Finance Advisory Committee – April 2021

By Bill Wethe
Finance Advisory Committee Chair

As published in The View, April 2021:

Work Completed

During the months of February and March 2021, the FAC and FAC Subcommittee continued its work with the Board as well as with DRM and Troon management on behalf of the Association including:

  • Review and recommend Board approval of the 2020 audited financial statements. Audited financial statements were approved by the Board on February 22, 2021, and issued by the Auditor on February 24, 2021.
  • Review and recommend Board approval of the 2020 income tax returns.
  • Review and recommend Board approval of the Association’s unaudited January and February 2021 financial statements including the:
    • financial statements and supplementary schedules.
    • combining and combined financial statements included in the Treasurer’s report.
    • summary financial information on financial position and results of operations included in the General Manager’s report.
    • condensed Association financial information to be published in The View magazine.
  • Review of the year-to-date variance analysis prepared by the General Manager on the:
    • 2021 Operating Fund revenues and expenses.
    • 2021 Replacement Fund expenses for the purchase and replacement of common area real property components and inter-fund transfers to the Operating Fund for the purchase and replacement of common area personal property and equipment components.
  • Review and written recommendations on the 2021 Forecast (2+10) of the Operating Fund and Replacement Fund as compared to the 2021 Budget.
  • Preparation of the Management Discussion and Analysis (MD&A) of the 2021 Forecast (2+10) provided to the Board.
  • Review and written recommendations on proposed BAFs for the expenditure of funds for the replacement or major repair of real and personal property common area components identified in the Reserve Study.
  • Review and recommend Board approval of the January and February 2021 bank statements, bank reconciliations, and investment account statements.
  • Regular meeting of FAC held on March 19, 2021, via audio and video conference call.
  • For the Board meeting on March 29, 2021:
    • Preparation of the FAC monthly written report to the Board.
    • Review of the General Manager’s monthly written report to the Board.

Work in Process

  • Insurance renewal as of April 22, 2021.

FAC Members

Thank you, Bob Giovannettone, for serving on the Committee from June 2019 through February 2021. We appreciate the contributions and recommendations you made. Now, FAC has six members; and we have Board approval for a total of nine. So we have three openings, and we would love to hear from you. We are looking for owners who have a background including accounting and financial reporting and an interest in serving on the FAC or on the FAC Subcommittee. Please contact the author if you would like to discuss completing an Advisory Committee Interest Form.

Further Information

Additional FAC Members: Larry Anderson, Bob Jester, Jerry Cavoretto, Mike Whelan, and Bruce Marley. FAC Subcommittee Members on the Replacement Fund and Reserve Study: Chris Stevens, Don Salvatore, Bruce Marley, and Bill Wethe, Chair.

Contact the author at finance@scshca.com.

President’s Report – April 2021

As published in The View, April 2021:

Kim Fuller
President

VOTE, VOTE, VOTE, PLEASE VOTE!

The HOA annual meeting will be on April 6, 2021. I know we are repeating this information, but we need everyone to vote. There are only a few days left, so please complete your ballot and put it in one of the ballot boxes in either the Montecito or Santa Rosa Clubhouses. In addition to the Board election, there is one CC&R change and one Bylaw change on the ballot. All ballots must be in before April 6.

The CC&R change that is on the ballot is in response to a new State law, California AB3182, that went into effect on January 1, 2021. Last month I described this new law, which changes the minimum rental period to less than 90 days. Our CC&Rs currently state that the minimum rental period is 90 days. Our HOA is required to follow the new State law even though the CC&Rs say something different so, effective January 1, 2021, our HOA must allow rentals for 31 days or more, not 90.

The new law requires us to change our CC&Rs to conform to the new State provisions. Hopefully, we can get enough ballots in favor of the change but, even if we do not, we will still be required to enforce the new law no matter what our CC&Rs state. Unfortunately, we are not allowed simply to change the wording in our CC&Rs; our residents must vote in the change.

The other provision the Board presented is to change Bylaw Section 4.6.4, Balloting Time Requirements. Our current provision limits the time we can request ballots to 90 days. We are proposing removal of the 90-day limit so the HOA can still request ballots from those who have not voted after 90 days. The goal is to encourage more homeowners to participate and vote by giving the HOA more time to collect ballots. This change does not affect how many affirmative votes it takes to change the CC&Rs or Bylaws. It will still take 51% of all homeowners to make any change. This just allows the HOA additional time to collect more ballots.

There are also four candidates running for two positions on the Board. Linda Aasen and Kim Fuller are running for re-election, in addition to two new candidates, John MacDonnell and Moira MacLeod‑Foster. Please be sure to get your ballots in as soon as possible for the Annual meeting on April 6.

Better days are coming, so don’t forget, “it doesn’t get any better than this.”

Contact the author at kim.fuller@scshca.com.

Flag Notification

Fly the United States Flag at Half-Staff Immediately Until Sunset on Saturday, March 27, 2021 Honoring the Victims of the Tragedy in Boulder, Colorado

A Proclamation Honoring the Victims of the Tragedy in Boulder, Colorado

As a mark of respect for the victims of the senseless acts of violence perpetrated on March 22, 2021, in Boulder, Colorado, by the authority vested in me as President of the United States by the Constitution and the laws of the United States of America, I hereby order that the flag of the United States shall be flown at half-staff at the White House and upon all public buildings and grounds, at all military posts and naval stations, and on all naval vessels of the Federal Government in the District of Columbia and throughout the United States and its Territories and possessions until sunset, March 27, 2021. I also direct that the flag shall be flown at half-staff for the same length of time at all United States embassies, legations, consular offices, and other facilities abroad, including all military facilities and naval vessels and stations.

IN WITNESS WHEREOF, I have hereunto set my hand this twenty-third day of March, in the year of our Lord two thousand twenty-one, and of the Independence of the United States of America the two hundred and forty-fifth.

JOSEPH R. BIDEN JR.

President’s Message: Current Guidelines 3/23/2021

Kim Fuller
President

Good Morning Residents.

As a result of the new State Guidelines, the Board has implemented new guidelines for the opening of certain activities which is now allowed by the State and County.

Please understand that the exceptions are not always consistent. Some activities are open while others are not, for example, the gym may open indoors but the indoor pool is closed.

