The Board had its regular meeting on October 16th, and I am in the process of writing that summary. In the meantime, I wanted to give out information regarding release of the full budget. I will post the regular meeting summary as soon as possible.
The Board finalized the 2013 budget in September. From comments made in previous meetings, I was led to believe that the Board would publish the full budget on the web site in mid-October so as to allow plenty of time for people to review it prior to the annual general meeting on November 12th. Since I had not seen it posted, I sent an inquiry to the Board and discovered that the disclosure procedures were not what I had expected.
Since I mentioned the mid-October date numerous times in previous meeting summaries, I wanted to let people know why the full budget is not yet available for review.
It now appears that the budget will be given out in three steps:
- First, included with the usual POA mailing that contains the voting ballots will be something called a “summary budget”. That mailing is supposed to arrive soon; hopefully within the next few days. I do not know how much detail will be in this summary budget; just that it will be a condensed version of the full budget.
- Second, a separate e-mail will be sent to all residents containing explanations and comments on the “summary budget”. This is supposed to go out approximately a week after the mailing.
- Third, the full budget will be posted on or after the first of November. The Annual Meeting is on November 12th.
For people who may have questions (detailed or otherwise) on the budget, the Board is considering having a separate meeting after the Annual Meeting to handle those inquiries.
Even though the full budget is being withheld, some information is available.
At a special Board meeting on September 28th, a motion to approve the 2013 budget passed by a vote of 5 to 2. The two dissenting votes were Kelley Hunter and Becky Berrey.
According to minutes of that meeting, the annual general assessment for 2013 (in other words, our 2013 dues) will be increased by $250 for developed lots and $187 for undeveloped lots. Please remember that there was no increase in the annual assessment for 2012.
This will effectively result in a budgeted contribution to the reserve fund of roughly $500,000. It is expected that the upcoming Front Gate to Manly road reconstruction project will essentially use all of our current reserves through the end of this year. Therefore, this budgeted $500,000 contribution in 2013 will start rebuilding the reserves for future infrastructure projects.
I believe this budget does not include the potential cost of purchasing the vacant land outside the front gate; other than various related expenses. It appears that the Board would rather borrow the necessary funds should that purchase be completed. I will cover that issue further in the October 16th meeting summary.
Apparently, the proposed amount for marketing expenses changed up and down as the budget evolved. The approved budget has an amount of $25,000; the vast majority of which deals with enhancing awareness of the community among real estate brokers. Kelley Hunter stated that she felt these proposed expenditures were not productive and, as a result, voted against approving the budget. (Sorry, but I do not recall hearing the reason for Becky Berrey’s negative vote; which is possibly my oversight.) I will also cover the marketing allocation in more detail in the October 16th meeting summary.
There is an allocation in the budget of $4,000 (or a slightly larger amount) for the newly formed Community Activities Committee. This is to help fund community wide activities. I will also cover this in more detail in the October meeting summary.
Once the full budget is finally released, I will take a look and, if appropriate, try to offer additional information in a separate post prior to the annual meeting on November 12th.
(Editorial Comment: If you have gotten this far, I assume you have at least a passing interest in the budget. If so, please note that I disagree with the way the budget information is being disseminated and have voiced my concerns to the Board. They are as follows:
- The budget was approved in September. I cannot see any reason to deliberately delay its full release.
- To the extent that the Board felt written explanations needed to accompany the release of the budget, there has been plenty of time to compose them.
- Releasing a condensed version seems to imply that the residents are not capable of understanding the full budget. I think they are.
- Residents should be given sufficient time to consider and to ask questions on the full budget in advance of the annual meeting. It is quite possible that residents may want clarification on budget items in advance of the meeting; which would allow for either fewer questions or better questions at the meeting itself. In my opinion, the early November release does not allow for that.
- I don’t think having a separate meeting for questions after the annual meeting is in the best interests of the residents. People should have adequate time to review the budget, and, if they wish to ask questions, it should be at the annual meeting. Everybody at that meeting should be allowed to hear the questions and answers. I understand that there may be time restrictions, but something can be worked out that allows people to leave if they are not interested. I believe that is preferable to making interested people come back to a second meeting.)
Last Item
More information on the approval process for the budget. Again, in case you are interested.
I have heard people asking questions about several issues related to the budget. Some have to do with limitations, if any, on the Board’s ability to raise annual assessments (dues), to enact special assessments or to borrow money. It appeared to me that a fair amount of erroneous information was being passed around, so I decided to direct a number of questions to the Board to obtain clarification. I have been told that responses to these questions (and perhaps others) are being composed and will be posted to the POA web site shortly.
Other questions had to do with whether or not property owners approve the annual budget. In case it helps, I believe I can offer an answer on this one. However, please note that I have not bothered the Board with this question nor have I consulted an attorney. This is simply my research and interpretation.
I reviewed our Covenants and By-Laws, and neither document contains any requirement to do an annual budget, nor does either document reference any requirement for property owners to vote to approve a budget. However, our covenants were amended in 2000 to make applicable to our community the provisions of the North Carolina Planned Community Act. That contains some provisions related to approving budgets.
If you are interested in reading the entire Act, it can be found here: Planned Community Act
Here is my understanding after reading the Act.
The Act says that a POA “may adopt and amend budgets”. (47F-3-102-2)
Within 30 days of adopting a budget, the Board must mail a “summary budget” to all property owners along with a notice of a meeting to consider its ratification. This minimum requirement is being met by our Board, and the “summary budget” will be considered at the annual meeting. The Act does not specify any information requirements or format for the “summary budget”. (47F-3-103-c)
The budget will be considered ratified unless 50% of the property owners object. That’s 50% of all property owners; not 50% of those in attendance at the meeting. Given that requirement, the budget will effectively be ratified irrespective of any voice vote or show of hands. To the extent either is called for at the meeting, it will have no effect other than to give the Board an idea of how people feel about the budget.
That said, the budget is a guideline. It is not cast in stone. So, even though a budget has been approved, there is nothing to stop the Board from amending it at any time. Therefore, the opinions of the property owners on budget expenditures carry as much weight after the adoption of the budget as before its adoption.