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Reader, I'm going to start the posting off with a quote from a legal article regarding HOA boards. Why? Because my review indicates to me, that our WPA board did not follow our governing documents from the very beginning - provision of information to the contractor, of the WPA current reserve study. I've been in the archives of information in developing this article for some time. I've done the best that I can, and suggest to you as always, to seek answers for yourself from your board, through requests to review documents - minutes, etc., and listen to tapes of meetings. The article will be long, and completed in parts. HERE IS THE QUOTE FROM THE LEGAL ARTICLE THAT DRIVES MY RESEARCH, AND HAS FOR A LONG TIME:
"VIII. Conclusion
Homeowner rights in a common interest community against their community association arise out of the community’s legal documents and the conduct of the association in carrying out the duties and functions assigned to it in those documents, by state statutes and common law. While the most clearly defined rights that a homeowner possesses lie in the areas of breach of covenant, simple negligence, and liability for trespass, more complex legal questions are posed by the extent of association liability for the protection of owners from foreseeable crimes and breach of statutory duties. While the outcomes vary from jurisdiction to jurisdiction, there continues to be an expansion of owner rights and community association liability. As community associations are increasingly being recognized as quasi-governmental entities with powers greater than a mere landlord, the exact nature of the legal relationship between the homeowner and their community association is in the process of being more clearly defined. In any event, educated homeowners with expanding legal rights will help ensure the smooth operation of the community by the community association."
The association had NEVER
had a professional reserve study performed until this one. It is a
critical tool for the long range financial planning of any association.
In our case it is probably even more important. The association has been
riddled with lawsuits, disputes, recall or recall attempts on board members, hiring and firing
of CPAs and lawyers, almost always driven by funding and the decisions of
boards regarding spending and interpretations of what needed to be done and
when. If done correctly, with good intention, it can be the confirmed
guide to planning and implementation in keeping a HOA sound. It would seem that the expertise, input, and approval would be
sought from EVERY board member and the community members would be openly kept
abreast of its development. Anywhere else but here. Consider:
*A shelf contract was
utilized. $10,000 had been set aside by one board. Later it was
reduced to $5,000.
*Information Obstruction:Since
the study contract didn't include engineering the contractor was reliant on the
board to provide concrete back ground asset information. Some on the board held
the project close to the vest. There was board in fighting
and information held from fellow board members. DeMarchi told me
that he had asked McMillin for information regarding the spoil site and canals
and McMillin told him "to mind his own business". Review
the study. There aren't any figures for the spoil site. Why? It is owned by the WPA, and maintenance of it resides in the ground's contract. It is more
than rumor that DeMarchi and President Walton would not allow McBride to sit in
on a conference call with the vendor. President Walton would not allow
McBride to view the draft of the study. I had asked to review the
draft. My request was denied and I was given an explanation that
didn't make sense. A draft is a draft. It is sent for review and
comment. Why would you deny anyone, let alone a board member (s) to
review all critical information? Additionally, I asked to
review the information that was provided to the contractor to initiate the
study. When I arrived at the office I was shown the equivalent of a large
moving box filled with engineering type plans. When I spoke to three
of the board officers I advised them that I was sure there was a notebook or folder
that gave reference to the drawings and other information and that was what I
wanted to see. They all remained silent and didn't answer. There was
information provided to the vendor on policy that conflicts with fact that will
be provided later. PRESIDENT'S REPORT: President Walton reported that the reserve study contract had been signed and sent to William Douglas. The start date has not been determined yet. He was asked whether the canals and spoil site were stated in the contract. The response was that they were included in the proposal, but not the contract. (January 15, 2013 Board Meeting)
*Was the information
provided to the contractor influenced by the opinion of the
current committee chair of an asset? For instance, remember, DeMarchi had told us that the last 6-7
drainage committees didn't know what they were doing and he was going to fix
his road and the road he owned lots on and built homes on. How could that
information contribute to a credible study. Here is what the study says
about drainage, "The grade of the community is quite
flat and abuts the Black River. It is our understanding that there has
been concern with slow site drainage from some of the residents. We have
noted standing water in the drainage swales along the roads.
Unfortunately, due to the flat grade of the entire community there is little in
the way of effective solutions. Simply cutting a steeper swale along the
road will have little if any effect with moving water quicker off site.
We have included an allowance for drainage problems that the community wishes to
address." At the time of the study development, I reviewed the correspondence file several times. There hadn't been
more than 2 letters regarding drainage to the board over the prior year.
