August 25th SOA Board Meeting Recap

recap 1

Following is a summary of discussions and actions taken by the Board at the August 25th Board Meeting. The Meeting Agenda may be accessed below:

August 25th BOD Meeting Agenda

Physical attendance by owners at the Meeting was low, about 5-6 attendees. Attendance via Zoom videoconferencing was undetermined by SU.

Since the crux of the meeting dealt with the “Future of Management in Somersett” issue, these agenda items will be addressed first:

Item 6.c. SOA Management Consultant Update

The SOA Management Consultant, Nancy Kerry, summarized her weekly report to the Board, which may be viewed via the following link:      “August 20, 2021 Weekly Update Memo

The update memo included a reference to the recently issued “Request for Proposal for Landscaping Services”, those wishing to access its contents may do so by clicking on the aforementioned title.

During the Landscape Services proposal preparation process there was a discussion on the benefits for posting the SOA’s RFP’s on bid-management websites frequently accessed by contractors. To quote: “By making construction bids publicly available and widely published, entities, such as the SOA, have the best chance of receiving a greater number of proposals thereby a better opportunity for obtaining the best price for the work”. In this regard, it was recommended that the SOA pursue this option by contracting with Planet Bids (www.planetbids.com) for this service. A Planet Bids quote was obtained, which consisted of a $150 one-time setup fee and a $3,875 annual fee. The Board approved the recommendation.

Item 7.e. Discussion and Selection of SOA Future Management

At the August 10th Special Board Meeting (See SU’s previous post of August 12th entitled “August 10th SOA Special Board Meeting Recap”) The Board voted to narrow the HOA Management Companies under consideration to CAMCO Nevada Management and Taylor Association Management Trust.

Predictably (In SU’s opinion the outcome had already been decided months ago) all four Board Members voted for contracting with Taylor Management. This with the understanding it will be on a transitional basis as the Association transforms from professionally managed to a self-managed structure, which Taylor will support and assist to accomplish.. To their credit, Board Members Capalongan, O’Donnell and Williams all read prepared statements explaining their vote. which may be viewed via the following links:

Mark Capalongan – Management Decision Comments
Bill O’Donnell – Management Decision Comments
Jacob Williams Management Decision Comments

In addition to the selection of Taylor, the Board voted to extend Nancy Kerry’s contract to perform the following services: 1) negotiate with Taylor on the details of the contract, 2) coordinate the transition process and establish timelines, 3) form a transition team (two Board members and a homeowner or two were mentioned), and 4) Coordinate with FSR during their termination period and interview those FirstService Residential (FSR) employees who may want to stay on (Note: FSR has given the Board a 60 day termination notice and provided permission to interview their employees).

It has not been determined exactly who will be employed by who and by when during the transition process, but clearly the Board would prefer to have the day-by-day operations staff as Association employees from the onset, leaving the administrative work (e.g., accounting) with Taylor. Also, to accomplish the full transition within six months and certainly before Board members Capalongan, O’Donnell and Williams’s terms are up, so as not to leave unfinished business to the next Board.

Other Agenda Items

4.  Committee Reports

  • Finance – The committee is mostly complete with their 2022 budget recommendations. Possibly looking at a small increase (5% or less) in Common Area Assessments, this due to cost increases and debt paydown considerations. No assessment increases anticipated for TCTC and Gates. It was also noted that the Committee is still looking for new members and a Chairman.
  • Communication – See attached “Communications Committee Report”. With regard to the Committee recommendation to create a list of residents, with specific expertise, willing to help others through Somersett Cares, it was concluded that the best way to accomplish this was via a resident newsletter. This would be a precursor to implementation of a Somersett Cares program proposed by Board Member Williams to provide volunteer help to assist those owners in need.
  • Facilities – See attached “Facilities Committee Report”. Solicited bids from security camera vendors and contractors for the TCTC Tot Lot expansion project. No Board actions required at this time.
  • West Park Garden – See attached “West Park Community Garden Report”. No Board actions required at this time. Expressed a desire to participate in Community Events as a vendor to raise funds for the Community Garden.
  • Community Events Committee – See attached “Events Committee Report”. The Board approved the addition of Kate Falcocchia as a member of the Committee. (SU Note: Still an all-female committee, understandable as women do a much better job at planning than men. However, with male representation perhaps in addition to the car show we could squeeze in a Texas Hold’em tournament or Casino Night!). It also appears the Committee will be asking for a $20K increase in their budget for 2022 (i.e., from $15K to $35K). Worth it, considering what has transpired this year!

5. Financials

  • Treasurer Report – Board Treasurer Simon Baker reported that through June 30th, 2021, the Association was sitting on $16.5M million in cash ($2.6M operating cash, $7.9M reserves) with $4.1M in debt. Also in the first six months of 2021, the Association experienced an excess of revenues over expenses in the amount of $910K (Common Area at $679K and TCTC at $212K).
  • June Financials – The Board approved the June financial statements

SU Note: It had been previously reported that Board Treasurer Baker was selling his house and moving out of Somersett. Indications are that the timing will be such that Mr. Baker will be serving out his term. This is good news, given Mr. Baker’s knowledge and involvement with Association financials and the 2022 budgeting process.

