Contents
1. Annual Meeting and Voting
2. Road Project
3. 2013 Budget
4. 2014 Projected Budget
5. Water Line
6. Amendment to By-Laws – Explanation

Note: Due to being out of town and working on the candidate Q&A’s, this is late and will be relatively short. Numerous issues will be picked up again next month.

1.  Annual Meeting and Voting

The Annual Meeting is on November 18th. The Candidates Night is October 29th. Update as of 10/4/12:  Although originally scheduled to be held at the Baptist Church outside the Lystra gate; both events are now apparently to be held at the country club. (Editorial Comment:  Still don’t know the back story on this issue; but I suspect it is interesting.)

Ballots will be sent out between October 4th and 19th. Per the new, amended by-laws, all votes will be due in advance of the annual meeting, but that date has yet to be determined. It appears that electronic voting will be possible for this election.

Paper ballots are normally counted by a small committee to ensure accuracy and integrity. As best I can determine, the proposed electronic voting software has built-in safeguards to preserve the integrity of that portion of the vote. But the details of those protections were not discussed.

The Board amended the By-Laws to change the voting procedures for vacancies resulting from resignations or other reasons. This change allows all three elected directors to serve three year terms. The change is somewhat complicated, and the Splinters e-mail provided a less than forthcoming explanation. I have covered this in more detail at the end of this summary.

2.  Road Project

I can’t add anything to the detailed e-mails being sent out by Roy Thornton. It appears that project costs are still within budget.

3.  2013 Budget

Last month, I reported that, after netting out category overruns against reduced expenditures and savings, the projected budget overrun would use $20,000 to $30,000 of our $50,000 contingency. It appears the position has worsened since then with the expectation that the entire $50,000 contingency account will now be used. The Finance Committee report indicated that cost savings will still have to be pursued to year end to avoid an overall budget overrun. I have not had time to do a thorough analysis or ask questions, so I will refrain from trying to explain exactly why the position deteriorated. I will try to cover this in more detail next month.

As an aside, part of this appears to result from lower than expected advertising revenues on the newsletter. But I don’t have all the necessary details to confirm this. However, this appears to be the main reason why the Board voted to discontinue the print edition of our monthly newsletter. (Editorial Comment: On that subject (the newsletter), I don’t feel that I have enough facts to explain why it started to lose money so quickly. If I obtain further information that might shed light on this, I will post in next month.)

4.  2014 Projected Budget

This budget was discussed in some detail, but it was not finalized at this meeting. The Board indicated that the final budget would be circulated and approved by e-mail subsequent to the meeting. Given the limited information available to me, I don’t feel comfortable commenting on the items discussed until the final budget is available. And I am not sure when that will happen.

However, there was one point worth mentioning. While no firm decision was made, it appears the Board is leaning towards levying a Special Assessment in the first quarter of 2014 to pay off any amounts borrowed under the loan facility for purposes of completing the road project. But those costs, and therefore the amount of any borrowings, will not be known until November or December, and the amount of the assessment cannot be determined until then.

Last year, we received a summary budget with the ballots, but it did not contain detailed, line item information. The full budget was posted two to three weeks ahead of the annual meeting, but I do not know if that will happen again this year. There is a budget review meeting for community members on Wednesday, October 8th at the POA building. Last year, a full, detailed budget was not handed out or reviewed at this meeting. I don’t know what is planned for this year, but anybody is welcome to attend the session.

5.  Water Line

For the past year, we have been aware that the Chatham County Water Department will be placing a line along 120 feet of Governor’s Drive starting around McLean going up towards Morehead. As part of this work, it will have to rebuild one half (one lane) of that section of Governors Drive. The Board has determined that it will be cost effective to have the other lane rebuilt at the same time at our expense using their contractor. The estimated cost of the work is $60,000, and I believe it is to be included in the 2014 budget.

I do not have firm details as to the nature of road closures for this work or how it will affect traffic circulation throughout the community. I believe this work is scheduled for some time during early 2014.

6.  Amendment to By Laws Regarding Elections – Explanation

The last Splinters e-mail included the following sentence:

“The board amended the Bylaws in preparation for this election to make explicit the Board’s authority, consistent with maintaining staggered terms for Directors, to determine the term of a Director to be elected to fill a Board vacancy, for example, due to the death or resignation of a Director.”

You could be forgiven for not understanding its meaning or why it was even included. Here is the full explanation.

Mark Ferraro resigned as a director this past summer. In such circumstances, the By-Laws allow the Board to appoint a replacement, but only until the next general election; at which point they call for a replacement to be elected to serve out the balance of Mark’s original term (in this case, two years). The Board declined to appoint the temporary replacement; which the By-Laws allow; thus leaving the vacancy open until this upcoming election.

