LAW OFFICES OF DENNIS JORDAN & ASSOCIATES, INC., P.S. A PROFESSIONAL SERVICES CORPORATION 4218 RUCKER AVENUE EVERETT, WA 98203 (425) 252-5554 (425) 258-4060 FAX March 30, 2011 Dear Members of the Chiwawa River Pines Community: I am the attorney for your fellow homeowners who wish to retain the right to continue to rent their vacation homes as "weekend rentals." As you have probably heard by now, my clients, through the Spokane Court of Appeals March 24,2011 ruling, were successful in their longstanding position that the 2008 Amendment barring residential rentals of less than six months is/was invalid from its inception. However, the "win" was bittersweet considering that the ruling was not achieved without both sides of the issue having spent a considerable amount of money toward costs and attorney fees including additional fees incurred by your Association for private investigators and for two attorneys. I had personally hoped that a ruling one way or the other would have brought an end to this litigation. Unfortunately, through an email that I received from your attorneys the same day that I received the decision from the Court of Appeals, I was advised that your Board seeks to submit yet another Amendment to the Covenants barring, this time, rentals ofless than 30 days. This letter is sent to you at the invitation of your Board to allow my clients to comment on the new proposed Amendment that we have just received. Given this short notice, I have been asked by my clients to provide this letter setting forth their position. My clients are reserving the opportunity to provide an additional response by April 6 and will mail that letter to the Association members identifying several reasons why it is in everybody's best interests to stop this litigation and, through regulation as described below, support short term rentals. First, the passage of a new amendment will only result in a new lawsuit that will again wind its way through the trial court, Court of Appeals and, if necessary, all the way to the Supreme Court. It will be years before a final decision is reached on the validity ofthis yet new Amendment assuming that it is passed. In the meantime, I am confident that the Trial Court and the Appellate Court will authorize continued rentals during the Appeal process just as they did in the current lawsuit. And I am confident that the final outcome of a second lawsuit will only result in a decision favorable to my clients. Second, while legal fees were not sought by my clients in the initial litigation, I believe that there is a firm basis for seeking legal fees in the second go around if the Amendment, if passed, is enforced by the Association Board. If I am correct, then the Association, likely through an assessment of its members, will have to pay those fees. In other words Association members could end up paying not only their attorneys fees but my attorneys fees as well.
March 30, 2011 Page 2 Third, in the long run, I also believe that the passage of such an Amendment will ultimately have a negative impact on the fair market values and the marketability of your individual properties. Notwithstanding what your Board may tell you, it is not hard to understand that in this economy where home and recreational properties are already depressed (and will be for the foreseeable future), most buyers are not and will not be willing to invest in a vacation home if they can't at least retain the right to rent out their properties to assist with payments, taxes and insurance. Without that rather large pool of buyers, the demand, and therefore the value, of your properties declines and in many cases, it declines significantly. You can check that out with any competent real estate agent or appraiser familiar with recreational properties in this area. 1 Bottom line, the more sensible and cost effective approach to the rental issue is to work with my clients to come up with a package that would regulate the rental of properties within the community that will benefit all concerned. As many of you may know, my clients have repeatedly expressed interest to come up with a regulatory plan that would address perceived problems with renters interfering with the peace and enjoyment of other owners. Many of you may not be aware that my clients did in fact make a written proposal to the Board about such a proposed regulatory scheme. However, the Board ignored them and refused to submit such a possible regulation scheme to the Association members and even refused to enter into any discussions with these short term rental owners. Instead the Board insisted on going forward with the vote to the members in September, 2008 and in my judgment did not act reasonably or responsibly. Ifthe Board had taken time to work out a regulatory scheme governing cabin rentals, this whole lawsuit and its expense would have been completely avoided. My clients will support regulations that would include a reasonable limit on the number of rental units within the community, the establishment of fines for violations of rules that are developed to assure that the community remains quiet and peaceful, and a negotiated contribution of monies to the HOA for each night that a unit is rented to assist toward HOA costs, if any, in monitoring and enforcing compliance in regulating rentals. In other words, my clients are open to many things that could be done in the form of responsible regulation. And this type of regulatory scheme will not only ensure peace and enjoyment for all property owners but it will most assuredly increase the marketability and market value of every home in the Chiwawa development. My clients remain strong and committed members to this community and the overall community welfare. They may choose to supplement this letter and if so there will be a second letter that will be mailed out to all Association members by no later than April 6. On behalf of my clients, we ask you to refrain from voting until you have received my clients' final position statement. As I mentioned above, the Board only gave my clients one and a half days to respond to this sudden decision by the Board to seek to again amend the Covenants. They are entitled to be given additional time to present any additional information that is relevant to the proposed amendment now before all Association members. Thank you. See the attached commentary as an example.
