Marymoor Trails
Board of Directors Meeting
October 24, 2022

The Marymoor Trails Budget Ratification Meeting, Special Budget Ratification Meeting, and Board Meeting were held on October 24, 2022. Attending: Michael Niksa, President; Van Chesnutt, Landscape; Josh Gibson, Treasurer; Linda O’Hara, Secretary; Tim Hollingshead, Morris Management; guest Jehan Bharucha, Project Manager – Improcon. Tim provided an overview of the two budget ratification meetings process.

2023 Budget Ratification Meeting
The Budget Ratification Meeting was called to order at 6:07PM by Tim Hollingshead. Tim introduced the Board members, and provided Proof of Notice that all homeowners were advised of the meeting in a timely manner. Formal Attendance was taken by Tim Hollingshead – we had 40.542% in attendance.

In accordance with procedures, the proposed budget for Marymoor Trails Homeowners Association for 2023 was presented. As previously communicated to homeowners by Morris Management, the Board recommends a dues increase of 16.75%.

State law says that 50% of homeowners must explicitly vote “no” to disapprove a budget; otherwise the budget is automatically approved. We had 40.5% in attendance, including people who would have voted in favor as well as those who would have voted against. The 2023 Budget is therefore approved. Meeting adjourned.

Special Assessment Budget Ratification Meeting
Immediately following the 2023 Budget Ratification Meeting, the Special Assessment Budget Ratification Meeting was convened. This budget addresses a special assessment of $1,042,194.00 recommended by the Board for the Homeowners’ Association in 2023.

The Special Assessment Budget Ratification Meeting was called to order by Tim Hollingshead. Tim again provided Proof of Notice that all homeowners were advised of this meeting in a timely manner. We had 40.542% of homeowners in attendance.

State law says that 50% of homeowners must explicitly vote “no” to disapprove a budget; otherwise the special assessment budget is automatically approved. We had 40.5% in attendance, including people who would have voted in favor as well as those who would have voted against. The 2023 Special Assessment Budget is therefore approved. This meeting was adjourned. Tim opened up the floor to discussion and we received many good comments and questions from homeowners.

Question: What are $80,000 interior improvements in Unit B-108 for? Why is a $1 million special assessment being levied? These are not improvements — they are mitigations of multiple issues. We were called in because B-108 was suffering substantial cracks in the garage and bathroom. We did measurements of floor slabs and basement and upper level, and got surveying experts to do level monitoring. We needed to find out if settlement was ongoing or if it was something that occurred in the past and is now at rest.

After 3 years of monitoring Bldg. B, engineers concluded that B-108 was experiencing the maximum impact because the dirt underneath the B-108 slab had settled by as much as 7” in places. To address this we will jack the slab — this is the most economical approach and very effective.

The initial plan was to focus only on B-108, but when we monitored Bldg. B for 3 years, measurements indicated all of Bldg. B was involved. We compared these new engineering measurements with our original plan to do pin piling only around B-108. Soils report indicated that pin piling was needed to arrest subsidence around most of the entire building – the North, East and South foundation walls.

Jehan explained that pin piling will involve driving 38 – 2” diameter metal piles/rods around the perimeter of the building, plus 13 additional piles to support the deck posts, and 11 tiebacks to hold the building foundation. The pilings go down 20 feet before they hit glacial till (very solid earth). Suffice it to say the method we have chosen is by far the most economical to minimize cost and stabilize the building. The building foundation extends 3 – 7 feet underground, varying around the perimeter. The pin pilings are attached to brackets placed under the bottom of the foundation, and the pin pilings are pounded down until they hit glacial till.

Question: If we know it is complicated, why not share this information with residents? Tim stated we do send out that information every month in the meeting minutes, and the Board has gone to good lengths to present information consistently to residents. The Board has been clear there could be an issue with Bldg. B, and recent engineering reports confirmed the specific issues we are facing.

Question: Why are we doing all of this special assessment for Bldg. B? Tim said it is also for the Association’s Master Policy insurance and reimbursement of reserves. Tim listed the following as the major components we are addressing in the assessment: Bldg. B foundation stabilization needed and subsidence remedied; a major electrical issue for Bldgs. I-J; a roof issue on Bldg. E; and a vastly increased insurance costs due to the fire in Bldg. J. Usually if your premium goes up, your deductible goes down – in this instance this is not the case: both increased greatly. We have had multiple costly issues impact our community.

