The Financial State of Our Association?

. . . it has been very difficult to maintain our ability to prepare monthly and quarterly financial closes timely. We are behind on the year-end close and Audit, and financial reporting set-up in Jonas (hence no June, July or August results as of yet). The Financial Statement reports are being designed, and the budget and beginning audited balances loaded. We expect to have the first quarter financial reports at the October Board meeting. (Emphasis supplied)

                                                              MANAGEMENT FINANCE REPORT (9/26/2017)

That information is not our opinion.  It was a small part of the status report provided in the written Management Report at the 9/26/2017 Regular Board meeting.

Friends of Lake Wildwood (FOLW) attended that meeting, at which the Agenda called for acceptance of the 2017 Annual Audit Report and review and discussion of the First Quarter Financial Report. Board minutes for the meeting reported the following results regarding those financial issues:

3. QUARTERLY FINANCIAL REPORT – The Board discussed the quarterly financial update during Treasurer’s Report.

7. ACCEPTANCE OF ANNUAL AUDIT REPORT – Representatives from the McClintock Accountancy Corporation, the firm that conducted an audit of our 2016/17 Fiscal Year expenditures and financial status presented their findings during Reports to the Board. The Board accepted this report.

In fact, the Association has not produced timely monthly financial reports for the past six months and the 2017 First Quarter Financial Report was unavailable for review at the September Board meeting.  It was also unavailable a month later at the October meeting.

The Auditor did deliver a summary video presentation of his Audit report in a half dozen, barely legible slides, that did not include standard elements of a financial audit such as the Balance Sheet, Statement of Revenues and Expenses, Statement of Fund Balances, or Statements of Cash Flows. He concluded his summary with a statement that he had issued a “clean opinion” without qualification. 

The Board then accepted the Audited Report without further review or discussion.  We wonder when the required review occurred?

Frankly, we have difficulty understanding how the Auditor could issue an unqualified report given the current status of Association financial reporting!

But sometimes an auditor will not identify material weaknesses in an audit and will, instead, report internal control deficiencies and recommendations for improvement in a “management letter” to the association. Auditor McClintock submitted a “management letter” to the Board with the  2016 and 2017 audits.

It’s useful to know that the term “internal controls” refers to a system of financial checks and balances that are designed to ensure reliable financial reporting and safeguard the association’s assets against error, fraud, and embezzlement.

After the Auditor’s presentation, members Tom Cross and Fred Huberty both asked the Board what issues or findings had been identified in the Auditors’ management letter. Board VP, Nita Edwards, stated that since the management letter addressed personnel issues, that information could not be disclosed.  She was then asked to state how many findings had been identified by the Auditor without disclosing their content.  Again, Ms. Edwards stated that the Management Letter was not subject to disclosure because personnel issues were discussed in the management letter.

The inclusion of “personnel issues” in the Auditor’s management letter is not a legitimate reason set forth in Bylaws, Article XII, Section 1 (e) for withholding or redacting information from the Association’s accounting books, records, or minutes.

To expand your sense of why access to the “management letter” seems particularly important at this time, we suggest you read the minutes of the Finance Committee. For example, the following comments appear in the August 17, 2017 meeting minutes:

  • The full year-end closing reports of May 31, 2017, as well as the June and July budget/actual reports were unavailable.
  •  Bank statement reconciliations are behind by 3 months.
  • Food and beverage is still a concern.  Revenues are down but labor is still high. 
  • Former President, Mike Zemetra, expressed concerns that the Audit Committee had not made a required report to members and that there is a lack of transparency with the Audit Committee because they have not provided minutes of all their meetings.
  • The Treasurer also expressed frustration with the absence of financial reporting.

If you want more hard facts, read the FINANCE section of the Management Report that’s posted in the Hot Topics section on the Association website.  Our new General Manager is doing an admirable job of providing us with important information.

FOLW also wrote the Auditor on May 17, 2017, expressing our concerns regarding what appear to be multiple instances of false or incomplete financial reporting and improper reserve expenditures. We asked Mr. McClintock to review our concerns with the Board.

