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How Bill Masters Saved Lake Holiday $120,000

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Clubhouse Post Renovation, January 2008
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.

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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!

Frederick County Tax Map 18 A 21D
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.

Ray Sohl to Bill Masters email 8/6/08

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

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May 15, 2008 Budget Meeting
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.

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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.

Steve Locke
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.

Suzy Marcus, 4/28/08 Winner
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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Now Is Not The Time To Be Passive

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We’ve finally gotten around to choosing the Silent Sitter for the January 28th board meeting. The meeting was held on a Monday, and it was some time before we could review the video tapes to pick a Silent Sitter award winner.

On the next Wednesday night, before we had reached any decision, LHCC reported that a director resigned. Oddly, it did not announce who resigned. The next day LHCC confirmed privately that 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, had resigned but still did not publicly identify the resigned director.

Just who resigned was a hot topic on The Summit Advisor two weeks after Bleck resigned, and posters there repeated what we had announced earlier. Just before the 2/23 Round Table, LHCC updated its website with what was by then stale news, identifying Bleck as the resigned director. After all, there’s no sense being secretive about something that is common knowledge. It’s peculiar that LHCC would take so long to keep the community informed on basic governance issues. Directors have come and gone before.

Bleck’s resignation made us re-think our guidelines for the Silent Sitter award. After much reflection, we realized our original concept for the whole award needed an overhaul, or at least a clarification. Here’s what we came up with: to win the Silent Sitter award, a contender had to still actually be a director. A fundamental point, to be sure. But given that Bleck, a solid contender for another Silent Sitter award was no longer a director, that would mean he couldn’t win. If he had won, that would have meant that one director would have won 3 out of 4 Silent Sitter awards, and the only won he failed to win during that award-winning stretch was the meeting he skipped!

Even without Bleck, there were several solid contenders for the Silent Sitter award on January 28th. We’re getting the sense that LHCC directors love our Silent Sitter award. So many of them seem to be working overtime to win it. Suzy Marcus, winner of the award for the December meeting, had little to say. Specifically, she had nothing to say about her Realtor Outreach scheduled for the November meeting that she missed. It’s never been mentioned since.

Noel O’Brien, another potential winner in any given month, also had little to say. However, Noel did introduce a motion to move the regular monthly board meeting from Monday to Tuesday in order to give board members more time to review their board books. We support the notion of board members having ample review time, but by itself it’s not a meaningful improvement. If board members remain Silent Sitters, increasing review time is meaningless. Voting down Noel’s motion to switch board meetings from Monday to Tuesday took about 6 1/2 minutes.

Jo-anne Barnard
By comparison, discussion of LHCC’s new proxy policy took about 3 1/2 minutes. The proxy policy is far more important than deciding whether to meet on Monday or Tuesday. Yet it got about half the time in a what was more than a 2 hour meeting. Generally speaking, when you have an important issue covered in 3 1/2 minutes, press the pause button on the video and look around. You’ll find your Silent Sitter.

We’ve covered why LHCC’s proxy policy is a bad idea. In the discussion in December, Jo-anne Barnard favored giving voters increased opportunities to express their opinions:

…I think we should provide the members every opportunity to vote whatever way they want.

However, despite our post and her initial opinion, Jo-anne voted in favor of LHCC’s new policy – which restricts how voters express their opinions. The policy was adopted at the January meeting. The policy restricts voter choice by requiring proxies be directed, something that is not in either LHCC’s Bylaws or Virginia statutes. It’s inappropriate for LHCC directors to effectively amend LHCC’s Bylaws by passing a board resolution.

The proxy policy also helps perpetuate the difficulty that Membership Lot owners have to revoke absentee ballots, a difficulty that proxies can fix. Restricting voter choice and making it hard for Membership Lot owners to revoke absentee ballots divides the community. Jo-anne pointed out in December that restricting proxies could be challenged, but directors didn’t vote on the proxy policy at that time. When it came time to vote in January, Jo-anne brought up none of this. Then again, it only was a 3 1/2 minute discussion of an important issue. Congratulations, Jo-anne Barnard! You’re our Silent Sitter for the January 28th meeting.