Indoor gatherings are now allowed for up to 3 households.

Gatherings: With the lifting of the Regional Stay at Home Order, new gathering rules are in place. Gatherings of up to 3 households are now allowed indoors or outdoors. This means residents and/or visitors from outside the HOA may visit your home.

Curfew: The Curfew of 10 pm to 5 am is no longer in effect.

Guest on Streets: Guests are allowed to use the streets and North Channel area. Residents may now walk with children, grandchildren, or friends on the streets and/or North Channel area. Visitors may bike on the streets and ride in golf carts but age restrictions on who can drive a golf cart still apply. Keep in mind the use of skateboards and scooters (or motorized skateboards and scooters) is strictly prohibited within SCSHCA streets, parking lots and common areas.

Putting Course: Guests are now allowed to use the Putting Course behind the Montecito Clubhouse. Reservations are not required for the Putting Course.

Library: The library is open for use from 9 am to 4 pm daily but is closed on Sunday. It is limited to one person at a time or people from the same household. If someone is waiting time is limited to 15 minutes. This is for residents only, so guests are not allowed. Reservations are not required to use the library.

Courts and Pools: Tennis, Pickleball, Golf, Pools, and Bocce have no changes. Outside play or visitors are allowed for golf, but visitors are not allowed for Tennis, Pickleball, Pools, or Bocce. Reservations are required to use any of these activities.

Dog Parks: There are no changes for the Dog Parks.

South Side Driving Range: The South Side of the driving range is still closed.

Masks: Remember that masks are still required at all times if 6’ social distancing cannot be maintained.

New! Gym is Open:

Capacity- The new guidelines permit the opening of the gym with 10% capacity. Here are the operating procedures.

The gyms will be open on a reservation-only basis with the following capacity limits:

Montecito-13 people

Santa Rosa-9 people

Face Masks and Social Distancing-Face Masks are required while indoors no matter what activity. Social distancing will also be required at all times.

Reservations-Each reservation will be for 45 minutes and you are limited to one reservation per day.

Arrival-You may arrive 5 minutes before your reservation time.

Departure-You must leave on time.

Temperature-Your temperature will be taken upon arrival. If it exceeds 100.0 you will not be permitted to enter or workout.

Waivers-You must sign a new waiver. The new waivers are required because of Covid. People using the online reservation system have already filled out the waiver, but residents that made a phone-in reservation need to sign the waiver. Please understand that it may take a few minutes to sign the waiver the first time you arrive and be patient.

Gym Hours:

Monday-Friday 6 AM-6 PM

Saturday/Sunday 7:30 AM-4:30 PM

Special Note regarding small equipment-All small equipment has been removed. The County order makes cleaning of small, shared equipment difficult to manage so we have removed the equipment.

Restrictions-By County order-the following will not be available: Lockers, water, showers, gatherings, chairs, and tables.

Resident ID Cards: Resident ID cards will be required to use the gym. If you don’t have one, make an appointment with the HOA office for a new card.

No Guests.

Fitness Classes: Fitness classes will be moved indoors at the Montecito Fitness Center and Santa Rosa Clubhouse.  Please note: there will be a few outdoor classes in the next three weeks. Please contact the fitness department with any questions.

Shadows Re-opening for Indoor and Outdoor dining:

Takeout and Delivery will continue. Hours for outdoor dining: 10 AM-7 PM Every day.

Guidelines:

8 people per table maximum.

No guests.

No changing of tables even if a seat is available at another table.

Reservations with the number of people may not change when you arrive at the restaurant.

Advance Reservations Required: Residents only and residents must show their Resident ID cards upon entry or a picture ID card with address like a Driver’s License.

No Public Access.

Temperatures will be checked upon entry and if temp exceeds 100.0 you may not enter.

Masks required upon entering building.

Masks required to walk to table.

You may take your mask off once seated.

You need a mask when leaving the table for any reason, including going to the restroom.

Indoor Capacity is 24 people.

Limited Menu-Not the same as before.

The Board wishes you a safe and healthy week as we slowly move to reopen activities here at Sun City Shadow Hills.

Kim Fuller
President

Presidents Message: Overview of Podcast #275

Kim Fuller
President

 

Audio may be found at: www.scshca.com/podcast275

Below is a synopsis of this episode.


 

The Big Secret Is No Longer a Secret

BOR - Bureau of Reclamation. This is Federal Government.

BOR owns the land alongside the canal which goes through part of the golf course driving range, hole #17, and hole #16 on the South course. So, all this land is owned by the BOR, the Federal Government.

Location map regarding the BOR License is attached. Location map of the 5 acres near phase 3 dog park is attached.

The areas marked in lighter green on the attached BOR map are the approximate boundaries of the land owned by the BOR and subject to the license agreement.

From a “high level” summary, area under license agreement is:

  • About 10% of hole 16, south course
  • About 80% of hole 17, south course
  • About 30% of the driving range
  • Portion of the storage areas next to the maintenance facilities

Pulte leased this land to develop SCSH back in 2004.

Original lease was for 25 years and a 25 year option at a cost of $80,000 per year. That price was lowered to $70,000 per year after a few years. Pulte was responsible for making all yearly payments.

Pulte’s goal was to buy the land from the BOR and give it to the HOA rather than paying yearly lease fees to the BOR.

The Big Secret was not having anyone else buy this land, so all information was kept confidential in order to protect the best interest of the HOA. If someone else were to buy this land the HOA could be held hostage for a large yearly payment or else the HOA would have to vacate the land. This would mean part of hole #16, most of hole #17 might be gone and a good portion of the driving range would be unusable. So, all past Boards would not discuss this lease publicly in order to protect the HOA interest of keeping the land within HOA control.

Over the years negotiations between Pulte and the BOR was slow at trying to buy the land from the BOR so the HOA could take permanent title. In the end the BOR said they would not sell directly to Pulte or the HOA because it did not follow their procedures. The only possible sale process was to go out to public auction. This idea had very high risk of a third party buying the land and then charging the HOA a high yearly fee to use the land. So, the HOA did not want to go through the public auction process. It was also not recommended by the BOR if we wanted to protect our interest.

