Accelerating debt service to pay down the Westside Park Community Center mortgage over the next five years could provide up to $100,000 in overall savings to the Seven Lakes West Landowners Association [SLWLA].
In his first official appearance as a member of the Board of Directors, newly appointed Treasurer Don Freiert presented this recommendation, along with a summary of the proposed 2011-2012 Fiscal Year Budget, during the SLWLA Work Session on Tuesday, December 14.
Freiert explained that increasing debt service payments by $47,000 each year, funded by a decrease of $52,000 in allocations to the capital reserve, would allow the Association to pay off the mortgage by mid-2016. Freiert recommended no change to the auto loan the Association carries on the community pickup truck, at a $5,000 annual cost.
Director John Hoffmann expressed concern that paying off the mortgage could make it more difficult for the Association to borrow more money, if it were needed.
“My understanding is that one reason we were carrying debt was so that we could put more debt there should circumstance arise,” said Hoffmann. “Under the Planned Community Act, we are precluded from incurring debt unless eighty percent of the membership approves. This [mortgage] has given us a means to add debt or carry debt without going through that process.”
Hoffman noted that it is imperative to maintain significant reserves in case of a major, unexpected expense.
“Sometimes it may look like we’re carrying extra reserves, and, prudently, we are,” he said.
Freiert responded that the primary debt was incurred to finance the construction of the Westside Park Community Center and was never intended to serve as general funding for the Association.
“We are electing to make these [extra] payments. If we run into issues, we could revert to paying the loan payments as required by the contract and use the $45,000 a year in an emergency. We are choosing to do this for savings. There is no reason to leave these funds sitting in a reserve account earning one to three percent, when the cost of interest [on the mortgage] is five percent.”
Proposed 2011-2012 budget unveiled
Freiert unveiled the Finance Committee’s proposed 2011-2012 budget during the December 14 Work Session.
Copies of the proposed 2011-2012 Fiscal Year Budget are available at the SLWLA office and have been posted to the website. A meeting will be held on Tuesday, January 4 at 7:00 pm for public input, and the Board is expected to vote on the proposed budget at the Tuesday, January 11 Work Session. A final budget will be submitted to the membership on or before February 1 for a final vote at the Annual Meeting in March.
The budget anticipates a decrease in both income and expenses, including a $12,000 decrease in total income and a $7,000 decrease in operating expenses. Both changes represent less than one percent difference over the current fiscal year.
Primary reductions in operating expenses include $10,000 less for road drainage expenses and $3,000 less for the yard waste program under infrastructure; an $8,000 reduction in dam engineering and maintenance; a $2,000 reduction in landscape maintenance and recreation equipment expenses at Johnson Point. The proposed budget includes an $8,000 increase over last year for safety and security, including $6,000 in anticipated increases for the renegotiated guard contract and $9,000 for supplies and equipment; however, those increases are offset by a $7,000 reduction in maintenance, operations, and patrols.
A significant reduction of $24,000 in pool equipment and supplies and equipment, maintenance, and landscaping at Westside Park Community Center allow for an overall decrease of $6,000 despite anticipated increases for utilities at $5,000, pool staffing at $5,000, and fireworks at $8,000.
In addition, the proposed budget includes a $15,000 increase in administrative costs which includes $7,000 in the renegotiated contract with CAS, $5,000 in insurance premiums, and $4,000 for audit expenses.
Responding to a question from SLWLA President Ron Shepard, Freiert explained the cost difference between an annual review and a full audit, which is completed in alternate years, was approximately $6,000 versus $10,000 for the audit.
Freiert said the Association received a clean report in its letter of review of financial statements completed by Busby & Company.
Reserves
After revenue, debt service and operating expenses, Freiert estimated the money left over to allocate to capital reserves would be approximately $500,000 — a $52,000 decrease compared to last year.