Although we never received a response to our letter from the Auditor or the Board, we learned from the May 25, 2017 Audit Committee meeting minutes that “Letters sent to the Auditor by a member related to Reserves was discussed with the auditors.  The external auditor did not plan on providing a response to the member and felt the concerns had no merit based on their opinion.

On October 16, 2017, member Bob Bumgarner wrote President John Valentine, requesting to view and copy the management letters for 2016 and 2017, in part, to validate that assertion. Jack rejected his request on grounds that, “Correspondence to the Association is simply NOT an “Association Record” that is open to member inspection under Civil Code section 5200.

In his October 23, 2017 reply to that rejection, Bob pointed out that the Association had already provided him with a copy of the Management Representations Letter to the Auditor, which falls into the same category of association records as the Management Letter from the Auditor.

Moreover, to the extent that Association governing documents are more stringent than Civil Code 5200, they must be followed. For example, Bob cited Finance Policy 4.30, which provides that:

  1. It shall be the policy of the Association to fully disclose its financial status to all members.
  1. Such disclosure shall conform to all Federal and State laws and Association Governing Documents.  (Emphasis supplied)

Bylaws Article XII, Section 1, Inspection of Books and Records, also requires:

The accounting [CC 1365.2] books, records, minutes (except executive session minutes), operating rules … and Member lists of the Association shall at all times, during reasonable business hours, be subject to the inspection of any Member or his duly appointed representative at the offices of the Association for any purpose reasonably related to the Member’s interest as such.

Civil Code ¶1365 defined Financial Records and Reporting requirements, “Unless the governing documents impose more stringent standards . . .”  Although ¶1365 was superseded when the entire Davis-Stirling Act was amended and recodified in 2014, new ¶5305 regarding Review of Financial Statements continues to subordinate statutory requirements to more stringent provisions in an association’s governing documents.  Our Association has yet to incorporate any of those amendments into the governing documents three years later.

We consider the Board’s actions to reject proper requests to review the management letter(s) that could explain reporting irregularities this year and last are unreasonable and improper.  We have even heard that the Board has denied the Finance Committee access to the management letter.

We will continue to pursue our investigation regarding inadequate financial reporting and provide you with further information on October 31 when the Association is required by law to provide Mr. Bumgarner with copies of the current management letter.

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The Clubhouse Project: A Financial Review

FOLW Advisory Team

Owners, especially those on fixed incomes, have limited resources. They may not  be able to afford the large special assessments that would be required if reserves are insufficient to cover a major replacement. Special assessments have the reputation of being indicative of poor management.

Community Associations Institute,  Replacement Policy

It’s been just over three years since the Clubhouse was shuttered and closed by the Board.  The new Clubhouse is open, the food is good, the views are lovely, and it’s being well-attended.  With the plan now realized, it is good business practice to conduct a post-completion project review to identify which elements of the project were successful and which were not so successful.

At the request of the Friends of Lake Wildwood (FOLW) Coordinator, this document summarizes financial events related to the cost of constructing a replacement for the Clubhouse, Clubhouse funding sources and methods, the accuracy and understandability of financial reporting to the membership. It also extends an invitation to FOLW and other members of Lake Wildwood Association to participate in a conversation about the future of our community prior to the coming Board election.

CLUBHOUSE CLOSURE: The Board closed the Clubhouse on January 1, 2014 due to “extensive unsafe building conditions” and “life safety issues.”  That severe level of disrepair did not develop over night.

In a courageous mea culpa article two months later, the Board President admitted that the Association had, for 15 years, excluded about 75% of all common facilities and common elements from the Reserve Study and funding to keep assessments low.  That resulted in substantial deferred maintenance and the transfer of costs to a future generation of owners.

About a month after the Clubhouse closed, the Board amended Association Finance Rules, adding all previously excluded assets to the Replacement Reserve Study.  As a result, estimated reserve obligations increased $10 million in FY 2014/15 and another $5 million the following year.

CLUBHOUSE COSTS:  The Board shuttered and closed the old Clubhouse on January 1, 2014.  It then proposed building a larger, upscale Clubhouse at cost of $5.5 million.  The special assessment prospectus for the new Clubhouse expressed a high degree of confidence in cost estimates.