6. Unfinished Business:

  • Legal Updates – Nothing new to report on Legal Issues.
  • 1880 Dove Mountain – No closure yet on this hillside stabilization project, engineering plans and contractor selection nearing finalization.
  • On a different issue, the Board President advised that Travelers Insurance would not be renewing the Associations Directors and Officers (D&O) liability insurance policy and a new vendor would be required, most likely with an increase in premiums.

7. New Business:

  • Gate Code Discussion – Apparently there has been some concern over gate code abuse with too many combinations (past and present) out there. Discussions included the changing of codes used by Association, Homeowners, Service Firms, Emergency Services, etc. on a more frequent basis. Too many things to consider here, so topic was referred to the Facilities Committee for study.
  • Rock Wall Monitoring Program – The Board approved renewal of the Kane Geotech contract to continue the Crescent Point Rockery Wall and SBE Slope Stability monitoring program. Cost of services being $6,000 annually with a rate schedule for supplemental services.
  • Lap Pool and Spas Resurfacing Proposals – Apparently a visit from the Washoe County Health Department’s pool inspector indicated that the TCTC Spas and Lap Pool would require resurfacing prior to the 2022 season. About 14 vendors were requested to submit bids. However, only Tahoe Pool and Spa Construction submitted a sealed bid, which was opened at the meeting. Quoted price was $39,700 for the Lap Pool and $15,605 for the two Spas. A confusing factor was that in a subsequent document from the County, only the Spas were mentioned. This caused the Board to table action until further clarification from the County could be obtained.
  • Approval of Charters for the newly formed Technology Advisory and Strategic Planning Committees – Both Charters were approved. The Technology Advisory Committee is a temporary ad-hoc committee consisting of members appointed by the Chairman of the Communication Committee. The Strategic Planning Committee is a permanent committee consisting of appointed members from the Facilities, Finance and Communication Committees. For the purpose and responsibilities of each committee, one may access the following:

Technology Audit Committee Charter
Strategic Planning Committee Charter

Homeowner Comments:

  • A comment on the hiring of FSR employees who may wish to stay on after FSR leaves, that it should be the new Management Company’s decision and not the Boards. Also, that owners should be surveyed to determine if self-management of the Association is really the direction owners wish to go.  Board response was that past communications have provided owners with sufficient avenues to express their opinions.
  • Given the importance of the Boards decision to homeowners and the complexity of the transition to a self-managed Association, a suggestion that the Board convene a “Town Hall Meeting” wherein the transition process is explained to homeowners. Thereby providing them with the opportunity to know what to expect and to ask questions.
  • A somewhat heated exchange occurred between the homeowner at 1880 Dove Mountain Court and the Board President. Apparently over a misconception of what Agenda Item 6.b “1880 Dove Mountain” pertained to. As the resident owner at 1880 Dove Mountain, the owner assumed this item pertained to his property and therefore, had the right to ask questions and express opinions when it came up on the agenda. The Board however advised that it did not involve his property, but only the Common Area hillside adjacent to his property, and if he wanted to comment he had to do so only during the homeowner forums at the beginning and end of the meeting. The controversy was resolved by the Board agreeing to meet with the owner at the next executive session.
  • An owner raised the following questions: 1) How many and what roles would those FSR employees, who may wish to stay, play in the new management structure, and 2) Given that the Association expects to save considerable funds with the move to self-management and new landscaping contracts, what are the off-setting costs that would require an increase in the Common Area assessment? (SU Note: not to mention the $679K excess of Common Area revenues over expenses previously reported by the SOA Treasurer, or the $100K budgeted amount for Rockery Wall lawsuit appeal that will now not be spent). With regard to question 1), the Board President responded that they were only looking at the senior FSR staff of around 10 employees. With regard to question 2), the Board Treasurer responded to cover uncertainties in future costs and if a surplus resulted to apply it to the Association debt. (SU Note: Perhaps paying down the debt is the primary reason behind any assessment increase!)

SU Note: Regarding the reference to senior FSR employees, and although not specifically stated, SU assumes this would pertain to the Community Manager (Ryan Fields), Assistant Community Manager (Jessica McCarron), Operations Manager (Jeff Lucas), Administrative Assistant (Michelle Powers), Aesthetics Coordinator (Aleah Marcelino), Communications Coordinator (Robin Bolson) and Club Manager (Camille Porter) staff positions. No mention was made regarding competitive interviews.

August 25th SOA Board Meeting

BOD Agenda 2

Following is the Agenda for the Somersett Owners Association (SOA) Board of Directors (BOD) Meeting to be held at The Club at Town Center (TCTC) at 5:30 PM on Wednesday, August 25th in the Canyon View Room.  Attendance may be either in person or via Zoom videoconference.  Zoom log-in instructions are available on the Meeting Agenda under “Join via Zoom”

August 25th BOD Meeting Agenda

The Board Meeting Packet for the August 25th Board meeting was not yet available on the SOA website at the time of this posting.  However, SU fully expects that one will be published prior to the meeting. For this, the reader is referred to the SOA Documents/Board Documents/2021 page link on the SOA website (www.somersett.org).

