Contents
1. Borrowing – Next Road Project
2. Barcode Program – Marketing and Realtor Relations Committee (MRRC)
3. Meet and Greet Program – MRRC
4. MRRC – Misc. Items
5. Financials
6. 2015 Budget
7. Sidewalk Subcommmittee
8. Joint POA – Country Club Branding Project
9. Holiday Fund
10. Market Update

The POA attorney was in attendance for approximately two and a half hours of this meeting; including a 30 minute Executive Session (the purpose of which was to take legal advice, discuss foreclosures and discuss personnel matters).

1.  Borrowing – Next Road Project

The idea of borrowing money to complete the next road project appears to be gathering momentum. The best candidate for the next project is the stretch of Governors Drive between the end of the first project and the entrance to the country club. This possibility was discussed last month and is summarized in Item 3 here:  8-19-14 Meeting Summary

We are currently accumulating roughly $500,000 annually in the Reserve Fund. If we wait to accumulate all the cash necessary to do the next project, work will not start until 2018 or 2019. The other alternative is to start the project in 2015 and use borrowed money to finance part of the project; and then repay those borrowings with the funds we would have otherwise accumulated in the Reserve Fund.

Bill Colton presented a scenario which gave compelling reasons in favor of borrowing. The advantages given were as follows:

• Savings in constructions costs; which the Board has been told are expected to rise over the next four years.

• Savings in maintenance costs that we would otherwise incur repairing that stretch of road over the next several years.

• The Board feels that these savings would more than offset the interest cost on the loan.

• The Board feels that having the road completed earlier would improve the community and help the home re-sale market. It believes that the condition of the roads has stopped people from buying homes here and has, in general, negatively affected our selling market.

The Board has the authority to borrow money on behalf of the POA without the requirement of a vote or other community approval. However, even though community approval is not required, it appeared to me that the Board would like to obtain some sense that the community supports the concept. To that end, they discussed the idea of having a community meeting to present the concept and the relevant financial information. I got the impression that this would be scheduled in the few months.

(Editorial Comment: Numbers and details were reviewed in this meeting. However, since it appears the Board will be making all this information available to the community, I don’t feel it is appropriate for me to preempt that effort by attempting to outline everything here. I strongly recommend attending the community meeting. Hopefully, a summary of its presentation will be posted to the web site for those that cannot be there.)

2.  Barcode Program – Marketing and Realtor Relations Committee (MRRC)

Paul Elstro noted that the monthly activity reports that were promised from the MRRC have not been received. There was, however, an activity summary done by the Safety Committee and attached to its minutes. From that and comments in the MRRC minutes, it appears that activity is fairly low. Paul commented that the Board was told that the program was instituted because there was a need, but it appears that the need is not there. Becka Huckabee noted that we are approaching a traditionally slow time in the market; which should result in lower activity levels.

The committee originally stated that any realtor who did not show reasonable activity within 90 days would have their barcode cancelled. However, its most recent minutes noted that, if such activity was not present, “this could be in fact due to the needs of their clients at the moment”. The committee is requesting that the Board grant a further 90 day extension to the original 90 day limit “in order to fully implement the program with these realtors”. A committee member will be contacting these realtors and reporting back at the next meeting.

3.  Meet and Greet Program – MRRC

Background: This idea came up several months ago. Not all prospective home buyers use agents, and it was felt that these people needed to have access to our community. However, we are not in a position to admit anyone who comes to the gates. So, the idea was to have community volunteers “on call” to accompany these people into the community and allow them to look around.

The idea was discussed at the MRRC meeting. It appears that Mary Lou Drake, the chair of the Community Activities Committee is spearheading the effort and recruiting volunteers. The MRRC minutes noted that the logistics of the program still need to be worked out. For example: how often volunteers will be on call; how many volunteers are needed, will they be at the POA building or at home; and how will these visitors meet with our volunteer guides.

This subject also came up in the Board meeting. In response to a question from Becky Berrey, Gerry Stickl, the POA’s contact at Universal Pro (the company that manages the gate attendants) said that perhaps one or two people a day drive up to the gates looking to gain entrance. Becky commented that this shows the need for a “Meet and Greet” program; because she believes these people could be potential home buyers. It appears the MRRC will be coordinating this effort and working out the details.

