SB 1489 Flops Before Even Reaching the Theatre

SB 1489 is dead. It’s hard to say which was a bigger flop: SB 1489 or its 2008 special session look-alike, SB 6016. Both of these bills were nearly identical. The 2008 version stayed alive for only 4 days but did get through the Senate before it failed. The 2009 version, SB 1489, was introduced on January 22nd and stricken from the docket of pending bills by Vogel herself on February 4th – before it ever even came to a vote in a committee.

We’ve previously outlined why SB 1489 (like its predecessor SB 6016) was a bad bill. Had it become law, it would have allowed the deed to an owner’s property to be changed in unforeseen and undesirable ways without that owner’s consent. The amendment provisions in the deed itself would be ignored. The prospect that “in whole or in part, any provision of a declaration” could be changed would have manufactured uncertainty for tens of thousands of property owners in associations in every corner of the state. That uncertainty would have destroyed property values across Virginia, all in an effort to meddle in a lawsuit involving Lake Holiday, the Bemis Case. That case is now before the Virginia Supreme Court.

That SB 1489, like SB 6016, was nothing more than an attempt to tip the outcome of an active court case is beyond dispute. Shortly after SB 6016 died in the Virginia Housing Commission on 6/26/08, Bob Diamond and Todd Sinkins went back to work to try to change the law to tip an active court case in favor of their clients. Diamond represents Miller & Smith in the Bemis Case, and Sinkins’ firm, Rees Broome, was Lake Holiday’s initial counsel in the case before withdrawing.

The changes Diamond and Sinkins came up with are outlined in a July 1, 2008 memo to “Interested Parties.” This memo proposes even more far-reaching code changes than Vogel included in SB 1489. This proposal and Vogel’s bills share a central theme: to permit re-writing property deeds without the consent of owners Diamond’s description of honoring the terms outlined in a deed to amend it: “impractical.” We can apply Diamond’s reasoning thusly: If a small property owner has rights granted in a deed and Miller & Smith, one of the largest developers in the state, doesn’t like that, well, that’s simply “impractical” and the law needs to be changed. In his testimony to the Virginia Housing Commission, Sinkins characterized re-writing owners’ deeds over their objection as a “minor” change.

Diamond and Sinkins offer up this contradictory message acknowledging the impact of their proposal:

Although these changes may have an impact on the Lake Holiday project, we do not think that they can affect the outcome of the current litigation.

Perhaps they claim to believe that their proposed changes can’t affect the outcome because they know that an attempt to retroactively change vested property rights is unconstitutional and won’t pass careful scrutiny. It’s about time that Diamond and Sinkins learned the Code of Virginia is not their personal rule book to deliver the whims of their clients.

In late December, 2008 the Lake Holiday board met to consider the changes Vogel would later introduce in the Virginia Senate. Despite a dissent from 1 board member, the Lake Holiday board approved pushing the legislation to solve their “problem.”

Any claim that Vogel’s effort is anything but an effort to tip the outcome of an active court case doesn’t pass the laugh test.

Now that SB 1489 is dead, it’s important to reflect on the future. That future rests squarely with the Virginia Supreme Court. Backed by hundreds of years of Virginia property law and countless decisions from the state’s highest court (including 3 on point cases, the most recent of which was decided in January 2008), the Bemis plaintiffs take the position that their property rights and obligations are to be found – and can only be found – in a properly recorded deed in the chain of title to their individual properties. The Bemis plaintiffs are fully prepared to honor those deed obligations.

Lake Holiday has a history of collecting fees and dues far above those authorized by the applicable deeds. Its officers and lawyers have known about the unauthorized collection for some time. That creates a sticky and serious legal problem. To solve that problem, Lake Holiday would like to unilaterally change those deed obligations. That’s why Vogel, following the direction of Diamond and Lake Holiday, tried to change Virginia law to permit re-writing property deeds.

Fortunately, they failed a second time.

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How Bill Masters Saved Lake Holiday $120,000

At the April board meeting, LHCC directors discussed a serious problem: they pledged the clubhouse (LHCC common area) as collateral for a loan from Wachovia without first obtaining owner consent. Several board members referred to this as a breach of their fiduciary duty, since common area can’t be mortgaged without first obtaining more than two-thirds consent of Lake Holiday’s owners and that consent was never obtained. GM Ray Sohl introduced the solution to this problem: “the board of directors has expressed an interest in re-collateralizing the existing clubhouse loan.”

The board’s solution: ask owners to retroactively approve mortgaging common area, and if approval were not obtained, to refinance the Wachovia loan at a great expense. Doing so would require paying about $18,000 in refinancing costs, paying approximately $20,000 more in annual debt service over 5 years, pledging 91 LHCC-owned lots, and allowing Wachovia to put a bank hold on $150,000 to $200,000 of LHCC’s cash. Add that up and you get a cash savings of $120,000.