\ March 30, 2011 Page 3 s~ Dennis Jorda
Ghiwawa River Pines - Effects of Rental Ban? I Icicle Creek Real Estate Page 3 of8 ~jqg AhoutlJ.~ S!;tlIT!<!LrJ)xJ::lQmeli YQJ.!IJ::Iome'sV!!,lue Get Listings 11~Email August 16th, 2009 by GeordiS1Romer Categories: LeaYS1J1WQrtJ:!~l:tbin~, Le!!'Yenwot1!lRe1!L~st!!,tem!!'rket, L~!!'\'elJwQrthY!!'9!!,tiQnHQm~s c.ommjll}ts: lj. The Chiwawa River Pines neighborhood in Plain had a lengthy debate in 2008 about permitting vacation rentals in their neighborhood. At the time. I took the position that I thought that enforcing the existing (but unenforced) prohibition on short term (nightly / weekly) rentals would be bad for home values. My experience tells me that vacation home buyers (who drive the Leavenworth and Lake Wenatchee real estate market) prefer to have the option to rent their home when they aren't using it. Not every vacation home owner does rent their cabin, but most prefer to have that as an option. A few owners in Chiwawa River Pines wrote in.. "Many of us that did not purchase a home 5 or more years ago are paying a pretty penny tofind a vacation home in Leavenworth. While we would all likely to be indepently weatlhy, many of us look to suppliment the cost of a mortgage with nightly rental proceeds. I also believe that the values will decline since you are removing a subset of the buyers from this community. " Al Lorenz, an owner in Chiwawa River Pines, a real estate agent in Chelan, and the author of the NCW_B&(JJJ;;liJJite13log, took an opposing view. "It has really only been in the last few years that there has been this noticeable rental activity. Certainly 4 years ago I never noticed it. Now, in certain parts of the development it is a problem. I'll use my speeding analogy again, just because I didn't get caught last week doesn't mean I won't get caught tomorrow. That's also whv I don't think the values will be ne~~acted. known rentals weren't allowed. " Thefolks that bought in Chiwawa River Pines have always In September of2008 the members ofthe Chiwawa Communities Association voted to rentals for periods less than 6 months.!!ms1.!1qjhe..'-l9_9ve!.1f:!nt~ to prohibit any What has happened since then? Of the 53 homes that have sold in Leavenworth and Lake Wenatchee, only 3 were in Chiwawa River Pines. One of these homes was a bank owned property that had been foreclosed upon. http://iciclecreekrealestate.com/2009/08/ 16/chiwawa -river-pines-effects-of-rental-ban/ 3/3012011
CUfrentlythere are 184 homes for sale in Leavenworth and Lake' Wenatchee. 20 of these homes are in Chiwawa River Pines (and one ofthese was recently foreclosed upon and is now bank owned.) What do these numbers tell me? A home in Chiwawa River Pines is less likely to sell than a home in another neighborhood. 6% of the sales occurred here, but they have 11% of the homes currently for sale. At the current rate of sales, there is a 5 l/2 YEAR supply of homes on the market in the neighborhood. I think any Leavenworth or Lake Wenatchee neighborhood that is considering banning vacation rentals should consider its effect on home values and what is happening in Chiwawa River Pines. ********************************************************************************************************** Required Disclaimer NOTE: This representation is based in whole or in part on data supplied by the North Central Washington Association of Realtors or its Multiple Listing Service. Neither the Association nor its MLS guarantees or are in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the Market. ~ Like Be the first of your friends to like this. St:~'/H l? ~c:..1\-<~l Sol TF J::Q CO t.--( J--\ e ~~ f.-1f}'oe TO JrJ ls 19-er I c. l...f!i"