Alternatives were discussed and the option of a new lease between the HOA and the BOR became the best alternative to protect the land use for the HOA and to protect the yearly lease amount. Given newer BOR descriptions of land use for this purpose, the yearly lease fee would be $2,637 per year, not $70,000. The lease would be for 25 years with a 25 year option. Payments would be made 5 years in advance. So, every 5 years we make a payment for the next 5 years.

Doing a lease would avoid a public auction where the HOA might not be the eventual owner of the land.

The negotiation on this transaction began in 2018, one year after I was elected and has been ongoing ever since. Since Pulte was responsible for making the $70,000/year payment the HOA’s concern was making sure the land was controlled by the HOA for years into the future, and at a reasonable rate. Naturally if the payment for the HOA was $70,000 per year, we would not sign a new lease but would rather have Pulte make such payments for as long as possible (25 years). Since the lease started in 2005 Pulte would have 9 more years of payments saving the HOA $630,000. As you can see it gets complicated.

Clearly Pulte wanted out of the current lease and the HOA wanted control for more than 9 years. The negotiation was to try and reach a outcome both Pulte and the HOA would like. Pulte offered money for the yearly payment for 25 years. It would be about a $50,000 to $60,000 payment and the HOA would use that over the years to make payments on the 25 year lease given the lease would start at $2,637/year. The priority for the HOA was to gain control over the land at a reasonable rate for a long period of time. We did not want to have to begin making payments of $70,000 per year starting in 10 years.

Here is where more fun comes into play with negotiations. Pulte wants out of a lease, and the Board knows about a 5 acre parcel owned by Pulte along the backside of the Phase 3 dog park and maintenance area. This is 5 acres on the corner of Madison and Avenue 38. The Board wanted to own that 5 acres more than having a $50,000 payment. Given the lease amount of $2,637/year, the Board’s position was the 5 acre parcel would have more value to the HOA for potential possible future use.

Two parts of the negotiation:

  1. 25 year lease at a reasonable rate. That we were going to get from the BOR.
  2. For Pulte to be released from the current lease agreement would they be willing to give us the 5 acre parcel.

The negotiation led to an agreement that Pulte would sign over the 5 acre parcel and the HOA would sign a new lease with the BOR. This is an example where both parties move forward to compromise on each getting something of value to benefit both sides. Pulte ended a $70,000/year lease and the HOA gained control over the BOR land for 50 years and acquired a 5 acre parcel of land in addition.

Through this process we needed to resolve some issues:

  1. Can the HOA go into a 25 year lease without resident approval? Example: Frontier needed a resident vote for a 5 year contract. Governing documents only allow for 1 year contracts other than a few exceptions. If we needed resident approval and the negotiation became public, it could harm the negotiation if third parties tried to bid on the proposal. HOA might have to pay more money.
  2. Can the HOA annex the land without HOA resident approval? Again, another element which might cause the negotiation to go public and compromise the effort to protect the interest of the HOA.

Fortunately, after legal review, our governing documents allowed for the 25 year lease with the BOR by a vote of the Board and we may also annex the 5 acres by a vote of the Board. Pulte’s legal team along with attorneys from the HOA (one being a land use attorney) collaborated to determine we were following all legal requirements to make the transaction possible.

This negotiation is now over, we closed escrow last week, so we have signed a new 25 year lease for the land at $2,637/year and we own the 5 acre parcel at the end of phase 3 by the dog park and maintenance area. It was actually 2 parcels totaling 5 acres.

Where do we go from here? What do we do with the 5 acres? Great Question.

Board will need to proceed with a process to determine what to do with the land. Currently, the Board’s intention is to form a committee to investigate all possible uses of the 5 acres to then make a recommendation to the Board. This will take time. The committee will need to reach out to residents to gather any and all ideas on what should be done with the land, what is possible, what are the possible costs of development, and then recommend to the Board a plan to move forward. These kinds of plans take time. First step will be to appoint the committee to begin the process. If you are interested on being on this committee (let’s call it the ‘5 Acre Land Committee), please fill out the application form from the HOA office to apply to be on this committee.

After the Board election, whatever Board is in place, they will be able to then proceed with the process given their priorities. I would like to think surveys will need to be done to gather resident input. It would be great to get some members on the committee that have had some development experience. I would also think Town Hall meetings will be needed to go over all the information just like we did with the Frontier plans. Please don’t think such a process happens in a short period of time. The investigation of ideas and research alone could easily take more than a year. Investigation and cost projections for design and planning for all approvals will take another year. Plans and specs will take another year and the permit process can take another year. Be aware this process takes time if done right, but the final outcome can be an improvement for the HOA which all residents will hopefully gain benefit.

So, the big secret is no longer a big secret and all the past Board members can now speak about the BOR which has been one of the closely guarded secrets of the HOA for 15 years.

If you have questions, please let me know.

Kim Fuller
President

Flag Notification

Fly the United States Flag at Half-Staff Immediately Until Sunset on Monday, March 22, 2021 Honoring the Victims of the Tragedy in the Atlanta Metropolitan Area

HONORING THE VICTIMS OF THE TRAGEDY IN THE ATLANTA METROPOLITAN AREA
- - - - - - -
BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION

As a mark of respect for the victims of the senseless acts of violence perpetrated on March 16, 2021, in the Atlanta Metropolitan area, by the authority vested in me as President of the United States by the Constitution and the laws of the United States of America, I hereby order that the flag of the United States shall be flown at half-staff at the White House and upon all public buildings and grounds, at all military posts and naval stations, and on all naval vessels of the Federal Government in the District of Columbia and throughout the United States and its Territories and possessions until sunset, March 22, 2021. I also direct that the flag shall be flown at half-staff for the same length of time at all United States embassies, legations, consular offices, and other facilities abroad, including all military facilities and naval vessels and stations.

IN WITNESS WHEREOF, I have hereunto set my hand this eighteenth day of March, in the year of our Lord two thousand twenty-one, and of the Independence of the United States of America the two hundred and forty-fifth.