That initial discussion of the problem was lengthy. Our nine video clips cover over an hour and ten minutes in Clubhouse Loan Pts 1-9:

By July, preparations were underway to put the re-financing to an owner vote. LHCC announced the upcoming vote on July 21st. At the July 28th board meeting VP Dave Buermeyer, guided by Wayne Poyer, proposed the specific language to describe the issue to owners. Right away he met with resistance from 2 board members, John Martel and Jo-anne Barnard. Martel claimed that the language gave the refinancing proposal an “air of legitimacy that it probably never really achieved.” Then, Martel did an abrupt about-face and retreated from that position when Poyer seemed to be bothered by his remark. Jo-anne Barnard called the referendum “meaningless” because despite the high cost, the board had already decided to do the refinancing even if owners didn’t approve it. Nevertheless, every other director was satisfied with the decision to proceed with the refinancing. Many felt no further discussion was necessary.

Barnard and Martel felt the significant cost of the refinancing did merit further discussion. Barnard corrected the cost estimate served up by Poyer and Buermeyer. She observed:

It doesn’t cost $20,000. It costs $20,000 and $18,000 in the near term every year at the same time that we have to do the dam.

Here’s the July discussion in clips Oct 08 Referenda Pts 1-5:

So what’s the biggest problem in refinancing the clubhouse balloon note to fix pledging the clubhouse without first obtaining owner approval? The clubhouse isn’t even pledged as collateral on that note. Either Poyer and Buermeyer weren’t being candid about their reasons for proposing the refinancing or they never even bothered to check the documents. If they had taken just a moment to read the collateral exhibit, they would have seen that it clearly contains a description of real estate that is not the clubhouse.

A cautionary word to the non-lawyers that try to comprehend an important legal document like the loan collateral exhibit: it’s a whopping 2 pages, and the description of the property used as collateral involves potentially hard-to-understand legal terms, such as “231 Redland Road.” Proceed carefully!

After watching the video of the July meeting, property owner Bill Masters did bother to check the documents, and the exhibit showing the collateral for the loan very clearly listed the collateral as 231 Redland Road, the location of Lake Holiday’s management office. Masters contacted GM Ray Sohl, and directors Barnard and Martel to understand how they missed this.

Sohl initially disputed Masters’ assessment and insisted the clubhouse was used as loan collateral. Masters had to show Sohl that the loan for which the clubhouse had been used as collateral was paid off and closed months ago. Keep in mind that Masters was making his argument to Sohl and several board members using documents he originally obtained from the Lake Holiday office in the first place.

Barnard and Martel were surprised by his claim but promised to investigate. To further support his contention, Masters supplied loan documents to Barnard and Martel and Frederick County tax maps, one of which appears nearby. In a few days, Sohl, Barnard, and Martel came to the same conclusion that Masters had: the clubhouse wasn’t pledged on the loan in the first place, so there’s no reason to spend all that money on the expensive refinancing supported by Poyer and Buermeyer.

The cash savings, as Barnard herself pointed out at the board meeting, is about $120,000 over 5 years. When Masters discussed with Barnard the significant cash savings, Barnard disputed her own number. Evidently, dollars that Masters saves don’t count as much as dollars that the board very nearly wasted. Beyond the cash savings, Lake Holiday retains clear title to its 91 lots and has unrestricted use of the $200,000 that it would have had to pledge to do the refinancing. Masters managed to accomplish all of this while holding down a full time job and not serving on the board.

Barnard’s attempt to discount the savings is just evidence of the board’s spin machine revving up. More evidence of that is Sohl’s email to Masters, thanking him for catching the “error,” but pointing the finger at Wachovia for not securing the loan with the right collateral. Maybe Wachovia’s Mike Wilkerson has a different opinion of who owns the “error.”

Much can be learned from this episode to improve Lake Holiday. LHCC directors voted to spend over $120,000 of the organization’s cash based on the erroneous belief that the clubhouse was pledged as collateral, a belief that reading the loan documents would have quickly corrected. While Barnard and Martel were against spending money on refinancing, at a minimum they and every other director are guilty of approving a significant expenditure without bothering to read the underlying documents. That’s wrong. If any director did read the collateral documents and recommended the refinancing based on a claim that he knew to be false, that would be far more troubling.

When Masters first called Ray Sohl, he encountered far too much resistance. Sohl spent too much time defending the position that the clubhouse was pledged as collateral, perhaps because the board had already invested so much time to approve the refinancing. If the clubhouse were not pledged, it would make all the resources devoted to the refinancing an embarrassing waste. Fortunately, Masters took the time to make the phone calls and send the emails to overcome Sohl’s resistance. Masters was in an exceptional position because he had previously requested the relevant documents and closely followed the board videos, two things for which he is often unjustly criticized. But it shouldn’t be that hard for owners to get the management office to reach an obvious conclusion. While this went from start to finish in about 3 days, that was too long because the loan collateral exhibit was so clear and unambiguous. The initial response involved too much defensive posturing. If Masters had not persisted after receiving Sohl’s initial response, the savings may have been lost.

Fortunately, Masters saved $120,000 of Lake Holiday’s cash. What the community learns from this affair may be even more valuable.

