Minutes of the Woodland Valley Ranch Board of Directors Meeting
Chandler, Arizona
August 13, 2016
Call to Order
President Dean Rachwitz called the meeting to order at 10:05 am. Aquorum of directors was present. The program for the day was explained and the landowners were welcomed.
Directors in Attendance: Dean Rachwitz, President; Gary Bowers, Treasurer; Zolin Moses Vice-President; Jo Whitehouse, Secretary.
Number of Association Members in Attendance: Six
- Approval of Minutes
Secretary Jo Whitehouse summarized the minutes of the June 18 Annual Meeting of the Woodland Valley Ranch Property Owners Association. A motion to approve the minutes as submitted was made, seconded and adopted.
- WVR Financial Status Report
Treasurer Gary Bowers presented the July financial report.
The Primary Checking Account total: $88,922.78.
Emergency Reserve Account total: $25,006.24.
Combined Total: $113,929.02
Combined Income from all accounts stands at $158,676.00 which, compared with Income through June, 2015 shows an increase in income of $10,410.00. This increase was attributed in part to the practice of dividing the annual dues into two payments. More landowners are paying their dues and the system is working.
Total Administrative expenses as of June 30 are $9,402.00 compared with $11,259.00 at the same time in 2015. The primary reason for the reduction of $1,857 in 2016 is some unanticipated legal expenses incurred in 2015.
WVR Road Expenses (Annual Grading, General Repairs, Culvert Maintenance, Cattle Guard Maintenance, Emergency/Washout Repairs, Long-Term Improvements).
Total Expenses Through June, 2016: $81,804.00.
Total Expenses Through June, 2015: $84,686.00.
Difference: $2,882.00 decrease in expenses in 2016.
General Expenses
Expenses through June 30, 2016 are $2,659.00.
Expenses through June 30, 2015 were $1,483.00.
The increase this year of $1,176.00 is due primarily to the purchase of signs for the main entries to the ranch and for road signs.
A motion was made and seconded to approve the financial report as submitted. The motion passed.
Discussion Points Arising Out of the Treasurer’s Report:
Emergency Reserve Account: In the past the Emergency Reserve Account maintained a balance of $50,000.00 most of the time. It was decided to reduce that amount to $25,000.00 and free up additional monies toward the maintenance of the roads. If an emergency arises that exceeds $25,000.00, the money in the primary checking account can be used. The practice has been to undertake one long-term improvement per year, but this could be increased to two in coming years.
WVR Well: Security Title which does business with First United Realty (FUR) is paying the property taxes for the portion of parcel 252 on which the well is located. This leads to the question of who actually owns the well property. It was agreed that this was on common ground for the benefit of WVR owners. Allegedly, FUR realtors are telling purchasers that the well is the community property not just of WVR members but other neighboring ranches also. Security Title appears to be one of the declarants on the title along with St Johns Area LLC who developed the property. The Board will clarify the status of the deed and registration of the well, with the possibility that WVR will assume paying the $31.22 tax bill. The CC&Rs clearly state that maintenance of the well is the responsibility of the WVR POA.
CC&Rs: Some legal issues have arisen over the last couple of years with regards to the legal rights of the property owners. Some feel the restrictions in the CC&Rs are too limiting and are interested in exploring whether or not changes can be made to allow more flexibility.
3. Annual Election Procedures
A short time before the last election, questions had been raised concerning the method used to submit ballots, in particular ballots being sent to private email addresses. In 2013, the decision was made to accept ballots electronically. The board discussed whether reverting to snail mail would ease concerns. It was confirmed that all ballots emailed to individual addresses had been circulated to the entire board, acknowledgements had been emailed to those sending electronic ballots and all submissions had been included in the election process. If ballots are emailed to they go to entire board. Having the property management company, TRT, manage the ballots is not an option. If they do it for one of their clients, they will have to do it for all and TRT does not have the resources to do that.
The decision of the board was that the best and most transparent practice was the one implemented at the annual meeting in June. It was moved and seconded that the official procedure for all future elections will be to have two board members and two volunteers from the POA membership tabulate all the votes at the annual meeting. The motion was adopted unanimously.
It was further agreed that the requirements for board service will be published on the Woodland Valley Ranch website. This will include the number of board meetings a member is expected to attend and that the candidate must be a member in good standing. A further essential requirement will be that all board members must have ability to communicate by email.