Comments on Agenda Items follow:

4.0  Committee Reports:

Regarding the Committee Reports (i.e., Budget & Finance, Communications, Strategic & Facilities, West Park Garden, Community Events and General Manager), these appear on every Board Meeting Agenda as place holders that may or may not be commented on.

5.  Financials:

Most likely just the standard Treasurers Report and monthly financial statements. The reader is referred to the Board Meeting Packet referenced above for details.

SU Note: It has been reported that the SOA Board Treasurer, Simon Baker, has placed his house on the Market. If so, hopefully he will be relocating within Somersett. If not, we will miss his service as Treasurer, which has been excellent.

6.  Unfinished Business:

a.  Legal Update –  SU does not anticipate any new news here. That is, no closure on the Preston Homes Lawsuit or any new legal actions against the SOA to report.

b.  1880 Dove Mountain –  After the ridiculous passage of time to settle this hillside stabilization issue, perhaps closure is finally on the horizon.

c.  SOA Management Consultant Update –  The SOA Management Consultant, Nancy Kerry, has published the following update on the SOA Website (click on to view):

Memo, SOA Managements Options Overview, August 25th Board Meeting

7.  New Business:

a.  Gate Code Discussion – No info yet available on what this discussion entails

b.  Rock Wall Monitoring Proposal –  For years now the SOA has been paying Engineering firms to monitor some suspect rockery walls for movement. Given the loss of the SOAs lawsuit against Somersett Development Company et al, is it now time to stop this practice, especially given that no significant movements have been encountered?

c.  Lap Pool and Spas Resurfacing Proposals –  Speaks for itself

d.  Approval of Charters for Newley Formed Technology Advisory and Strategic Planning Committees –  At the June 30th Board meeting, the Board approved formation of two new Committees: 1) a Technology Advisory Committee to carry out a SOA “Technology Audit”, that is, to study and recommend changes to the SOA’s many communication and data systems, and 2) a Strategic Planning Committee, which will be separated out from the current Strategic and Facilities Committee. Given that the SOA Website does not currently identify these new Committees or their membership, it is not known if members have already been established or are being solicited.  However, one may always access the SOA Website Committees page and fill out the “Application to Join a Committee”.

e.  Discussion and Selection of SOA Future Management – This Item is a  result of the August 10th SOA Special Board Meeting, wherein the Board met to “Consider and review the management proposals and identify those that the Board wishes to interview”, which was recapped in the following SOA Post of August 12th:

           August 10th SOA Special Board Meeting Recap

Now that the Board has gone through its “due diligence” in addressing future management options, SU believes the option selection is obvious, if not preordained. That is, the selection of Taylor Management as a professional management company to assist the Board in transitioning the SOA to a self-managed Association. A decision for renewal of the FirstService Residential contract or selection of any other professional management company, would come as a major surprise to SU.

August 10th SOA Special Board Meeting Recap

recap 1

Following is a summary of discussions and actions taken by the Board at the August 10th Special Board Meeting. Attendance was via Zoom videoconferencing only. Approximately nine homeowners signed in. The video/audio recording of the Zoom meeting is available on the SOA website (www.somersett.org) under the “SOA Board and Committees/The Board of Directors” page. The special meeting consisted of three agenda items. Comments follow:

Item 1.  –   Consider and review the management proposals and identify those that the Board wishes to interview.

To start this discussion, the SOA’s Management Consultant, Nancy Kerry, gave a summary report on the management proposals submitted by the following six companies, focusing primarily on cost data.

    • First Service Residential
    • Associa Sierra North
    • CAMCO Nevada Management
    • Eugene Burge Management Corporation
    • The Management Trust
    • Taylor Association Management

To support Ms. Kerry’s presentation, the following cost comparison table was put on the screen for viewing by Zoom conference attendees:

Management Proposals Financial Impact Comparison

Following Ms. Kerry’s presentation each Board Member was chartered with expressing comments that they may have on the individual proposals and to vote for two companies they would like to bring in for interviews. First Service Residential was essentially excluded because the current working relationship and contract is well known by the Board, and therefore, no interview required.  The Board members voted as follows. Note that Board members Capalongan and O’Donnell cast their two votes for the same company.

    • Jacob Williams –  CAMco and Taylor
    • Simon Baker  –  CAMco and Taylor
    • Bill O’Donnell  –  Taylor and Taylor
    • Mark Capalongan  –  Taylor and Taylor

Board Member Williams and Baker’s selection of CAMco was predicated on the desire to interview another large company.

The selection of Taylor by all Board Members was predictable. It has become abundantly clear that the Board wants to transition the SOA to a self-managed (internal) structure. Apparently, to address this eventuality, Taylor has proposed a hybrid structure which would support a transition to self-management. Hence the redundant votes for Taylor by Board Members O’Donnell and Capalongan, who, in doing so, appeared to have no interest in interviewing any of the other five. In commenting, Board member O’Donnell pontificated extensively on why the current professional management model is unworkable, proclaiming self-management as the only viable option for Somersett. It was also apparent that Board President Capalongan had previously evaluated Taylor and had already zeroed in on them as his choice. This raises the following questions: 1)  were any of the other companies interested in or requested to also submit a hybrid approach, and 2) was there really any objectivity present in the evaluation process? Whatever the case may be, Kudos to Nancy Kerry for her diligent work on this issue.