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This Has To Stop

Whatever one may think of John Martel, he consistently manages to come up with great one-liners. Mind you, they’re not going to be heard on the big movie screen anytime soon. They’re just pithy observations on the problems at Lake Holiday. We took the title of this post from his remarks on the issue of ordering tote bags for new owners for the Welcoming Committee.

Too many bags were ordered at a price double what they should have cost because the wrong person ordered the bags.

Wayne Poyer described the mix-up:

A batch of bags was ordered which, based on the rate of people coming into the community, it’s going to last about 40 years.

As Martel said: “this has to stop, this has to stop.” We’ll go out on a limb and guess that the Welcoming Committee only welcomes new homeowners and not new membership lot owners with one of the too many totes ordered at an exorbitant cost.

The budget review was made a little more difficult when it was discovered that one of Mike Kilmer’s staff incorrectly coded an expense item as an income item. Robin Pedlar thought Kilmer’s firm was “overpaid.” According to Martel, the distribution of work between the LHCC office and Kilmer’s firm has created problems. His view:

It’s hard to sort out who’s doing what to whom.

Kilmer’s firm is paid $4250 per month (an annual rate of over $50,000), and the board was reviewing other cutbacks to balance the budget at the May 15th budget meeting. Despite that, Pat Shields didn’t think that meeting was the appropriate time to address the value of Kilmer’s services.

In the video of overpaying for too many tote bags, Robin Pedlar worried:

If this is indicative of how phony all the numbers could be, it scares me.

She was not alone in her concern about sloppy accounting. Wayne Poyer asked somewhat rhetorically:

How bad is our accounting?

Let’s look at one area, the relationship between delinquencies and receivables. In our videos 2008 1Q Delinquencies and How Bad Is Our Accounting, Treasurer John Martel gave the numbers on delinquencies: 114 homes (including trash assessments), 70 water/sewer lots, and 242 membership lots. Based on LHCC’s published assessment rates, this is a monthly delinquency of $30,748.08. Yet the difference between LHCC’s reported accounts receivable in March and April of 2008 is only $9,299.73. If the delinquency rate is actually that high, why didn’t accounts receivable go up by a larger amount? If it’s not that high, why is the board over-stating the delinquency rate and budgeting based on this over-statement? As Poyer himself remarked, the delinquency report “just doesn’t pass the nonsense test.”

Budget-related videos from this meeting also include a discussion of getting foreclosing banks to pay their dues and a brief review of Kilmer’s role (which includes a little spat between a frustrated Martel and Suzy Marcus). A few unrelated topics were addressed after the budget review: creating the nominating committee; handling road violations, in which directors acknowledged that the roving patrol is not authorized to stop alleged violators; and relisting lots for sale with Oakcrest.

If you find it odd that in all this budget talk, the name of Steve Locke doesn’t come up much, we do as well. Steve’s resume says he’s a certified financial planner and a former member of the Financial Management Task Force. He had little to say about changes to the budget, a topic that is very relevant to his background and experience. What is the point of serving on the board if you don’t have much to say on the topic most directly related to your background or work experience? Congratulations, Steve. You’re our Silent Sitter for the May budget meeting.

With all of the excitement about accounting and budgets (a subject that caused Robin Pedlar to comment a little past the half-way point of the budget meeting that “we’ve got to move faster or I’m going home”), we realized that we neglected to announce our Silent Sitter winner for the April 28th meeting. The most important topic covered at the April 28th meeting was a proposal to refinance the clubhouse balloon note. In a meeting where directors openly acknowledged they breached their fiduciary responsibility, Suzy Marcus sat in almost total silence. She neither objected to the characterization expressed by several board members that the board (of which she was a member) had in fact breached its fiduciary responsibility or raised any concern about the cost to fix that mistake. Important issues require the input of all board members. Congratulations, Suzy. You’re our Silent Sitter for the April meeting.

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Quick Takes on the April 28th Board Meeting

The April 28th was long – over 3 1/2 hours, not counting an executive session. We’ve included all but about 15 minutes of that meeting, spread over 26 video clips.

Review of a new front gate contract took about 5 1/2 minutes, but review of a $1500 reimbursement for additional lifeguard open water rescue training took over 30 minutes. The latter issue apparently stemmed from roving patrol/lifeguard supervisor Zeb Brevard, rather than the board, authorizing an expenditure made by the parent of one of the lifeguards.

Just because review of the front gate contract took 5 1/2 minutes doesn’t mean there was serious review. The board rubber-stamped GM Ray Sohl’s recommendation of keeping the contract with Haines at a cost of $15 per hour rather than accept a much lower cost proposal from Spartan at a cost of $13.33 per hour. The potential savings from Spartan’s proposal? About $15,000. The board couldn’t spend a lot of time on this $130,000 contract because it had to have enough time to discuss a contract with the lifeguards requiring them to reimburse the $100 training cost if they failed to work the entire season. At one point, presumably just to shorten a ridiculously long (or was it just ridiculous?) discussion, an audience member volunteered that he would reimburse the $100 training cost if that event occurred.

