Contents
1. Holiday Fund
2. Committee Terms
3. Financials:  2013 Budget and Road Project
4. ARB Fee Changes
5. Miscellaneous Items
6. Holiday Fund – Further Information

1.  Holiday Fund

Everybody received an e-mail from the POA that announced the cancellation of this year’s Holiday Fund for the gate attendants. Instead, the Board decided to make similar payments to contractors out of general POA funds; the participants being the gate attendants, the POA staff (not including our community manager) and the Bland landscaping staff. The Board has not officially disclosed the amount of funds to be distributed.  I do not believe this amount, whatever it is, has been factored into the 2013 budget projection discussed in item # 3 below.

Reconciling the recent Splinters summary with what I heard in this meeting is somewhat difficult; because there appear to be some inconsistencies.

According to the Splinters summary, our community manager “reported that some residents are confused about how this year’s holiday fund for all contract employees, such as gate attendants, office personnel, and landscapers, is being managed”.  Such confusion was not surprising given that the Board decided in November to cancel the fund but neglected to inform the community of its action.  Only at this meeting did the Board decide to disclose its decision by sending an e-mail on December 19th.

In addition, the Splinters summary stated the following:  “This decision was made in an earlier meeting, based on concerns about accessibility of the POA building during the completion of the road projects.  The Board agreed to revisit how this fund will be handled in 2014.”  This language implies that this was a one-time decision for this year only based on potentially problematic access to the POA building.  Based on what I heard at the meeting, that is not necessarily accurate.

First, the decision was not made in an “earlier meeting”.  Rather, the resolution was passed by e-mail shortly after the November meeting; which is why I am unable to provide any information as to why the Board came to this decision.  Because, if there was any discussion, it was done by e-mail among the directors.

Secondly, the fund only came up in this meeting because one director questioned the intent of the resolution; namely whether this change is one-time (for this year only) or a permanent change going forward.  From the discussion, it was clear that some directors intended that the Holiday Fund be permanently eliminated (which has nothing to do with possible short term access problems).  Since the matter was not subject to a vote, I can’t give the exact numbers for and against that idea.  However, there were definitely more than one or two who expected this to be a permanent change.

Also, when the resolution itself was read aloud, it clearly made the cancellation of the fund a permanent change.  Only when several directors questioned this intent did the Board agree that the issue could be revisited at the next holiday season.

Therefore, community members should, at a minimum, understand that there is a contingent of directors who would prefer to see the Holiday Fund permanently abolished and for similar payments to be made from general POA funds.  And, unless modified or rescinded, the resolution that was passed makes the change permanent.

For those who are interested, at the end of this summary is a more detailed explanation of this issue; including some background information.

2.  Committee Terms

The recent Splinters summary stated the following:

The Board will discuss at its next meeting on Jan. 14 the merits of appointing all committee members to one-year terms. The Board can subsequently reappoint any volunteer committee members to additional one-year terms.  Board members hope this action will stimulate broader participation by community members on POA-related committees.

This was not discussed in the open meeting, so I have to assume it was discussed in the Executive Session.  Therefore, I cannot offer any additional reasoning or rationale to support this idea; because I did not hear the discussion. However, it will be discussed in January; hopefully in the open portion of the meeting.  If you have any input to offer the Board on this idea, now would be the time to do so.

(Editorial Comment:  As presented, this idea makes little sense to me.  I can’t see how it will encourage more participation on committees.  And I doubt it would preserve continuity or otherwise be in our best interests to have people serve only one year on a committee.  If anything, all I can see is the Board becoming unnecessarily involved in committee functions and exerting influence over who can serve on particular committees.  Perhaps more information or a better rationale will be disclosed in the January meeting.)

3.  Financials – 2013 Operations and Road Project

It appears that there have been no major changes from previous Board discussions. 2013 operations should be either right on budget or there might be funds left in the contingency account; but most likely no higher than $15,000 to $20,000. It appears that the largest savings will be something above $30,000 in the infrastructure maintenance budget; and that this savings will ensure that there is no overrun for the year.

Barring unforeseen problems, the road project should be in the range of $2.6 million. Until those numbers are better known and depending on timing of expenditures, it is not clear how much will have to be borrowed to finish the job. There was no follow-on discussion (from last month) regarding the possibility of borrowing the full amount of the facility for a future project.

For a more detailed explanation of the possibilities, see item 6 here:  10/15/13 Meeting Summary   ……..and items 1 and 2 here:  11/19/13 Meeting Summary

4.  ARB Fee Changes

The Board reviewed changes being made to the ARB fee schedule; primarily dealing with work and improvements on existing homes. The idea behind these changes is to make it easier for residents to make improvements without being subject to fees. Most improvements or changes which affect the exterior of a house require ARB review and approval. Many fees for this type of work have been eliminated effective 1-1-14.

5.  Miscellaneous Items:

• The Board is moving forward on purchasing new gate hardware and upgrading our entry software system.

• To date, 54 deer have been taken in this year’s culling.

• The new electronic POA newsletter is up and running. The country club also has its own electronic newsletter. Starting in January, each newsletter will contain a link to the other for ease of access.

• From the Realtor Relations Committee December minutes: 48 homes sold to date versus 37 for all of 2012. 67 homes and 88 lots are currently on the market.

6.  Holiday Fund Change – Further Information

To obtain some historical context, it is worth revisiting when and why this fund was created along with changes made over the past five years. I obtained some of this information from a community member who was involved in the original effort to create the fund.