The Summary Report prepared by Ms. Kerry which addressed each of the six companies was contained in the Board Meeting Packet and is available via the following link:    “Review of Management Proposals

The individual proposal summaries for the “chosen” two, along with First Service Residential, are repeated below:

Item 2. —   Review Insurance Proposals

This was not a review of individual insurance proposals by the Board. Rather this agenda item consisted primarily of an agent who specializes in HOA insurance (Ron Wright – Menath Insurance) providing the Board with his take (during a 25 minute dialog) on what they should be considering when renewing the SOA’s insurance policies. He has apparently reviewed the SOA’s insurance policies and opined that we were underinsured in some areas. He also advised that, in his opinion, the SOAs insurance costs would be doubling in the future.  In response to the question if moving to self-management would result in an increase in the SOA’s insurance costs, he advised not necessarily. That added costs such as Workman’s Compensation and Employment Practices Liability were currently being paid for indirectly via FSR’s management fees.

If Mr. Wright submitted an actual cost proposal to the Board, it was not discussed.  It also appeared that, rightfully so given the effort he put into his review, Mr. Wright was soliciting his services.

 Item 3.  –  Approve Brightview’s proposal to extend their contract on a month-to-month basis after September 1st.

The Board approved the BrightView proposal for extending their contract, which expires on August 31st, on a month-to-month basis.  This to provide the Board time to obtain competitive quotes.

Homeowner Comments (SU apologizes for any mischaracterizations of homeowner comments and refers the reader to Zoom video/audio recording for actual statements)

The Board President of The Villages sub association had read into the record his endorsement of BrightView as the SOA landscape contractor. This in response to the Boards apparent dissatisfaction with BrightView’s performance and the decision to go out for competitive bid rather than renew their contract. He praised the quality of BrightView’s services as compared to previous landscape contractors and urged the Board to retain them. In response, the HOA Board President, advised they were not looking specifically to replace BrightView, but to consider other options.

 A Board member of the Vue sub-association stated their satisfaction with FirstService Residential as their community manager. However, liked the idea of self-management but cautioned that we know exactly what we are getting into before we do it, as there is a cost to get in and a cost to get out. He also expressed a concern that while we may be doing the right thing for the current Board, are we doing the right thing for future Boards? This based on the observation that the current Board is well motivated and willing to spend a lot of time on Association management, but this has not been the case for past Boards and may not be the case for future Boards.  In response, the Board President basically advised that if the internal management structure was properly established, that future Boards would function in an oversight role as opposed to the day to day Association management.

An Owner Perspective on the SOA Rockery Wall Lawsuit Settlement

The following post submitted by Geoffrey Brooks, Somersett Homeowner:

SU Note: Following the announcement that the SOA Lawsuit Appeal against the Somersett Development Company et al had been denied, Mr. Brooks posted the following within the Discussion Forum on the SOA website. It is being republished here at his request. The following also contains Board President Mark Capalongan’s response, with his permission,  to Mr. Brook’s comments.

Geoffrey Brook’s August 4th SOA Website Post:

“I attended the legal meeting before the vote to pursue the rockery wall builders and developer. Schulman gave a presentation where little in the way of a “prima facie” case was made. (We were told that they did not want to tip off the legal opposition)

Most of the meeting revolved around discussing the Geotech report on how badly built the SOA owned 17 miles of walls were… Monitoring devices were put into place in some areas (now removed as no significant movement has been detected). The report created a climate of fear within the community …

Personal inspection using the GeoTech report of nearby rockery walls (not just in Somersett) at that time, including those near where my house is located (along with my neighbors) led us to the conclusion that any defects noted were minor and inconsequential. The danger of them tumbling down was obviously exaggerated (for the law-suit)!

At the meeting several folks spoke out against pursuing legal action. The community vote did not meet the CCR/NRS legal requirements. Back in 2011 when the SOA (developer controlled) was suing under Chapter 40 – the vote was held open until the CCR/NRS voting requirement was satisfied…

The Board actually had perfectly good reason not to pursue the law suit…(homeowners were not privy to the legal analysis, on which the suit was to be pursued).

But the fear for the safety of the community from collapsing rockery walls (based on GeoTech’s report) and under persuasion from our attorneys – justified their decision to go ahead, without proper legal community approval (per NRS and CCR’s).

I read through the original judgement against Somersett … The judge was all over our attorneys for not having a case, and making nonsensical arguments about how long a wall should last!

At a subsequent homeowner meeting, when the attorneys wanted the Board to pursue the appeal. We were told that this would be done essentially pro-bono. They were pursuing a similar case in Las Vegas; where the turnover date by the developer to the residents, is the date from which the “countdown” clock for 6 years start for any property now owned by the HOA. This would establish a new legal precedent!

In my business life, I never felt that being on the cutting edge of legal precedent was a good idea; whereas, conversely for science based projects it might be OK to be on the leading edge!”

