now trying to use the “new” ballots solely to declare a quorum, then disallow them, and rely solely on the initial ballots to declare whether the amendment passes based upon a plurality of qualified ballots? The very sending of “new” ballots and “informational” material is improper because it treats owners who received “new” ballots differently from those who have already voted. The failure to give opponents of the amendment an equal opportunity to include informational material is also improper. All ballots received after the original deadline should be disqualified for quorum purposes as well as from the election itself, and the CC&R amendment declared to have “not passed.”

    Has the board appointed anybody to the election board (that oversees elections) that is opposed to this amendment? This committee should have produced a “not passed” report to the board that included the actual ballot counts when the original deadline passed. The association has repeatedly failed to follow proper procedures designed to ensure a fair and unbiased election.

    The proposed amendment to the CC&Rs allows the board (with as little as 10% of owners approval) to engage in sale/leaseback contracts for the benefit of private entities. Why should owners entrust a board of directors (with the approval of a small group of supporters) with the power to sign contracts obligating owners to subsidize private entities, whether a golf club, gas station, supermarket, liquor store, or any other business? The present board’s unwillingness to follow proper election procedures begs this question even more urgently.

  2. Although your evaluations reflect accuracy, I suggest that in pragmatics, the proposed ballot measures are not out of line with many larger HOA’s. In my review of the current Golf Lease, it is important that we get control of the future!! Without this agreement, the SOA could lose a vital ingredient in the home values we currently experience. [Note, it does not matter whether you play golf or not, the value of the golf course is already factored into your purchase. To lose the course is to lose perhaps as much as $35,000 per residence.] And, historically, large HOA’s are never able to get 50% of their members to vote on anything, which is why the State has allowed the current formula in CC&Rs. We need to move forward on the golf agreement, while we can. Attempting to fix CC&Rs first is most likely not reality. If the State allows us to move forward on the New Golf Agreement, then let’s move forward. Get out the vote! Perhaps we could use this vote to demonstrate whether or not 50% of our membership actually will vote.

    1. How to motivate community spirit, enhance participation ??

      Firstly, there is no evidence that when a golf course closes that one will lose as much as Bruce indicates. We spent an extra $100,000 on a golf view lot. Recent resales indcated that we might recapture $15,000 of our investment if we sell, and the golf course is still open. So much like the equity members who paid upward of $40,000 to join the Country Club, we are big losers.

      The Golf Course was built so the developers could sell their properties and make more profit. We bought in 2006 in Talon Pointe where there are 30 Golf Villas with views. So, Ryder homes were able to add $3,000,000 to their bottom line. Golf Views are a worse investment if re-sold than an auto!

      The real issue is that there are still over 400 lots paying dues that are owned by developers, so it is in their self-interest (and bottom line) to vote to keep the golf course going. We have a way to go to be a owner occupied and controlled community. Hence, if the low quorum numbers are used to set the vote for the new “buy our own golf course amenity/open space”, the developers will vote en masse for it. A yes vote will enhance the saleability of the new houses being built and to be built.

      The recent community survey garnered just over 500 responses. The lack of response from the 1500 or so homeowner properties was interpreted in that they are “happy”.

      Low quorum numbers are used by new communities, so that the developer owned lots can still control outcomes that they want, as they know that homeowner “happiness” works in their favor.

      Everyone, please reveiw the current deal – our community is spending $2.75 MILLION – does it make sense?

      Bear in mind that the Country Club will not have the $435K per year subsidy any more, so its long term survival is dependent on its management’s ability to keep the members expectations in line with current golfing demographics and environmental requirements.

      (we have two sustainable LEED buildings in the Town Center, why not a LEED golf course).

      The bottom line is we will all pay about $8 a month (assuming interest rates are stable) for 20 years, per residence!

      Get involved, understand the issues, and please vote for the actual RESIDENTS best long-term community interests.

      1. Geoffrey;
        In your own words, ” The Golf Course was built so the developers could sell their properties and make more profit.” Even you put the word “MORE” in there. [How do you get ‘more’ into this sentence without added-value from a golf course?.]
        Secondly, there are demonstrable statistics that at golf course community adds value to property, usually between $25k and $50k….One should check with their own Real Estate agent. He/she will certainly verify….it is easy to provide the sale statistics of comparable properties inside and outside golf communities.
        Thirdly, this assertion that “Low quorum numbers are used by new communities, so that the developer owned lots can still control outcomes that they want….” does not bear out with the experience of other well-established HOA’s. Just up the mountain at Tahoe Donner HOA, a 6500 member 40-year old community, they continue with this same low quorum formula, because they cannot motivate their members to vote.
        Fourth, your assertion that “The recent community survey garnered just over 500 responses. The lack of response from the 1500 or so properties…” seems to suggest that we cannot get a 50% quorum, even now.
        Fifth, the intrinsic value of a golf course has already been added into your property. You paid for this value when you purchased. Sorry to all of us, but, we did. Again, inquire with a local real estate agent about the plunging market values of the houses around the local abandoned Northgate Golf Course.

        We need to protect what we already have, and what we already paid for. Let’s move forward and GET OUT THE VOTE!!!