On a humorous note, one contribution Jo-anne did make at the January 28th meeting was attempting to correct Steve Locke after he mixed up the names “Platt” and “Pratt.” At least everyone had a good laugh about the incident.

Many in the community probably held high hopes for Barnard’s election in October. She’s a lawyer with an impressive resume. However, we understand that she didn’t attend the one candidates’ forum LHCC held before the 2007 election, and she skipped the 2/23 Round Table, an event all board members were asked to attend. We wonder if she’s reluctant to answer questions from property owners. Answering questions from those owners comes with the territory when you seek and win a board seat of an organization serving 2700 properties.

Based on her background, we assume that Jo-anne Barnard is familiar with the problems brought about by passive board members. One relatively recent example is the collapse of Worldcom. In June 2003, former US Attorney General Dick Thornburgh issued the Second Interim Report in the Worldcom bankruptcy proceedings. In his report, Mr. Thornburgh criticized board members who approved board actions:

with little or no information and almost no inquiry. A board vigilant about fiduciary duties would not have been so passive.

His report pointed to a “culture and internal processes that discourage or implicitly forbid scrutiny and detailed questioning” and the lack of “meaningful deliberation or analysis” by Worldcom’s board as big factors in Worldcom’s collapse. Mr. Thornburgh concluded:

In short, at a time when the Board should have been more assertive, it instead became increasingly passive and submissive.

To be sure, Lake Holiday is not Worldcom. Sometimes, examining the same problem on a dramatically bigger scale helps make the possible impact of that problem more clear. Passive board members weren’t good for Worldcom. Silent Sitters aren’t helping Lake Holiday.

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Keep It Over Here Punk

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Bob Fraser
Lake Holiday’s board held a Round Table on Saturday, February 23rd to give property owners a chance to ask questions and receive answers from board members and the GM. All but two board members (Jo-anne Barnard and Suzy Marcus) attended, along with GM Ray Sohl. Wayne Poyer answered most questions, including those questions posed to other directors. Steve Locke, Noel O’Brien, and Robin Pedlar didn’t answer a single question. One wonders why Wayne Poyer didn’t let these directors contribute at all during more than a 2 hour informal question-and-answer session. After all, every board member was asked to attend, and the purpose was to give owners the opportunity to ask questions of the entire board, not Wayne Poyer exclusively.

As he promised on his website, Bill Masters attended the meeting and waited his turn to ask questions of the board. On a number of occasions, Round Table audience members attempted to upend the purpose of the meeting and direct questions to Masters. At one point even board member Steve Locke engaged in this. The result: several fights nearly broke out.

Three of these near-fights are combined on the above clip. The first involved resident Bob Fraser yelling at an innocent and uninvolved camera operator to “keep it over here punk” to capture his rant. This was provoked by Locke’s turning the purpose of the meeting on its head and directing questions to Masters, who was the only audience member that either the board or other attendees wanted to question. Masters was singled out.

A short time later, the question-answer format got back on track. Masters directed a question to Treasurer John Martel, but, instead of getting an answer from Martel, Poyer decided to answer the question for him. Masters complained. Evidently, director Steve Locke was still fuming from his perception that Masters didn’t answer his questions. Locke moved so aggressively toward Masters that he had to be restrained by his wife and ordered by Wayne Poyer to return to his seat.

The third incident came as the meeting was breaking up. Fraser, apparently not content with one YouTube moment, wanted a little more camera time. After getting up and walking toward the exit, he reversed direction, moving aggressively toward the camera operator he previously called a “punk.” That forced Masters to put himself between an obviously irate Fraser and his target, if only to delay Fraser to give him a chance to cool down.

Fortunately, these almost-altercations remained just that, and no real fights broke out. We’ll state the obvious: violence and suggestions of violence, including the intimidation shown on the video, have no proper place, and certainly not at a Saturday morning community meeting over coffee and donuts. Steve Locke and Bob Fraser owe Masters, all attendees, and every owner an apology for their behavior. If you can’t behave in public, stay home.