Mark Capalongan’s Response:

“Hello Geoffrey,

That informational meeting is still on the web and can be viewed here:

https://www.youtube.com/watch?v=NWziVILTz48

Afterwards, 71% of the votes received were in favor of the lawsuit. Missing from the presentation was any discussion of the risks of bringing the lawsuit, the costs of that lawsuit, if the defendants had any ability to pay, and any estimated on the chances of success. The discussion seemed to be centered on the fact that the walls were bad, and defects were identified. Very little was said about the statute of repose, and in the end that’s all that mattered.

So homeowners were missing some key information when they voted. We forgot to ask (or the law team effectively evaded) the hard questions. In making the wrong case, the legal team pumped up the defect status to include some 70 miles of rock wall and did the entire community a disservice by overstating the risks and problems. Some of those claims made the papers.

For the appeal, the SOA paid a fixed cost up front. It wasn’t free.

In the end, this case was probably used to test the robustness of the statue of repose, something that should be left to deeper pockets (and scientists.) In the future anyone coming up against a similar situation will have an even tougher time of it.

Mark Capalongan”

Mr. Brooks response on August 4:

“Hi Mark

It is obvious that if the CCR’s and NRS had been followed to the letter, the suit would not have happened… The then Board decided to sue, based on the fact that by the end of January the 6 years the Statute of Repose for the Declarants turnover to the Homeowners would have expired.

Unfortunately, before the turnover, over 2000 homes had been built, and the SOA was a functioning entity for the homeowners, albeit controlled by the developer. A change in control, did not mean that the clock restarted from the infra-structure building viewpoint.

Future Boards can avoid esoteric legal theory being pushed by their attorneys, by following the R&R!

Back then, the Board was under pressure from many residents to get the private golf course to pay for the repair to their collapsed wall, and the SGCC encouraged the suit. Note that 2 of the Board members were members of the country club. Somersett HOA should not have paid to fix the golf course wall, the responsibility to repair and maintain leased property was clearly theirs.

The falling walls were attributed to an extreme weather event – a once in a 100 year storm. We have to ask ourselves whether this kind of event can happen again in the near term. We need to make sure that any wall built either 20 years ago, or today in Somersett drains properly, and is built on a stable land base.

I Appreciate your taking time to comment on past events, I believe that a litigation light existence is far less stressful!

Geoffrey”

Mark Capalongan’s Response:

“Several people have asked what the final cost of the rock wall case was.

From the past financial reports here is what I’ve found:

Looking strictly at the rockery wall case against Somersett Development as summed in account 77765 we might have spent $644K. However, the other legal expenses for 2018 and 2019 were also unusually high and probably included legal costs of the action against SGCC for that rockery wall.

Our average legal costs in a typical year average 100K. So for the period of 2018-2019 while the rockery walls were being litigated, our legal costs above normal were $844K.”

SU Note:  For those interested, the Court of Appeal’s legal ruling make be accessed vis the following link: 

Supreme Court Appeal Opinion 21-21960, Case No. 799211

 

Error Correction

opps

As indicated in Mr. Capalongan’s comment on SU’s previous post “August 10th SOA Special Board Meeting”, under Item 3. “Approve Brightview’s proposal to extend their contract on a month-to-month basis after September 1st”, we erroneously made reference to the FSR contract, which expires December 31st, 2021. The BrightView extension is required because the Board will be going out for competitive bid rather than renewal.

SU apologizes for mixing the two!

 

 

August 10th SOA Special Board Meeting (Updated to correct item 3 error)

Specialeeting

Following is the Agenda for the Special Meeting of the Somersett Owners Association (SOA) Board of Directors (BOD) to be held at The Club at Town Center (TCTC) at 5:30 PM on Tuesday, August 10st in the Canyon View Room.  For those wishing to participate via Zoom video conferencing, the login passwords are contained within the Agenda document.

August 10th SOA Board Special Meeting Agenda

The Special Meeting Agenda Items are as follows:

 1.  Consider and review the management proposals and identify those that the Board wishes to interview.

One of the Management Options Study objectives was to obtain competitive quotes from a number of HOA Professional Management Companies. At the July 21st Board Meeting, the Board opened sealed bids from the following six companies.

    • First Service Residential
    • Associa Sierra North
    • CAMco HOA management
    • Eugene Burge Management Corporation
    • The Management Trust
    • Taylor Association Management

Action on the above proposals were deferred to a subsequent Board meeting to allow time for the generation of a matrix of comparable features and fees to assist in the evaluation process. The intent being to narrow down the field, who will then be brought in for interviews.  The results of this review process are contained within the following report, prepared by the SOA’s Management Consultant, Nancy Kerry.

Review of Management Proposals

In the proposal submittal process, our current management company, FirstService Residential (FSR) was requested to submit answers to some supplemental questions.  These may be accessed via the following:

FSR Supplemental Answers to proposal

SU Note:  Apparently the Taylor Association Management proposal addressed a hybrid approach to Association management in the event the Board is interested in pursuing a combination of  internal and external management elements. At the last Board Meeting the Board President expressed a strong interest in this approach, such that SU expects they will make the short list.

2.  Review Insurance Proposals

An option under consideration by the Board is to convert to an internal management structure (i.e., as opposed to the hiring of a professional management company). This option would obviously require a re-structured Association insurance policy. Hence, the request for quotes from various insurance companies for such a scenario.