JOSEPH R. BIDEN JR

Red Tier Reopening Update

Shadows Restaurant

  • Shadows Indoor Dining is now open
  • Indoor restriction is 25% capacity or 24 Residents
  • Patio remains open
  • Reservations are required – Maximum party of eight (8)
  • All current COVID safety procedures still in effect
  • Hours of Operation:
    • Monday – Friday, 10:00 am to 7:00 pm
    • Saturday & Sunday, 8:00 am to 7:00 pm

Lifestyle

  • Library continues to be open Monday – Saturday, 9:00 am – 4:00 pm
    • Library will also be open on Sundays, starting March 28
  • Afternoon Movies Coming Soon
    • Starting Friday, March 26, at 4:00 pm
    • Montecito Clubhouse (room location to be determined)
    • Reservations are required
    • Movie schedule: www.scshca.com/movies
  • Church Services begin Sunday, March 28, in the Capistrano Room; masks are required at all times

Fitness Centers

  • Capacity is limited to 10%
    • Montecito has a capacity of 13 people
    • Santa Rosa has a capacity of 9 people
  • Reservations are required to use the fitness center
  • Resident ID is required to access the fitness center
  • Each reservation is 45-minutes
  • Masks are required to be worn at all times

We will be moving fitness classes indoors. More information to follow.

 

Please remember to check our website for further coronavirus updates:

www.scshca.com/coronavirus

Treasurer’s Message: A Treasurer’s Report

Carey Thompson
Treasurer

Hello residents,

I’m Carey Thompson, a fellow homeowner and since June 2020, your Treasurer of our HOA Board. I assumed that responsibility when Bruce Marley resigned for personal reasons. It was an easy transition for me since I was the previous Treasurer and a member of the Finance Advisory Committee. Since I rejoined the Board, we have not been able to have meetings with homeowners in attendance. I’ve been very brief in my reports at the open Board meetings held via streaming, so I thought it might be a good time to provide you an update.

By now you should have received a packet in the mail that contains a cover letter from me and includes the 2020 annual audit results as well as our current insurance coverage. The law requires us to mail this information to you every year. In addition, our resident’s only website has an abundance of detailed financial reports for those of you interested in drilling down into the details.

So, in the spirit of a “State of the Union” address, I want to bring you all up to date on how our community is doing financially. Although this topic makes some people’s eyes glaze over, I think you’ll want to hear how we’re doing. I’ll keep it simple and brief, and I promise you there won’t be a quiz at the end.

Overall, how are we doing financially? In a word – great.

When the pandemic crisis hit in March 2020, the Board took proactive measures to slash expenses to make up for lost revenue. At the height of the pandemic, both Shadows and our golf courses were closed. With no end-of-season group and club parties, there was no revenue from catering, which is usually quite profitable for us. Our investment income was decreased due to falling investment rates.

The Board took steps early on in the crisis to decrease our operating budget expenses including golf, landscape, property protection, fitness, facilities/maintenance, mostly in personnel costs. Closed facilities do not need as many people to maintain them in good working condition. As a result, our 2020 actual performance was just over $600,000 above our budget plan. Here are the numbers:

When the 2020 operating budget was approved, the Board planned just over $14 million in revenue and $14.4 million in expenses, which was a $331,000 budget deficit of revenue over expenses. Our existing working capital would cover that deficit. It allowed the Board to approve an $8 per month credit on the 2020 monthly assessment.

However, due to the cost saving measures the Board took, the actual financial performance for the year was $12.8 million in revenue and $12.5 million in expenses. Although we had reduced revenue in fitness, golf, food and beverage, as well as investment income, we reduced the expenses even more. That’s how we were able to finish the year more than $600,000 above our planned budget. In addition, the favorable variance in actual results, as well as the accumulated net working capital in the

Operating Fund, allowed the Board to authorize a one-time annual credit of $144 per home or $496,800 in total effective January 1, 2021. This $144 credit per home was reflected in your HOA account and your monthly assessment for January 2021 was reduced by the one-time credit.

Since rejoining the board, in addition to the standard monthly responsibilities, I have been quite busy with several major projects: I coordinated the development of the 2021 budget, renegotiated the Troon contract, updated our investment policy, oversaw the 2021 Reserve Study, and the 2020 annual audit and filing of our income taxes. Of course, I had lots of help from FAC and Bill Wethe, as well as significant support from our DRM General Manager, Tyler Ingle and Troon General Manager, Rolland Vaughn.

Here’s what’s on tap for the coming year. The Board is now working on ways to increase our investment income. Return on standard Certificates of Deposit is extremely low, less than 1% of the value of the CD on maturity. We have received some recommendations from our Comerica investment advisors and the FAC for the Board’s consideration. The more revenue we can generate from investment income means less we need to assess homeowners in monthly dues. I will share more information on this in the near future.

We are also planning to replace our golf cart fleet this year. The fleet we purchased almost 5 years ago has been fully depreciated and it is time to purchase new carts. We have been saving money in our Replacement Fund for this purchase. Fortunately, unlike when we previously leased golf carts, we have a trade-in value of more than $200,000 as opposed to no value on the leased carts. We are receiving bids and expect to have new carts delivered by the start of the season this coming November.

When this term of office expires in April 2022, I plan to apply to rejoin the FAC as a regular member. Currently, our FAC has three vacant positions. Yes, you do need a financial or related background to serve on this committee, but we have not had any applications for membership in many months despite our many efforts at recruiting. It’s easy to apply, just go to our resident’s only section of the HOA website and search for the volunteer application form.

As I mentioned, you recently received a packet from me including the 2020 audit of financial statements highlighting our results along with an abundance of additional detail. Take a moment to review the audit. I think you will be happy with our financial standing.

I welcome your comments and questions. You can email me anytime. The address is on the inside front cover of The View every month. I look forward to seeing you at an open board meeting in the future.

Carey Thompson
Treasurer

Photos: Classy9ers

Tuesday, March 9, 2021
Photos Submitted by Trish Belisle

Pictures from March 9th. We dressed up for St. Patrick’s Day!

Daylight Saving Time

Remember to "spring forward" this coming weekend!

Daylight Saving Time begins Sunday, March 14, 2021, at 2:00 am Clocks should be moved forward one hour.

Presidents Message: Overview of Podcast #269

Kim Fuller
President

 

Audio may be found at: www.scshca.com/podcast269

Below is a synopsis of this episode.