*It could appear that the
contractor was not informed that those members providing information had not
included the entire board. The contractor states the following regarding dredging, "On 4/6/13 RDA met with Wedgefield Plantation board members. RDA
was informed that the canal dredging was not the responsibility of the
Association, even though it covered the cost of the first dredging. The
board explained that the canals are owned by the Federal Government and future
dredging may need to be performed by the individual homeowners with property
fronting the canal However, the board presently wishes to provide
$30,000 each year toward any future dredging. RDA has reviewed the Declarations and
dredging is not discussed. We have attached this document. It is
our understanding that first dredging involved multiple government agencies and
legal proceedings. RDA has not reviewed any of the government or legal
documents from the previous dredging and has relied on the board's direction
concerning the responsibility of the canal dredging." The contractor did not meet with the entire
board. We don't know how many of the board members were included.
We do know that President Walton and DeMarchi have appeared to be in
charge. If you'd been at board meetings at the time, it could appear that Garrison was kept informed about this project. I have been able to confirm that
there wasn't a notice sent to all board members for a meeting noted
by the contractor in the above quote. You decide whether those in
attendance misinformed, or lied to the contractor. First we all know that
there have been two dredgings and the entire membership paid to some levels in
both. The bottom of the canals are owned by the government.
Multiple government agencies were involved in approval of permits and the state
of SC in a lawsuit. No court has ever decided that the WPA does not have
responsibility. In fact, here is the wording from the court order on the
lawsuit brought by Zieske, Thomas, and Wilson, Page two of the court order says, "The
State Plaintiffs, and other named defendants acknowledge that this order in NO
WAY addresses ANY RIGHTS, DUTIES OR OBLIGATIONS of the Board of Directors for
Wedgefield Plantation regarding the maintenance, dredging, or ANY OTHER
ACTIVITIES pertaining to the canal and therefore, this order in NO WAY
addresses or RULES UPON those rights, duties or obligations." The contractor appears to find it
necessary to include language about what the BOARD?????? - not with the
knowledge of the full board told them, a second time in the reserve
study. "The board has informed us that dredging of the canals is
the RESPONSIBILITY OF THE INDIVIDUAL HOMEOWNERS WITH WATERFRONT. This
direction is based on history of the community, multiple government agency
involvement, and lawyers' opinions. The board has indicated that
they would like to contribute $30,000 each year the
dredging, REGARDLESS of association obligation. WE CAN CHANGE
THE WORDING, TIMING, AND UNIT COST OF THIS ENTRY IF THE BOARD SO DESIRES." Whether you want the canals
dredged, or believe it isn't the responsibility of the WPA, you have to wonder
why it may have been necessary to lie to the contractor. Why
didn't they provide the contractor with complete information? Why did
some board members speak for the entire board, while not informing the entire
board? Lawyers opinions? There are concrete lawyer opinions from
the board attorney of record at the time of the board vote for the last
dredging, that are contrary to what some on the board told this
contractor. Additionally, if the board does truly believe that they have
no obligation, members should be asking them why they are setting aside $30,000
a year for dredging? It could look like once again some are speaking out
of both sides of their mouths. How can you trust your board or the reserve study after the shoddy preparation, hidden agenda, denied access to process and information to all duly elected board members, and what could appear to be outright lies to the contractor? MOST IMPORTANT: ask the board to identify the meeting minutes prior to these conversations with the reserve study vendor, that state the exact date of meeting, motion, and vote by the entire board to set aside $30,000/yr our WPA assessment dollars for future dredging of the canals? I haven't been able to find it. The minutes are a permanent record on the WPA retention of records retention schedule in the WPA policy manual. Write and ask the board to provide you that information.
Remember, I wrote the board and requested the opportunity to review the contract, proposals, and RFP (request for proposal). I was provided the contract, and the responses to the RFP. The RFP was not in the file. I was told that William Douglas (Short lived management company) sent out the RFP and the board didn't have it. This is just the beginning of a list of problems that have surfaced during the early months of reserve study, at the January 15, 2013 board meeting.
