2018 DECLARATION & ARTICLES OF INCORPORATION VOTE. Various photos courtesy of Renee Steinpreis

Transcription

1 2018 DECLARATION & ARTICLES OF INCORPORATION VOTE Various photos courtesy of Renee Steinpreis

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3 COOPER COMMUNITIES (original developer)

4 HOW DOES THE CCI MODEL CURRENTLY WORK? For Profit CCI Buys Land Has option to Develop Land* Sells Land Makes a Profit *Plats lots, contributes towards infrastructure, roads and amenities and builds those costs into the sales price

5 How does the CCI/HSV Model Work? For Profit CCI Buys Land Has Option to Develop Land* Sells Land Makes a Profit D E C L A R A T I O N Not for Profit HSV Maintains Investment Provides Services Contributes to Cost of Infrastructure & Amenities Manages the Association Receives Assessments & Fees No Profit *Plats lots, contributes towards infrastructure, roads and amenities and builds those costs into the sales price

6 EXAMPLE: MOTOR HOME PARK For Profit CCI Supplemental Declaration Sells Land Makes a Profit D E C L A R A T I O N Not for Profit HSV Contributes $3.85M to Cost of Infrastructure* Provides Services Maintains Investment Manages the Association Receives Assessments* & Fees and 50 lots = $39k, or 98+ years for POA to recover, with no additional spending to repair and maintain

7 THE DECLARATION AMENDMENTS PROTECT OUR RIGHTS For Profit CCI Adds Land at Will* Develops Land at Will* Sells Land at Will* Makes a Profit D E C L A R A T I O N Not for Profit HSV

8 Cooper Communities (CCI) CURRENT RIGHTS & RESPONSIBILTIES Declarant rights The Declarant is the person or entity that creates the original governing documents for the Association, often keeping a great deal of power and voting rights for development so a return on that investment can be achieved without interference from homeowners (POA). CCI may sell these rights to anyone they want at any time. Three main categories: voting, real estate owned (reserved, Class B property, Class A property) and ability to expand HSV boundaries and complete development Voting: Reserved properties are those designated as such on any recorded subdivision plat and have no votes or assessments When CCI brings reserved properties into the Village through a Supplemental Declaration, CCI creates additional voting rights (Class A & Class B) for however many lots CCI plats on those parcels Class B properties have 10 votes each, Class A properties have 1 vote each. As of July, CCI owned approximately 70 lots with voting rights. This could change depending on reserved property activities or property sales and acquisitions. Current majority vote of each class voting language allows a veto on assessment votes and the sale of common property

9 Cooper Communities CURRENT RIGHTS & RESPONSIBILTIES Property Owned CCI owns over 1200 acres in and adjacent to Hot Springs Village. CCI was originally responsible for road construction and the POA was responsible for water and waste water construction. In December 2009, the entities signed an agreement that transferred certain paving responsibilities to the POA in exchange for certain parcels of property (i.e. Woodland s auditorium site). The POA became responsible for constructing roads in platted subdivisions existing at that time. CCI remains responsible for constructing roads in any subdivisions it plats in the future. CCI owns the utility easements and cell tower sites, which provide revenue streams to CCI. CCI currently has the sole right to develop at will on reserve property or to sell those rights to another party. As allowed by CCI, the POA s trail system passes through CCI reserved property. Right to add additional property Besides currently identified reserve property, CCI has the sole right to purchase new property and bring it into the Village, similar to how cities might annex rural areas. In our case, the POA would incur certain infrastructure costs which would take many years of assessments to recover. Unlike cities, the POA does not receive tax revenue to offset development. It only receives assessment revenue and amenity fees.

10 CCI Reserve Property Example Article II, Section 2(a) of the Declaration currently reads: Additions in Accordance with a General Plan of Development. The Developer, its successors and assigns, shall have in future stages of the development the right but not the obligation to bring within the plan of this Declaration additional properties, regardless of whether or not said properties are currently owned by the Developer CCI has signaled their intention to sell their HSV parcels; i.e. recent Diamante sell, Motor Coach and lodge negotiations

11 2018 VOTE

12 2018 Declaration & Articles of Incorporation VOTE Amendments are designed to provide a stronger foundation for property owners to control and influence the value and future of Hot Springs Village. Most comprehensive changes to the community s governing guidelines since the Village was established in 1970