 3.  Approve Brightview’s proposal to extend their contract on a month-to-month basis after September 1st.

Given the Boards decision to go out for competitive landscaping bids rather than renew the BrightView contract, which is up on August 31st, extension on a month-to-month basis will be required.

The above linked documents were extracted from the Board Meeting Packet and are included here for convenience. The reader is also referred to the “Future of Management in Somersett” page on the SOA website (www.somersett.org), for a listing of published documents (past and present) related to the Management Options Study.

Rockery Wall Litigation Update (7)

Case-Dismissed-1

Yesterday (August 2nd) the SOA Board President, in a “Somersett Happenings” email distribution to Homeowners, announced that the Nevada Court of Appeals has upheld the District Court’s Summary Judgement dismissal (based on statutes of repose and limitations) of the SOA’s lawsuit against Somersett Development Company et. al. That is, the SOA’s lawsuit for damages (In excess of $4M) associated with the SOA Common Area Rockery Wall failures. This essentially bringing an end to the litigation. Or does it?  Will the SOA be liable for any of the defendants legal fees?

In announcing the appeal decision, the SOA email contained a brief summary of litigation events (initiated in April 2018), implied that the lawsuit was ill advised and will end up costing the SOA in the area of $754K.

Did the SOA Attorneys lead us down the “primrose path” for their own benefit? Many believe so. However, the previous Board did conduct Homeowner Information Meetings on the lawsuit, wherein the SOA Attorneys and  Engineering Firms presented the case for litigation and addressed owner questions. Subsequently, information letters and ballots were distributed to all SOA members (approximately 3000) for ratification of the lawsuit by majority vote as required by Nevada law. The Vote count being 716 for, 205 against, and 36 invalid.  Note that a “majority vote” would constitute approximately 1500 votes. However, the SOA attorney advised that the SOA had conducted a good faith effort and that their interpretation of Nevada Law allowed the SOA to proceed with the litigation without having to extend the voting deadline to obtain a majority vote, which they did, bringing us to the present.

The President’s email contained the following quote from the Court of Appeal’s decision, describing it as a “scathing opinion”.

“NRS 11.202(1); NRS 11.2055, which we clarify in the context of the common law, means sufficiently complete so that the owner can occupy or utilize the improvement. Here, SOA failed to offer anything beyond “gossamer threads of whimsy, speculation, and conjecture” to support its argument that it commenced this action within that six-year period.”

However, for the complete text (13 pages) of the Supreme Court Opinion, the reader is referred to the following legal filing:

Supreme Court Appeal Opinion 21-21960, Case No. 79921

For those interested in reading the “Summary Judgement” issued by the District Court in October 2019, which was he basis for the appeal, the following link is also provided.

Order Granting Defendant’s Motion for Summary Judgement

The SOA President’s email also contained a paragraph about being more judicious in pursuing legal actions. Amen to that. However, Board members are normally not legal experts and have to rely on the Association’s legal team for guidance. Perhaps a new legal firm representing the SOA is warranted!

July 21st SOA Board Meeting Recap

Following is a summary of discussions and actions taken by the Board at the July 21st Board Meeting, the agenda for which may be accessed via the following link.  

July 21st BOD Meeting Agenda

The following addresses some of the more salient points that transpired at the meeting. For a more complete understanding of what was discussed and acted upon, the reader is referred to the meeting audio/video recording, which may be found on  the SOA Website (www.somersett.org) under the “SOA Board and Committees/The Board of Directors” page.

4.  Committee Reports

4.a.  Finance Committee –  Reported the following financial summaries through May 2021:

      • Operating cash –  $1.0M
      • Reserves – $9.1M
      • Revenue – $2.7M and Expenses – $1.9M (Note: No comment on whether or not the $0.8M in revenue over expenses represent a net positive to the bottom line or expenses not yet accounted for)
      • Association Debt – $4.15M

4.c.  Facilities Committee –  Made a recommendation that rather than renewing the BrightView Landscape contract (contract is up in September with a one year extension clause) that the Association instead solicit competitive bids. This based on dissatisfaction with BrightView’s performance and that the current contract is too open-ended to hold one’s feet to the fire. The Board approved the recommendation for soliciting competitive bids.

4.d.   West Park Garden Committee –  Reported that table umbrellas and potted flowers to attract pollinators have been installed. Also, that volunteers will soon be installing small critter fencing around the perimeter of Garden. (SU Note:  The garden plots appear to be flourishing, readers are encouraged to check it out!).

A question was raised as to whether the large dog park was open, and if so, too many foxtail plants still exist to the detriment of users. Response being that the park is indeed open and that BrightView would be commissioned to “sweep” the area.  It was also commented on that the City of Reno just did not have the resources for park improvements, hence the desire by the Board to have it turned over to the Association (at what cost one may ask?)

4.e. Community Events Committee – A comment on the success of the Auto show and to check the calendar for upcoming events.

SU Note:  It appears that Committee reports are mostly being presented by the Board members who liaison with the Committees, rather than the Committee Chairpersons, often without any formal report being contained within the Board Meeting Packet. A deviation from past practice!

6.  Unfinished Business Agenda Items:

6.a.  Legal Updates – Nothing new to report on the Somersett Development Company and Preston Homes lawsuits.