        1. I do not think your analysis of the impact of a golf course on real estate values is correct, If the club membership is required with ownership of property, then the only potential buyers of homes will be those willing to pay for membership. others will look elsewhere. If membership is voluntary as I understand it is in Tahoe Donner, the number of potential buyers is much larger. The incremental value from a golf lot has more to do with the privacy of not having a neighbor in back than a golf course per se. I seriously doubt realtors and builders will highlight to potential buyers that SOA owns SGCC and leases it to 130+ members for $1000 per year. I’d like to hear that sales pitch to a potential customer,

    2. Bruce,

      Lets not mix issues here, voting on the CC&R Amendments is not about property values. Whereas one could argue that voting on a new Country Club agreement is, the BOD has made it clear that Country Club agreement is a completely separate issue not dependent on the CC&R vote.. If we assume this to be true, then the property value argument is moot and needs to be put aside and therefore cast our votes only on the merits of proposed additions to the CC&R’s. The pros and cons of which (mostly cons) have been discussed extensively in previous articles and comments on this website.

      Personally, based on the haste, ballot screw-ups and BOD misstatements associated with the current ballot, I would encourage a DISAPPROVE vote. Subsequently the BOD can get it right by appointing a CC&R Committee to review and propose amendments to the entirety of the current CC&R’s in a more diligent manner before submitting for homeowner vote.

      However, whatever one’s disposition, I agree that all should “get out the vote”, as we do not want a minority of voters deciding the destiny of the majority.

  3. You did not mix the topics. OK. The CC&R’s are separate from the Golf Course. But since the prior letter annexed the two into a single form, it seemed appropriate. Personally, we could/should address the State-allowed Low Quorum rules, but with my experiences, asking for a 50% voting Quorum is unrealistic. And, I do not know what would be a viable number. The most important part of SOA voting, in my opinion, is that we all are giving the opportunity to vote. What we do with our opportunity is another issue.

  4. Bruce

    Thank you for your comments. I especially agree with your last comment, lets get out the VOTE.

    Having checked relevant real estate sales in a functioning golfing community, Somersett and in D’Andrea for lots that face on to a golf course (and not). The premium for open view space in a re-sale is about $15K. Interestingly, even though the golf course has closed in D’Andrea, the residents with golf (now open space views) still get a premium. I have fact checked this information using the information posted on the Washoe County Tax Assesors web site, where all property transactions are recorded.

    I looked into the facts for the Northgate Park as far as the Somersett residents are concerned and there have not been enough resales to draw any conclusions. There does not seem to be any evidence that sellers/purchasers will value the property any less for the open space views (desert landscaping now) than if it still was a functioning Golf Course (as is the case in D’Andrea, albeit with less expensive homes).

    The point I was trying to make, is that the developers, if they vote their 400 lots, can actually command the theoretical minimum number of yes votes to pass something, so they can actually control our community expenditures. As they have successfully sold golf course lots for a much greater premium than any re-seller has (so far), it is obvious where their interests lie.

    As you point out, Tahoe Donner has been around 40 years, and has to use the “quorum number” for voting, due to apathy, lack of interest, community spirit. However, there are no developer voting blocs which can influence, control the vote. Also at Tahoe Donner, I don’t believe that any of your monthly dues are used to purchase the golf course (we are buying 1 at the moment) and the Town Center Club facilities from the Developer. As I understand it, paying for golf, joining the golf club, using the Club House and other facilities are an optional extra. You only pay if you use. We have to pay whether we use or not! A big difference!

    I want everyone, ALL the Resident Unit owners, to be informed, read the current proposal to acquire the Golf Course land to ensure that the space remains under community control and vote for the best interests for the future of our community. I am also anxious to see if we all agree in keeping our communities scenic design, clustered housing, open spaces, trails and amenities. This not about housing values, it is all about the quality of life and building a vibrant community where retirees and working families live in a healthy environment.

    We value the quality of our life, these are not necessarily the same values held by Somersett developers and realtors.

    1. Tahoe Donner’s HOA fees of $1550 annual, plus $240 recreation fee, goes toward the maintenance, upkeep, usage, etc, for 11 amenities, including the golf course. Thus,the course is supported by the HOA monthlies. Uncertain as to what you are suggesting???

      Checking tax assessor records is not a recommended manner to assess market values. [It’s almost as useless as checking Zillow to determine market value for one’s property.] Lenders, who must have accurate market value, require their appraisers to review current market data from the local MLS. Realtors, when going on a listing appointment, do not review tax assessor records to suggest market value; they check the current MLS records of comparable sales. As I suggested earlier, perhaps one should check with one’s local Realtor for current data. I believe one will conclude, with current market data, that a golf course community is at least $25k more per property.

      And, we agree, Let’s get out the vote. 🙂

  5. If BOD’s stated purpose for the CC&R changes is to limit the authority of the BOD, why are they asking for the authority to increase our assessments above established limits based on a majority vote of 20% of homeowners, when the current CC&R’s require a majority vote of 100% of homeowners?

    Also, why are they asking for the authority to expand the common area via land purchase when the current CC&R’s do not authorize it?

    Doesn’t sound like limiting their authority to me, what am I missing here? Are they being honest to us about their intentions? I suspect not.

    1. It seems to me it would make sense to simply ask: “Shall SOA purchase the golf club?” in an election.
      It seems to me that if less than 50% voted for the proposal, it was rejected.

      The real question is why would any one or any organization buy a golf club? Must be some money going somewhere to somebody.

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