OR5 Community Update
OR5 Community Update:
A “How goes it” from your HOA Board of Directors
Friends and Neighbors,
First of all, allow us to say what a privilege and an honor it is to serve all of you on our Otay Ranch 5 Board of Directors. The last 4 months since the election have been tumultuous at times, but always rewarding knowing that we are striving every day to make a positive difference in our community. So, for your patience, your confidence, and your understanding as we continue to do our best to serve both the community and yourselves, we personally thank you.
This report is designed to give you some background and insight into some of the decisions this Board has made and to dispel some of the rumors that have been floating around the neighborhood. Of course, there are things that the Board cannot talk about publicly as it relates to contracts and member accounts and such, but we will address some of the things that we can discuss publicly. With a little bit of accurate information, anyone could see exactly how and why the Board has gone in the direction that it has in the last few weeks. We will provide links for you to that information in this report. We are confident that everyone would agree with the decisions that are being made if they had facts, not speculation and rumor, in front of them.
Where shall we start?
The Bathroom at the Park.
The reality of the bathroom at the park is that it is a project that was conceived, initiated, and then partially constructed and partially paid for beginning 2 years ago. This is not something new. Here’s the link to the Open Session Meeting minutes where the park was conceived and initiated: February 2012 Minutes. Much of the initial construction was already approved, contracted and paid for by the Board before the election in January.
What we are left with is a half-finished project that is an eyesore. There has been over 100,000 dollars already invested in this project, and other park improvements. Contrary to rumor, the previous Board did negotiate a contract for the pre-fab bathroom itself, and construction has reportedly already begun on the unit. As a result, failing to follow through could leave the association liable for work already performed but not paid for, and potentially lead to litigation for the association. So we are left with a choice.
Option 1: Cancel or delay fulfilling the contract, risking litigation (being sued could cost the association far more than the bathroom would cost,) throw away the money that has already been spent on the project, pay someone to clean up the mess and eliminate the eye sore currently at the park, and end up with no bathroom for the trouble.
Or, Option 2: Bite the bullet in spite of the budgetary concerns and pay for the bathroom, complete the project leaving us with a modernized, new bathroom, and protect the association from the potential legal backlash. The cost would be covered by a loan from our reserves, which would be paid back over the course of 12 months. The Board has worked hard to re-negotiate the cost so that it does not surpass the legal threshold of spending in a fiscal year that a Board of Directors must operate within. We have succeeded in this.
Which leads us to the increase in assessments.
The Board recently approved an increase of 10 dollars in assessments, from $95.00 to $105.00 per month, for the purposes of paying back the reserves for the bathroom, but to also primarily aid in increasing the reserves. The current reserve account is funded at 56%, which is of concern to both the Treasurer and the Board, as well as our CPAs. The Board for the last 2 years has been operating considerably above budget, to the tune of 78,798 dollars in 2013, and 133,212 dollars in 2014.
2013: December 2013 Financials
2014: December 2014 Financials
This has left the association with little funds in the operating budget, and $59,242 already owed to the reserve account.
Add to this the fact that the Board voted to decrease the assessments in November 2013, November 2013 Minutes even though the association was $80,089 dollars above budget (and owed $16,381 to the reserves) November 2013 Financials. It was during the time following the decrease that the Board began initiating expensive projects like pavers and gate arms. It’s imperative for the membership to know that with or without the bathroom project, the assessments had to be increased to raise our account balances. The fact is, the assessments were lowered, and now we are forced to do something about it. Even without the bathroom, assessments would have had to be increased by 8 dollars a month just to bring the operating budget and the reserve accounts back to a reasonable operating level.
The increase in assessments is also at the explicit recommendation of the Association’s CPAs. As a part of our responsibility to you and the association, we have a duty to follow our hired professional’s advice in order to represent the association’s best interests. All of this was discussed at length with the membership in attendance at the Open Session Board meeting on April 23rd.
There is absolutely no truth to any rumors that the Board is raising assessments for any reason other than what I have mentioned here.
There has been some talk in the community that the newly elected Board is making decisions and proposals solely to fulfill “campaign promises” and to push a “personal agenda.” Members of the Board elected in January were elected on the platform of bringing positive change to the community. If the new directors were to be elected, and make no effort to bring that positive change, then they would be not be living up to their end of the bargain. The only “agenda” that we are aware of is the one that reflects the will and desires of the community as a whole. The only proposals that have been presented are ones that were openly advertised during the election, which members clearly supported through their votes.