With only a 5% cost overrun allowance, the project was $1.2 million over budget (24%) prior to the start of construction.  Many costs were underestimated (furniture/fixtures/equipment, professional fees, loan points), some were not included (landscaping, an estimate for code changes), and some costs were added when special interest groups asked for changes to the original plan

While Association Declaration Article IX requires the Board to obtain competitive bids from licensed contractors, that did not happen.  Instead, the architect preferred a specific contractor whose profit margins were substantially higher than other builders under consideration.  The Board adopted that recommendation by a 4 to 3 vote.

CLUBHOUSE FUNDING:  The $5.5 million in Clubhouse replacement costs were to be financed by a $4 million loan, the sale of four Association-owned lots for about $1.25 million, and the balance of about $250,000 from replacement reserves.  The Board proposed to assess each membership interest $1,500 to repay the $4 million construction loan.  That assessment was approved by the members in September 2014.

Sale of the four lots netted $943,000, leaving a shortage of $367,000.  That, plus the $1.2 million cost overruns compelled the Board to raise another $1,567,000.  The Board funded most of that shortfall by improperly spending $1,511,826 from Replacement Reserves.

Here’s the problem with that expenditure. The Association maintains two reserve funds: a Replacement Reserve Fund for capitalized assets and a Non-capitalized (Maintenance) Reserve Fund for assets that have not been capitalized.  Finance RULE R-4.10.10 defines capitalized assets as those that have been “booked” or added to the Association’s balance sheet.

The Association never capitalized the old Clubhouse, as required by Finance RULE R-4.20.80. That’s why the 2014 Audit reported no reduction in asset values due to Clubhouse closure. It’s also one reason why spending $1.5 million from the Replacement Reserve Fund for capitalized assets may have been improper.

To keep assessments low, Association reserve policy had long excluded structural components of the Clubhouse and all common facilities, along with the golf course, lake, dam, 5 parks, culverts, etc..  Consequently, the 2014 Audit reported only $374,300 in replacement costs for the Clubhouse, comprised almost entirely of furniture, fixtures, and equipment. NO reserves were targeted for replacement of the Clubhouse structure at the time it was closed.

We have been advised that the Board’s $1.5 million reserve expenditure on replacement of the old Clubhouse was likely improper because: (1) Exclusion of the Clubhouse structure for so many years confirms that it was not a purpose for which the Replacement Reserve Fund was established; and (2) When the Board decides to replace a destroyed or no longer usable asset such as the Clubhouse, its replacement must be funded out of the operating account unless it involves a like-for-like replacement.  The new Clubhouse certainly does not constitute a like-for-like replacement for the old building.

FINANCIAL REPORTING: At a time when many people wanted to know about reserve liabilities before voting on the clubhouse assessment, the 2014 Audit improperly reported reserve obligations based on the prior year’s Replacement Reserve Study. That caused estimated replacement costs for all major common elements to be understated by $10 million. With no oversight, only a single manager signed the Management Representations letter to the Auditor, thus failing to comply with the two-signature requirement for an audited statement.

In 2015, the Board hired a credentialed reserve specialist to produce the reserve study and funding plans.  Although a major step in the right direction, the new Reserve Study does not provide a complete and understandable picture of the cost of replacing major common facilities and common elements. Instead, the Member Summary reports only the cost of replacing sub-component parts of common facilities like concrete, decking and balconies, roofing, lighting, etc., but does not aggregate those sub-component parts under major common facilities or even the major component categories listed in the full Reserve Study. That makes it very difficult for members — or Board Members — to assess the reasonableness of reserve obligations and funding.

The Reserve Study Member Summary reports available funds from only a single “Reserve Fund” and does not disclose the respective funding status of the Association’s two restricted reserve funds. Consolidation of the two reserve funds into a single Reserve Fund, as has been done the past two years, makes it impossible to see if money is being spent from the proper source or if funds are being improperly co-mingled.

The Association has repeatedly asserted that $1.5 million was available in the reserves to replace the Clubhouse and, has in fact, spent that sum on the Clubhouse project.  However, as previously noted, NO reserves were targeted for replacement of the Clubhouse structure prior to its closure.  By law, the Board may not expend reserve funds for any purpose other that the repairs, restoration, replacement, or maintenance of major components for which the reserve fund was established.