Why is it a problem? When did your board verify for themselves that the RFP detailed all the necessary specifications and information, for our project? Our first reserve study should literally lay the foundation for our reserves. It is always important for this process to be competitive, but this isn't the time to go cheap, if it impacts credible results. Is cost, not enough money, why the didn't really want to know what the RFP, representing our needs, looked like? You get what you pay for, and the time you are willing to invest to see that your project is done correctly, start to finish. It would be the same as you asking a contractor to bid to build something, and not knowing what specs he was using to bid. Things only go from bad, to worse. How could board members vote to accept the reserve study if they didn't ALL have the request for proposal specs? Our governing documents require the following review of request for proposal on expenditures. How, if the RFP wasn't in the office, did your full board - each and every member, ever get the information they needed to vote to accept the reserve study, and assign reserve percentages? "Expenditures in excess of $2,500 but less than $5,000 can only be made after Board approval. These expenditures require a scope of work to be prepared prior to being submitted to the Board. The scope of work will specify: a) why the work is to be done; b) exactly what is to be accomplished by the expenditure; and c) the measurable results from the work. It is desirable to secure three or more bids for this work; however, if not practical, the Board may accept a single bid for the work. (Rev. 6/16/15)" An HOA legal article states, Directors must exercise reasonable diligence in following through and carrying out the responsibilities assumed by or assigned to them under the governing legal documents. Generally, directors must remain informed about the community association’s business at all times, be knowledgeable about the legal documents governing the affairs of the association, and attend and participate in the association meetings. Directors may be held responsible for obtaining and reading the minutes of those association meetings the director was unable to attend. Directors must also vote against actions taken or adopted by the Board of Directors that they are in disagreement with and record their disagreement in the meeting minutes. Failure to perform any of these duties in a reasonably diligent and prudent manner could expose the director to liability to homeowners for breach of fiduciary duty."
I reviewed what I was told was the contract in January 2013. About a year prior, we were told that if the board didn't assign reserves we would face problems, with either the audit, or our taxes. I don't recall which, but I believe it was a set up to use one board member's figures. I had reviewed the last audit administrative report and it wasn't mentioned. We'd been paying taxes for years, and it wasn't mentioned in the past. What we didn't know at the time was, almost immediately, the board began to use this formula to distribute funds into reserves, monthly. There was no real foundation to the appropriations, a lame excuse, but now we have reserves assigned accordingly.
From the contract, "(CONTRACTOR - I won't name) will assume, unless otherwise advised by client, that all reserve assets have been designated and constructed properly and each estimated useful life will approximate that of the norm per industry...." In signing that contract your board lied on paper, and violated the contract. The WPA doesn't have any of that. No former reserve study, as a building block. No experts EVER out here to assign the life of anything! Our reserves were assigned, without realistic formula or backup. They may have been based on a study by board members of past expense, but what is that worth? It doesn't speak to life of asset, or have a solid foundation. Take roads for instance. In 2011, we spent almost $30,000 on an unlicensed, uninsured, contractor. Many on this board justified it, and knowingly let it move forward. Is this how the board prepared their information for the only study we ever had?
In 2013 when I was doing this review I ran into a board member in the office. I asked if I was correct in stating that any assets that didn't have a proper reserve study background and foundation, would cost us beyond the contract, if the vendor had to create that information? The board member said that was how he read it. Basically, we don't have anything solid on any of our assets. I don't believe we have a single asset, that has the appropriate documentation.
At that time, more information came my way, from two different, credible sources. When I can't, or won't provide documents, The Wedgefield Examiner calls the information - RUMOR. That is what I called it then. Turns out, it was credible information. First, the contract President Walton signed, was not the contract the board approved. Next, a board member stopped payment on the check written to the contractor. Was I concerned? YES!!!! I was afraid we are were headed to another half baked job, and we were! I had a question during the 2017 WPA annual meeting. It reinforces what I just stated, and some of the other areas in this article. I did a write up of the annual meeting immediately after. Here is a portion of what I reported. "Back to my own last question to the board. I asked the board how they could appropriate money to the reserves according to the reserve study, when according to president Walton's answer to a resident question (not mine) at the time that the canals were included in the proposal, but not the final reserve study. President Walton didn't recall that, and they'd have to look into it. This is a long subject which will require a lot of documented research. I have the information, and I went to the office after the reserve study was approved, and reviewed it, took notes, and reported on it, on the blog with documentation, at the time. So for now, I'll present to you the rest of the story as it relates to this question, by posting what I emailed a resident last night. Here it is:
There is something smelly there when I had questions after, and quoted Jacky Walton about his answer at the time of the reserve study completion when he was asked if the canals were in the study, and Jacky answered that they were in the proposal, but not the final. Larry jumped in and said there were TWO SETS of finals. I requested and reviewed the final way back then, and the company had stated clearly that the board didn't want the canals in the study."
Don't let this board add - enhance or update a corrupt reserve study. Suggest they start again on a real, honest reserve study.
Remember, I wrote the board and requested the opportunity to review the contract, proposals, and RFP (request for proposal). I was provided the contract, and the responses to the RFP. The RFP was not in the file. I was told that William Douglas (Short lived management company) sent out the RFP and the board didn't have it. This is just the beginning of a list of problems that have surfaced during the early months of reserve study, at the January 15, 2013 board meeting.
