Contents
1. Club Cottages
2. Expense Reviews
If you have not already done so, please read the Board summary. It is a very thorough and includes good information. It can be found here: 4/19/16 Board Summary
I am offering some additional information on just a few of the points mentioned there. Please note that the above summary covers both the March and April meetings. What follows pertains only to items in the April 19th meeting. My notes on the March meeting were posted separately.
1. Club Cottages
The following note was included in the Board’s summary of items discussed in Executive Session:
“…..to discuss the Cottage Association’s request for information on appointing someone to the Board….”
For those that may be puzzled as to how the Club Cottage owners can appoint someone to the Board, some background information may help.
The Club Cottage Association consists of the owners of the 18 lots circling Club Drive. (One point of clarification……in last month’s summary, I referred to a total of 20 lots. I have since learned that the two corner lots that were deeded to the POA in 2009 (lots 465 and 478) are not included as lot owners. When conveyed to the POA, they were both classified as Common Property. Apparently, there is no county tax paid on Common Property, and no dues are paid to the Club Cottage Association. In addition, these lots have no voting rights within the Club Cottage Association.)
These 18 lots have a special right within the master POA Covenants; which are the covenants that affect all lots within the development. Without getting into all the legal definitions and details, the owners of just these 18 lots are collectively entitled to appoint a director to the POA Board.
If you are surprised to learn this, please bear with the explanation. Some items that follow are suppositions on my part, and I will note them as such; but I believe I have the gist of it right. It goes back to the original developer and the its intended use of these cottages.
I believe the original intent was for the developer to control the majority of cottages and run them under a centralized management company as a large bed & breakfast operation. I know this was being done in 2006 and 2007, because we stayed there several times when visiting the area. The cottages were designed and built for overnight stays and group functions. Also, a few were sold to corporations; and I suspect they were to be used for corporate meetings and functions.
The developer ceased the B&B operation sometime after 2007; perhaps because it was not making enough money. In any event, a number of those cottages have, since then, been empty and on the market. Also, most of the cottages that were owned by corporations have since been sold. And the developer sold a number of the vacant parcels after 2006.
In sum, it did not work out as originally intended. But here is the important point. Way back in the beginning, the POA Covenants were drafted by the developer with that original intent in mind. They specify nine directors for the POA Board. Eight were to be elected by all property owners other than Club Cottage owners, and the ninth was to be appointed by the Club Cottage owners. Back then, however, the definition of “Club Cottage owners” was, in effect, the developer.
Why was it set up this way? I suspect the developer wanted some limited control and representation on the Board; because the original plan may have been for the developer to have a long term interest in a majority of these lots. Therefore, when it owned most of the club cottage lots, that ninth directorship was effectively the developer’s seat on the Board.
However, the developer currently controls only four of the eighteen lots. Unfortunately, there was no “exit strategy” built into this section of the Covenants to cover the possibility that the developer might decide to divest itself of these lots. As a result, we now have a situation where the majority of lots are owned by separate, unrelated parties. But that language in the Covenants still remains. And that means that these 18 owners are technically allowed to appoint a director to serve on the Board.
I believe the discussion in the Executive Session had to do with this situation.
Now, you may be asking yourself, “What has been going on in the past regarding this “ninth seat?”. I can only give a partial answer.
For at least the past five years, the Club Cottage director’s seat has been vacant, because the developer did not appoint anybody. It may have been vacant for even longer, but I have not done any research on that timing. Bottom line, it appears that, at some point, the developer lost interest in having any representation on the Board.
Therefore, we had only eight directors for a number of years. However, in 2015, the Board decided to increase the total number of directors from nine to ten; thus giving us a full complement of nine directors plus the one vacancy. I believe it was felt that having nine working directors made far more sense than having eight; as did having an odd number versus an even number. And I believe it was also assumed that the Club Cottage director’s seat would continue to remain vacant.
(Editorial Comment: I tend to think most would agree that these 18 owners do not warrant having their own director on the Board. The concept makes no sense. However, at this point, I am not prepared to make any assumptions about what the 18 owners want. Rather than speculate, it is probably best to wait and see the outcome of any Board discussions. All I wanted to do here was give people the background to allow an understanding of the nature of issue. I believe it is quite possible that the Board will achieve a satisfactory resolution with the Club Cottage owners and that we will end up with nine “at-large” directors.)
2. Expense Reviews
The Board summary referred to the four committees doing the overall review of expenses. For anyone interested in more information than is provided in that summary, the individual committee reports can be found in the Board papers here: 4/19/16 Board Papers
Information is on pages 14 through 17 and 51 through 54 (using the Adobe page numbers).