For the monthly staples, Martel gave the Treasurer’s Report and GM Ray Sohl gave the Management Report. Martel also put forward a motion to fully expense rather than capitalize all of LHCC’s depreciable assets. No director asked whether that was GAAP-compliant. For that matter, no director asked what GAAP is.

Dave Buermeyer gathered up some projections from Miller & Smith and some boxes of old documents. He rolled them into his Vision 10, a plan for the next 10 years at Lake Holiday. It drew applause from the board, which is the only group that will pay any attention whatsoever. Buermeyer also brought back more modifications to a policy to fill board vacancies. Secretary Ken Murphy secured approval for a new Rules Tracking System. At least they’ll look pretty. Early topic of the video: picking the right font. We’ll state the obvious: when a simple community association has to have a rules tracking system, it has too many rules. The board also approved a motion to hire a new collection agency, Debt Recovery Bureau, to try to collect old LHEUC debts on a contingency basis. According to Ray Sohl, these debts are outside the 3 year statute of limitations, and 1 firm has already tried a similar approach and given up after about 2 months.

On a positive note, director Steve Locke brought up negative communications relating to architectural compliance during the Committee & Task Force Reports. He was critical of his own experience and said the board needed to find a “much more neighborly way of going about things.” He thought “a little conversation would have gone a long way.” Perhaps his wife Deborah is working with him to try to develop a “kindler, gentler” side rather than the pseudo-tough guy tactics he displayed in our Keep It Over Here Punk video. Imagine: one LHCC director thinks “a little conversation” with an adversary could go “a long way.” Believable? Enduring? Let’s wait and see.

In earlier meetings, the board concluded that LHCC lacked the money to install guard rails, a safety issue, but evidently the money is there for the GM to solicit proposals to improve the acoustics at the clubhouse. Safety, no. Better acoustics for board members to hear themselves talk, yes.

The biggest topic of the night: re-financing the clubhouse loan. GM Ray Sohl started the discussion by stating that the “Board of directors has expressed an interest in re-collateralizing the existing clubhouse loan.” Oddly, there’s no expression of such interest during open meetings. Since the board voted on a motion to direct the GM to get bids on changes to the clubhouse acoustics, why is there no approved motion to direct the GM to investigate refinancing the clubhouse? This is just more evidence of the backroom discussions that Wayne Poyer denied the existence of when questioned by Bill Masters at the February Round Table.

In a sometimes heated debate, the board decided what to do about the fact that it pledged common assets without first obtaining 67% approval of the membership. To those who say the board never violates LHCC’s governing documents, this is just 1 example. The board acknowledged it didn’t follow LHCC’s governing documents on one of the largest transactions in Lake Holiday’s history. Jo-anne Barnard expressed the view that had she been given a chance to vote to incur a big mortgage to remodel the clubhouse, she would have chosen not to do so.

According to some board members, to fix things would require:

  • pledging over 90 LHCC-owned lots
  • paying $18,000 in closing costs
  • paying an extra $1400 per month for 5 years
  • putting a bank hold on $150,000-$200,000 of LHCC deposits for 5 years

The hold would prevent LHCC from using the money. The board’s fix relies on an artificial distinction between “common area” and “common property.” Mortgaging the clubhouse without member approval was wrong because the clubhouse is “common area,” but mortgaging 91 lots without member approval is acceptable because these lots, according to the board, are something entirely different – “common property.” The extended debate is covered in a total of 9 parts, the first 8 of which include the discussion and the last of which includes the final vote.

Several directors expressed the view that the fix was expensive at a time when money is tight and the damage from violating LHCC’s governing documents can’t be undone. The decision: put the issue to retroactively approve pledging common assets to a member vote (which will almost certainly fail, as Poyer himself acknowledged), and if it fails, to enter into the refinancing, probably in early 2009. Martel asked that the record reflect that this decision to refinance is a breach of directors’ fiduciary responsibility, and when Poyer objected to the minutes reflecting Martel’s comments, he withdrew them. Not to worry, John Martel. The record of your inability or unwillingness to stick to your position is amply reflected on YouTube.

We extend our continued thanks to Bill Masters for his unflinching efforts to let property owners monitor the conduct of LHCC’s board. Despite the board’s talk of openness, they blocked Masters’ videographer from the boardroom on the grounds that he wasn’t an LHCC member. Property owners should be deeply troubled by a board that blocks openness and at the same time denies it is doing such blocking.

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Bye, Bye, Bleckster

Rick Bleck, who did not meet the 1 year ownership requirement for nomination set forth in LHCC’s bylaws and was invisible on the campaign trail but was elected anyway, resigned from LHCC’s board on January 30th. Bleck, aka the “Bleckster” (see his own email address), sent a resignation email to Wayne Poyer. He resigned essentially the day after attending the January board meeting which included an Executive Session focused on LHCC’s litigation issues. He wished the remaining board members “Good Luck to all with this one” and with that, he was gone. He may not have left a lasting impression, since GM Ray Sohl mistakenly identified him as “Bill Bleck” when forwarding his resignation email. Maybe the community that allegedly elected Bleck to the board didn’t leave a lasting impression on him either. In 2 instances he referred to Lake Holiday simply as “Holiday.”