 

Waivers and Rules

Short version:

  1. The HOA may require waivers.
  2. Current rules require waivers only for fitness center/outdoor sports activities.
  3. Current rules do not require waivers for Clubs/Groups.
  4. Owners are responsible for their guests even without a waiver.
  5. Committee of 4 lawyers (I Board member, 1 member from the FAC, and two from the law firm representing the HOA) disagrees with Bob Israel’s assumptions and conclusions.
  6. Board will evaluate possible new rule about Waivers for Clubs/Groups.
  7. Board will be distributing new waiver for resident comment.
  8. Process for new waiver will take about 60 days.
  9. If you sign a waiver you do not become the insurer of the HOA.

Why Waivers: The Board is trying to prevent the Association from being sued for frivolous claims. We want to protect all the assets of the HOA, which protects all residents, which in turns help to maintain property values. One affects the other. Waivers explain a person is responsible for their own actions and that there are risks to any activity. Each person must be responsible for those risks.

Mr. Israel claims: The Board is exceeding its authority by requiring members to sign an informed consent document (Waiver). We disagree, this is not true.

Section 3.6.1 of the CC&Rs states ….the Association shall have the responsibility of owning, managing, and maintaining the Common Areas…

Section 3.7 of the CC&Rs gives the Board rule-making authority. The Board may enact and amend rules which may concern matters pertaining to the use of the Common Area and Common Facilities . . .”

Association’s original rules and regulations (from 2005) have contained a provision which requires all Residents and Guests eighteen years of age and older are to sign a Waiver before participating in fitness center/outdoor sports activities.

Signing a Waiver does not make you the insurer of the HOA. The four attorneys reviewing Mr. Israel’s comments do not know why he made such a statement.

Claims and the threat of claims will increase insurance rates as we have already experienced. Mr. Israel will remember when he was on the Board, because of threats of a lawsuit against the HOA, that list of lawsuit threats increased our insurance rate by $20,000 in one year. Claims matter, so everything we can do for risk and claims management will help all of us in lower insurance rates. I have said on many occasions please don’t threaten a lawsuit, it can increase our insurance rates.

 

CC&R’s:

  1. Mr. Israel cites 2.4 Rights of Owners in Common Area: The interest to use Common Areas goes with the lot. The Owner can’t separately sell those interests. That interest stays with ownership in the lot. This does not mean owners have unrestricted rights to common areas whenever they like. Example: hours of operations.
  2. Mr. Israel cites 2.5 Owners' Nonexclusive Easements of Enjoyment. Every Owner shall have a nonexclusive right and easement of enjoyment in and to the Common Area. Israel left off ‘subject to the following provisions’: Residents do not have unrestricted rights to use Common Areas.
  3. 2.5.1 Right of Association to Regulate Common Area Uses. Rules about guests, membership cards, RV’s, who qualifies to use facilities, etc.
  4. 2.5.2 Right of Association to Adopt Rules. This section allows for rules for use of Common areas. This section allows the Association to adopt Community Rules about the use of Common Areas by a majority vote of the Board. See 3.7.
  5. 3.7 Community Rules. Allows for rules of Common Area by majority vote of the Board. The Community Rules may concern (i) matters pertaining to use of the Common Area and Common Facilities. Example of rules: Golf, dress code. Swimming, reservation. No Skateboarding on the tennis courts. Lots of rules for use of Common areas. Rules are implemented by due process and 28 day resident comment before Rules can be imposed.
  6. 13.6.1 Rights and Remedies of the Association (Governing Document Enforcement). ..the Board, may enforce the obligations of each Owner to obey such Rules,
  7. Mr. Israel cites 13.6.4 (a) Limitations of Disciplinary Rights. Israel quotes this as a basis an owner has access to Common Areas. This section does not apply to Common Areas at all. It says The Association shall have no power to cause a forfeiture of an Owner's right to the full use and enjoyment of his or her Lot…. So, his reliance on Section 13.6.4 is misplaced. This section applies to actions on the homeowner’s private lot and does not have any application for the use of Common Areas.
  8. Mr. Israel cites 13.6.4 (c) Hearings and Summary Enforcement Rights. This section states the enforcement hearing process in applying fines and suspension. The HOA may suspend privileges and impose fines. Explains the process and what is allowed.

 

By-laws Article 6, 6.1, 6.3, 6.4:

ARTICLE 6 - MEMBERSHIP RIGHTS

  1. 6.1 Use and Enjoyment of Common Areas by Members and Family. Use of Common Area is subject to Association rules and regulations regarding occupancy and subject to 6.4. It does not state residents have unrestricted access.
  2. 6.3 Invitees and Guests. Guests may use Common areas but are subject to all rules regarding guests. Again, no unrestricted access.
  3. 6.4 Association Rules and Regulations. The right of any person to use and enjoy the Common Areas and Common Facilities shall at all times be subject to the rules, ……and regulations as promulgated by the Board.

This section also explains the HOA cannot cause an absolute forfeiture of Common area use. In other words, the HOA cannot take Common Area rights away for all time. The HOA may suspend use once due process is followed, but it cannot be permanent.

 

Rules and Regulations:

4.13.3

Informed Consent – Release and Waiver: All Residents and Guests eighteen (18) years of age and older are required to sign an Informed Consent, Release and Waiver before participating in fitness center/outdoor sports activities.

4.13.8

Cardiovascular and Strength Training Areas:…………. Neither the Association nor its employees shall be responsible for injuries or accidents. All Residents and Guests eighteen (18) years of age and older must sign an Informed Consent, Release and Waiver before participating in any fitness center activity.

 

Guests:

Sections 4.4.1(a) and 7.3.1 of the CC&Rs provides Owners are financially responsible for their guests. Even if we don’t have a waiver, all Owners are responsible for their guests.

Rule 2.4 of the Association’s rules and regulations; Resident is responsible for the behavior and actions of their invited Guests.

Mr. Israel supports a waiver for certain activities if done in a certain way. Hopefully after a new waiver is presented most residents will agree to its implementation. We will see after the 28 day comments period. This will take a little time, about 60 days.

 

So where do we go from here:

Given these two rules I do not see how at this time the HOA can require a waiver for Clubhouse use, for Clubs or Groups, or any other activity outside the listed rules. History: Waivers have been used since 2005. First communication of waivers for Clubs and Groups I found in 2014. I don’t see anywhere where they added the rules to require a waiver for other activities. If we are going to require Clubs and Groups to sign a waiver, we must first have a rule in place to require that process. For now, I have instructed staff the waivers are not required for Clubs and Groups, so if you are a member of a Club or Group you don’t have to fill out the waiver. You may if you like, but there is no current requirement. If the Board wants to add such a rule it will need to go before the residents for 28 day comment. That issue will be discussed at the next Board meeting. This will take some time to do it right, and we all know how long lawyers take.