Why is it a problem? When did your board verify for themselves that the RFP detailed all the necessary specifications and information, for our project? Our first reserve study should literally lay the foundation for our reserves. It is always important for this process to be competitive, but this isn't the time to go cheap, if it impacts credible results. Is cost, not enough money, why the didn't really want to know what the RFP, representing our needs, looked like? You get what you pay for, and the time you are willing to invest to see that your project is done correctly, start to finish. It would be the same as you asking a contractor to bid to build something, and not knowing what specs he was using to bid. Things only go from bad, to worse. How could board members vote to accept the reserve study if they didn't ALL have the request for proposal specs? Our governing documents require the following review of request for proposal on expenditures. How, if the RFP wasn't in the office, did your full board - each and every member, ever get the information they needed to vote to accept the reserve study, and assign reserve percentages? "Expenditures in excess of $2,500 but less than $5,000 can only be made after Board approval. These expenditures require a scope of work to be prepared prior to being submitted to the Board. The scope of work will specify: a) why the work is to be done; b) exactly what is to be accomplished by the expenditure; and c) the measurable results from the work. It is desirable to secure three or more bids for this work; however, if not practical, the Board may accept a single bid for the work. (Rev. 6/16/15)" An HOA legal article states, Directors must exercise reasonable diligence in following through and carrying out the responsibilities assumed by or assigned to them under the governing legal documents. Generally, directors must remain informed about the community association’s business at all times, be knowledgeable about the legal documents governing the affairs of the association, and attend and participate in the association meetings. Directors may be held responsible for obtaining and reading the minutes of those association meetings the director was unable to attend. Directors must also vote against actions taken or adopted by the Board of Directors that they are in disagreement with and record their disagreement in the meeting minutes. Failure to perform any of these duties in a reasonably diligent and prudent manner could expose the director to liability to homeowners for breach of fiduciary duty."
I reviewed what I was told was the contract in January 2013. About a year prior, we were told that if the board didn't assign reserves we would face problems, with either the audit, or our taxes. I don't recall which, but I believe it was a set up to use one board member's figures. I had reviewed the last audit administrative report and it wasn't mentioned. We'd been paying taxes for years, and it wasn't mentioned in the past. What we didn't know at the time was, almost immediately, the board began to use this formula to distribute funds into reserves, monthly. There was no real foundation to the appropriations, a lame excuse, but now we have reserves assigned accordingly.
From the contract, "(CONTRACTOR - I won't name) will assume, unless otherwise advised by client, that all reserve assets have been designated and constructed properly and each estimated useful life will approximate that of the norm per industry...." In signing that contract your board lied on paper, and violated the contract. The WPA doesn't have any of that. No former reserve study, as a building block. No experts EVER out here to assign the life of anything! Our reserves were assigned, without realistic formula or backup. They may have been based on a study by board members of past expense, but what is that worth? It doesn't speak to life of asset, or have a solid foundation. Take roads for instance. In 2011, we spent almost $30,000 on an unlicensed, uninsured, contractor. Many on this board justified it, and knowingly let it move forward. Is this how the board prepared their information for the only study we ever had?
In 2013 when I was doing this review I ran into a board member in the office. I asked if I was correct in stating that any assets that didn't have a proper reserve study background and foundation, would cost us beyond the contract, if the vendor had to create that information? The board member said that was how he read it. Basically, we don't have anything solid on any of our assets. I don't believe we have a single asset, that has the appropriate documentation.
At that time, more information came my way, from two different, credible sources. When I can't, or won't provide documents, The Wedgefield Examiner calls the information - RUMOR. That is what I called it then. Turns out, it was credible information. First, the contract President Walton signed, was not the contract the board approved. Next, a board member stopped payment on the check written to the contractor. Was I concerned? YES!!!! I was afraid we are were headed to another half baked job, and we were! I had a question during the 2017 WPA annual meeting. It reinforces what I just stated, and some of the other areas in this article. I did a write up of the annual meeting immediately after. Here is a portion of what I reported. "Back to my own last question to the board. I asked the board how they could appropriate money to the reserves according to the reserve study, when according to president Walton's answer to a resident question (not mine) at the time that the canals were included in the proposal, but not the final reserve study. President Walton didn't recall that, and they'd have to look into it. This is a long subject which will require a lot of documented research. I have the information, and I went to the office after the reserve study was approved, and reviewed it, took notes, and reported on it, on the blog with documentation, at the time. So for now, I'll present to you the rest of the story as it relates to this question, by posting what I emailed a resident last night. Here it is:
There is something smelly there when I had questions after, and quoted Jacky Walton about his answer at the time of the reserve study completion when he was asked if the canals were in the study, and Jacky answered that they were in the proposal, but not the final. Larry jumped in and said there were TWO SETS of finals. I requested and reviewed the final way back then, and the company had stated clearly that the board didn't want the canals in the study."
Don't let this board add - enhance or update a corrupt reserve study. Suggest they start again on a real, honest reserve study.