We suspect Bleck was duped to keep his name on the 2007 ballot even though he didn’t meet the nomination requirement to block the election of Bill Masters. Masters has been critical of the board, and the board is intolerant of criticism, however justified. Caught in a place where he would not be able to make a meaningful contribution or independently become familiar with the challenges facing Lake Holiday, Bleck would have little more than a marginalized role on LHCC’s board. However, Bleck himself opted to take on this marginalized role by allowing his name to remain on the 2007 ballot after he learned of a legitimate challenge to his nomination. Although he put himself in a difficult position, he should have stuck it out.

At the March 27th board meeting, LHCC’s board decided to appoint Bleck’s successor. The deadline for expressing an interest to serve was March 18th, and only 2 prospective candidates responded by that date: Bill Masters and Mike Sweeney. Just as with Bleck’s nomination, there’s a big problem here. Mike Sweeney is the husband of Robin Pedlar, one of LHCC’s current directors. LHCC’s Articles of Incorporation contain this simple sentence:

A Lot shall not have more than one membership, but the single membership shall be shared by all owners of the lot.

Since Robin Pedlar and Mike Sweeney jointly own only 1 property at Lake Holiday, there’s only 1 possible membership in LHCC to go around. But to serve on LHCC’s board, one must be a member. Robin Pedlar is already serving on the board, so she must be a member. That leaves no membership for Mike Sweeney. Case closed. Not so fast. Wayne Poyer said he reviewed this issue “quite thoroughly” and that usually translates to getting a legal opinion to trick trusting owners that this is somehow, someway legitimate. Here’s that legal opinion from Juan Cardenas of Rees Broome as read by Wayne Poyer:

Assuming Mr. Sweeney is a member of LHCC and in good standing, he is eligible to serve on the board of directors per the Bylaws. The fact that he is a co-owner of a lot with Ms. Pedlar does not invalidate his eligibility to serve, nor would it affect his right to vote on matters as a member of the board on matters before the board of directors as the Bylaws do not regulate, much less prohibit, the possibility of two or more co-owners of one lot serving on the board at the same time. The Bylaws make clear that Mr. Sweeney and Ms. Pedlar share voting rights with respect to their lot as members of LHCC on matters before the membership, as only one vote is assigned to each lot regardless of the number of co-owners. But again, this point does not affect the issue of eligibility to serve on the board. I hope this further explanation is helpful. (emphasis added)

Bill Masters challenged whether Mike Sweeney is a member of LHCC, and he specifically referred to that statement under LHCC’s Articles of Incorporation. Cardenas avoided all mention of the Articles and instead tried to focus attention on LHCC’s Bylaws because there’s no way around the unambiguous statement in the Articles. His opinion has a more fundamental flaw. He assumed the very result he should have been asked to evaluate, whether Mike Sweeney is a member of LHCC. Given that Robin Pedlar is an existing director and thus a member, LHCC’s Articles make clear that Mike Sweeney is not a member of LHCC. Therefore, as long as Robin Pedlar is using that membership by holding office, Mike Sweeney is ineligible to serve on the board. We suspect that Mike Sweeney himself knows that this arrangement doesn’t pass the laugh test. That’s why he put the onus back on the board and expressed the hope that the board “reviewed all the documents” and would act in “good conscience.”

We also wonder why Cardenas filled his opinion with arguably true statements that are totally irrelevant to the real issue of whether Mike Sweeney is a member of LHCC. Did he do this as a slight-of-hand trick to draw attention away from his circular logic? Did Wayne Poyer accurately frame the question to Cardenas or read Cardenas’ entire response to the board? We may never know. What we do know is that the LHCC board will blatantly violate its own governing documents without blinking an eye.

During the vote to appoint Bleck’s successor (the first part of which is covered in the above video and the second part here in Breaking the Rules Pt 2, Robin Pedlar abstained and gave no reason for her abstention. We doubt that she needed to explain to other directors that Mike Sweeney was her husband. However, given that Robin Pedlar and Mike Sweeney have different surnames, that fact may not be obvious to the rest of the community. She had a tough choice: be silent or make it crystal clear that she is Mike Sweeney’s wife and explain her abstention, which would have only drawn attention to the illegitimacy of Sweeney’s appointment – attention that clearly LHCC’s directors did not want. Given a tough choice, a Silent Sitter will usually choose to keep silent. Congratulations, Robin Pedlar! You’re our Silent Sitter award winner for the March 27th board meeting.

Robin Pedlar is our 6th Silent Sitter award winner, and the 2007 board is about half-way through its tenure. We thought it was time to create a Silent Sitter page honoring all the winners, with a little background on the award itself.

If your own wife can’t openly vote in favor of whatever you’re trying to do, there’s a problem with it. And she knows it.