4. Woodland Valley Ranch Website.
A motion was made and seconded that President Dean Rachwitz would become an administrator on the WVR website at woodlandvalleyranchaz.com and that Bonnie Tormohlen will continue as an administrator also. The motion passed.
It was agreed that Jo Whitehouse will answer questions from potential buyers going forward.
5. Priority Road Projects and Board Interaction with the WVR Road Contractor
Gary Bowers reviewed the project at Mag Hill. Repairs to this area were costing several thousand dollars every year due to monsoons. The board made the decision to put Mag Hill on the long-term project list and further determined it would be a priority. It has been a very worthwhile investment and the repairs have held up to the three monsoons we have had this year. The Board’s responsibility is to evaluate the risk/reward factor of road maintenance. Do we invest in a major repair or continue to make temporary fixes year-after-year? These decisions are made with the help of the road contractor who is very good at sizing up needs.
It has been recommended that a new road from Homestead be put on the long-term project list for 2017. Rancher Travis Johnson is allowing members to use his road at the moment, but eventually we will need to construct a separate road. This recommendation needs to be weighed against other priorities. A request has been made from a member for culverts to be put on the Hoodoo/Lawrence section of Anasazi. Culverts are needed at the far end of Anasazi. When the land was first developed some smaller culverts were used and they are now inadequate. A decision can be made closer to the end of the year when we will know how much money is available. We had budgeted $18,000 for monsoon repairs and at this half way point in the year no expenditures have been made. Usually $15,000-$20,000 a year is spent on monsoon repairs.
A temporary fix to Holly Lane will cost approximately $2,500 to purchase the gravel. Sand should be added to the mix for increased stability on the quarter mile section where the road traverses a butterfly easement. This will give a little traction for tires to cling onto. A more permanent fix to the mile or so section of Holly, formerly identified as a problem, will be in the region of $25,000. Heavy rains will likely mean Mountain View will need major repairs.
In the past, the board had voted to give authority to one board member to approve repairs up to $3,000.
The protocol for communicating with the contractor was reviewed.
A motion was made and seconded that email communications to the board from our road grading contractor will be copied to the entire board. A designated and alternative board member will be responsible for responding to the contractor’s communications. The motion passed.
Gary Bowers will be the contractor’s primary contact with Dean Rachwitz the secondary contact, however, all directors will be kept informed, as has always been the procedure in the past. It was confirmed that the Board has a legal responsibility to keep communications with contractors confidential. However, all decisions of WVR road maintenance that may stem from this communication are made exclusively by the Board on behalf of the POA; and are then reflected in and documented by itemized invoices from the Contractor, thoroughly reviewed and approved by the Board.
6. Status on WVR Road Signs and Well
Road Signs
Vice President Zolin Moses reported that 25-30 road signs had been delivered and were being been installed. A similar number will be purchased and installed this coming year, which means two-thirds of the ranch will have signed roads. By the end of 2017, we hope to have all roads signed. We also have a property owner who is updating the maps and a new map will be available in the next few weeks. Zolin has received a thumb drive with a draft and is checking that for accuracy.
The grading contractor, who also installs the road signs, has been given authority to use the signs and poles left over from previous years despite some small variations in design. This will save POA funds.
Well
Well drillers, Willis, are still reluctant to come out and adjust the solar panels on the WVR well, but Zolin continues to press. The good news is that the well has been 3/4 full since Memorial Day.
Well Rules and Regulations
The well rules and regulations brochure given by FUR to new owners needs updating. The rules still say an owner can draw 1,000 gallons of water per week, but that was reduced to 500 gallons per week some time ago. FUR will be reminded of the change so new purchasers are clear about the 500-gallon limit. The new signs for the well will reflect 500 gallons per week with no carry over. A letter was sent to FUR and to all 800 members. There is a penalty for misuse of the well.
7. WVR Attorney Retention
President Dean Rachwitz reported that there have been several cases in the last couple of years, especially pertaining to CCR’s, that might have merited a legal review. One of those cases (Rosie Road) was submitted to a law firm for review and option.
It was confirmed that the board always has the best interests of the POA members and the association’s funds at heart. It was decided at prior meetings that the WVR association documents need legal review. The CC&Rs still bear the date of their first writing in 2000 and Arizona HOA law has undergone extensive revision since then. Should we have a legal firm on a monthly retainer or simply consult a lawyer for specific tasks on an ad hoc basis? The pertinent section of the February 20 board minutes where this topic was raised were reviewed where it was voted that the documents undergo review by a lawyer It was stated in those minutes that Board members will agree on three topics at a time for legal review.
