The Crestone Eagle, December 2006:

POA members protest 68% dues rate hike for 2007
by David Nicholas

Over 60 members of the Baca Grande Property Owners Association attended the monthly meeting of the association’s Board of Directors on Thursday, November 16, to hear the Directors explain their decision to raise rates 68% from $260 to $438 per year. The Directors stated at the beginning of the meeting that people would have to sign up on a list to speak about the issue for 3 minutes and that there “would not be a dialogue” about the issue. When questioned about this procedure by former Director Richard Enzer, Director Lee Mitchell said that the process to be followed was required by law, a state statute. However, such a state law only applies for municipal public hearings, but members went along with the procedure anyway. The presence of the under-sheriff reflected the Board’s concern regarding member’s reaction.

If you arrived to the meeting early enough, you could get a packet of documents entitled “Dues and Reserves” which included a letter from Tim Brenner, then BGPOA Board Vice President.

“As some of you have already heard,” Mr. Brenner wrote, “the POA Board has set the annual dues assessment for 2007 at $438 per lot. Of this amount, $338 covers budgeted operating expenses and $100 is to be used for reserve funding.”

In the letter, Mr. Brenner cites reduced revenues from lot consolidation and past POA Board’s reluctance to raise dues for the reason to increase the dues 68%.

Further in the rationale he states, “Up until 5 or 6 years ago lot prices (and dues) were cheap, which provided people of more limited means the opportunity to buy land and build their own homes as they could afford. However, speculation in lot trading and home sales, punctuated by perceived market shifts surrounding the Sand Dunes National Park have pushed prices upward and have generated a level of activity that has increased demand for services by the POA.”

Given the extensive rationale and the lack of a democratic process at the meeting to question the Board about its thinking, people who spoke against the dues were angry but civil. Of the people who chose to speak under the rules, only five spoke for the raise.

POA member Mark Jacobi, speaking for the dues increase, said, “I don’t know. I look at this and I go: there are services we all use and we all require them and we all need them. Some of us don’t use them everyday some of us don’t use them in a long amount of time. But they’re there because we support them constantly, and they have to be paid for somehow. We can split hairs truly what we want to support and what we don’t want to support. They (the Board) have meetings trying to put the budget together and I didn’t go to any of them because I accept the fact they did their due diligence . . . I have been through a few budget processes myself so I know what’s involved. It comes down to something like this.

“Yeah, it hurts,” he said. “I don’t want to pay more. I’d rather not! I’d rather not pay more for my gas bill. I’d rather not pay more at the pump. I’d rather not pay more for my insurance policies, but I do. Because those are things that I need to have for whatever reason. Before we get too irate about any of this, we have to kind of figure what, as a community, we really want in-so-far as we all use. And if you use it, then you need to pay for that and if you don’t use it, then you need to realize that you might need to use it sometime.”

Among the other six or seven who spoke in favor of the increase was John Reeves, a former POA director who voted for the raise. Mr. Reeves made the point that when the news broke in the community there was considerable anger, which he thought was not based in fact. “I am looking how I am going to pay for it. It’s difficult for me. I’ve got parents living on fixed incomes that live down the road. This is going to be hard for them. I have a daughter who is going to think about selling her lot.”

Mr. Reeves continued, “I sat on the Board. I was part of the decision. I trusted in the information that was presented to me by the people who were hired and paid to do that research and collaborate with us in terms of what was going on. I would have felt much more comfortable with this room full of people being part of it. This was not an easy decision to make. I feel like the people I was serving with on the Board operated in good faith. You may not agree with the decision they made. I understand that. I am hear to tell you that the people who made this decision operated in their best integrity.”

Opposition & resistance
John Loll was the first speaker inviting the Board to do something worthwhile, “ . . . which is to undo the upside down practice that you’ve gotten into where you’ve already made a decision about dues, but most of the community didn’t know about it and hasn’t had the opportunity to speak about it.” The problem, Mr. Loll said, was that the Board often missed solutions to revenues and dues problems as an association by this practice. “No taxation without representation, OK?”