6.b  1880 Dove Mountain – The Board President summarized the history associated with this ongoing issue. He advised that the solution has been re-engineered with a new proposal in the works, but that only one company has expressed any interest in doing the job.

6.c  Update on Management Options Study  –  SOA Management Consultant Nancy Kerry provided a status report on progress to date.  Rather than summarizing her comments here, the reader is referred to the attached updates, which are also available, along with all previous reports, on the SOA website (www.somersett.org) under the “Future of Management in Somersett” page link.

7.  New Business Agenda Items

7.a.  Guest Pass Discussion –  After much discussion on the TCTC guest pass issue, the Board voted to reinstate  the free four guest passes per household per season and to charter the Facilities Committee to address the other issues being raised and recommend a “Criteria” for guest pass usage moving forward.

7.b.  Variance for Basketball Hoops in Driveway Discussion  –  The Board voted to extend the relaxation on use of basketball hoops in driveways (i.e. can be left out permanently) until October, and in the meantime to conduct an owner survey on criteria for their future use.

7.c.  Review of Association Insurance Proposals – Individual vendor proposals being complied by an Insurance Brooker were not yet available and will be addressed at the next Board meeting.

7.d.  Review of Management Services Proposals  –  One of the Management Options Study objectives was to obtain competitive quotes from a number of HOA Professional Management Companies. In response to the Association’s Request for Proposal, six companies submitted proposals along with sealed cost data. The proposal content was made available to the Board prior to the Board meeting, with the sealed quotes to being opened at the meeting  The six companies submitting proposals were as follows:

      • Associa Sierra North
      • CamCO HOA management
      • Eugene Burge Management Corporation
      • First Service Residential
      • Taylor Association Management
      • The Management Trust

With respect to individual quotes, base management fees ranged from $5,700/month to $9300/month not including other fee structures. It was evident that the individual quotes could not be compared on an apples to apples basis and a more detailed analysis of the individual proposals would be required. In this context the SOA’s Management Consultant and Staff was chartered with generating a matrix of comparable features and fees to assist in the evaluation process. The intent being to narrow down the field, who will then be brought in for interviews and further investigation before deciding on the preferred vendor. A special Board meeting is scheduled for August 10th to provide some closure on the process. It should be noted that this vetting process does not mean that the Board has decided to employ a professional management company as opposed to internal management, that decision has yet to be made.

7.e  Acceptance of Streets and Gates in Cliffs from Toll Brothers  –  Toll Brothers is requesting the SOA to accept turnover of the Gates and Streets (i.e., maintenance responsibility) within the Cliffs development. Basically to save them money, as is they are currently paying assessments to the Association on their unsold lots ($89 for Gates and Streets) while still maintaining them out of their own pocket (e.g., snow removal). However, given that the development is far from complete, they will indemnify the Association for any damage caused by their construction traffic. After much discussion on the merits of this request, the Board tabled action to review previous Toll Brothers requests, and their outcomes.

SU Comment – SU believes that action on Item 7.e. is a “no-brainer”, and that is to deny the request. Once the Association accepts maintenance responsibility in this context, any subsequent damage will most likely result in an argument over who caused what, with potential lawsuits. Other than being neighborly, there is no benefit to the Association here, only to Toll Bros, so why go down this perilous path?

July 21st SOA Board Meeting

BOD Agenda 2

Following is the Agenda for the Somersett Owners Association (SOA) Board of Directors (Board) Meeting to be held at The Club at Town Center (TCTC) at 5:30 PM on Wednesday, July 21st in the Canyon View Room. Apparently Zoom video conferencing is not yet available from that location, so owner participation must be in person.

July 21st BOD Meeting Agenda

The Board Meeting Packet for the July 21st Board meeting was not yet available on the SOA website at the time of this posting. Therefore, SU is unable to provide any background info or comments on the individual agenda items at this time Given the two days to the Board meeting, perhaps one may still become available. For this, our readers are  referred to the SOA Documents/Board Documents/2021 page link on the SOA website (www.somersett.org), login is required.

Regarding the Committee Report agenda items (i.e., Budget & Finance, Communications, Strategic & Facilities, West Park Garden, and Community Events), SU suspects that these are simply place holders that may or may not be commented on. However, at the last Board meeting, two new committees were approved:1) a Technology Advisory Committee, and 2) a Strategic Planning Committee (separated out from the Strategic and Facilities Committee). Although not specifically identified on the agenda, perhaps an update on these two new committees will be provided.

Unfinished Business agenda items included: 1) legal Updates and 2) 1880 Dove Mountain (the saga continues). Again, SU suspects these are also placeholders with little new to report.

New Business agenda items include: 1) Guest Pass Discussion, 2) Variance for Basketball Hoops in Driveway Discussion, 3) Review of Insurance Proposals, 4) Review of Management Services Proposals, and 5) Acceptance of Streets and Gates in Cliffs From Toll Brothers. The latter two items should be of general interest to all owners. An action item of the ongoing “Management Options Study” was to solicit bids from other management companies in addition to FirstService Residential, perhaps some have been received, The last item pertains to a request for the SOA to accept turnover of the gates and streets at “The Cliffs at Somersett “ to the Association, even though home site development is far from complete. Not a good idea!