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Quick Takes on the March 27th Board Meeting

Here’s our quick take on the March 27th board meeting. We now include video thumbnails directly in posts. If you click on the thumbnail, a video player will pop up and begin playing the video. Look for this feature in future posts. If you have problems using this feature, make a comment on our Help page.

We’ve uploaded 15 videos from the March 27th meeting, representing over 1 1/2 hours of about a 2 hour meeting.

One of the first orders of business: fill the board seat vacated by Rick Bleck, who did not meet the 1 year ownership requirement for nomination set forth in LHCC’s bylaws and was invisible on the campaign trail but was elected anyway. There were 2 candidates: Bill Masters and Mike Sweeney, who is the husband of board member Robin Pedlar.

LHCC’s own Articles include the requirement that “A Lot shall not have more than one membership, but the single membership shall be shared by all owners of the lot.” Since Robin Pedlar is a director, she must be a member. If there’s only 1 membership for a lot, there’s no membership opportunity left for Mike Sweeney. LHCC’s directors get around that major roadblock by obtaining a legal opinion from Juan Cardenas of Rees Broome. That opinion starts out “Assuming Mike Sweeney is a member of LHCC….” As far back as Aristotle in 350 B. C., this con job has been understood to be a logical fallacy, often referred to as “circular reasoning.” Check it out: Assuming pigs can fly, then pigs can fly. Use it, like Wayne Poyer did, to impress passive directors and gullible neighbors. Just don’t actually try to fly, because that will expose the fallacy pretty quickly. Buermeyer gave a speech intended for the camera that encouraged diversity on the board yet offered Masters the hope of joining the board only if he became a clone of Buermeyer himself. Buermeyer and Pedlar abstained; Murphy and Marcus avoided controversy by skipping the meeting. Task #1: pass a resolution to make the vote on this charade an open vote. Watch LHCC’s rules trampled on and tossed away in these 2 clips, Breaking The Rules Pt 1 and Breaking The Rules Pt 2. This action shows the board will recklessly violate LHCC’s own governing documents to keep its grip on power.

GM Ray Sohl gave the management report, Mar 08 GM Rpt Pt 1 and Mar 08 GM Rpt Pt 2, in which the topic of the effectiveness of the Roving Patrol was raised. Is it effective? The board moved that question to Executive Session, so members will never know just what the roving patrol led by Zeb Brevard, the roving patrol supervisor, actually does all day. Treasurer John Martel, who sometimes struggles with accounting issues, offered a friendly health tip in his Treasurer’s Report. Wayne Poyer raised a concern that an owner/builder was possibly blocked from using white garage doors, which should automatically be approved, in our clip Garage Doors and asked Judy Platt about stocking the lake with non-native fish.

There have been 2 serious accidents on West Masters Drive, so the topic of guard rails (Guard Rails Again Pt 1 and Guard Rails Again Pt 2) came up again. We’ve heard reports that a driver was very seriously injured, perhaps paralyzed, in a recent accident on West Masters. If guard rails had been installed, the seriousness of these accidents may have been reduced. Steve Locke did offer a suggestion: put up caution tape. Action on the guard rail issue was “tabled” because of LHCC’s “serious financial headaches.” Estimates for dam culvert work (just 1 part of a much bigger project) came in at approximately $175,000 compared to a budget of $45,000. This $130,000 surprise didn’t find its way into Wayne Poyer’s April 2008 President’s Report, which discussed dam costs.

Changes were made to construction guidelines, apparently requiring a member to be in good standing for all properties owned, rather than the property for which construction approval is applied, before approving new construction permits. If allowed to stand, this will just about kill any new construction at Lake Holiday. The board also discussed taking more aggressive action against serious compliance violations. That could mean spending more money on lawyers at a time when money is in short supply. With her husband’s help, Robin Pedlar outlined the plans for 2008 social activities and suggested that LHCC in effect have a second set of books to get around the troubles created by accrual accounting. Directors seemed comfortable they could find a way to shift expenses from one time period to another to make everything work.

Dave Buermeyer led a discussion of changing LHCC’s water conservation rules, but most of that discussion focused on eliminating the single word “services” from a motion actually made by Jo-anne Barnard. Barnard was concerned about expressing positive comments about Aqua Virginia’s services when there have been so many complaints from Lake Holiday homeowners that Aqua Virginia’s service is “not at an acceptable level.” Buermeyer lost control of his own topic, and in the end, voted against the resolution he presented. John Martel seemed to have no idea what he just voted on, since he voted against Buermeyer’s resolution but said that he wanted the resolution to pass. Maybe that one word “services” was the glue that held everything together. Maybe some would pout and block their own ideas if they couldn’t have it their own way.

The Middleton story that we previously covered has recorded a new chapter, after he put “No Trespassing” signs on his property. Wayne Poyer vowed to “do it much more crisply than we did the last one.”

We’ve also added a link on our sidebar to SchoolMatters, a Standard & Poors website with test scores, demographics, district finances, parent reviews, and other information on schools nationwide. It’s easy to compare schools. Our link is for Frederick County, VA schools. Check it out.

