The Laguna Woods United Mutual Board advanced the Golden Rain Foundations Bylaw 2.1.4 onto the annual meeting of the Corporate Members after heavy redlining during its regular meeting on Tuesday, Sept. 11.
Essentially this bylaw limits and controls the parameters in which GRF may operate businesses and activities on Trust property via guidelines, according to a Village Management Services staff report.
“In my opinion, this resolution … is probably the most important resolution that you will vote on,” Director Pat English said.
The resolution details a process for obtaining Corporate Member approval, defines potential triggers and provides classes of projects that would require the approval of Corporate Members, according to a staff report.
For example, construction expenditures that exceed $500,000 or projects that increase the existing square footage by more than 1,000 square feet would require a vote by the Corporate Members.
Per the request of Director Manuel Armendariz, three items originally written to not require approval –– the renovation of the Board Room, the relocation of the gym from the second floor to the first floor and the renovation of Clubhouse Three –– were moved to require Corporate Member approval.
“Why wouldn’t we want approval for that if it’s going to involve several million dollars?” Armendiaz said about the renovation of the Performing Arts Center, formerly Clubhouse Three.
Businesses and activities that would not require approval of Corporate Members include repair, replacement or maintenance of existing improvements, assets and/or vehicles, listing streets signs and sewers.
According to a staff report, the potential for “inefficiency, waste and dispute” necessitated the resolution, though staying out of the courtroom “like last time” is a major concern raised by English.
Some terms that were defined for clarification included “total project cost,” “structure,” “modification and repurposing” as well as “demolition.”
United moved the item 10-1-0, with Director Andre Torng in opposition. It will be redlined and presented before the Corporate Members at a special meeting, scheduled for Wednesday, Nov. 14.
2019 Business Plan
United board approved a resolution to adopt the 2019 business plan that will increase members’ monthly assessment by $9.53 –– a two-percent increase when compared with the current year budget.
Overall, the 2019 basic assessment will be $578.52 per manor per month, compared with this year’s assessment of $568.99 per manor per month.
Broken out, $5.27 will be allocated for the mutual and $4.26 for GRF.
GRF’s portion will primarily fund planned wage adjustments, service enhancements in compliance, communications, and records management, including a contingency for higher programming fees.
United President Juanita Skillman noted that the base assessment varies from unit to unit due to property taxes and property insurance, over which the mutual has no control for standardization.
“Each unit is individual –– depending on what they have upgraded, when the last time it’s been assessed, is it a newly sold share? –– that kind of thing,” Skillman explained. “$9.53 is the increase we’re doing for United and GRF for all of your amenities. Anything above that is your property taxes.”
The budget projects $28 million in mutual operating expenses in 2019. Property and sales taxes account for the largest portion at $9.8 million and employee compensation at $7 million.
United adopted the resolution 8-3-0, with Directors Manuel Armendariz, Reza Bastani and Andre Torng in opposition.
2019 Reserves Plan
With regard to the 2019 reserves plan –– passed by a 8-3-0 vote –– the board approved expenditures in the sum of $14.8 million, of which $13.4 million is planned from the reserve fund and $1.4 million from the contingency fund.
The board’s vote is in alignment with its Reserve 30-Year Funding Plan, an arrangement designed to maintain reserve fund balances at or above $10.4 million, according to a staff report.
Skillman noted that major projects were moved from operations into reserves so that funding may be accessed outside of the designated annual budget, as many projects are multi-year endeavors.
English and VMS director Mary Stone both spoke highly of the board’s practice of the threshold method, managing the reserve funds at about 15 percent, or about $16.8 million in projected reserve balance.
“We don’t want to put $109 million in a bank account or in an investment of some sort or another, that would be very risky,” Stone said in reference to the amount of United’s reserves if they were to be fully funded. “It is important for directors to understand that you have to manage the risk.”
United adopted the 2019 reserves plan, with Directors Armendariz, Bastani and Torng in opposition.
Supplemental appropriation for emergency repairs
The board authorized a rough total of $162,000 in repairs and replacement for two projects: emergency electric panel replacement at buildings 765 and 766 and emergency paving work in cul de sac 38.
An estimated $48,000 would be pulled from the replacement reserve fund to replace the four-meter panels corroded by outdoor elements, which interrupted power to several manors in each of these buildings. The new panels would be placed above irrigation and made from materials better suited for outdoor installation.
Regarding the latter, $114,245 would be pulled from the contingency fund for the unplanned paving, which was caused by poor subgrade conditions that failed during milling operations. The project is being expedited to allow residents access to their respective parking spaces, according to a staff report.
As part of the 2018 budgeted amount for approved paving and concrete repair, $176,001 was already planned for, setting the total (with supplement) at a total cost of $290,247.
Both resolutions unanimously passed and will take immediate effect.
Next Meeting
Since there was not a full 30-day cycle between the August and September meetings, United will reconvene in a special, open meeting on Wednesday, Sept. 26 to address five items still pending satisfaction of 30-day notification requirements.
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