13 AMENDMENTS

14 PROTECTING PROPERTY OWNER RIGHTS AMENDMENT REFERENCE CATEGORY GOAL EXAMPLE Art. III Sec 2, Voting Rights Voting To give all property owners an equal vote, regardless of class. CCI has sole authority to add platted lots, thereby allowing 10 votes each on all lots platted with assessments only beginning when the lot is under contract or sold. Art. VIII, Sec 3 (i) Extent of Members and Associate Members Easements Voting To provide all members in good standing an equal vote with regard to dedicating or transferring common property and remove the veto of one class over the other. Instead of a majority of each class, a majority of the combined class A & class b member will determine such decisions. Art. X, Sec 4-6 Covenant for Maintenance Assessments Voting To secure the right of property owners to equally determine funding mechanisms and remove the veto of one class over the other. Instead of a majority of each class, a majority of the combined class A & class b member will determine such decisions.

15 PROTECTING PROPERTY OWNER RIGHTS AMENDMENT REFERENCE CATEGORY GOAL EXAMPLE Art. II Sec 2-3, Additions to Existing Property Development & Financial Decisions To ensure additional property and infrastructure obligations are not imposed on the Association without its consent Motor coach resort negotiations; 3 rd 9 at Isabella following completion of 9 courses Art. VI, Sec 1 Water & Waste Water Construction & Maint. Development & Financial Decisions To reduce unplanned financial liability. CCI s negotiation with hotel developer on Hwy 5 parcel. Reserve property inside the boundaries Art. VI, Sec 2 Roadway Construction & Maint. Development & Financial Decisions To reduce unplanned financial liability. Road beds under culverts Art. VI, Sec 3 Lakes, Golf Courses, Permanent Parks and Recreation Plots Development & Financial Decisions To reduce unplanned financial liability. Reserved property available for sale and development, 9 golf courses and 12 lakes to support Art. VIII, Sec 3 (new) Extent of Members and Associate Members Easements Development & Financial Decisions To permit minor common property parcels to be sold or abandoned and protect approval rights of adjacent property owners. Traffic signal improvements planned by DOT required a condemnation suit for.02 acres.

16 PROTECTING PROPERTY OWNER VALUE & RIGHTS AMENDMENT REFERENCE GOAL EXAMPLE Art. VIII, Sec 3(c) Extent of Members and Associate Members Easements Protecting Property Owner Rights To clarify duration of the penalty. Art. X, Sec 3 Basis and Maximum of Annual Assessments Protecting Property Owner Value To clarify annual assessment increases and stabilize financial planning. Art. XI, Sec 1, Architectural Control Committee Protecting Property Owner Value Roads built to specification and homes being built to consistent published standards Art. XIV, Section 1 & 6, Duration Protecting Property Owner Rights To allow property owners to make amendments at any time and determine the effective date of said amendments. Articles of Incorporation, Nonprofit Act of 1993 Protecting Property Owner Rights To provide clear and complete rules for corporate governance and establish modern standards of conduct for directors and officers.

17 OVERVIEW OF ASSESSMENT INCREASE 5% is a maximum. Through the annual budgeting process, Board and leadership will evaluate whether some, all, or none of the increase is needed in a particular year. Consider current Southern Region CPI implications. For 2019, that amount is 2.9%. There is no cap. Review pages in the CMP for discussion surrounding Consumer Price Index vs. Construction Price Index. The Construction Price Index has risen an average of 4.6% per year in Southern states. 10 years from now, if maximum increases are approved each year, improved assessments will be $106 per month and unimproved will be $61 per month. Most similar communities, even those with far fewer amenities than ours, are paying more than that today. $83.18/mth $106.15/mth $1, $66.50/mth $ $68.42/mth $ $ $38.40/mth $ $39.50/mth $ $48.03/mth $ $61.30/mth $ ANNUAL IMPROVED ANNUAL UNIMPROVED Current % CPI-2019 After 5 Years After 10 Years-2028

18 THE LIFECYCLE BETWEEN DEVELOPERS AND ASSOCIATIONS SHOULD NOT SURPRISE HSV. THROUGH PROPER PLANNING WE CAN AVOID THE HARDSHIPS ENDURED BY OTHERS BEFORE US AND BETTER CONTROL OUR FUTURE. Creekmore Missouri Glade Springs Virginia Sienna Lakes Little Rock, AR Cherokee Village Arkansas Bella Vista Arkansas Savanna Lakes South Carolina Tellico Village - Tennessee