Bob Fraser and threatening language have crossed paths before. In June of 2006, a homeowner circulated an email with information about a recent post on this website. Bob Fraser’s reply? He started with profanity and ended with “I’ll get even.” (Click on the image to read his exact words, which contains the profanity unedited.) Former LHCC President and current Architectural Committee Chair Lou Einstman, one of the email recipients, didn’t like Fraser’s tirade, and he told him just that.

Lou Einstman Email 06/09/06

Fraser wasn’t impressed by Einstman’s principled stand. Fraser’s response to Einstman: “You are a sanctimonious jerk.” At least he replaced the four letter words with longer ones that can be quoted here.

Bob Fraser Email 06/09/06

Is it believable that these former adversaries settled their differences and were working together on the oft-cited positive agenda of the board? In October 2007, both Einstman and Fraser put their names on the same Lake Holiday Owners Group postcard (which also bore Fraser’s return address), urging their neighbors to elect the same candidates. The postcard omits all mention of weak minds and sanctimonious jerks.

Was this mailing just an outsider’s attempt to try to create the illusion of political unity at Lake Holiday? Is it credible that Einstman and Fraser got together and chipped in their proportionate cost of this mailing, given the history we’ve reported? Or are people that label others as having weak minds and being sanctimonious jerks united in at least 1 thing – keeping control to themselves?

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Suzy Marcus, Silent Sitter

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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, was absent from the December 27th meeting. Rick was the two-time defending champion (if that’s the right phrase) in our Silent Sitter contest. In fact, up to this point, Rick has won every Silent Sitter award we’ve given, since we’ve only given 2. We’re not sure if he was busy or has a strong sense of fair play that required him to give another director the chance to win the Silent Sitter award.

12/27/07 Winner, Suzy Marcus
Given a fair chance, somebody other than Rick Bleck did win our Silent Sitter award. That person is Suzy Marcus. Congratulations, Suzy! You’re our Silent Sitter for the December 27th meeting. Ever since we conceived copied the idea for the Silent Sitter award, we just knew that as long as she showed up, Suzy Marcus would put in a strong showing. The video clip Oops We Goofed (also linked in our post Twenty Certified Letters Later… and on our Videos page) pretty much includes Suzy Marcus’s entire contribution at a meeting that was well over 2 hours in length. In other words, if you don’t count silence, she didn’t contribute very much. When you consider that board members get their board books in advance of the meeting so they can show up ready and prepared to contribute, there’s simply no excuse for that much silence.

Suzy was absent from the 11/26 board meeting, at which she was responsible for presenting an “Open Discussion on Realtor Outreach.” Presumably, she was planning to lead a discussion of ways to help market the Lake Holiday community to real estate agents. When she was absent in November, this topic was moved to December. Perhaps she forgot about her own agenda item. We didn’t. Any benefits from a realtor outreach have now been delayed for 2 months. Sellers may not take kindly to a board that talks tough about a challenging real estate market but when it’s time for action only procrastinates. Chalk it up to having Silent Sitters on the board.

We do have sympathy for Rick Bleck, Suzy Marcus, and every future Silent Sitter. It’s very difficult to break out of the Silent Sitter role, as our video Only 3 For the DEC demonstrates. The DEC is LHCC’s Development Executive Committee, and this committee is where the important stuff happens. As Wayne Poyer explained in the following video, the DEC manages the relationship with Miller & Smith, the biggest developer at Lake Holiday. The DEC also handled the initial relationship with potential golf course purchasers and developed the Utility Extension Program (UEP). In other words, it plays a lead role in critical development issues at Lake Holiday before these issues ever reach the board.

After Wayne Poyer described the DEC at the board’s November organizational meeting, a number of directors jumped at the chance to serve on this important committee. Directors Noel O’Brien and Robin Pedlar, two directors who could challenge for a Silent Sitter award in any given month, wanted to serve. But alas, after offering the tease of what the DEC got to work on, Wayne Poyer explained that there are only 3 seats on the DEC. Without further explanation, these potential Silent Sitters who wanted to contribute just had to understand that Wayne Poyer, John Martel, and Dave Buermeyer would take over the DEC. Is it unusual that 3 men appear to just assume they should dominate this committee and 2 women appear to just understand that this committee is not for them?