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Silent Sitters Face The YouTube Era

One of the hot issues at the February 25th board meeting was videotaping board meetings. In fact, the issue made it on to the agenda for that meeting. However, when the board reviewed changes to that agenda, the videotaping topic wasn’t changed or dropped. It was just silently skipped during the meeting.

If the board wasn’t prepared to discuss videotaping, homeowner John Platt certainly was. Platt gave a nearly 10 minute presentation on the perils of videotaping that ranged from behavioral control to breaching personal security and identity theft. We can sum up Platt’s message in 2 words: stop videotaping.

Videotaping open meetings fosters good governance. Governance at Lake Holiday extends to committees and task forces, which are the principal advisors to the board. Together, the board, committees, and task forces make decisions that affect about 2700 lots and approximately $210 million of property value (based on February 2008 Frederick County tax valuations). The board, along with committee and task force members, opted to take on the responsibility of governing their community. That authority comes – and should come – with scrutiny.

Videotaping also helps to address something that LHCC Treasurer John Martel acknowledged:

We also have a lot of baggage that we have to overcome.

Homeowner Bill Masters records the meetings. Both Wayne Poyer and GM Ray Sohl have publicly acknowledged that Masters has a right to make these recordings. In fact, at the December 27th meeting, LHCC’s directors briefly discussed recording board meetings on their own.

Getting videos on the web quickly takes some work. To further his goal of fostering open governance, Masters gives the raw video tapes to us to take the most relevant or interesting portions of these meetings and get them on the web as quickly as possible. In many instances, we have video clips of important discussions available on YouTube before LHCC releases a written synopsis of what took place at a meeting. Anyone, including LHCC itself, is free to embed the codes to display any of these videos on a website. The videos are provided at no cost.

Some LHCC directors complain that we edit videos or provide clips that are not representative of what took place. That’s trying to bundle an obviously true statement with a crazy one, hoping that people can’t tell the difference between the two. A typical board meeting takes place over several hours, and the clips we make are no more than 10 minutes long. We don’t set or control this limit; it’s set by third-party video sharing services. It’s self-evident that we edit them. That much is true. In every case where we make an edit, we insert a clearly visible transition effect. If you don’t see a clearly visible transition effect, the video you see is an unmodified video stream.

The claim that something is unrepresentative or taken out of context is the crazy part. Lake Holiday’s board meetings are divided into tabs, as the agenda for the 2/25 meeting demonstrates. These tabs are discrete topics that often have little to do with one another. For example, on the 2/25 agenda, Tab 14 involves a roughly 3 minute discussion about selling a 1991 Ford pickup for $150. The very next tab is a roughly 26 minute discussion of a policy to fill board vacancies. One does not need the context of the old truck sale to understand a policy on filling board vacancies.

The videos we present are clips from a larger meeting. Given that the videos are made available at no charge, technological and practical considerations make it impossible to deliver a 3 hour watch-on-demand meeting video in rural Virginia. YouTube, backed by the multi-billion dollar resources of Google, doesn’t do it. Hollywood movie studios don’t do it. Those that attribute sinister motives to Masters or us for failing to deliver community association videos in their entirety for free display their technical ignorance. Maybe their motives are on display as well.

Dividing meetings into clips allows a viewer to watch what he wants, when he wants. We are not extracting unrepresentative comments from the video when there were opposite or contradictory comments readily available. When we quote John Martel as saying that “we also have a lot of baggage that we have to overcome,” he did not contradict this assertion before or after making that remark. In fact, after Pat Shields expressed an opposing point of view, Martel repeated his position more firmly and succinctly: “Lake Holiday has baggage.”

There are a lot of benefits to providing videos on the web. The majority of Lake Holiday owners do not live at Lake Holiday, so internet-hosted videos enable more owners to observe how their community is governed. Very few owners actually attend meetings, and those that do typically do not stay for the entire meeting. We’ve uploaded more than 100 videos to YouTube, and these videos have been watched over 4000 times. That’s roughly the equivalent of 40 people attending 45 minutes or more of every board meeting for a year. Since board meetings frequently draw no attendees outside open forum, videos create community involvement.

Many of our videos are informative, such as our series on the dam or the maintenance building (Dam Pt 1, Dam Pt 2, Dam Pt 3, Maint Bldg Pt 1, Maint Bldg Pt 2, and Maint Bldg Pt 3) available by clicking the nearby thumbnail or visiting our Videos page). Most videos show LHCC’s directors conducting routine business, such as reviewing the Treasurer’s Report or the GM’s Management Report. Unfortunately, too many videos show the board engaging in what we believe is inappropriate behavior or making a bad decision. A dramatic example of this is the Keep It Over Here Punk video, featuring the antics of director Steve Locke and Bob Fraser. In all cases, owners get to watch their board in action and form their own opinions. If board members find that their conduct appears unflattering when watched on video, the proper course is not to try to pull the plug on videotaping; the proper course is to change that conduct.

