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Dakota Ridge Board of Directors Meeting Minutes
July 22, 2022 at 8:30am via Zoom

Present: Ron Lemieux, Holly Van Deursen, Carrie Hayden, Scott Prochazka, Andrea Wilhelm (CPG)

Andrea called the meeting to order at 8:35am and the first order of business was the 1st quarter financial review. Treasurer Holly Van Deursen provided the following highlights and reported the finances were looking good for the first three months of the fiscal year:

Operating Budget YTD
• Revenue is approximately equal to budget, with water user fees about $1000 over (a bad thing from a water usage standpoint) offset a bit with lower ARC fees. Annual fees collected from all owners.
• Operating expenses overall are ~$3000 under budget. Items more than $1000 off budget levels are:
o HOA management fees: ~1000 over YTD budget due to covenant review support
o Legal fees: ~$5000 under YTD budget, as spending has not begun on covenant review.
o Snow removal: ~$1500 over YTD budget, due to late snowfall
o Sign repair: ~$1000 under annual budget, as requirements have been light
o Water system operations: ~3000 over YTD budget due to $1800 tank cleaning and a $1200 annual software charge for the pump house meter
o Water system repair/maintenance: ~$2000 under YTD budget, as no requirements have arisen (Andrea will reclassify the aforementioned $1800 tank cleaning to this account)

Balance Sheet
• Capital reserve is ~$507,000 versus guideline of at least $300,000, and will draw down as we complete this year’s projects
• ~$2000 over the FDIC limit of $250,000 at Yampa Valley Bank, and $5000 over in savings/reserve account at Mountain Valley Bank

Capex
• Capex spend to date is ~$88,700 versus a plan of ~$180,500 all towards road improvements (crack-filling, sealcoating, and NWCC reports)

Scott asked if the Board felt there was enough money in reserves to cover the repaving in 10 years and Holly provided a helpful summary of the minimum reserve baseline of $300K established by a previous Board of Directors. That threshold was based on a “worst case scenario” of needing to replace a water tank at the estimated expense of $600K with the assumption that owners could cover the difference through increased reserve dues or a special assessment. Holly further elaborated the Board members from 3-5 years ago did not wish to assess owners now for road repaving that would occur more than 10 years in the future and instead felt the funding could be assessed 3 to 5 years ahead of the repave. After further discussion, the current Board members felt this approach should be reviewed during next year’s budgeting process.

The next order of business was an update on the water system and 2nd quarter water loss. Andrea reported that the loss was slightly worse than 2nd quarter of the prior year but given that the smart meters were not installed last year, this could have been a result of calibration issues. She also reported that the acoustic leak detection testing on the main lines earlier in the week did not produce any findings. Testing of the service lines is still a possibility but as previously discussed, this is only effective on copper lines not plastic/PVC lines. The Board asked Andrea to circle back with Ron Dvorak, the Denver based water engineer who had provided a second opinion on the loss issue in the spring of 2021. At the time, he proposed four possibilities in his memo dated 2/16/21 (two of which have now been eliminated) and he ultimately believed the loss to be implied loss related to metering. After three quarters of data with smart meters data, the Board would like him to revisit his analysis.

The next topic on the agenda was roads. Andrea indicated that Rocky Mountain Asphalt had been crack-filling in the neighborhood earlier in July and hoped to perform the sealcoating by end of August. Next, she said Brian Len with NWCC had scheduled an on-site meeting last week with Andy Volk from Native Excavating to discuss Upper Trail Ridge Road and subsequently provided three bids for consideration. The first was a bid from Native for ditch cleaning for $13,290, culvert pipe at $160/foot (estimated 50ft) and rock wall installation at $65/sf. The second was a bid from GMCO for chip sealing the entire road - estimated at $31K including mobilization. The third was a bid from United Asphalt for a full FDR repave with 4” overlay totaling $335K. Brian has advised that it would be much more economical to reach out to the Lot 71 lot owners to see if they would allow some grading on the slope above the road in lieu of, or to reduce, the height of the proposed rock walls. Andrea was asked to follow up with those owners to inquire about their approval of such work. In the meantime, the Board unanimously approved the ditch cleaning and culvert pipe in the Native bid as well as the GMCO and chip and seal bid. Andrea explained that the former needed to be completed before the latter therefore the chip and seal might have to postponed to the summer 2023. She was also asked to inquire about road closures for both in order to provide the lot owners with as much notice as possible.

Next, Andrea reported that the Covenant Review Committee was scheduled for their first meeting with the association attorney, Paul Sachs, later that afternoon in order to ensure they were on the right track and to ask a series of questions about how to proceed. Ron stepped in to provide a summary of the first lienholder approval clause in the Articles of Incorporation. After much back and forth with Paul Sachs, Ron said he felt it was important to amend Article VI F of the AOCs prior to the proposed Covenant amendments and also felt this amendment should remove the first lienholder approval from Article V B (Borrowing) in the case of an emergency. Andrea was asked to see if Paul and Ron could be available 15 minutes prior to the CRC meeting that afternoon during which Ron intended to update the committee members on this issue. After further clarification, Paul confirmed the borrowing amendment could be done at a special meeting where a quorum was established and two thirds of owners present or present by proxy voted in favor. In contrast, the amendment to Article VI F would require written ballots affirming two thirds of all owners had voted in favor. Following both votes, notices of the AOC amendment would be mailed to first lienholders during a 60 day waiting period along with a published notice in the newspaper in order to abide by CCIOA provisions for Covenant amendments. To avoid a piecemeal amendment process as much as possible, Ron would prefer that both of these amendments be voted on at the same time and in the same manner (requiring written ballot approval by two thirds of all owners.) Ron believes that a HOA meeting and/or Zoom Call will be required in any event to answer Owner questions regarding the changes before the vote. Since both amendments relate to the elimination of the first lienholder approval requirement, he suggests that we vote on these two matters together and before the HOA is asked to consider any changes that might arise from the current CRC review. A final decision on how to handle the first lienholder requirements will be made after we receive the proposed language from Paul Sachs.

The last order of business was a discussion of the Firewise Designation as recommended by one homeowner as well as the question of whether to mow the south meadow common area as recommended by another homeowner. The Board did not believe there was compelling evidence to mow the meadow, but did ask Andrea to seek a professional opinion from Keith Kyhl with NRSG. After some discussion about the Firewise designation and the qualification requirements Andrea had previously circulated, the Board decided to table this initiative for consideration next year once the covenant review process is complete and further research is conducted regarding the availability of any insurance discounts resulting from the designation. Andrea was asked to follow up with the owner who suggested this.

The next meeting date was set for October 26th at 8:30AM with October 27th as a possible alternative. The meeting adjourned at 10:10am.

Recorded by,
Andrea Wilhelm
Commercial Property Group