4.  MRRC – Misc Items

The committee is working on several broker outreach events. It is also working to come to an arrangement with a cottage owner to have it available for rent; thus making it available for prospective out-of-town home buyers.

Paul Elstro commented on the make-up of the committee members; noting that the majority were real estate brokers. The Board seemed to agree that it would be better to have a more balanced membership which included more non-realtor members.

Lastly, the following appeared at the end of the most recent committee minutes:

“Discussions over the last several months have focused on the need for a professional to manage realtor relations for the community. Volunteers and committee leadership change from year to year. The committee believes consistent and professional management of this critical area will benefit the community and address many of GC’s current home resale concerns more effectively. We encourage the Board to have a healthy debate regarding this suggestion.”

(Editorial Comment: This point is probably even more germane in the context of any type of national marketing effort. To date, I have not heard the committee’s suggestion debated in an open Board meeting.)

5.  Financials

Nothing significant was reported, and it appears the budget will be met for the year. A summary of variances can be found here: 9-14 Variance Report

There was a brief discussion of bad debt collection costs. To date, $34,900 has been collected due to the POA attorney’s efforts. The related legal fees totaled approximately $9,000; which fees are paid by the property owner.

There was a discussion regarding ongoing infrastructure maintenance work and whether or not this would be within budget for the year. The situation was not clear cut and should be covered in the next meeting.

6.  2015 Budget

There do not appear to be any significant changes in the 2015 budget compared to 2014. Numbers were briefly reviewed in this meeting, and a few items were noted. Storm Maintenance will be kept at $58,000, which is the same as 2014. However, we are already well over that amount this year and could be hit with additional costs before year end. If I heard correctly, the Board felt that it was almost impossible to predict this expense and that contingency amounts should cover possible overages next year. Legal expenses are expected to be around $35,000 to $40,000. The Community Activities Committee budget has been reduced to $1,500.

The Board expects to approve the final version of the budget sometime around the end of September. I have inquired when the Board will post the full budget but have not received a reply. As a requirement of the Planned Community Act, a condensed budget will be sent out with the notice of the Annual Meeting. But, at this point, I don’t know if the Board will post a copy of the full, detailed budget prior to the Annual Meeting.

7.  Sidewalk Sub-Committee

Last month, the Board decided to form a subcommittee within the Infrastructure Committee to look at possible sidewalk projects. Doug Frey reported that Les Stuewer was asked to head this effort. He has been working on the project and will report to the Board at the October meeting.

(Editorial Comment: In case this sounds familiar, please note that this subcommittee is different from the Walkways Committee that was formed by the Board in April 2013 and which was summarily disbanded by its chairperson in October 2013. In the end, that committee did not submit any useful conclusions; primarily because the members never had the opportunity to do so. If you are interested in what happened with that short-lived committee and how it was disbanded, you will find a summary here.  Start in the middle of Item 8 under the heading “Recommended Change” : 2/18/14 Meeting Summary )

8.  Joint POA – Country Club Branding Project

The report from Immortology has been received. The two boards are working on a presentation to be made to the community sometime in early October.

9.  Holiday Fund

The Board took action on this item. But, to understand what was done and why it was being considered, you will need to understand past actions that go back to 2013. To obtain the most complete background, read Item 1 and Item 8 from this meeting  12-17-13 Meeting Summary and then Item 1 from this meeting  1-14-14 Meeting Summary.

As an alternative, here is a quick summary of background information.

The Holiday Fund was made up of voluntary donations from residents. Traditionally, the proceeds were divided only among the gate attendants. In 2011, the Board included the POA staff; excluding the managers. In 2012, the Board added the POA managers (for variable amounts) and the Bland landscaping personnel (for small fixed sums) to the distribution pool. But it did not notify the property owners of the 2012 changes. It was first disclosed at the January 2013 Board meeting; and only because one director pressed the point. This director felt that, since residents had been asked to donate funds, they ought to know who received them. (See details in Item 1 here: 1-15-13 Meeting Summary)

In November 2013, the Board cancelled the voluntary, contribution fund and decided to fund similar payments out of general POA funds. Supposedly, the cancellation applied only to 2013; the ostensible reason being that, due to the road reconstruction, it was too difficult for residents to drop off their donation checks. However, after making that decision, it turned out that, according to the resolution that was passed by e-mail, the Holiday Fund had been permanently cancelled. It came out in a subsequent meeting that this was driven primarily by the preferences of two directors, Becky Berrey and Kelley Hunter; both of whom did not like the nature of the fund and wanted it terminated in favor of alternative methods of payment by the POA.

