Forest Ridge HOA Semi-Annual Meeting

1. March 4, 2019 Forest Ridge HOA Semi-Annual Meeting

2. Agenda • Call to Order • Review Minutes/Finance from Previous Meeting • Police Report • General Board Overview • Meeting Re-formatting • Assessment 2019 Calculation • Ohio State Law 5312 Review

3. Agenda • Committee Reports • Communications • Maintenance and Green Areas • Activities • Recreation and Pool • Assessment Evaluation Committee • Resident’s Questions and Concerns • Adjournment

4. Meeting Re-formatting • The intention of the new format is to allocate sufficient time for the board to do the necessary business that does not belong in a public format for legal reasons without taking additional time on weekends • Employee/ personnel matters • Contracts • Legal counsel • Private matters from residents/local officials • All these are regulations per Ohio Code 5312.07B

5. Monthly Meetings • Per the bylaws, there is NO requirement for the monthly BOARD meetings to be public- it’s just “what’s always been done” • We feel that there absolutely needs to be a public forum, but that the time utilization is not efficient nor allocated to allow all interested parties to speak • The overwhelming majority of organizations do not require all business to be transacted in an open forum- we want to best serve the community in an efficient manner without redundancy and in a respectful and productive way.

6. New policy as of 3/2019 • Agenda- Open Meeting (3rd Monday of the month, 7-8 PM) • Review of previous minutes/financials- 5 minutes • Police reports (Dayton/Riverside)- 5-10 minutes • General Board business- 5 minutes • Committee Reports- 15 minutes • Greens • Communications • Recreation/Pool • Activities • Assessment Evaluation • Residents Open Forum- 30 minutes • 3 minutes per person • Executive Session (immediately following at 8 PM, limited to Board members and involved parties)

7. General Board Overview-Assessment Calculation, Spring 2019 • Memo, published 3/4/19 • PURPOSE: This memorandum outlines the FRA Board of Trustee’s interpretation of how Annual Assessments are determined in accordance with the FRA Amended Code of Regulations dated November 22, 2017. • DISCUSSION: • Article XII Section 3 states that the annual assessments or charges shall be established by the Board of Trustees and that the amount shall be based upon the anticipated operational expense for the ensuing year. Article XII then states in Section 9 subsection (b) subsection 1 and 2 that the board then can apply either CPI (Subsection 1) or above CPI by vote of the members as outlined in Subsection 2. Article XII Section C states that the annual assessment may not be set higher than the maximum. • The Board’s interpretation of Section 3 and Section 9 of Article XII is that the maximum is set by the Board of Trustees when they determine what the operational expenses are for the year as outlined in Section 3. Once the maximum is set, the Board can either apply CPI (to cover the cost of inflation for the year) as outlined in Subsection 1 of Section 9 or if the board wants funding beyond what is needed to meet operational expenses the board must go to the members as outlined in Subsection 2 of Section 9 for approval. • This rules interpretation was reviewed by the FRA Board of Trustee’s attorney, who determined it to be “defensible under FRA’s current Declaration/Code of Regulation and stems from a reasonable interpretation of its language on adjustment of such fees.”

8. Article XII, Section 3 • Bylaws Article XII Section 3 states that the annual assessments or charges shall be established by the Board of Trustees and that the amount shall be based upon the ANTICIPATED OPERATIONAL EXPENSE for the ensuing year.

9. Assessment Calculation • 2019 Operating Expenses Bylaws Article XII Section 3 states that the annual assessments or charges shall be established by the Board of Trustees and that the amount shall be based upon the ANTICIPATED OPERATIONAL EXPENSE for the ensuing year.

10. CPI • Bylaws Article XII then states in Section 9 subsection (b) subsection 1 and 2 that the board then can apply either CPI (Subsection 1) or above CPI by vote of the members as outlined in Subsection 2 • December 2018- CPI @ 2.5%

11. Calculation • $291,055 Operating Expenses • Add CPI @ 2.5% • $7,276 • Total Expenses with CPI addition= • $298, 331

12. Final Assessment- 2019 • 1123 Homes in the Ridge • $298,331 =$265.66 1123

13. “ I believe a 15% raise of the Association fees is defensible under FRA’s current Declaration/Code of Regulations and stems from a reasonable interpretation of its language on adjustment of such fees.” • Donald Rineer • Auman, Mahan & Furry, Attorneys on Retainer

14. Ohio 5312.06(A) • (A) Unless otherwise provided in the declaration or bylaws, the owners association, through its board of directors, shall do both of the following: • (1) Annually adopt and amend an estimated budget for revenues and expenditures. ANY BUDGET SHALL INCLUDE RESERVES IN AN AMOUNT ADEQUATE TO REPAIR AND REPLACE MAJOR CAPITAL ITEMS IN THE NORMAL COURSE OF OPERATIONS WITHOUT THE NECESSITY OF SPECIAL ASSESSMENTS, unless the owners, exercising not less than a majority of the voting power of the owners association, waive the reserve requirement annually.