19 PROTECTING PROPERTY OWNER VALUE & RIGHTS AMENDMENT REFERENCE GOAL EXAMPLE Art. VIII, Sec 3(c) Extent of Members and Associate Members Easements Protecting Property Owner Value To clarify duration of the penalty. Art. X, Sec 3 Basis and Maximum of Annual Assessments Protecting Property Owner Value To clarify annual assessment increases and stabilize financial planning. Art. XI, Sec 1, Architectural Control Committee Protecting Property Owner Value Roads built to specification and homes being built to consistent published standards Art. XIV, Section 1 & 6, Duration Protecting Property Owner Rights To allow property owners to make amendments at any time and determine the effective date of said amendments. Articles of Incorporation, Nonprofit Act of 1993 Protecting Property Owner Rights To provide clear and complete rules for corporate governance and establish modern standards of conduct for directors and officers.

20 BENEFITS OF 1993 ACT Provides members with control certain governing document changes such as those that alter rights, privileges, preferences, restrictions or conditions of a member as to voting, dissolution, redemption or transfer of memberships; and Board composition matters. Provides clear and complete rules for corporate governance and action which complement the Association s existing articles of incorporation and bylaws, including: Guidance on the conduct of members meetings Guidance on extraordinary matters such as corporate dissolution Guidance regarding the procedures for amending the governance documents Provides modern standards of conduct for directors and officers, including Standards for measuring the duties of care and loyalty Guidance on the indemnification of officers and directors *NOTE: THERE WERE UPDATES TO THIS LAW IN IF YOU ARE READING GUIDANCE PRIOR TO THAT DATE, THE INFORMATION MAY HAVE BEEN ALTERED OR SUPERCEDED.

21 VOTE REQUIREMENTS OF 1993 ACT Requires approval by a majority of all members to adopt, originally Requires approval by the lessor of a majority of all members or 2/3 of those voting at a meeting where a quorum (majority) is present to make future changes Requires same membership vote on certain bylaws that are designed to protect member rights

22 VOTING

23 VOTING DETAILS Estimated members in good standing = 23,500 (9,000 improved; 14,500 unimproved) and approximately 3,200 POA owned lots Must have a majority for a Declaration quorum (approximately 11,751 without POA lots or 13,351 with POA lots) Declaration amendment requires 2/3 affirmative vote. Example: 12,000 cast a vote and no POA lots required, 8,000 needed to pass Articles of Incorporation vote requires approval by a majority of all members in good standing Class A & B votes are combined on Declaration votes. The Association s bylaws specifically allow proxy voting so in-person voting is not required Each proposed amendment will be voted on individually but as a group they provide a strong foundation for property owners to control and influence the value and future of the community The amendments were prepared by Mitchell Williams attorneys following discussions with board and management about goals to protect the Association s value and limit future liabilities imposed by for-profit entities

24 COMMON PROPERTY AND LOTS OWNED Your Association owns all common property (i.e. buildings, recreation facilities, golf courses, lakes, roads, water and waste water facilities) and approximately 3,200 residential lots. There are around 7,000 additional lots at varying stages of delinquency with the Commissioner of State Land. Approximately 10 years ago NRPI (which operated in several CCI developments) and their successor entities and buyers began defaulting on assessments and property taxes.

25 COMMON PROPERTY AND LOTS OWNED

26 TIMELINE

27 Timeline Future Town Halls in HSV: October 29 Regional Meetings throughout September Oklahoma City (12 th ), Schaumburg (13 th ), Little Rock (19 th ), Memphis (20 th ), Arlington (26 th ), Bossier City (27 th ) Proxies Mailed: October 26, 2018 Ballot & Final Proxy Count: November 30, 2018 Effective Date of Articles of Incorporation: January 2019 Declaration Amendment s 1 Year Notice Period: April 2019 Effective Date of Declaration: April 2020

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29 THE FUTURE OF THE VILLAGE IS IN YOUR HANDS. VOTE YES TO INDEPENDENCE AND A PROSPEROUS FUTURE!