Another question came up in review of the documents, does a change to the waiver require 28 day comment by the residents? We currently have a rule about requiring a waiver for certain activities. So, does a change in the waiver also require 28 day comment. Grey area for which we are not sure, but the Board has already said they we will put out a new waiver for 28 day comment so everyone will be able to respond.

As I stated at the last Board meeting, we felt there were already many comments about the waiver that needed to be reviewed. Clubs/Groups need to be protected, and there needs to be more clarity on who is responsible based on fault. These concerns are being reviewed by the same four attorneys and hopefully by the next Board meeting we can have a new waiver for review.

In the meantime, Clubs/Groups do not need to sign a waiver. If you want to use the fitness facilities or outside activities a waiver is required which is already part of the rules. To sign up for such activities requires a reservation and that process is mostly in place so when you sign up to make a reservation you will be automatically agreeing to the waiver terms.

We will have more information by the next Board meeting and hopefully a new draft of the Waiver for everyone’s review.

Kim Fuller
President

Avenida Sombra Installation of Bike and Cart Path Lane

Schedule Date – Thursday, March 11, 2021

Temporary No Parking from 7:00 am to 4:00 pm
Please see the map below for the Temporary No Parking Zone

 

  • Streets will remain open to thru traffic.
  • Please make sure your sprinklers do not turn on during this time.
  • Please be aware that there will be some detouring, and crews working in the roadways.
  • Please note the site map showing the roads affected.
  • Striping paint is a rapid dry pavement paint that will dry within a few minutes when applied to pavement.

We apologize in advance for any inconvenience this may cause you and we thank you for your cooperation.

For more information, please contact the Facilities Maintenance Department at 760-345-4349 ext. 2401.

HOA Election Ballots

Please do not deliver ballots to the HOA Office.

There are two ballots boxes, located by the main entrance inside each clubhouse. Staff will not deliver your ballot to these ballot boxes.

Please remember to sign the secret envelope before placing it in the ballot box.

Montecito Clubhouse Santa Rosa Clubhouse

Finance Advisory Committee – March 2021

By Bill Wethe
Finance Advisory Committee Chair

As published in The View, March 2021:

Work Completed

During the month of February 2021, the FAC and FAC Subcommittee continued its work with the Board as well as with DRM and Troon management on behalf of the Association including:

  • Review and recommend Board approval of the unaudited January 2021 Association financial statements including the:
    • financial statements and supplementary schedules prepared by DRM/Associa, Troon, and the Controller.
    • combining and combined financial statements included in the Treasurer’s report prepared by the Controller.
    • summary financial information on financial position and results of operations included in the General Manager’s report to the Board.
    • condensed Association financial information to be published in The View magazine.
  • Review of the year-to-date variance analysis prepared by the Controller on the:
    • 2021 Operating Fund revenues and expenses.
    • 2021 Replacement Fund expenses for the purchase and replacement of common area real property components and inter-fund transfers to the Operating Fund for the purchase and replacement of common area personal property and equipment components.
  • Review and recommend Board approval of the January 2021 bank statements, bank reconciliations, and investment account statements.
  • Review and recommend Board approval of a written agreement to engage a firm to provide non-judicial foreclosure services approved by Board on January 25, 2021.
  • Board approved proposed revisions to the following items on January 25, 2021:
    • FAC Charter and Mission – FAC BAF 2021 # 1.
    • FAC Subcommittee Charter and Mission – FAC BAF 2021 #2.
    • Association Procurement Policy – FAC BAF 2021 #3.
  • Special meeting of FAC held on February 3, 2021, via audio and video conference call.
  • Regular meeting of FAC held on February 19, 2021, via audio and video conference call.
  • For the Board meeting on February 22, 2021:
    • Preparation of the FAC monthly written report to the Board.
    • Review of the General Manager’s monthly written report to the Board.

Work in Process

Review and recommendation to the Board on the:

  • 2020 audited financial statements.
  • 2020 Federal and California tax returns.

Upcoming Work

Insurance renewal in April 2021.

FAC Members

FAC has seven members, and we have Board approval for a total of nine members. So, we have two openings, and we would love to hear from you. We are looking for owners who have a background including accounting and financial reporting and an interest in serving on the FAC or on the FAC Subcommittee. Please contact the author if you would like to discuss completing an Advisory Committee Interest Form.

Further information

Additional FAC Members: Larry Anderson, Bob Giovannettone, Bob Jester, Jerry Cavoretto, Mike Whelan, and Bruce Marley. FAC Subcommittee Members on the Replacement Fund and Reserve Study: Chris Stevens, Don Salvatore, Bruce Marley, and Bill Wethe, Chair.

Contact the author at finance@scshca.com.

President’s Report – March 2021

As published in The View, March 2021:

Kim Fuller
President

PLEASE VOTE!

The annual meeting for the HOA will be on April 6, 2021. The Board election, along with one CC&R change and one Bylaw change, will also be on the ballot. All ballots must be in before April 6. Please fill out your ballot and send it in right away. All ballots have been mailed, and you should have received yours by now. If your ballot has not arrived, please contact the HOA office for a replacement.

The CC&R change that will be on the ballot is in response to a new State law, California AB3182, that went into effect on January 1, 2021. Last month I described this new law, which changes the minimum rental period to less than 90 days. Our CC&Rs currently state that the minimum rental period is 90 days. Our HOA is required to follow the new State law even though the CC&Rs say something different, so effective January 1, 2021, our HOA must allow rentals for 31 days or more, not 90.

The new law requires us to change our CC&Rs to conform to the new State provisions. Hopefully, we can get enough ballots in favor of the change but, even if we do not, we will still be required to enforce the new law no matter what our CC&Rs state. Unfortunately, we are not allowed simply to change the wording in our CC&Rs; our residents must vote in the change.