Why aren’t Noel O’Brien and Robin Pedlar on the DEC?

We’re reminded of LeeAnn Stevens’ comments about former LHCC President Chris Allison’s attitude toward women:

Chris [Allison] has a real problem with women. We don’t have brains. Our opinions don’t matter. He’s not going to give her the time of day.

Silent Sitters like Suzy Marcus and Rick Bleck have to overcome more than any general reluctance to contribute. They’re fighting against a highly concentrated leadership that blocks them from tackling important tasks.

As much as board members may claim to dislike our Silent Sitter award, the powerful few cherish the existence of Silent Sitters like Suzy Marcus.

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To Build a Class Act Type Thing, You Must Vote Your Conscience

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Current Recreational Vehicle Storage

Robin Pedlar Arguing Against The RV Storage Proposal...
One of the issues taken up at the November 26th board meeting was Ray Sohl’s appeal of the Architectural Committee’s rejection of his plan to locate boat and RV storage.

Director Robin Pedlar, a member of the Architectural Committee, summarized one of the reasons for that committee’s rejection: “It’s pretty ugly.” Why let a reasonable objection like that stand in the way of what the Board and the GM want to do, when the Board can simply overrule the committee?

Thus, we have the appeal of the Architectural Committee’s decision that’s shown on the following video clip.

In previous posts, we criticized several LHCC directors for their utter lack of meaningful contribution to the discussion taking place in the boardroom. We were pleased to see that at this meeting just about all directors present participated in the discussion at one time or another. Perhaps they didn’t want to win our Silent Sitter award. The absence of Suzy Marcus may have added to the pressure on some board members to contribute. With one of the best candidates absent, it was just about anyone’s award to win.

Director 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, came out of his shell and offered these insightful comments:

I guess I’m going to show some ignorance and obviously not knowing the history of it and that’s why I’ve been learning a lot at these meetings and stuff. Is this the only common area that the association owns? To me it’s a real eyesore. You’ve got rusted out campers up there and you’ve got boats in disarray. … I don’t know how long the association’s been around and/or committees but…. I own property down in Orlando. The front of…when you enter the property, it’s got trees, palm trees, and flowers, and you come up here and it’s like holy smokes, who lives back in there? I know there’s some nice houses, nice lake back there, and all of a sudden you come in around the corner. You’ve got these beat up trailers and campers. I don’t know if you have any kind of regulations like if the camper is 10 years old you’ve got to get rid of it if it’s rusted out. I really hope there is a common area maybe in the back of, somewhere in the back where you’re not looking at this stuff. The other thing is I’m just surprised you’d allow this. I mean I’ve got my boats in my yard. That’s where I keep my boats. So, anyway, I’m not really sure about the issue here. But anyway, I was thinking, we need a…actually, the office should be a building with bricks and stuff, and you’ve got this old beat up house. I’m just kind of amazed that all these places I’ve ever had or lived in associations, it was really a class act type thing. This kind of parlays into maybe I’ll start getting active in this now. To entertain something like this, but again, my ignorance. We may not have any other land here and this may be the only solution. I hope someday that…I headed back to this one area, I’m going, I can’t believe that we’d ever entertain this.

When Rick Bleck described the treasured Lake Holiday office as an “old beat up house,” we wondered if we looked more closely, perhaps we might be able to see smoke rising from the other directors’ heads. Apparently, no one bothered to copy Rick on the memo that if you can’t mindlessly focus on positive, un-critical comments, you will be ostracized. We dreamed of a very brief return of Chris Allison. We can imagine his response to Rick Bleck would have created a memorable video moment.

