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RE: Why the Rossmoor GRF Should Be Declared An Association, No. 4, "Assessments"

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  • Apushark
    Jack, what incentives can you think of that might motivate the Board to change? What would convince the boards of the Mutuals? As we have learned from the
    Message 1 of 21 , May 15, 2013



      what incentives can you think of that might motivate the Board to change?  What would convince the boards of the Mutuals?


      As we have learned from the Events Center decision making, neither polite pleas by residents nor shrill broadsides and ad hominem attacks seem to motivate the GRF Board to act in accordance with the our wishes.


      Seems to me that unless we can demonstrate that change is to the advantage of the powers that are, the probability of success is even considerably less than the chances of Rossmoor being destroyed by an earthquake.


      I happen to disagree strongly with Fred, but do not think he should be shut up by ridicule and/or personal attacks.  I do recognize his underlying concerns:  Are we complaining because we have too much time on our hands, or because our age makes us more likely to be disgruntled and cantankerous, or because we elected incompetent directors, or because we want to trade one group of leaders with one preferred by a very vocal but also very small minority?” 


      Carl Ahlemeyer


      From: IRVinforms@yahoogroups.com [mailto: IRVinforms@yahoogroups.com ] On Behalf Of Jack Archer
      Sent: Sunday, May 12, 2013 6:40 AM
      To: IRV; Rossmoor chat group
      Subject: [IRVinforms] Why the Rossmoor GRF Should Be Declared An Association, No. 4, "Assessments"



      The previous note, No. 3, May 11, 2013, dealt with residents' right to veto certain actions by an association board and characterized this power as quite broad.  This note concerns the limitations that the Act imposes on a board's capacity to increase regular and special assessments.


      Before a board may increase the regular assessment in any fiscal year, it must comply with certain requirements set forth in section 5300 of the Act.  If it does not comply, it may not increase the assessment.


      Generally, the board must first prepare an operating budget, showing estimated revenue and expenses on an accrual basis, meet several detailed requirements concerning the association's reserves, and disclose outstanding loans (identifying the payee, interest rate, amount outstanding, annual payment, and the date the loan is scheduled to be re-paid).


      The "reserve" requirements the board must meet before increasing a regular assessment are of particular interest.  They are specific and detailed, requiring a summary of the association's reserves; a statement whether the board has determined to defer or not carry out repairs or replacement of property; whether special assessments will be required, including amount, starting date and duration of the assessment; a statement of the methods the board will follow to fund reserves; and a general statement describing the procedures used to calculate and establish reserves.


      In the alternative, rather than comply with these requirements, the board may obtain the majority vote of a quorum of members to approve an increase in a regular assessment.  Section 5605


      I believe that you will agree that these are substantial requirements to meet before an increase in a regular assessment may be approved by an association board.  The issue of reserves will be covered in another note, although I may observe that based upon its current practice, the GRF Board would have to make major changes and improvements in the manner in which it handles "reserves" generally before it would be able to comply with these requirements.


      In addition, the Act prohibits an increase in a regular assessment "that is more than 20 percent greater than the regular assessment for the association’s preceding fiscal year" without the "approval of a majority of a quorum of members" in a special vote (section 5605).


      Finally, the Act also prohibits "special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members" (section 5605).


      Regular monthly and special assessments are a contentious issue at Rossmoor, as they are at any association.  The Act establishes a number of strict budget and reserve disclosure requirements that association boards must meet before assessments may be increased.  These requirements are designed to protect residents from sudden and unanticipated increases, and to establish limits which may be exceeded only if a majority of residents approve.


      At Rossmoor, we lack these protections provided by the Davis-Stirling Act.



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