To amend a CC&R or a Bylaw, we need 51% of all homes to vote in favor, which is 1,760 homes. If we do not get 1,760 affirmative votes, we will have to leave the language in our CC&Rs the same, even though it will not apply and will conflict with the new State law.
When your ballot arrives, be sure to vote for this provision so we can align our CC&Rs with the new State law. If we don’t pass this in April, we may need to hold a special election in the fall at a cost of $10,000 to try again.

The other provision the Board will present is to change Bylaw Section 4.6.4, Balloting Time Requirements. Our current provision limits the time we can request ballots to 90 days. We are proposing to remove the 90-day limit so the HOA can still request ballots from those who have not voted after 90 days. The goal is to encourage more residents to participate and vote by giving the HOA more time to collect ballots. This change does not affect how many affirmative votes it takes to change the CC&Rs or Bylaws. It will still take 51% of all residents to make any change. This just allows the HOA additional time to collect more ballots.

It has been difficult in the past to change a CC&R or a Bylaw because of this 90-day time limit. In one case, 88% of the residents voted in favor of a change. But we ran out of time to collect ballots, so we did not reach the needed 1,760 affirmative votes. Changing this Bylaw will allow the HOA to contact residents who have not yet voted and ask them to submit their ballots. Our HOA attorneys tell us that we are the only HOA they serve that has this 90-day limit on collecting ballots. Your vote in favor of this action will not only save our HOA in election costs but will also help us to move forward with needed, and sometimes required, amendments to our governing documents.

There are four candidates running for two positions on the Board this April. Linda Aasen and Kim Fuller are running for re-election, while two new candidates – John MacDonnell and Moira MacLeod Foster – are also running. Please be sure to get your ballots in as soon as possible.

We are slowly beginning the process of reopening all activities in our community. As soon as the State and County revise their guidelines, the Board will contact you about those changes. It has been a most difficult time for everyone, and hopefully we can all remain focused on helping each other to remain safe and healthy as we slowly return to normal.

Better days are coming, and I look forward to those special days again knowing “it doesn’t get any better than this.”

Contact the author at kim.fuller@scshca.com.

Final Crack Seal Project Schedule

The Phase I Asphalt Crack Sealing Project

Updated 2/23/2021

Phase I – Red & Purple Zones
Original Scheduled Date – Friday, January 29, 2021

New Date
Red Zone – Monday, March 1, 2021
Purple Zone – Tuesday, March 2, 2021

Please see updated Phase I Map for Crack Seal Schedule Dates

No Parking on Streets on Crack Seal Schedule Dates from 7:00 am to 5 pm

  • Streets will remain open to thru traffic
  • Parking will be allowed after street is completed and contractor & staff inspects final crack seal.
  • Please be aware that there will be some detouring, and crews working in the roadways
  • Please note the site map showing the roads affected

We apologize in advance for any inconvenience this may cause you and thank you for your cooperation.

For more information, please contact the Facilities Maintenance Department at 760-345-4349 ext. 2401.

Flag Notification

Fly the United States Flag at Half-Staff Immediately Until Sunset on Friday, February 26, 2021 Remembering the 500,000 Americans Lost to COVID-19

A Proclamation on Remembering the 500,000 Americans Lost to COVID-19

February 22, 2021 • Presidential Actions

As of this week during the dark winter of the COVID-19 pandemic, more than 500,000 Americans have now died from the virus. That is more Americans who have died in a single year of this pandemic than in World War I, World War II, and the Vietnam War combined. On this solemn occasion, we reflect on their loss and on their loved ones left behind. We, as a Nation, must remember them so we can begin to heal, to unite, and find purpose as one Nation to defeat this pandemic.

In their memory, the First Lady and I will be joined by the Vice President and the Second Gentleman for a moment of silence at the White House this evening. I ask all Americans to join us as we remember the more than 500,000 of our fellow Americans lost to COVID-19 and to observe a moment of silence at sunset. I also hereby order, by the authority vested in me by the Constitution and laws of the United States, that the flag of the United States shall be flown at half-staff at the White House and on all public buildings and grounds, at all military posts and naval stations, and on all naval vessels of the Federal Government in the District of Columbia and throughout the United States and its Territories and possessions until sunset February 26, 2021. I also direct that the flag shall be flown at half-staff for the same period at all United States embassies, legations, consular offices, and other facilities abroad, including all military facilities and naval vessels and stations.

IN WITNESS WHEREOF, I have hereunto set my hand this twenty-second day of February, in the year of our Lord two thousand twenty-one, and of the Independence of the United States of America the two hundred and forty-fifth.

JOSEPH R. BIDEN JR.

February 2021 Board Meeting Video Now Available

To see more videos, visit our Videos page by clicking here.

Presidents Message: Overview of Podcast #265

Kim Fuller
President

 

Audio may be found at: www.scshca.com/podcast265

Below is a synopsis of this episode.


 

Hello residents,

Here is a summary of the podcast.

The Board has received questions about the new waiver being distributed by the HOA to all Clubs and Groups. Why is it being done now? In the hope that the State will start to allow the opening of indoor facilities soon, we need the waivers in place for residents to use the Clubhouses. With COVID, the HOA needs to protect itself from COVID claims and the new waiver has such protections. Since there is no insurance for a COVID claim, and residents could be personally liable for any such claim, the HOA needs new waivers in place before residents may use the Clubhouses so that all residents are protected against any such claim.  So, before residents can use the Clubhouses, we need these new waivers signed to protect everyone.

We have received questions as to why we need to have waivers at all. Not all residents sign a waiver. It is true not all residents will sign a waiver. There is no legal requirement for a resident to sign a waiver just to live here. A person may live here, and if they do not use Common facilities like the pool, gym, tennis courts, etc. they would never be required to sign a waiver, nor can we make them sign a waiver. Governing documents allow residents to live here and use the streets without signing any waivers.

Simply put waivers put in writing that residents and guests are responsible for their own actions and so they may not file a legal claim for damages. Without such waivers the HOA would be responsible for every accident and claim against the HOA. This would lead to increased claims, increased costs to insurance companies and eventually our rates would increase, or possible insurance companies would not insure us because the risk is too great.

Insurance is for the unexpected and not for the controllable daily acts. Insurance companies do not like businesses that are not proactive in controlling events to help reduce frivolous claims. This not only means taking actions to always ensure safety, but it also includes waivers to explain to residents in legal terms they are responsible for their own actions and so they will not sue the HOA just because an accident occurred on HOA property.