Replacement Reserve Fund expenditures are also restricted to the renovation or replacement of capitalized assets that have been booked to the balance sheet. Since the Association never capitalized the old Clubhouse, the expenditure of $1.5 million on the Clubhouse from the Replacement Reserve Fund for capitalized assets may have been improper.

LET’S FIX THE SYSTEM  This article has presented a troubling list of inadequate construction cost controls, false or misleading financial reports, and improper use of replacement reserve funds.  However, it is not our intent to fault the actions of our well-intentioned Board Members.  

The volunteer Board members who have served Lake Wildwood Association over the years have generally acted with intelligence and in good faith, but sometimes without a clear understanding of what was required of them. Recent results have made clear that we are outgrowing the system of governance and financial management created nearly a half century ago by the developer.

As a starting point for a change conversation, we ask you to think about the following factors as possible contributors to the concerns we’ve presented:

  1. The Board is restructured by elections every year, thus interrupting the continuity of Board planning and actions and leading to inconsistent decision making.
  2. Long-term memory regarding Association policies and practice resides in our standing committees.  The Board has recently circumvented those committees by appointing ad hoc committees that report directly to the Board to serve specific purposes.  Previously, it was Board policy to appoint sub-committees under the standing committees.
  3. The Board eliminated the audit function of the Finance Audit Committee last year, transferring that responsibility to a new Audit Committee populated and controlled primarily by Board Members.  The Audit Committee, which will be restructured annually along with the Board, is not independent and cannot objectively audit Board financial planning and actions.
  4. Volunteer Board Members often have no prior corporate management or Board experience and do not receive adequate training on the highly specialized statutory requirements that apply to homeowner associations in California.  Perhaps all new Board members should be provided with more complete training such as the Leadership Training Course for Board Members that’s offered by the Community Associations Institute?

We ask each of you to respond to the five-question survey we’ve prepared.  Simply click on the following link, and you’ll be taken to the Survey.  We intend to present a summary of the results to the Board, but your answers will remain unattributed and confidential.

https://www.surveymonkey.com/r/BGTMJG9

                                   YOU CAN MAKE A DIFFERENCE!

. . . with Liberty and Justice for All

America will never be destroyed from the outside.  If we falter and lose our freedoms, it will be because we destroyed ourselves.

                                                                                                Abraham Lincoln

As our nation approaches the 240th anniversary of its birth, it seems fitting that we should pause for a moment to consider some of the important principles that made it a great and unique democracy.

For example, the Pledge of Allegiance, faithfully uttered by all members prior to the start of each Board or membership meeting, is no ordinary sentence. It is a definition of American democracy and a constant reaffirmation of our dedication to the fundamental principles of that democracy.  The last six words of the Pledge underscore the applicability of those principles to each individual citizen.

When we become citizens of this Great Nation, at birth or otherwise, we get a warranty that guarantees certain inalienable rights, including a Bill of Rights that defines certain personal freedoms and rights. That warranty is supposed to be honored by every government franchise in every city and town of this nation. It is not transferable and it is good for life.  Those are principles veterans in our community fought to defend.

But our association is not a governmental entity; it is organized as a private non-profit corporation.  As such, it is not required to honor the freedoms and liberties set forth in the Bill of Rights or the freedom of speech provisions in our State Constitution.  Instead, our rights are defined and delimited by the governing documents of the Association and sometimes unclear statutory requirements.

According to the Adams & Stirling Law Firm, “Free speech issues are often misunderstood when it comes to community associations. First Amendment constitutional protections apply to governmental restrictions on free speech and do not apply to private organizations. The same is true for state constitutional protections. In Golden Gateway v. Golden Gateway, the California Supreme Court made it clear that the California Constitution protects against restrictions by the state, not private organizations.”

Aggravating the absence of such important Constitutional protections, Lake Wildwood Association is controlled by volunteer board members who are often lay people without prior corporate finance or management experience. There are no minimum training or experience requirements and few board members posses the knowledge needed to manage a multi-million dollar corporation, how to run meetings, how to fairly pass rules, or understand their fiduciary duty to act in the best interests of the association even if at the expense of their own interests.