We applaud Rick Bleck’s candor and his willingness to address things that perhaps other directors would like to cover up. Lake Holiday should and can be a class act, and Rick Bleck indicates he’s willing to tackle areas in which it falls short. For his straightforward, on-the-record statement that few of his fellow board members have the courage to make, we could just about eliminate Rick Bleck from consideration for our Silent Sitter award. Just about. But not entirely. And not so fast.

Rick Bleck discredits his own comments by remarking that he is showing “ignorance” and that the present proposal may be the only solution. You can’t persuade others if you can’t convince yourself. Board members need to come to meetings prepared. That means reviewing the topics in their board books and investigating other solutions before the meeting. If every board member does not diligently undertake these steps, the ability of the board to reach intelligent decisions at a meeting is lost. Rubber-stamping the decisions already made by other members is a problem fueled by the Silent Sitters.

Bleck raised a number of serious objections to the plan for boat and RV storage, and just before the vote director Steve Locke advised him that this plan is only temporary. However, Rick Bleck never got responses to his objections or answers to the questions about which he professed ignorance. He never pressed Locke or other directors on what the permanent solution would be, when it would be implemented, and what it would cost.

Rick Bleck Winning His 2nd Silent Sitter Award...

Compare Rick Bleck’s contribution to that of director Robin Pedlar. Our quote above represents nearly Rick’s entire contribution over 2 meetings. In addition to her comments shown on the video, Robin Pedlar weighed in on another topic at the meeting, John Martel’s proposal for board workshops to foster open communication between property owners and the board. We have a mixed view of 2 points she raised in that discussion. Robin thought that it would be helpful to have neighbors get together for coffee and talk about what they like about Lake Holiday, something that smacks of nothing more than a social gathering. But she also was one of few directors who expressed a willingness to listen to whatever complaints members had in an unstructured setting, something we support and that seemed to frighten other directors like Ken Murphy.

The standard for our Silent Sitter award is not purely the lowest number of comments made. We draw a more meaningful distinction than simply counting words. During the discussion on locating boat and RV storage, Robin Pedlar said she and her committee thought it was “pretty ugly.” Evidently, she voted her conscience, because she was the only director that voted against this plan. Rick Bleck, while strongly criticizing the plan, came to the meeting unprepared to discuss alternatives and didn’t press anyone else at the meeting for specifics. When the vote was taken, Rick Bleck voted in favor of a plan that he could not believe would ever be entertained. Steve Locke’s comments would not satisfy a person with serious objections. They would, however, satisfy a Silent Sitter.

For voting in favor of overturning the decision of the Architectural Committee, Rick Bleck is our Silent Sitter for the November meeting.

The question for December: will Rick Bleck three-peat? We hope he’s better prepared, more forceful and less equivocal, and votes according to his concerns, even if that means standing alone.

We support building a class act. To have any hope of doing so, each and every LHCC director must vote his conscience.

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Silent Sitters Vote Unanimously To Raise Dues

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Have you ever read something and thought to yourself “Wow, that’s a great idea. Why didn’t I think of that?”

We had just such a reaction to the phrase coined by an anonymous poster on Bill Master’s website in a thread discussing LHCC’s then upcoming 2007 election of directors. The phrase: Silent Sitter. That phrase succinctly describes the conduct of too many of LHCC’s directors at board meetings. A Silent Sitter just occupies a chair during a board meeting, contributes very little and seriously questions even less, and ultimately votes in support of the decision already made by the powerful few.

We’re going to award a Silent Sitter award to that board member that contributes the least at each board meeting in the hope that highlighting this bad behavior prompts potential Silent Sitters to change their conduct. We make it in the spirit of Sen. William Proxmire’s Golden Fleece award.

The November 12th board meeting to review and approve the 2008 budget is a good place to start. After the organizational meeting on November 5th, this was the first meeting to take up the business of Lake Holiday. Despite the fact that the board was reviewing 2008 expenditures that will exceed $2.275 million, the board meeting on the budget was the shortest meeting that we’ve watched on video, coming in at 38 minutes. Most of the discussion for the entire budget focused on how a single, unbudgeted $9,000 dock repair expense could be deferred or delegated to a committee. This lack of debate shows that the Silent Sitter race will be a close one.