Tim explained that because of the Bldg. J-135 fire we now have a large open claim on our Association’s Master Policy. Because of this very large open claim, the current insurer would not renew coverage. We contacted 35 carriers and got 30 “no” responses, others simply did not reply. Only two insurers said they would insure us, but with a much higher deductible and premium.

Our 2022 premium increased in May 2022 to $171,000, from $50,000 previously. We do not know what our premium will be next year. What the Board has tried to do is plan for the current premium of $171,000, and plan to have money on hand when the premium is due in May 2023. The actual insurance cost is an open question because all of these issues will not be concluded by then.

In addition, the new insurer required that our deductible increase from $10,000 to $50,000. We are legally required to have Master Policy insurance. We do not have the cash reserves to cover this vastly increased cost.

Question: Doesn’t insurance cover foundation damage in Bldg. B? No — insurance doesn’t cover ground movement.

Question: This is not a good time for this. We agree.

Question: How many families are living in the community right now? Are there empty units? We believe all units are occupied except fire damaged units, J-135 and J-136.

Question: Why are our dues so much higher than other communities in our area? For communities, Master Policy insurance is the most expensive item. Our Master Policy insurance is very high because we have a very large open fire claim.

Question: How does insurance become a community responsibility? The Associations are required to have a Master Policy for the grounds, exteriors, structural, roofing, etc. It is up to owners to have coverage known as H-06 for the interior of their units – “from the paint in.”

Question: Are we doing a dues increase or are we doing a special assessment? We are doing both an HOA dues increase of 16.75% and special assessment of $1,042,119.00 to be apportioned among all homeowners based on square footage.

Question: Have we ever gotten 50% of homeowners to vote down a budget or special assessment? Never. As far as having people attend, we do everything by Washington State Law. Today’s meeting is in the higher range we have ever seen as a turnout.

Question: $40,000 for consulting in the 2023 Budget sounds excessive. Is this necessary? “Consulting” is for actual project management on the ground. This includes vetting bids, finding best work for least cost, and overseeing to ensure work is done right. Consulting is a budgeted item; it can be lower or higher than that. In our experience Jehan Bharucha’s expertise has saved us a lot of money. For example, recently the electrical issue impacting Bldgs. I and J was estimated by the original electrical contractor to cost $350,000, replacing electrical components across all units. Jehan Bharucha said the repair could be targeted to one area experiencing an issue; he specified the scope of work and the final cost to the Association was $11,000. The amount we pay Jehan per hour for this overview is more than made up by what we save.

Overview: For those who disagree, Tim asked what is their solution, noting you cannot just not do it. We have looked at doing it in multi-phase, not doing it all in 2023 — this would be much more expensive. Josh Gibson, Treasurer, commented that rates of inflation on labor alone are skyrocketing. If we drag out repairs over multiple years, it will cost much more in the long run. We need cash on hand before contractors will begin work. Inflation is at its highest now. Van Chesnutt noted that the Board has a fiduciary responsibility to act in the best interest of the whole community.

Question: On the special assessment, is there a timeline as to when it is due? We are targeting February 1, 2023. This gives people time to get a home equity loan, if needed.

Question: We look at burned Bldg. J all the time. What is the timeline for getting this repaired? Has Morris expressed our dissatisfaction with the permit process at the City of Redmond? Multiple people are in touch with City of Redmond. We just got a response shortly before the meeting, that new fire sprinkler systems only have to be installed in J-135, not the entire building. This issue has been at an impasse for some time. We have a project manager and a construction company and the owners of the unit all calling City of Redmond. Michael Niksa, President, notes that City of Redmond keeps adding more and more things to be done. In short, we are reconciling current code with 1989 construction. Repairs cannot simply put things back to the way they were built in 1989. Bottom line: Bldg. B repairs cannot begin, and the insurance claim cannot be finalized, until City of Redmond says what modifications need to be made and issues permits.

Question: I think the other 60% of residents not at this meeting would be opposed to the assessment and budget. We respect your feeling, but we have done everything possible to advertise and announce this meeting, in an effort to get people to attend — email, mailbox signs and a special mailing from Morris Management. We have 54 units — we would need 27 to vote “no”. Tim says the result of the vote from the 40% of homeowners who did attend has the same legal weight as any other debt you would owe the Association. Nonpayment will be turned into collections and can result in foreclosure.