Despite such shortcomings, board members are granted plenary authority to make rules (like a legislature), enforce rules (like an executive), and resolve disputes over rules (like a judge).  Such extraordinary, unchecked power, coupled with inadequate accountability, can result in ill-advised, uninformed, and highly detrimental business decisions and governance actions.

Over the past several years, our community has wrestled with an increasing number of difficult financial and administrative challenges. The list of issues includes long-term deferred maintenance on most of our commonly-owned facilities, inadequate replacement reserve savings, inaccurate and misleading financial statements and reserve reports, and multiple procedural deviations from the Association governing documents.  With $3 million in reserves, the 2016 replacement reserve study reported that nearly $70 million ($25,000 per property) in reserve assessments will be needed to repair and replace our major common elements over the next 30 years, not including the cost of maintaining and replacing our new Clubhouse, the Dam, or Deer Creek Bridge, etc.

Members dissatisfied with the workings of this flawed, autocratic system often feel powerless to influence Board policies and plans. In fact, many members now believe that the Board can do pretty much what it wants with impunity and that it’s a waste of time to attend Board or Membership meetings.  That frustration is reflected by low voter turnout in the election of new Board Members – typically less than 50%.  And now, with three Board Seats open for election, only a single member volunteered to run.

Even members who remain committed to the need for change are frustrated by Board actions that deny them the ability to communicate with other members via the same electronic mail facilities used by the Board to support its viewpoints and positions. Denying members access to electronic mail for purposes of exchanging ideas relative to issues that affect their interests as members eliminates any realistic possibility of timely, interactive, and cost-effective  communication. That’s because the Association offers, alternatively, only regular mail at a cost of around $3,000 per membership message.  That effectively muzzles members, denying them their free speech rights and the ability to use political processes as a check on unbridled corporate power.

If we, as member-citizens of Lake Wildwood Association, hope to restore the promise of liberty and justice for all, it is important that we engage in a discussion aimed at generating member consensus regarding appropriate amendments to our system of governance.[1]  The goal of making our community more vibrant, responsive, and attractive in the real estate market should be the context for that discussion.

With those goals in mind, the Friends of Lake Wildwood will soon sponsor and conduct one or more Forums to enable interested members to think together in a safe space about those critical issues. To stimulate critical thought and participation, FOLW has drafted a Lake Wildwood Association Homeowner Bill of Rights. That draft is modeled on the AARP BILL of RIGHTS for HOMEOWNERS in ASSOCIATIONS, which can be found at:

http://assets.aarp.org/rgcenter/consume/inb128_homeowner.pdf

The draft Lake Wildwood Homeowner Bill of Rights follows.  Please read that document, think seriously about each of the proposed rights, and feel free to share your  comments and suggestions.  Your participation can make a real difference in the future well-being of our community.

[1]  Consensus is a group decision making process that seeks the consent of participants, not necessarily complete agreement, and the resolution of objections.  “I can live with that” is the test.

Draft LWA Homeowner Bill of Rights

LAKE WILDWOOD ASSOCIATION HOMEOWNER BILL OF RIGHTS

Modeled on the Preamble and Amendments to the U.S. Constitution and an AARP-proposed Bill of Rights for Homeowners in Associations,[1] this draft Bill of Rights seeks to inspire member confidence in the concept of private government, to ensure amicable and equitable relations between homeowners and our association, and to provide a simple definition of member rights.

I        Homeowners and prospective homeowners must be provided with full written       disclosure regarding the Association’s governing documents and fees.

The Declaration of Covenants, Conditions, and Restrictions (CC&Rs) of the Association constitutes a contract between the association and each owner. Homeowners shall be told–before buying–of the association’s broad powers and the association may not exercise any power not clearly disclosed to the homeowner if the power unreasonably interferes with homeownership.

II      Homeowners shall have a right to stability in the Association’s Governing Documents.