The Board decided that legal counsel will be hired on a case-by-case basis. The first task is to review the CC&R’s, the Bylaws, and the Grazing Lease. It is important that we track down the complete 50-page copy of the original Grazing Lease as despite numerous efforts we have been unable to obtain one. Gary Bowers will research legal firms and will also continue to track down the Grazing Lease.
There have been some concerns with gates being erected by the ranchers. It was confirmed that the POA is responsible for the maintenance or replacement of gates and cattle guards and the rancher has been willing to work with the Board on these aspects.
8. Remedies for CC&Rs Violations
Secretary Jo Whitehouse had been asked to research HOA (POA) best practices. A question had been raised regarding eligibility for board service. Research on this issue revealed that members seeking to serve on the board of an HOA should be in good standing and not be in violation of any CC&Rs. It is impossible for a board member who is himself/herself violating the CC&Rs to then impose fines/liens on another property owner who has violated the CC&Rs. One of the first things legal counsel will be tasked with is to advise on the best corrective methods for dealing with violations.
9. POA Dues Delinquencies
Gary Bowers reported that the list of delinquencies looks much longer than it actually is. This is due to the transition to twice-yearly payment of the POA dues. TRT’s accounting system only allows for an annual payment and changing the software to accommodate the two-payment system for WVR would be cost prohibitive. Consequently, the second half of the payment is showing up on the delinquency list even though it is not delinquent. These owners are not in default and their names will be removed as soon as their second payment is received.
The protocol for handling delinquencies was explained. Action is not taken until an owner is $750 in arrears, although that amount could be changed in the future (lower or higher). TRT handles collection of all unpaid dues and most are recovered without issue. Some owners have stopped paying Apache County Taxes, which indicates a more serious financial problem. It is not always financially feasible to retain a lawyer to collect delinquent dues for out-of-state WVR owners. WVR owners who live in another state means that an Arizona lawyer must retain the services of lawyers in each of the homeowners’ states. They also sometimesnegotiate the outstanding balance down and that would mean WVR would get a small percentage of what is owed. TRT has done an excellent job of pursuing the defaulters and once a lawyer is engaged we would not be able to work with TRT staff anymore. It was noted that any dissatisfaction with a contractor’s work on an individual owner’s property is NOT a valid reason for withholding payment of dues. Disputes of that kind are to be resolved privately between the parties involved.
10. The Rumor Mill
Vice-President Zolin Moses reported that he had recently spent several days at the ranch and had heard a number of rumors that were being spread, none of which have any truth to them.
- It was clearly stated that no member of the board accepts gifts of any kind from any contractors doing work at WVR.
- The election of board members is not, and never has been, “rigged”. The election procedures outlined in Item 1 above will continue to ensure complete transparency in the election process.
- The board cannot and will not respond to vague rumor. Documented evidence with photos where possible is required to substantiate any and all claims of improper use of WVR resources. The board will take evidence of such claims extremely seriously if supporting documentation is provided.
- The Treasurer has been authorized to approve expenditures for roads and other appropriate maintenance of the common property up to $3,000. All board members are notified of such expenditures and are provided with supporting material to justify such expenditures.
- A quorum of three board members is required in order to make decisions affecting Woodland Valley Ranch and its property owners.
- The Association’s check book is lodged with TRT and no checks are written by that company without all board members having seen and signed off on invoices.
- No board member has access to WVR checks or cash.
11. Open Forum
- Independent Audit of WVR Accounts.
A full discussion was held. Research has shown that HOA/POAs that have undertaken an independent audit have regretted it. They have spent $8,000-$10,000 on doing this just to find what they already knew: everything was in order and there were no irregularities. An independent management company (WVR has TRT) that handles all financial transactions eliminates the potential for impropriety. The new Arizona laws, rules and regulations governing HOAs ensure that Homeowners rights and privileges are protected.
The proposed legal review and updating of the association’s organic documents will also ensure owners’ rights are protected according to current Arizona law.
- Contract with Road Graders
The board discussed sending out Requests for Bids to road grading companies in the region. The frequency of sending out bids was discussed. There are a limited number of companies that can handle a project the size of WVR and with the amount of work and time involved in developing a comprehensive bid we will quickly exhaust the supply of qualified contractors if bids are solicited annually. It was suggested that while the contract would be an annual one the bid process should be on a three-year cycle. i.e. we will solicit bids every third year but only sign a one-year contract, renewable annually based on performance.