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Dakota Ridge Board of Directors Meeting Minutes
October 26, 2022 at 8:30am via Zoom
Present: Ron Lemieux, Holly Van Deursen, Carrie Hayden, Scott Prochazka, Bill Noyes, Andrea Wilhelm (CPG), Macy Lindsten (CPG)
Andrea called the meeting to order at 8:35am and the first order of business was the 2nd quarter financial review. Treasurer Holly Van Deursen provided the following highlights:
2nd Quarter Financial Review
Operating Budget YTD
• Operating income is approximately $20,000 over YTD due to the water leaks and lower than budget water user fees. The Association will likely have to use reserves to help cover the repairs and possibly reclassify some of the leak expenses to capital.
• Andrea shared that 2nd quarter water usage fees were approximately $9000 under budget.
• Operating expenses overall are ~$12,000 over budget. Items with variances of at least $1000 are:
o Legal Fees: ~$5,000 under YTD budget, as spending has not begun on covenant review
o Snow Removal: ~$1,500 over YTD budget, due to late snowfall
o Sign Repair: ~$2,400 under annual budget, as requirements have been light
o Weed Spraying/Mowing: ~$1,000 over YTD budget, as substantial weed mitigation was completed
o Water System Operations: ~$4,800 over YTD budget due to Civil Design invoices, chemicals, and increased YVEA invoices from the pump house electric
o Water System Repair/Maintenance: ~$12,400 over YTD budget due to September leak
Balance Sheet
• Capital reserve balance is ~$420,000 versus guideline of at least $300,000, and will draw down further as this year’s projects are completed and the October leak is expensed.
• ~$2,500 over the FDIC limit of $250,000 at Yampa Valley Bank
Capex
• Capex spend to date is ~$169,000 versus a plan of ~$180,500. Roads are approximately $7,000 over budget due to higher cost of mastic crack-filling, and water is likely to exceed its $25,000 plan after we consider the two, unplanned water repair projects.
Ron asked if YVEA was still charging the surcharge fees on commercial accounts. Andrea confirmed this was still occurring. Scott asked about the current interest rate on the Yampa Valley account and wondered if the Board should consider other investment options such as CDs for a better return rate. Andrea explained that the current reserves are in a variable money market sweep account and screen shared YVB’s current interest rates for accounts vs. CDs. Holly felt that the ~$300k minimum balance should not be held for any longer than 6 months and the current 6 month CD rates were lower than the current variable money market rates. The Board agreed not to move money at this time but asked Andrea to check with Yampa Valley Bank about investing in treasury bonds.
Water System
The next order of business was an update on the water system and 3rd quarter water loss. Andrea reported that the loss was slightly worse than 3rd quarter of the prior year. Water pumped was similar to 3rd quarter last year but roughly 1M gallons less were metered through the new smart meters, so the loss percent was higher. A meeting was held in September with Civil Design Consultants (CDC) and Native Excavating to discuss pressure testing and revisit the DIP replacement project near the intersection of Aspen Ridge and Agate Creek roads. Since the second leak occurred, the Board decided to move forward with the replacement project as soon as possible but it will likely be next spring based on contractor schedules and the short time frame before winter. With the help of CDC, Andrea will be sending the revised RFP to Native Excavating, Inc. 8 Excavating, Duckels Construction, and Anson Excavating for bids. Pressure testing will continue as planned when Native can squeeze it in. Andrea also reported she had reached out to Merrick Engineering after the last Board meeting multiple times but Ron Dvorak retired and she received no response from anyone else at the firm. She stated she could ask another Wyoming based company called Sunrise Engineering to potentially provide a third opinion on the water loss issue. The Board felt pressure testing should be completed prior to seeking another opinion but asked her to investigate Sunrise’s proposed costs in the meantime.
Roads
The next topic on the agenda was roads. Andrea said she was having trouble connecting with Brian Len with NWCC for answers to Holly’s questions in regards to financial projections but hope to have more information in time for spring budget preparation. She reminded Native that the bid for ditch cleaning and culvert installation on Upper Trail Ridge was signed back in July with hopes of completing the project before winter. Native confirmed in writing it was still on their agenda this year but the rock retaining wall would have to take place next spring/summer and chip seal should not take place until after that project is completed. The Board felt that 5/8” chip seal was still the best plan for Trail Ridge Road but would consider 3/8” for the rest of the roads in the future. Lastly, Andrea reported that the asphalt was repaired from the second water leak and said she made a note to have new gravel added around the mailbox pad in the spring where there is currently a drop off. Holly noted the Board may need to consider an increase in reserve dues to cover costs for these 2023 water and roads projects.
Water Court Application
Next, Andrea reported on an upcoming Due Diligence review for a Conditional Water Right that was first granted to Dakota Ridge in 1995, renewed in 2016, and currently up for review in November. According to the Association’s water attorneys (Moses, Wittemyer, Harrison & Woodruff) as long as the pumps in the Dakota Ridge water supply well were replaced/upgraded and now have the capacity to divert at a rate of 250 gpm or more – which was confirmed by CDC - the Association should be eligible to convert those water rights to absolute versus conditional. Andrea has another meeting scheduled next week the attorneys and CDC to continue gathering the necessary information before the deadline of November 30th.
Covenant Review Committee
The notices of the AOC amendments were certified mailed to first lienholders and which started the 60 day waiting period before the Articles can be formally amended with the state of CO. In the meantime, Paul Sachs agreed to take care of the public notice in the newspaper. Ron summarized some highlights from last week’s CRC meeting regarding detached structures. He reported that most members on the committee do not want to approve detached structures or allow variances for greenhouses. He also pointed out that what the committee ultimately recommends is likely to be approved by owners so the committee is still working towards a consensus. Carrie recommended the Board consider Article 7.3 be removed from the covenants and relocated to the ARC Guidelines. She also proposed that ARC should be comprised of up to five members including one board member and ideally another member with real estate experience. She further noted that the Guidelines will need to be rewritten as a subsequent project and she has been reviewing samples provided by Andrea from other comparable HOAs.
Revisions to Policy & Procedure for Collection of Unpaid Assessments
Andrea presented the final agenda item in regards to updating the Collections Procedures outlined in the Dakota Ridge Responsible Governance Policies. Following up on a recent email, she reminded the Board that House Bill 22-1137 was recently signed by the CO legislature in August imposing some very strict limitations related to enforcement and collection procedures – the most notable change being that unless the violation is a threat the public safety, the association cannot assess more than one $500 fine. Associations can no longer foreclose on fines related to covenant violations but can still foreclose on past due assessments after two 30-day notices to cure, a Board hearing and notice of decision, an 18 month payment plan, and no more than 8% interest. The primary implication for associations is that a $500 fine is not likely to deter many owners from blatant violations and small claims court is the only option to force compliance. Andrea circulated a first draft of a revised policy compliant with this new legislation prior to the meeting but noted the actual monetary fines were not outline within the policy. This may have been intentional so that if these limitations are overturned or changed, the fine schedule can revert to what is outlined in existing HOA documents. The Board asked for more time to review the policy and Ron requested that all the Board members to send their questions to Andrea by the end of the week so she could work with Paul Sachs on revisions if necessary.
The next meeting date was set for February 1, 2023 at 8:30AM. The meeting adjourned at 10:21am.
Recorded by,
Macy Lindsten
Commercial Property Group