According to the By-Laws, we were supposed to have two concurrent elections this year; one for two directors serving three year terms and another for one director to serve out the two year balance of Mark’s term. Those of you who have been around a while will recall this being done about five years ago when a similar situation arose. The Board chose to follow the By-Laws, and there were two concurrent elections; one of which was for the balance of the term of a resigning director. Therefore, I assumed that would happen this year, too.

However, communications from the Board and Nominating Committee kept referring to the election of three directors; each for a three year term. Since this was obviously in conflict with the By-Laws, I inquired in late August as to why this was being done. Without going into all the details, the Board’s response essentially said that it decided it would be easier to deal with three year terms for all three positions and avoid the separate, concurrent election. Further, the Board and its attorney felt that no amendment to the By-Laws was necessary. To support this, the attorney offered the following opinion:

“…….the technical requirement is one without a penalty, and it is my opinion that the board may alter the rotation for the convenience and less confusing understanding of the membership and the process. In other words, by electing directors for a 3-year term, the board is elevating substance over form, which has no negative legal implication.”

I believe the simple translation is that the Board and its attorney felt that, in this instance, there was no harm in not following the By-Laws and that it was therefore acceptable to take the easier path of having one election as opposed to two.

Now, if you read the Splinters sentence again, you will see that it refers to amending the By-Laws; which is confusing given that, as of late August, the Board did not feel an amendment was necessary. I do not know why the Board changed its mind, but it did subsequently decide to amend the By-Laws to allow it to determine the length of the terms and thus have one election.

At this meeting, the necessary amendment was voted on and approved by the Board with no discussion. It had obviously been circulated before the meeting, and any discussion must have been done in advance of and outside of the regular meeting.

Here is my brief interpretation of this amendment.

First, it starts with the Board finding the language in our current By-Laws dealing with vacancies to be “vague and unclear”. This language can be found in Article IV, Section 5 here: POA By-Laws

Then it restates Section 5. The key difference is in one clause as follows:

Original version: Property owners will elect the director for “the remaining unexpired term, or for a new term, as the case may be”. I believe this says that the election will be for the remainder of the term unless, by the time of that election, there is no “remainder”; in which case it will be for a new three year term. By no “remainder”, consider the following example.

Assume a director resigns in July of the third year of the term. There would be roughly five months left on that term until the next general election in November. The Board could appoint somebody to fill the vacant slot until November or choose to leave it vacant. In either case, come November, that three year term will have run out. Therefore, the language “as the case may be” refers to the fact that the election would have to be for a new three year term; because there will be no “remainder” left on that term.

But, if the resignation is in July of year one of the term, then, by the time of the next general election in November, there are still two years left on the term. In this case, the language clearly says that the election will be only for the remainder of the term; because there actually is a “remainder” left on the term.

New Version: Property Owners will elect a director for “the remaining unexpired term, or for a new term, as the Board shall so designate, at its sole discretion”. This says that the Board can choose to handle the November election in accordance with the original language; in other words, elect only for the remainder of the term. Alternatively, at its discretion, it can declare that the replacement director will be elected to a new three year term irrespective of the balance remaining on the old term. For example, if there is one year remaining, it can choose to have the new director elected for a three year term.

Since this decision can be made solely at its discretion and without giving any reasons, I assume the Board has concluded that giving itself such arbitrary authority will not harm the association or property owners in any way.

(Editorial Comment: I have read the original language in Section 5 very carefully and do not find it to be particularly vague or confusing. While it may not be perfect, the intent seems pretty clear.

It appears to me that the Board wanted nothing more than to give itself the option of not having to run two concurrent elections. I cannot say for certain whether or not this new arbitrary authority can be abused; just as I cannot say for certain why the original language did not allow for this authority in the first place.

For what it is worth, I believe the language in the Splinters sentence referring to “consistent with maintaining staggered terms” is irrelevant and unnecessarily confusing. Unless the number of directors is changed, there will always be staggered terms irrespective of the existence of this new amendment. All that changes is the timing of the staggered terms. The language becomes much clearer when that clause is removed. It would then read as follows:

“The board amended the Bylaws in preparation for this election to make explicit the Board’s authority to determine the term of a Director to be elected to fill a Board vacancy.”

And that is exactly what this amendment does; namely give the Board arbitrary authority to choose the length of the term.

Lastly, more than a few people have questioned how the Board can make these changes to the By-Laws. According to the By-Laws themselves, they can be changed by a vote of a majority of sitting directors. Nothing more is required.)