Current reserve funds include $280,000 restricted for roads, $10,000 for the dam emergency valve replacement, and $210,000 in capital reserves. Long range projects that are not approved, but are under consideration include $288,000 in road expenses and $238,000 in other expenses, including mail house relocation, replacement of piezometers, and expansion of recreation facilities at Westside Park Community Center and Pine Island.
Small dues increase proposed
Dues income in the proposed budget is expected to increase $15,000, based on a two percent increase in rates, with dues on improved lots rising to $912 and dues on unimproved lots rising to $684.
Freiert reported that approximately ten lots that are currently categorized as unimproved do, in fact, have improvements on them, as defined by Moore County for tax purposes.
“We’re talking about a $2,200 difference in income if these were judged improved,” Freiert said, “which is not a significant number; but the question has come up.” He cited as examples a lot with a stable that includes living quarters, and a bulkhead and dock that is being leased for income.
“Are these not improved lots?” Freiert queried.
Legal Director Ed Silberhorn recommended that an objective standard should be developed by the Architectural Review Committee [ARC] since the community’s covenants do not provide a definition for improved and unimproved lots.
“My sense is that something that requires or should have ARC approval would be the litmus test whether it should be considered improved or unimproved,” stated ARC Director Adam Wimberly.
However, Director John Goodman said that bulkheads are necessary to stabilize waterfront lots and recommended that owners should not be penalized for doing so. Instead he suggested only categorizing bulkheads that are also functioning as a dock as improved lots.
Architectural Review
A Pinnacle resident who was twice denied a permit to build a fishing dock over one of the Westside ponds, won approval from ARC to build a fishing “deck” that would not extend over the water, Director Adam Wimberly reported. But, when the completed project was inspected, it included a non-compliant staircase to the water and appeared to be essentially the disallowed dock.
“We told him his choices were to tear down the dock and staircase, or to get the necessary approvals for the work that has been done,” Wimberly said. “Our concern was: ‘Why are we here if we deny a request and they go and do it without repercussions?’” He suggested there needs to be a rule or regulation that is punitive in such cases.
“Our other thought was to tell him he must take it down or carry liability insurance on the dock and put something in the property deed that any future owner must also carry insurance.”
Wimberly said the owner had sent a letter of apology and also submitted letters of approval from Moore County and the Army Corps of Engineers. ARC then voted to approve the project as built, with one opposing vote, and recommended the request also be heard by the Board.
Director Silberhorn argued that the application could not be left in limbo between ARC and Board approval.
“ARC must make the decision and then it can come before the Board as a written request for appeal,” he explained.
Community Standards
Community Manager Joan Frost noted that “quite a few” lots have been inolved in bankruptcy proceedings and that she sent notice on four foreclosures last month; one was recalled because the owner is in bankruptcy in Florida.
“Delinquents [accounts] are down, but we sent out lot of liens,” said Frost.
In addition, she reported fifteen to twenty compliance letters were sent out last month; and that a few ongoing concerns had been forwarded to the Judicial Committee for resolution.
Director Hoffmann expressed concern about unresolved complaints that posed a safety hazard or danger to neighboring properties — such as a leaning or diseased trees. He recommended sending a final warning notice after a reasonable period of time and, if the property was still not in compliance, that the Association perform the necessary work and bill the property owner.
Frost replied that the Association won’t do the work but, instead, could start fining the lot owner up to $100 a day. She also recommended that, if a resident is fearful of a neighbors tree leaning toward their property, that they should send a certified letter declaring their concern, which puts the liability on the offending owner.
“The court will recognize the certified letter and see it as negligent, if no action was taken to inspect or correct the problem,” said Frost, noting that determining if a tree poses a danger can be a very hard call. “You can have one healthy tree uproot in a storm that is right next to an old, dead tree that is left standing.”
Community Events
Twenty-eight residents helped “Deck the Halls,” and nearly seventy children enjoyed a visit with Santa during the children’s Christmas Party in early December, reported Director Jane Sessler. She thanked Theresa Clark for chairing the event and also the Women of Seven Lakes for their financial contribution, which is a long-standing tradition of support from the group.