Dave Buermeyer
LHCC VP Dave Buermeyer said next to nothing at the November 12th meeting. But in light of the nearby photo from that meeting, we can’t be sure if Dave Buermeyer was actually awake throughout. We don’t want to turn the award into the Sleeping Sitter. We also don’t think it’s fair to the other board members vying for our award to credit what little he did say at the meeting in light of our uncertainty over his sleeping status.

We also had to seriously consider Jo-Anne Barnard. Among Jo-Anne’s many qualifications to serve on LHCC’s board, she is LHCC President Wayne Poyer’s neighbor. She recovered somewhat from the “deer in the headlights” look she displayed at the board’s organizational meeting and managed to ask several questions. One of her questions helped clarify a caption on a budget line item. Unfortunately, substantive contribution requires more than debating captions.

Jo-anne Barnard
We also had to consider Suzy Marcus and Ken Murphy, who stayed true to their usual performances and contributed next to nothing. Had Noel O’Brien been in attendance, our decision may have been even more difficult since she’s expected to be a regular contender for our award. We’re sure these three will put up strong showings in future Silent Sitter contests.

Despite the close race, we give our first Silent Sitter award to LHCC board newcomer 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. During the board’s organizational meeting, Rick Bleck managed to correct his own phone number on a board member contact sheet. That apparently talkative performance was not repeated on November 12th, when Rick Bleck was virtually silent. He didn’t question any element of the 2008 budget, nor did he suggest any change. When it came time to vote for the budget, he dutifully raised his hand. He fulfilled the role of a Silent Sitter to perfection. He questioned nothing and voted in favor of everything. Congratulations, Rick Bleck, the first recipient of our Silent Sitter award. We have to wonder: did his involvement peak very early?

11/12/07 Winner, Rick Bleck
We think LHCC’s board erroneously believes that unquestioned unanimity indicates a good decision. In contrast, we believe that open, thorough examination of alternate and sometimes opposing views is a better approach. At the very least, those holding the minority view can take comfort in the fact that their position was given careful consideration and had a fair chance to capture support.

For example, in an earlier post we reviewed LHCC’s administrative expenses and discussed the need to adjust these expenses downward by the portion reimbursed by LHEUC. This shows how dramatically LHCC’s administrative expenses have grown since 2006. After deducting LHEUC’s share, LHCC budgeted $182,826 for 5 administrative expense categories (office supplies, office equipment, printing/copying, administrative salaries, and telephone) in 2006. Based on the approved budget for 2008, these expenses are projected to jump to $297,429, an increase of $114,603 or about 63% in 2 years. That is one example of out-of-control spending. Yet no director had the common sense to ask: “Why are these expenses going up so much?” No director made any effort to discuss ways to reduce LHCC’s expenses at the November 12th meeting.

Another example of the perils of blind acceptance can be found in John Martel’s discussion of the balloon note used to finance the clubhouse remodeling, which is part of the above video clip. John Martel says that both he and the 2007 board have been criticized for committing LHCC to a balloon note. To directors operating reasonably, at a minimum criticism indicates an issue that should be carefully scrutinized. John Martel defends this decision:

We have a commitment from Wachovia that they will refinance the loan when it comes due in 5 years.

Unfortunately, the Promissory Note dated February 2, 2007 that John Martel himself signed doesn’t support his claim. That note provides for full repayment of all principal and interest by February 2, 2012 (which is less than 5 years away) and contains no language committing Wachovia to extend the loan. The Promissory Note itself states that:

This Note and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

Yet no director – especially not the Silent Sitters – saw fit to ask John Martel if he had that commitment in writing. Apparently, they accepted his unsupported statements as fact. LHCC’s board operates on the principle of “don’t question – just blindly accept.” Silent Sitters are an important component of this “question nothing-act unanimously” culture.