The Holiday Fund was started about ten years ago. It’s creation resulted from the fact that many residents wanted to offer a holiday “tip” to gate attendants and were doing so on their own as they passed through the gates. However, certain attendants benefited the most by virtue of their working hours coinciding with those hours when the most residents came through the gates. Therefore, the Board decided to encourage people to voluntarily contribute any “tips” to a general fund which would then be distributed more evenly to all the attendants.

At that time, it was not the Board’s fund. It was a fund of voluntary tips only for the gate attendants, and the POA served only as a conduit. While the Board encouraged people to participate, there were no expectations as to the size of the fund in any given year. Whatever came into the fund was distributed, and the Board did not worry about the level of donations. Distribution was based on a seniority formula administered by the community manager.

After a number of years, the Board decided to include the office support staff (but not the mangers) in the distribution pool.  I believe this happened five or six years ago. I don’t know whether this change was prompted by the express desire of community members or whether it was simply a Board decision. However, residents were told of this change and therefore had the opportunity to decide whether or not to change their contribution accordingly.

Then several changes took place in the fall of 2012 which only came to light in the January 2013 Board meeting. First, the number of participants was expanded to include all POA staff; including all managers and not just the support staff. Second, the Board decided to include Bland’s five or six landscape contract workers by giving each a small fixed sum. (Regarding Bland, they took over responsibility for maintaining all common areas in December 2009 under a three year contract, and that contract was renewed for a further three years in December 2012.)

Residents were not aware of these two changes when the donations were solicited in November and December of 2012. Neither change was discussed or debated in an open Board meeting, and neither change was mentioned in the fund solicitation e-mails sent to residents.

At the November 2013 meeting, the Board decided to continue the Holiday Fund this season and discussed including the gate attendants, all POA staff (but with the exception of the general manager) and the Bland landscape workers. However, shortly after that meeting, they voted by e-mail to permanently cancel the Holiday Fund and to pay these people similar amounts out of POA funds. This decision was announced to the community about a month later on December 19th.

(Editorial Comment: These are more perceptions than editorial comments. They focus on trying to understand how this situation evolved to the point that the fund was cancelled.

The Holiday Fund started out as a way to equitably distribute tips to the gate attendants; tips that residents, for whatever reason, wanted to offer those who they saw every time they passed through the gates. At its start, the POA served only as a conduit, and the total amount donated was not a material factor.

With the addition of the support staff to the distribution pool, the involvement of the Board increased, because the decisions regarding distributions became more involved and arguably more subjective. I suspect this is where the line between “tips” and “year-end bonuses” began to be blurred. I will admit that this is simply my perception, but I believe it is quite possible that the support staff viewed these payments more as “year-end bonuses”  than as a “tip”.

In 2012, the Board added all the POA managers and the Bland landscaping personnel to the distribution pool and did not disclose these changes when soliciting donations. In fact, I strongly suspect these changes would never have come to light had not one director raised the issue in the January 2013 Board meeting. But, by then, the donations had already been received and distributed.

More importantly, these changes and the way they were disclosed to the donors demonstrated that the Board was no longer acting just as an intermediary or conduit. Rather, it felt it had complete control of the fund and could therefore make any decisions it wished as to how the funds would be distributed.

Now, in 2013, the Board has decided that it is no longer a voluntary fund. The Board will make the distributions it believes are appropriate out of general POA funds. By doing this, everybody will participate whether they wish to or not. This move appears to complete the transition from a fund of “voluntary tips” to one of expected “year-end bonuses” that will inevitably be considered part of overall compensation packages. In other words, it is no longer a voluntary, community fund. Rather, it is a personnel related fund to be controlled by the Board.

In fact, it really isn’t appropriate to call it a “fund” anymore, because there will no longer be a fund. Payments will be determined solely by the Board and will most likely be lumped in with overall salary costs within our financial statements.

In the end, this is not a change in the way the Holiday Fund is handled. Rather, the decision eliminates the fund and replaces it with something entirely different. Assume for a moment that the Holiday Fund never existed. This decision has added an element of compensation to the POA budget that was not present before; namely year-end bonuses for employees and select contractors to be paid out of general POA funds. I am not passing judgment on such a move. I am simply pointing out what has been done so that it is clearly understood.

One could easily argue that bonuses; performance based or otherwise; should be given to our POA staff. If so, it is appropriate for these to be determined by the Board and community manager without community involvement; and for them to be paid out of general POA funds.

One could argue that bonuses are appropriate for contractors, too. On the other hand, one could also argue that the whole idea behind having contractors as opposed to direct employees is to avoid having to deal with matters such as individual bonuses. If so, then the POA would do no more than negotiate the agreements with those contractors and avoid dealing with individual employee compensation. As to which method is better, that is an issue that will now be dealt with by the Board.

I should also note one difference between the Bland workers and the others.  I believe that our POA has some direct input into the compensation of POA staff and the gate attendants.  I do not believe that is the case with Bland.  Rather, I believe we pay Bland a fixed contractual sum (plus any agreed upon extras) and that the Board has no input into the compensation of their individual workers.

For now, the community Holiday Fund will cease to exist, and all property owners will, in effect, pay for year end bonuses to those designated by the Board.  If we assume the Board wanted to dispense with “tips”, to institute regular “year end bonuses” and to have total control over the process of bonus payments, perhaps this is the best move.  But these are only assumptions.   Since the decision was not discussed in an open meeting, nobody is entirely sure of the reasons behind the move.)