As a result of watching board videos, we’ve observed too many board members sitting in silence and then unanimously rubber-stamping a motion or resolution. Typically, we’ve given our Silent Sitter award to a director that we thought was especially passive. During the February meeting, directors Noel O’Brien and Robin Pedlar said very little. However, Noel O’Brien made a strong statement in favor of installing guard rails on West Masters Drive without delay. In light of the recent serious accident on that road, O’Brien is on the right track. Pedlar also voted against the recently adopted policy on filing board vacancies, an unnecessarily cumbersome procedure. These are positive steps, but we think they need to do more. Perhaps some directors are realizing that passivity is not such a good thing after all. Sorry, Robin and Noel. No award for you this month.

We’ve never given an officer our Silent Sitter award. In award terms, LHCC’s officers get off easy, since several have regular responsibilities at monthly meetings that force them to speak up. Sometimes, in the course of that speaking up, officers say things that hurt Lake Holiday. At the February 25th meeting Wayne Poyer complimented John Platt on his “excellent presentation” focused on putting an end to videotaping. Poyer offered this praise despite Poyer’s numerous acknowledgements of Masters’ right to make those recordings. We certainly support Poyer’s allowing Platt the time to make his point. But fueling Platt’s views, especially since they are contrary to opinions that Poyer has expressed, only increases political divisions at Lake Holiday. Poyer should have firmly conveyed that open governance, however uncomfortable it may be at times, is a good thing, and that it is supported by the LHCC board.

For keeping silent on this point, Wayne Poyer is our Silent Sitter for the February 25th board meeting. Congratulations, Wayne! You’re a Silent Sitter!

Making videos of public meetings is an issue that has been closely analyzed outside of Lake Holiday. In March of 2007, the New Jersey Supreme Court decided a case that raised issues similar to those in the discussion of videotaping at Lake Holiday. In the NJ Supreme Court case, Robert Wayne Tarus, a 15 year resident of the Borough of Pine Hill, was blocked from videotaping public meetings. Tarus was a frequent critic of the Borough Council. The court decision referred to remarks the mayor made to a local paper about Tarus: “If he was a decent resident, we would have no problem.”

The court also discussed the Borough’s concerns about how Tarus would use or edit the videos he made:

Finally, during oral argument before this Court, defense counsel for the Borough explained that a primary concern expressed by Council members was that ‘this political opponent . . . was going to take tapes and take them back to his basement and edit them around and turn us all into monsters.’ Thus, by their own admissions, when they blocked plaintiff from videotaping the meetings, the Mayor and Council acted on an impetus that found its genesis, to some degree, in animus against the plaintiff. In that context, we find those actions to be arbitrary and unreasonable.

The concerns that the Borough expressed against Tarus are nearly identical to those that LHCC board members have expressed about Masters’ recording the meetings and our editing the videotapes.

Tarus won his case, and the NJ Supreme Court ruled:

The law has embraced the undeniable fact that modern electronic devices are silent observers of history. These legal foundations support a finding that there is a common law right to videotape.

The NJ case also addressed the concerns expressed by John Platt that videotaping has a negative impact on other meeting attendees:

Video cameras and recorders have become a commonplace item in our every day life. They are a common security device and confront us at the bank, in stores and even in apartment houses. Exposure to video recording of all of us is a normal occurrence on the streets and in public gatherings such as athletic contests and sporting events where participants and spectators are under constant television surveillance. Such exposure is actively sought by all those running for public office in order to place their image and their ideas before the voters. … Today, hand-held video cameras are everywhere — attached to our computers, a common feature in consumer still-shot cameras, and even built into recent generations of mobile telephones. The broad and pervasive use of video cameras at public events evidences a societal acceptance of their use in public fora. … So too, we are not persuaded by fears that the use of video cameras in non-judicial settings will generate intimidation and harassment. … Trepidation over the effect of video cameras in public meetings is overstated. The prevalence of video cameras in society and the open nature of public meetings militate against such hyperbolic concerns. Although some citizens may be fearful of video cameras, we find that consideration insufficient to deny the right to videotape. … The legal foundations described above, with roots wide and deep, offer a glimpse into our evolved understanding of the right of public access and support our finding that there is a common law right to videotape.

Writing for a unanimous NJ Supreme Court, Chief Justice Zazzali referred to the ideas of Jeremy Bentham, Patrick Henry, and James Madison, offering these powerful words:

In short, our civic forefathers have long recognized that spores of corruption cannot survive the light of public scrutiny. … Openness is a hallmark of democracy — a sacred maxim of our government — and video is but a modern instrument in that evolving pursuit. … Arbitrary rules that curb the openness of a public meeting are barricades against effective democracy. The use of modern technology to record and review the activities of public bodies should marshal pride in our open system of government, not muster suspicion against citizens who conduct the recording.

Perhaps Poyer was less than firm in sending that message because openness and hallmarks of democracy do not really enjoy the support of LHCC’s board. Perhaps the disappearing agenda item on videotaping will resurface, and LHCC will seek to block such recording by a policy resolution. We hope not. Whatever happens, watch it play out on YouTube.

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