Question: One of the things people are upset about is the magnitude of the dues increase and special assessment. Can there be a more detailed discussion of how much investigation and research was completed. It took quite some time to get the numbers for what everything was going to cost. Some numbers came in only in the last couple of weeks. For 3 years we have been hoping we would not have to do this. For the budget, we do the budget every fall – Tim could not give us a preview in May because we did not have the numbers. Did not know how bad, or not bad, it would be. This is not something the Board has been sitting on for 2 or 3 years. We also had a number of bad things happen – the fire, plus electrical, plus roof, plus B Bldg. This confluence of issues is not anyone’s fault.

Question – How many homeowners in our community paid their HOA dues last month? Michael Niksa, President, says that this year almost everyone has paid their dues timely. Josh Gibson, Treasurer, confirms that no one is late with dues at the present time, and only one charge is outstanding, a small late fee for one unit.

Question; I have been living here 23 years. It is such a surprise to have such a large issue now. Is that due in any way to the fact that we do not have sprinklers in our units? Tim says we have made claims, two very recently. These were flood claims, in the amount of $20,000 – $50,000. This fire damage is an $800,000 payout. We don’t know how much the addition of sprinklers for the one unit will cost.

Question: Why have a rental cap with all the owners living here? Shouldn’t owners be allowed to rent if they want, with no restriction? It will help with the market value of the house. Tim has brought up the issue of rental cap many times to the Board. The experience of the Board over past decades is we really want to keep it. There are significantly more common area maintenance issues in units occupied by renters, costing the entire Association money. It is also better to have a high proportion of owners vs. renters when looking for a home equity loan. Michael notes that of 8-9 rented units at Marymoor Trails, only 1 owner has actually called in to this meeting. We consistently experience significantly less engagement from remote owners, even if they just live nearby. It’s often hard to get a response from them. One attendee stated that owners have a duty to let you know what their contact information is — we agree, but this isn’t typically what we see. Another resident commented that they don’t see/understand the non-engagement part — having a rental cap or not doesn’t impact the ability of people to join Zoom meetings. We agree, yet that is absolutely what we experience.

Comment: Resident thanked the Board for all the work done. Saying that we have all done the ground work. Says the insurance payment has increased because we are high risk. Makes insurers say, “Nope, we are not going to touch you.”

Question: If units get sold between now and February, who pays the special assessment? Tim states there is already a note on the Resale Certificate, of what is owed by each unit. It is up to the buyer and seller to negotiate how they are going to pay it.

Question: Can the special assessment be deducted from income taxes? Tim says talk to your tax attorney; we are not tax professionals. It is his understanding that, in general, you are not allowed to deduct a special assessment.

Question: Are we taking any steps to make sure other buildings are not sliding down in the future? Michael notes we have asked if we should do exploratory work on other buildings. We have concluded it would cost substantially more to get everything in perfect condition. Instead, we aim for serviceable to good.

If we did detailed engineering in the absence of any evidence of subsidence, we would have a lot of consulting fees to soils engineers. Tim doubts that the Association would want to spend that much money doing that, as opposed to other projects. We do not want to do unnecessary work, but do preventive stuff. We are not going to go looking for imperfections.

Conclusion: Tim notes residents will be getting a letter regarding the special assessment. Tim thanked the assembled attendees, thanked them for their questions and comments. He noted it is quite a shock to the community – denial, anger, arguing, then acceptance. It is something that has to be done.

Board of Directors Meeting
Immediately following the Special Assessment Ratification Meeting, the Board convened for regular business.

Treasurer’s Report
Josh reports the Marymoor Trails Operating Account (checking) is $11,110.75 and Reserve Account (savings) is $383,827.21.

Landscape Report
Van has recently walked the property with the arborist from Davey Tree. There are few trees that need trimming. The good news is that we are in much better shape than last year. Davey Tree will take care of dead branches and trimming where necessary. The arborist thinks our trees are in good shape.

Michael has been doing work over the last several months on the complex’s sprinklers, fine tuning the adjustment of the system. Earlier this summer, the watering was dialed back a bit too far, had brown areas showing up last month. Working closely with the sprinkler software company HydraWise.com and Premiere Landscaping.

Josh has not yet seen a reduction in the water and sewer billings. Josh has only annualized figures. We did not have water expenses in Jan-Feb-Mar when the sprinklers are turned off. Josh will look at YTD this year vs last year, now that sprinklers are done for the season and see if we can ascertain any savings.

Van notes also, heads up, this is the time of year where a few foundation drains need to be cleaned out. As the rains begin, we become aware of what has become clogged. Josh appreciates that heads up.

Next Meeting
Our next regular Board meeting was scheduled for Monday, November 28, 2022, but had to be postponed due to illness. A new date has not yet been set. We will hold the November-December Board meeting as soon as feasible and announce it to the community.