Once it learned what had actually happened, the Board reversed its decision (by a 5-3 vote in January 2014) and reinstated the previous format of a contributory fund. It then set up a subcommittee of directors to look at all the options and make recommendations; including the possibility of setting up a performance based bonus pool for POA staff members.

That subcommittee presented a report to the directors sometime in the past month or two. At this meeting, the subcommittee recommended continuing the old format of a fund made up of voluntary contributions from residents. The Board voted unanimously to approve that recommendation.

Since the subcommittee’s report has not been made available, the reasoning behind the recommendation is not known. Also, it is not clear whether the “old” system is the one that included all the POA staff and the Bland Landscaping personnel or the old system that was limited only to the gate attendants. I sent the Board an inquiry on this item but have not received a response. Perhaps it has not yet decided on this point. Hopefully, the community will be made aware of the nature of the distribution pool when the donations are solicited.

10.  Market Update

During this month’s MRRC meeting, Linda Todd provided market update information to the committee. I took that data plus additional information she provided to me to come up with the following distilled points.

Please note the difference between Days on Market (DOM) for listed homes versus DOM for homes that have sold. The DOM for listed homes will, by definition, always be higher than that for sold homes. And GC’s DOM figures can arguably be adjusted for some special factors; primarily the developer’s Club Cottages; some of which have been on the market for over three to four years. While we can adjust figures for 2014, we cannot go back and adjust those for prior years; thus making comparisons difficult. Those adjustments are noted below.

Within GC, there are currently 81 homes for sale; at an average size of 4,251 square feet and an average asking price of $169/sq. ft. The unadjusted DOM is 343 days. Taking out the Club Cottages and ten other very unique homes that have been listed for over 400 days, the adjusted DOM drops to 145 days.

The number of homes for sale in GC has been relatively constant for the past five years or so at 80 to 90 homes. The national average percentage of “homes for sale” in golf course communities is 10%, and we have been slightly below that average for over a decade.

For 2014 year-to-date, 33 homes have sold at an average price of $144/sq. ft. That per square foot value was adjusted to remove a club cottage that sold for a very low price. The adjusted DOM was 196 days.

Comparing that to the same time range in 2013, there were 38 homes sold at an average price of $152/sq.ft. The 2013 unadjusted DOM was 190 days; compared to the 2014 unadjusted DOM of 203 days.

We are on track to sell somewhere between 45 to 50 homes this year; which is similar to the sales volume achieved last year.

When comparing GC to markets outside the gates, other considerations come into play. GC has a very wide range of home prices and thus can’t be easily compared to one specific community in the immediate area. For example, GC has a number of larger homes that would not compare to those in Briar Chapel. Similarly, GC has a number of smaller homes that would not compare to those in, say, Legend Oaks, Wesftall or Lystra Preserve. Also, it may not be appropriate to compare all of GC to higher end communities in Chapel Hill proper. Keeping that in mind, here are a few comparisons using only homes above $300,000.

Chatham County with a Chapel Hill address (not including Governors Club): For 2014 year-to-date, 163 homes sold at an average size of 3,056 sq.ft., an average sale price of $145/sq.ft. and a DOM of 127 days. For the same 2013 time range, 118 homes sold at an average of $143/sq.ft. and a DOM of 132 days.

Combined figures for The Oaks, Meadowmont and Southern Village (Chapel Hill proper): For 2014 year-to-date, 77 homes sold at an average size of 3,321, an average price of $199/sq ft. and a DOM of 91 days. For the same 2013 time range, 77 homes sold at an average of $195/sq.ft. and a DOM of 70 days.

 (Thanks go to Linda Todd for providing this information and helping me with its presentation.)