Homeowners shall have the right to vote on additions or amendments to the Association’s Articles of Incorporation, Bylaws, and the Declaration, as well as their termination.  Where the association’s directors resolve to rescind, amend, or deviate from operating rules in the governing documents (policies, rules, and procedures), homeowners shall be provided with adequate prior notice and an opportunity, by majority vote, to rescind new rules or amendments thereto.

III     Homeowners shall be entitled to freedom of speech, freedom of assembly, and free interaction with other members regarding issues that affect their interests as members.

The association shall not abridge a member’s freedom of speech or of the press through policy, direct order, or intimidation or any kind of public abuse.  The association shall neither deny nor impeded any member’s ability to communicate with other members regarding matters that directly relate to their interests as members.

IV     Homeowners have a right to privacy regarding their personal contact information.

To protect each member’s right to privacy, the association shall establish and maintain a procedure that enables members who prefer not to share their personal contact information with other members to Opt Out and, instead, to instruct the association to provide a reasonable alternate method of distributing proper messages to them in a timely and cost-effective manner.  Electronic mail addresses shall be shared in accordance with the Opt Out Policy.

V       Homeowners shall not be deprived of property without speedy due process of law.

The association shall not foreclose against a homeowner except for significant unpaid assessments and any such foreclosure shall require judicial review to ensure fairness.  The association may not foreclose against a homeowner on any lien except under express authority granted by the CC&Rs and with the approval by a two-thirds vote by the directors.

VI     Homeowners shall have a right to individual autonomy.

Homeowners shall not be unreasonably required to surrender any essential rights of individual autonomy because they live in a common-interest community.  The governing documents of the association may not include provisions that are illegal or contrary to public policy.  Provisions that violate public policy include: (1) terms that are arbitrary, spiteful, or capricious; (2) terms that unreasonably burden a fundamental constitutional right; (3) terms that impose an unreasonable restraint on the right to sell property; or (4) terms that are unconscionable.

VII   Homeowners shall have the right to oversight of the Association and Directors.

Homeowners shall have reasonable access to records and meetings, as well as specified abilities to call special meetings, to obtain oversight of elections and other votes, and to recall directors.  They shall be provided with timely, accurate, and understandable accounts regarding the financial condition of the association, the status of reserve accounts,  minutes and records of actions by the board and its standing committees, and policies regarding administration and operations. Upon request, homeowners shall be entitled to copies of all such records in a timely manner.

VIII  Regular and Special meetings of the Board of Directors shall be open to all members and will be conducted in accordance with the requirements of the Open Meeting Act.

Open meetings favor public deliberation by association boards. The Board shall not hold Executive Sessions or other secret meetings that exclude members except in the case of issues that involve pending litigation or employment or disciplinary actions regarding employees. Matters discussed during Executive Sessions must be outlined in the agenda for the meeting, the results from which shall be summarized and disclosed to members at the next regular Board Meeting.

IX     Homeowners shall have a right to prompt resolution of disputes without the need to resort to litigation.

Homeowners shall have access to non-judicial, internal dispute resolution (IDR) and alternative dispute resolution (ADR) to reduce the need for expensive litigation.  IDR and ADR shall be conducted in a prompt, respectful, and private manner with the intent of resolving disputes.

X       Homeowners have a right to governance by adequately trained board members.

Members of the Association Board of Directors shall be adequately trained for their position as guardians of the well-being of the community and its members.  At a minimum, new board members shall be required to complete training comparable to the Board Leadership Development Workshop offered by the Community Associations Institute,  expanded as necessary to inform each board member regarding requirements of the California statutes applicable to common interest developments and the governing documents of Lake Wildwood Association.

[1]   A BILL of RIGHTS for HOMEOWNERS in ASSOCIATIONS: Basic Principles of Consumer Protection and Sample Model Statute.  AARP Public Policy Institute (2006);(http://assets.aarp.org/rgcenter/consume/inb128_homeowner.pdf).