Here’s the short list of positive changes that the newly elected members of the Board wanted to see: Parking rule revisions, more transparency on the Board, decreased spending on Legal fees, and budgetary responsibility.
Parking Rule Revisions: Please keep in mind that the Parking rules we currently operate under are not part of the CC&Rs, nor are they part of the “governing documents” we all bought into when we purchased our homes. (Unless you purchased since those rules were implemented in April 2014) District Parking, Garage use policy (in part), and the ban on all Employee issued vehicles are all rules that were implemented just a short time ago. Open Session Minutes April 2014 The community operated successfully for 10 years or more without these restrictions. However, that being said, the parking revisions are merely a proposal at this point, and no implementation will be made until the community has given their feedback to the board. If it becomes obvious that the community is in favor of the rules as they stand, then the revisions will be revised again to reflect the wishes of the community or thrown out all together. This Board is determined to serve the people of the community as a whole, with no regard to its personal feelings on the matter of parking. Such should always be the intent of public service.
Transparency on the Board: In an effort to show the community that this Board of Directors is serious about serving the people of the community and hearing your voices, many measures have been taken to demonstrate this. This letter is one example. If you’ve been to an Open Session Board meeting recently, you have already seen the display of open communication and spirit of cooperation prevalent in those meetings. People are being allowed to speak, and have their voices heard. Their opinions are being considered, and weighed. It’s a different atmosphere from what we’ve grown accustomed to. If you haven’t come to an open session recently, we invite to come and see for yourself. We welcome your feedback and opinions.
Decreased spending on Legal fees: One of the primary drains on our operating budget over the last 2 years has been the exorbitant spending on Legal matters. We are grateful for our attorneys and we like them very much, but there are many things that simply don’t have to be run through legal in order for us to operate. Measures have been taken to reduce the access Board members have to legal without consensus from the other members of the Board. The board is working diligently and with marked success at reducing the fees associated with Legal counsel, primarily focusing on the elimination of unnecessary reliance on Legal for everyday matters. Even with a backlog of legal matters, and billing lag, it appears that we are succeeding. It’s too early to measure that success quantitatively, but in next month’s community update report, we’ll have some numbers for you.
Budgetary and Fiscal Responsibility: While we have already covered this, just know that this Board does not believe that fines and fees should be leveraged to cover over-spending on the budget. We believe that the budget should reflect what we expect to spend and we should operate within it. With regard to the rumors being spread that this Board is trying to fire all our vendors…we believe this was fabricated from residents seeing vendors on the property assessing the property for bids. Basic business sense dictates that the responsible thing to do is to get multiple (e.g., two or three) bids from several vendors and compare them to get the best value, quality of work, and price for the association. None of our vendors are currently under scrutiny for replacement. But this Board will ensure that when jobs are needed, they put the needs of the association first, and work hard to get the best quality work for the best price. It is true that our management company will be changing, but that was not the will of the Board. Tawny made a personal and professional decision to do what was in the best interest of her company, and it was not at the request or direction of this Board. Management Cancellation
With all of this being said, we believe that reducing spending, balancing the budget, fulfilling our contractual obligations, listening to homeowners, keeping the community informed, working hard to revise rules in accordance with the wishes of the majority of homeowners, and upholding our standards and policies with mutual respect to the homeowners are all positive changes for the community.
We believe firmly that Otay Ranch 5 is one of the most beautiful communities in all of Southern California, and it’s going to remain so! The Board will work tirelessly to not only have beautiful grounds and parks, common areas and recreational areas, but to be financially sound and to uphold our standard of living for everyone. We want a community that we can all be proud of. Not just of how it looks from the outside, but how it is run from the inside, too. We desire a harmonious working relationship with the homeowners, vendors, Board members, and other third parties. We want the community to feel as though this board represents them, hears them, values them, and works with them. We value mutual respect, integrity, and responsibility. We are grateful for the opportunity to serve you, and look forward to seeing you at the park, by the school, at the pool, and in the meetings.
Your OR5 Board of Directors.