POA member John Myszko believed that the POA members had not been fully informed of the increase when it was under discussion, prior to the Board voting on it. Mr. Myszko said that before the meeting he had talked to about 150 people and out of those only 3 had agreed with the increase, which was about 98% opposition to the increase. “My point in standing here is that the will of the community is not being served by this and that needs to change,” said Mr. Myszko. “It (the dues increase) should have been announced beforehand in a way that it reached everyone. I understand it was announced, but it did not reach everyone.

Mr. Myszko said, “Wait till the absentee folks find out about this; they don’t even get the services. They’re going to be pretty irate.”

Plan A, Mr. Myszko said, was to work with the Board, and he requested a series of Board meetings to do just that.

Plan B, Mr. Myzsko said is that many had spoken to attorneys and that a court injunction in District Court to prevent implementation of the increase, or a series of lawsuits in Small Claims Court, is possible.

The final recourse is Plan C: recall.

Diane Dunlap, a POA member who attended some of the budget discussion by the Board, said that former POA President Lee Mitchell had stated at the previous meeting that the POA was never intended to try to run a municipality, “and that’s just about where we are at this point,” Dunlap said.

Further Ms. Dunlap stated, “It may very well be time for the POA to be letting go of some things and relinquishing some responsibilities and some services. My understanding is that we have another alternative for the EMT service, and maybe even one for the fire department. We certainly have a lot of POA land that is sitting around not doing much of anything. We haven’t really made time to begin thinking seriously of the POA divesting itself of some of those responsibilities.”

Ms. Dunlap added that Director Brenner had previously mentioned that the Board had considered a gradual increase in dues and spreading it out over a few years, but that the Board decided not do to that. “I think in hindsight,” said Ms. Dunlap, “that this was not the best idea.”

POA Member Bill Johnson said that he would be paying 5% of his income next year to the POA. “That is serious,” Mr. Brewer said. Citing the fact that he did not know about the dues increase until Mr. Myzsko told him, he said, “And you needed to invite me to talk about this. Noting that one of the justifications is the increase in the value of lots, Mr. Johnson said, “The only justification you can have for dues increase is the will of the people to receive more services, it has nothing to do with the speculative value of the real estate. That is not a justification.”

Further investigation of the rationale
POA member Dr. Eric Karlstrom said at the meeting that the proposed 2007 dues constitute a “shocking increase.” He continued, “The process came across as being secretive, . . . so I would like to see that the people in this room could be involved in this decision. I would also like to see a covenant where it says that the Board cannot increase dues by more than 20% without a referendum.”

In a letter widely circulated in the community, Dr. Karlstrom, opposing the dues, wrote, “It is my understanding that the figures used to justify this increase come from a study by Beverly Johnson of Bookkeeping Business Solutions, Inc., in Buena Vista. Johnson, who has no familiarity with our community, apparently utilized an arbitrary depreciation formula from the IRS that may have little applicability to our community. Whereas Johnson’s study claims that the POA has a $3.9 million deficit, in fact, the POA’s own balance sheets show it has $1.1 million in unrestricted cash on hand. This $1.1 million in cash was not factored into Ms. Johnson’s study as an asset.

“Erroneous assumptions lead to erroneous conclusions. Until the findings of Johnson’s study are corroborated by some of our local accounting experts, I do not think the POA is at all justified in mandating such a radical dues increase. In fact, by utilizing the POA’s $1.1 million in unrestricted (and unreported) cash, it could keep the dues at the current level and still meet their two goals of increasing operating expenses by 30% and creating a $434,000 reserve account next year. And it would still have $275,000 left over in addition to the approximately $1.4 million in next year’s dues.”

Bill Johnson gets the last word: Mr. Brewer stated that he had set up a website (POA members Community Action Network) for the community to become involved, “Let’s not be excluded from the decision making process anymore; let’s just start doing it.”

Special meeting
In response to POA members wanting to discuss the dues increase further, the POA Board has decided to hold an additional meeting on Thursday, December 14 at 6 pm at the POA Hall.