15. Required Voting • A majority of the ownership’s voting power is necessary to waive the “fully funded reserve” requirement, and the vote for waiver must be taken each year.

16. Using Ohio Revised Code Section 5311.081(A)(1) as an example • (A) Unless otherwise provided in the declaration or bylaws, the unit owners association, through the board of directors, shall. . . • (1) Adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments, provided that the AMOUNT SET ASIDE ANNUALLY FOR RESERVES SHALL NOT BE LESS THAN TEN PERCENT OF THE BUDGET FOR THAT YEARunless the reserve requirement is waived annually by the unit owners exercising not less than a majority of the voting power of the unit owners association;

17. Using 5311 as an example for the 10% minimum requirement • “provided that the amount set aside annually for reserves shall not be less than ten percent of the budget for that year.”   • THIS LANGUAGE DOES NOT STATE THAT A BOARD WILL BE IN COMPLIANCE WITH THE LAW IF IT BUDGETS TEN PERCENT (10%) OF ITS TOTAL BUDGET FOR RESERVES.   • Rather, the law sets the minimum reserve as “an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments.”   • The ten percent (10%) language applies only when the “adequate” amount is less than ten percent (10%) of the association’s total budget. Source: https://ohiocondolaw.com/article/budgets-reserves-and-the-ohio-requirement-for-an-annual-ownership-vote-if-reserve-funding-is-to-be-waived-the-special-assessment-problem/

18. Using 2019 and the 10% requirement from 5311 as an example, the operating expenses were $291,055 before applying CPI • $29,106 per year into reserve fund • The 2019 Budget allocated $6500 into the reserve. **HAD WE TAKEN THIS 10% REQUIREMENT and put the full $29106 , THE ASSESSMENT WOULD HAVE BEEN $279.31

19. Reserve Studies • The recommendation for determining the required amount to be maintained in the reserve fund is for a reserve study to be commissioned (ours was done in 2017) • “Compliance with the law means avoiding liability.  The easiest way for the board to avoid liability is to obtain a professional reserve study; immediately share the results of the reserve study with all owners and either: 1) adopt a budget that is in accordance with the reserve study recommendations or 2) obtain a majority vote of the ownership waiving the reserves requirement for that particular year.”

20. The Decision to Remain “Underfunded” • “Under-funded” reserves exist when the budgeted amount for reserves is not enough to accumulate enough money over time to cover the cost to repair or replace an item without the necessity of a special assessment.  In this circumstance, owner votes waiving the reserve requirement must be taken.… if the unit owners are voting each year to “under-fund” the reserves, a special assessment will be no surprise.  Source: https://ohiocondolaw.com/article/budgets-reserves-and-the-ohio-requirement-for-an-annual-ownership-vote-if-reserve-funding-is-to-be-waived-the-special-assessment-problem/

21. Committee Reports • Communications • Maintenance and Green Areas • Activities • Recreation and Pool • Assessment Evaluation Committee

22. 2019 Activities Calendar Spring Easter Egg Hunt 4/13/19 (Sheds) Memorial Day Pool Opening/ Food Truck Rally 5/27/19 (Pool field) Garage Sale 6/22/19 (Boulevard) Summer July 4th Party 7/4/19 (Pool) Pool Raft Party 8/10/19 (Pool) Labor Day Party/ Pool Movie Night 9/3/19 (Pool)

23. 2019 Activities Calendar Autumn Halloween Hayrides 10/21/19-10/23/19 (Sheds) Fright Night 10/25/19 (Sheds) Halloween Parade 10/26/19 (Gazebo) Give Back Thanks 11/10/19-11/17/19 (TBD) Winter Christmas Light Fight Preliminary Judging 12/16-12/18, Online judging 12/20-12/22 (TBD) Christmas Party 12/14/19 (Sheds)

24. Resident’s Questions and Concerns Ask away!