Aside from the Board meeting, for some great pictures of the July 10th Auto Show at The Town Center, including award winners, our readers are referred to the SOA Website at http://www.somersett.org. Login is not required.

SGCC 2020 Financial Summary

happy golfers 1

Given the Somersett Owners Association’s (SOA) investment and liabilities associated with the Somersett Golf and Country Club (SGCC) Purchase and Lease Agreements, the SOA has a vested interest in the financial health of the SGCC and hence of interest to many Association members. Since the SGCC’s financial data is not made available to Association members through any other media, it has been SU’s practice to annually publish what is publicly available, hence the following update.

The following table represents a summary of the Somersett Golf & Country Club’s (SGCC) revenue and expense data for the years following turnover from the Somersett Developer to its Equity Members in 2010. The table has been updated to include the 2020 financials. All financial data contained in the following table are derived from the SGCC’s IRS Form 990’s, which require submittal by May 15th of the following year and become available for public inspection. The SOA Revenue Column represent previous monies provided to the SGCC from SOA funds as indicated by the corresponding “Notes”.

Year SGC* Equity Members SGC Total Revenue SGC Total Expenses Revenue Less Expenses SOA Revenue Contribution ** Notes
2010 188 1,990,652 2,550,940 -560,288 0 1
2011 152 2,087,950 2,715,815 -627,865 0 2
2012 129 2,645,620 2,613,692 +31,928 435,000 3, 4
2013 115 2,918,754 2,815,109 +103,645 440,000 4
2014 194 2,729,114 2,695,062 +34,052 360,000 4
2015 220 995,670 2,581,250 -1,585,580 2,750,000 5,6
2016 241 2,611,329 2,664,450 -53,121 0  
2017 256 2,957,651 3,030,659 -73,008 0  
2018 293 3,149,162 3,257,636 -108,474 0  
2019 274 3,152,660 3,302,604 -149,944 0  
2020 330 3,160,269 3,049,520 +110,749 0  

*  Represents full proprietary membership with voting rights, does not include non-permanent or provisional memberships

** SOA Revenue Contribution does not include Canyon9 Maintenance Agreements with the SGCC which ran through 2017 at then $309K annually. The SGCC no longer provides this maintenance service to the SOA.

Table Notes:

  1. In the Fall of 2010, the Somersett Development Company negotiated early turnover of the SGCC to its Equity Members via Member majority vote.
  2. 2011 was the first year in which the SGCC was run entirely by Equity Members.
  3. In late 2011, the Developer controlled SOA Board voted to divert $15/month of homeowner assessments to the SGCC via a “Lease Agreement” in exchange for some SGCC access amenities. This agreement was to run for three years starting in January 2012 with optional 3 and 4-year renewal periods. The obvious purpose being to subsidize the SGCC’s operating losses.
  4. The SOA Revenue column represents revenue the SGCC received in years 2012, 2013 and 2014 from the SOA under the Lease Agreement described in Note 3 above. 2014 was the last year under this agreement after being declared unlawful by the Nevada Real Estate Board.
  5. As a replacement for the aforementioned Lease Agreement, in late 2014, a SGCC Real Property Purchase and Lease Agreements were approved by SOA owner majority vote. Under this agreement, the SOA purchased the SGCC land and water rights for $2,750,000 with a subsequent leaseback of the land and water rights to the SGCC at a base rate of $1000/year (subject to escalation) plus a fixed rent amount of $1200/year. Lease term is for 50 years with two SGCC optional 20-year renewal periods. The SOA purchase funds were obtained via an ongoing bank loan currently being paid for from homeowner assessments.
  6. The SGCC 2015 negative revenue less expense amount was primarily due to the $2,750.000 sale price income (see Note 5) minus a reported sales expense (asset loss) of $4,294,781.

A copy of the SGCC’s 2020 Form 990 may be accessed via the following link:

SGCC 2020 Form 990

Comments on the Preceding:

After years of moderate equity member growth, the 330 total at the end of 2020 represents an increase of 56 members over 2019, the largest gain since 2004.  Note: Unless subsequently modified, equity membership is capped at 450.

The SGCC’s operating loss, which had been steadily increasing since the loss of the SOA revenue contributions in 2016, showed a good turnaround for 2020, with an excess of revenue over expenses of $110,749. This primarily due to a decrease in expenses of $253,084. Better management possibly?

In 2020, The SGCC was facing a lawsuit from the SOA for their share of Rockery Wall failure repairs (approximately $680K) on he hillside adjacent to Hole #5. This lawsuit was settled out of court with the SGCC agreeing to pay the SOA $263,097 via an annual payment of $5,979.48 per year for 44 years (i.e., the remaining 44 years on the current lease agreement). A good settlement for the SGCC, not so much for the SOA.

A breakdown of the SGCC’s  revenue and expenses by category is found in Part VIII “Statement of Revenue” (page 9) and Part IX  “Statement of Functional Expenses” (page 10) of the SGCC 2020 Form 990.

Based on the 2020 financials, the SGCC appears to be reaching financial stability. Perhaps this will alleviate the fears of many that the SOA will again be called on to provide some sort of financial support to the SGCC, which has not been the case since 2015.