Lake Holiday owners pay a price for Silent Sitters. A portion of that price is the higher dues discussed in the above video and unanimously approved by LHCC’s board. Lake Holiday does not have a board of 11 people who independently and critically evaluate information. Instead, it has a board packed with Silent Sitters that gives the community the illusion of an independent and thoughtful governing body yet keeps power in the hands of a few.

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Defendant Steve Locke Will Stop At Nothing…

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At the June 25th board meeting, LHCC directors debated defending against the Masters lawsuit. Directors evaluated whether they should use Rees Broome, a Vienna-based law firm that LHCC Treasurer John Martel compared to an “ambulance chaser” with “extravagant” rates or the lower-priced Segan Mason & Mason. (For more on John Martel’s evaluation of Rees Broome, watch Use Rees Broome Pts 1 & 2 on our Videos page.) The board also considered whether LHCC should defend the 5 directors individually named in the Masters suit: Dave Buermeyer, Suzy Marcus, Ken Murphy, Noel O’Brien, and Steve Locke.

On this last point, defendant Dave Buermeyer suggested that the individual defendants recuse themselves or abstain from voting on whether LHCC should defend the 5 directors. After all, it would be very self-serving for these 5 directors to vote in favor of a motion to get LHCC to pay for their defense. But that created a little problem. Earlier in the meeting, with everyone – including Steve Locke – in the room, LHCC President Wayne Poyer announced that director Chris Allison was “called away unexpectedly.” At no time during the 3 hour meeting did Chris Allison appear and, in light of Wayne Poyer’s comment, there was no reason to believe that Chris Allison was nearby.

LHCC has 11 directors. With 1 absent, that left 10 directors. If the 5 director defendants recused themselves from voting on that motion, that would leave only 5 directors able to vote. However, 6 directors are required for a quorum, or the minimum number that can transact business. The 5 non-defendant directors actually present at the meeting would not be able to approve a motion to pay for the defense of the 5 defendants.

To get what he wants – a motion passed for LHCC to pay for his legal representation, director Steve Locke suggests:

I can go outside and in 30 seconds get Chris Allison’s signature on a piece of paper. I’ve been trained. I’ve watched and observed how to do that. Yeah.

Since Chris Allison was “called away unexpectedly,” he is not in the immediate vicinity. Obtaining his legitimate signature in 30 seconds is an absolute impossibility, particularly if Chris Allison were allowed any time to review what he is asked to sign. It’s pretty clear what Steve Locke is suggesting to the board. Steve Locke will do whatever it takes, even if it means coming up with the signature of a director who is not even present, to pass a board resolution authorizing LHCC to pay for his legal counsel.

Instead of a negative reaction to Steve Locke’s repugnant suggestion, he gets a warm reaction. Pat Shields can be heard on the video interjecting in a complimentary way: “You had training.” When Steve Locke says that he has “watched and observed how to do that,” one senses that this is business as usual. This conduct reminds us of defendant Noel O’Brien’s suggestion that LHCC fabricate costs for non-existent employees as a response to Masters’ information requests. Fabricating things must be, as Pat Shields and Steve Locke remark, part of the Lake Holiday training. Ray Sohl, the current GM, sat through this entire episode and said nothing. We can imagine that former GM Dave Ingegneri witnessed equally troubling episodes, yet said nothing.

When Bill Masters heads to court on Thursday against Steve Locke and the other defendants, these are the kind of people he will be up against: soul-less people who will stop at nothing to get their way.

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LHCC Board Votes Down Humanitarian Assistance Policy

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Colby
The Boyd family’s cherished cat Colby has gone and remains missing since mid-February. Finding Colby safe and sound is the paramount objective. If you’ve seen or have any information to help Colby get back home, please call or email us, and we’ll quickly put you in touch with the Boyds.

Colby’s unfortunate disappearance brought to the fore the issue of signs at Lake Holiday. The Boyd family had run afoul of Lake Holiday’s prohibitions on signage in their efforts to locate Colby. They took the initiative to encourage the Board to show more reasonableness in administering Lake Holiday by developing a more humanitarian outlook. However, at the February 26th board meeting, the LHCC Board voted down the humanitarian assistance policy championed by Sharon Boyd.

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