The HOA requires a waiver from those residents and guests that want to use Common Area Facilities like the tennis court, Clubhouse, golf, pool, gym, etc. The HOA has a right to ask for a signed waiver to protect itself from residents using the Common Property. One viewpoint is that all residents and guests using Common Property should sign a waiver. Another viewpoint is that only sport related activities need a waiver, and some residents prefer waivers to be eliminated. The HOA has required a waiver for activities since the beginning of the development. A card player for example, may fall on their own accord in the hallway, break a hip, and then want damages from the HOA simply because their fall occurred on the HOA property. The HOA does not agree that all residents should be able to file a claim and be paid for damages when the accident is the responsibility of the resident.

We are permitted to get waivers from all residents and guests that participate in Club activities, this has been done for years. We get waivers on all residents and guests using the Clubhouse gyms, pools, etc. where we have a main point to check in. We have not gotten a waiver from a resident that happens to buy a ticket for a concert for example, and we don’t have residents sign a waiver to attend that concert. It is correct that we do not have waivers on everyone for every activity. We do the best we can to get waivers but given our circumstances and the different activities we cannot always get waivers for every person for every activity. But that does not mean we should stop getting waivers entirely.

The Board is now, because of a resident request, looking at ways to get more waivers on residents and guests that attend any function, but it is difficult to make that happen. The Board is not looking at removing the waiver requirement that has been in place for years. If residents voted to remove the waiver requirement entirely, knowing all such claims would be paid by the HOA, and possibly each resident personally, and knowing our insurance rates would increase dramatically, that could be a point of discussion if most residents wanted to follow that path.

The Board currently believes that just because some people don’t sign a waiver does not mean we should not get waivers on everyone we can in order to protect the HOA from frivolous lawsuits and claims. I have personally been in court representing the HOA against claims that were the responsibility of the resident, but the resident was seeking damages just because the accident occurred on HOA property. Fortunately, because of waivers and other printed material the judge found in favor of the HOA. The Board believes waivers are in the best interest of the residents of the HOA to protect them legally and financially. Our insurance rate went up $20,000 in one year just because the number of lawsuit threats by residents increased, even though no claims were filed, but just the threat of a claim increased the rate. When insurance rates increase, monthly dues are also increased, so it is in our best interest to do everything we can to keep insurance rates as low as possible.

Board will be looking at ways to require everyone to sign off on a wavier for all activities. But we do not believe it can be 100% foolproof and there will always be people not signing a waiver. Example: if we hold a free concert outside on the driving range, we will not be able to get waivers on every person unless we gate off the concert and make everyone sign a waiver as the enter the concert. We don’t feel that is efficient, so the HOA takes on more legal liability risk in that case. Some residents believe non-sport activities should not sign a waiver, the Board disagrees. But that discussion will take place on Monday to decide on a future course of action and if any changes to waiver requirements will be implemented.

Currently the Board believes the crafts club should sign a waiver, card players should sign a waiver, and anyone using Common Property should sign a waiver. Anyone can have an accident on the Common Property and the HOA Board feels we should protect ourselves from those residents that try to make money for their own irresponsible actions just because the HOA has deep pockets. Just because we can’t get a waiver on every resident for every activity does not mean we should stop getting waivers. We do the best we can, but we also do the best we can to protect the HOA from frivolous claims which will increase costs to each resident.

Some residents believe that all claims except for sports related claims should be paid by the HOA. We get many claims not related to sports and when the HOA is not responsible the Board believes the HOA should not have to pay for such a claim just because the accident occurred on Common Property. Some residents believe that because we have insurance that is enough, the Board disagrees and in the end such actions will lead to higher HOA fees, or possible not being insurable.

Companies that have too many claims will be denied insurance coverage by the best companies with the lowest rates. Too many claims lead to higher rates or no coverage at all. Many insurance companies will not insure unless waivers are in place and they will inspect and approve such waivers. This is the case in my own business. The best insurance rates come from companies that know waivers are in place to protect against the irresponsible and frivolous claims.

Questions have also come up about guests and residents’ responsibility for guests. You are responsible for your guests; it is listed in the Governing Documents and has been that way from the beginning. If your guest goes through a stop sign, we write the ticket to the homeowner and the homeowner must then get reimbursed from their own guest. We do not have jurisdiction over your guests. Many residents have requested that homeowners should not be responsible for their guests. Once again, then HOA fees could go up to all residents for the actions of guests. One guest drove through the closed gates and caused $4,000 damage. We believe the HOA should not have to pay for that damage, so the homeowner was billed for the damages and the homeowner needs to be reimbursed from their guest. We had one guest speeding. Three weeks later after getting a violation and fine, that same guest continued speeding. The homeowner was again cited for an additional $300. If we did not cite the Homeowner, the HOA would have little recourse in stopping such action by guests and the speeding would continue causing an unsafe condition.

COVID is still among us so please practice all safety measures. We have done extremely well in trying to control the spread of the virus given the actions taken by all the residents. We have confirmation on less than 30 cases in our community compared to 244 cases in SCPD.

As we have stated since last June, the HOA is not looking for violations of the State Order on private property, it is the responsibility of each resident to follow the State Order. The HOA cannot give permission for indoor gatherings on private property because it would violate the State Order.

Some have asked about gatherings among residents that have been vaccinated or opening the Clubhouse for use for those that have been vaccinated. Currently the State is granting no exception for vaccinated people, so we are not allowed to open the Clubhouses yet. Gatherings indoors for residents that have been vaccinated is also still not allowed per State Order. To protect all residents financially we must follow that State Order and hope it changes soon, but until then no gatherings are allowed indoors and outdoor gatherings are limited to 3 households.

If you have any questions be sure to let me know.

Take care and be safe.

Kim Fuller
President

HOA Phones Technical Difficulties

We are currently experiencing technical difficulties with the HOA and Shadow Hills Golf Club phone systems. You may experience issues issues contacting us by telephone.

We are working on resolving this problem as quickly as possible and apologize for any inconvenience this may cause.

President’s Day – Commercial Visitors

In observance of President’s Day, commercial visitors will not be allowed to access our community or work on Monday, February 15, 2021.

Reminder, this also applies to the following nationally observed holidays:

  • New Year’s Day
  • President’s Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day