A crowed of 125 enjoyed the adult holiday party at Westside Park Community Center, an event chaired by Nancy Workman, reported Sessler.
The first of two community CPR courses will be held on Tuesday, January 11 at 7:00 pm. Each can accommodate fifty participants and are offered with cooperation from Moore County EMS and the Seven Lakes West CERT team.
“This is not a certification class but a course for everybody. Even if you don’t think you can physically do CPR, this class is helpful for training to be part of the CPR team,” explained Sessler.
Other upcoming events include a jazz blues concert featuring ‘The Musicians’ on Friday, January 14 at 7:00 pm. Styled as a BYO coffeehouse-type event, there is no cost for members to attend, but a donation of non-perishable food items will be collected. Later in Winter, a dance night with Glen Davis will be scheduled.
Safety and Security
“Slow down — for all the good reasons this holiday season,” cautioned Director Hoffman, noting icy roads will be a concern and that he has asked Moore County Sheriff’s deputies to patrol community streets to the maximum extent possible, watching for impaired drivers.
Hoffmann also recommended buying yourself a gift this year: a highly reflective address sign that can be posted prominently and will help identify your house during an emergency. These signs are available for purchase from the local fire departments.
Emergency gates at either end of Lake Auman Dam were tested recently by West End Fire & Rescue with positive results, reported Hoffmann. He said the new gates allowed rescue crews to save time in responding to areas west of the dam.
Legal
Concluding a two-year project that he described as “a monumental effort,” President Ron Shepard thanked the many volunteers who assisted in reading, editing, rereading and updating the community rules and regulations, looking for discrepancies between ARC standards and the Bylaws.
At the Tuesday, December 14 Work Session, Legal Director Ed Silberhorn presented a few, mostly minor, changes, including updates to the definitions of developer, security, and the land area description for Seven Lakes West. Other changes included speed restrictions for the community, and a provision that swimming pool filters must not be visible from adjacent properties where practical.
More significantly, the rules now require written permission from ARC prior to any road cuts and set new standards for road patching. As approved, the subgrade must be compacted with suitable soils to 95% of maximum wet density with a minimum of six inches of graded aggregate road base and four inches of asphalt paving.
Also, any renovation or repair of a bulkhead or dock must first be approved by ARC and accomplished within Moore County, Army Corps of Engineers, and NC-DENR rules and regulations. Bulkheads may only be installed from October 1 through March 1.
Recreation hours for Pine Island and its adjacent beach and buoy areas are restricted to dawn to dusk except by specific written permission of the Community Manager.
A complete copy of the newly updated Rules & Regulations will be available on the website, with hard copies and CDs available at the SLWLA office by request.
Other business
In other business on Tuesday, December 14, the SLWLA Board:
• Heard from Director Mick Herdrich that the Lakes & Dam Committee would review a proposal for replacement piezometers in January.
• Discussed whether ‘wake boats’ should be restricted on Lake Auman. Because they are designed to create large wakes even at slow speeds, there is concern that these boats are causing damage to bulkheads. After going around the table, the Board tasked the Lake & Dam Committee with researching the issue.
• Heard that the Long Range Planning Committee will be conducting a survey of the membership, with results to be presented at the Annual Meeting. Hoffmann requested the Board have an opportunity to review the survey prior to distribution.
• Heard from Community Manager Joan Frost that utility bills have increased dramatically. She asked residents to be thoughtful about turning off lights when leaving Westside Park Community Center in the evening.
• Tabled a presentation by Mick Herdrich of the Costs, Revenue, and Taxes Study Group on the question of incorporation. The report will be published on the website and will be presented at the January 11 meeting.
Following the Work Session, the Board went into Executive Session to discuss Clubhouse Commons, Stonegate Annexation, land next to Johnson Point, and the member-called Special Meeting to be held on December 15.