Going Unarmed, The Stonegate Security Plan

Going Unarmed, LWW as of 3/21/2016

LWW Stonegate Protection Team,

Effective Monday, March 21, 2016, all shiftwork will be unarmed. Understandably, this change impacts our Patrol Officers. Until we create a safe and consistent procedure for traffic stops (beyond drawing on previous experience in Law Enforcement) we will use our marked vehicles with active patrolling as a deterrent, combined with our usage of the PA system to kindly articulate speed warnings to drivers (“Please slow down, excess speed. Courtesy Reminder (repeat if needed)”). This means that effective March 21, traffic stops will NOT be conducted until further notice. Less than lethal tools may continue to be carried at work if your BSIS training is current, but please understand that firearms are not permitted while working at LWW under any circumstances beginning March 21, 2016.

The aforementioned, combined with an “Observe and Report” philosophy where we increase our safe distance from threats, utilize the Nevada County Sheriff when potentially exigent circumstances arise (as currently done), and put our heads together as a team to enforce traffic through creative means, we will successfully enforce traffic across the 32 miles of roadway we are responsible for.

Shortly, we will be crafting a ghost car program where we strategically place unused security vehicles throughout the community, safely away from the roadway, but visible to mitigate speeding. We will do security checks on these vehicles as well. Hang tough for now and I am truly looking forward to being safe and forward-thinking about the challenges we face as an Organization.

ln your service,

Benjamin McNulty

benjamin@stonegateprotection.com

(530)263-1740

Letter to the Board of Directors Lake Wildwood Association

Letter from Byron Maynard and Robert Bumgarner

September 23, 2015

Mr. Mike Rodriguez

President

Lake Wildwood Association

Dear Mike:

Thank you for meeting with By and me on the 20th to review our concerns regarding what we consider to be a number of inaccurate or misleading Association financial reports, reporting procedures that are inconsistent with FASB standards, non-compliant replacement reserve reporting and funding practices, and potentially improper Clubhouse funding arrangements.

As you know, rather than devoting a great deal of time to review of the exhibits we submitted in support of the nine issues stated in our IDR demand letter, we offered and discussed a five-point settlement concept.  Our aim in doing so was to provide the Board with the information it needs to identify and correct the causative system factors, policies, and procedures that enabled inappropriate actions.  It was not our intention to discredit past or present Board Members.

In our view, the magnitude of current financial pressures demands that the Board do everything in its power to amend the governing documents as needed to ensure that members are never again hit with a multi-million dollar increase in deferred maintenance costs or previously undisclosed replacement reserve obligations. Without such amendments, the next Board could easily reverse all of the good works of recent Boards.

Continue reading

Manage violators rather than ban all – we will become a better community!

In the coming months we will debate whether we should allow dogs in our parks, and motorcycles in the community.   There have already been many letters about motorcycles, and now we are seeing letters about letting dogs in the parks.

In the letters to the editor against both changes members of our community bring up the risks of allowing either in our community or parks.  These members bring up issues like noise by motorcycles, or irresponsible dog owners who do not clean up after their hounds.   If we let dogs in the park, there is the possibility that an owner will not pick up their dogs feces.  If we let motorcycles in there may be the possibility that someone will thoughtlessly rev up its engine making noise.   Clearly the concern is over the exceptions and not the majority of motorcycle and dog owners.  It is an interesting issue, because for some reason our community is very inconsistent in how it applies its rules.  Some rules ban all, others just specific violations.

If we let boats on the lake, then someone may drive it in the wrong direction, or may speed in a no wake zone.  We let boats in, and have rules for use.  If we let kids live in Lake Wildwood, they might use skateboards in the street.  We let kids live here but have rules for skateboard use.  If we let new golfers on the course, they might play very slow.   We have marshals to keep the pace up.  If we let cars in the community they might speed.  We have security patrols to enforce speed limits.  Hopefully you see a consistent trend.  In most case rules are put in place to manage exceptions and risks so that we might have a pleasant and safe community.  So why are we treating people with dogs and motorcycles differently?  Why are we punishing the responsible many for the careless few?  We don’t do that with anything else.

Banning rather than managing exceptions hurts our community.  At its worst it negatively impacts our home values because we are sometimes perceived as a community of rule mongers, or worse yet non-inclusive narrow thinkers.   This is especially apparent from those who state “it’s the rule and always has been” argument.   CC&Rs need to support current reality, not a community of rules stuck forty years in the past. Continue reading