2018 AGM Newsletter
/ANNUAL GENERAL MEETING (AGM)
The AGM will be held this year on Saturday, August 25th, at the LISE Clubhouse starting at 10:00 a.m.
Parking may be a little tight so if you are able to walk or carpool to the meeting that would help. We know that crabbing will be under way, but we would very much appreciate it if those members with boat trailers could take into consideration parking for the AGM when parking their boat trailers that morning so that our older members or those with physical limitations are able to park close to the club house. Thank you in advance for your consideration.
OPEN BOARD POSITIONS
An opportunity to get involved
The LISE board is composed of volunteer members, acting on behalf of the entire community. At this year’s AGM there will be three open board positions that all members will be asked to vote on. We’re looking for volunteers that are interested and willing to participate. It’s a great way to participate in the community and ensure that our community continues to develop and meet the needs of all members.
Both Leslie Dempsey and Tim Slater have fulfilled their two-year board terms and are stepping down. Don McCuiston resigned from the board in June and Ben Twigg was appointed by the board at our June board meeting to fill that open board position which ends at the August 2018 AGM. Ben has agreed to put his name on the ballot for a new two-year term.
Joining Ben Twigg on the ballot are Sharleen Peitsch-Tyerman and Paul Dempsey. Ben, Sharlene and Paul have each provided short bios [read bios here]. There will be an opportunity for additional prospective board member nominations from the floor at the AGM. Once again, the Board would encourage members to step up and get involved.
We also want to remind folks that at last year’s AGM the membership approved a bylaw amendment authorizing board members to receive a stipend equal to 1/12 of the annual dues for one lot for each regular monthly board meeting they attend (i.e. the stipend cannot exceed the dues on one lot in any given year per board member). The stipend is intended to encourage members to step up and volunteer their services as a board member.
OTHER ITEMS TO VOTE ON
Proposed 2019 budget
The proposed 2019 budget, which has been adopted by the Board, is enclosed for your review. This budget maintains dues steady at the previous year’s level. It also anticipates our insurance cost remaining high for the next year or more, as a result of the litigation brought by Chuck Ortego, Louise Weber and others. Although we are hopeful that at some point our insurance cost will eventually come down, there is no way of knowing when that will happen so the budget necessarily is based on insurance cost as they currently are, not as we wish they were.
2017 PROFIT & LOSS NOTES
Because of the combination of stepped up past due collections and operations projects budgeted for but not completed in 2017 due to short staffing, LISE’s 2017 yearend Profit & Loss Statement (cash basis) shows a considerable profit. Please note that our budgets aim for zero profit or loss at year end. In early 2018 the board made the decision to transfer $40,000 of this profit into our reserve accounts. This deposit is in addition to the 2018 budgeted $45,000 reserve deposit which LISE will make in December of this year. The board’s rationale for not transferring the entire profit into reserves is that we anticipate that some of the 2017 operations projects which were deferred, still may be completed during the remaining months of 2018.
STAFFING
We have had some very positive changes during the past year. Specifically, as many of you will recall, our Office Manager Glenda resigned to move to Texas with her family just before last year’s AGM. Operations Staffer Isaac Colgan rose to the occasion and covered the basics of the position for about three months while Kevin kept the water system’s “wheels on the bus” figuratively speaking. Our last two office employees lived off-island and commuted to Lummi Island to fulfill LISE’s office hours. This time around the board decided to try and hire an islander. We were surprised to receive limited interest in the job posting, and thrilled when Allison Cash eventually applied. Board member Doug Cash recused himself from the hiring committee and from any direct supervision of the Bookkeeper position to avoid a conflict of interest. Allison started work last October and has proven to be a wonderful fit for this job. If you haven’t met Allison yet, please make a point of introducing yourself to her at the AGM.
Kevin Southworth is doing a terrific job at the helm as LISE Operations Manager, we value and appreciate the knowledge and perspective that his nearly 19-year experience with the LISE water system brings. Isaac continues to make good progress on his water treatment education and on-the-job training. He recently achieved two different level one water certifications.
DELINQUENT ACCOUNTS
During the past year the board has increased our focus on collecting on delinquent accounts. We became aware, during the office staff transition, that the delinquent accounts report, which has historically been provided for board review, wasn’t a comprehensive view. LISE’s accounts receivable was bigger than we realized. We researched and discovered many small balances from previous years, and that LISE had no procedure in place for communicating these small old balances to members.
In October of 2017, we did a late notice mailing which resulted in a significant reduction of these prior year and 2017 delinquent balances. One result of the pending lawsuit is that the board has adopted a mantra: “we need to treat all members the same”. The board applied a one-size fits-all strategy to communicate and collect these old balances, and we know that some members were offended. We apologize for any hurt feelings and assure you that LISE has instituted a delinquent notice procedure that should avoid this type of surprise going forward.
OPERATIONS HAD A BUSY YEAR
LISE had our 3-year Sanitary Survey by the Department of Health (DOH) which was highly favorable. We are working on installing a SCADA monitoring system for chlorine and turbidity as required by the DOH Regional Engineer.
Chris Immer (left) and Kevin Southworth place the new gangway.
This year Kevin and Isaac focused on many maintenance projects including leak repairs, replacement of a pressure reducing valve, and pavement repairs at the Clubhouse parking lot. They installed a new aluminum ramp prior to launching the docks with help from Chris Immer and Brian Parberry’s large forklift. New shop doors were installed.
DNR renewed LISE’s marina facilities permit after completing an extensive application, and LISE’s water treatment plant received a DNR Gold Certificate of Achievement for 10 years of exceeding optimization goals.
IMPACT OF DOGS ON LAKE/RESERVOIR
Please take time to read the attached LISE Operations report titled Why are dogs not allowed at the lake area? We’ll have an opportunity to discuss this public health issue at the AGM. This impacts each one of us that relies on LISE water. If you are a dog owner, please obey our community rules!
The specific rule for dogs is Article 5.1.3. and the link is: www.LISECC.com/part5/section5-1.
LAWSUIT UPDATE
Many of you may be wondering what is happening with the litigation brought by Chuck Ortego, Louise Weber and others (please refer to the pleadings posted on the LISE website if you would like to see the names of all the Plaintiffs, listed in the caption). As noted in the 2017 AGM Newsletter, the Plaintiff’s appealed the trial court’s rulings in favor of LISE. The appellate process involved both sides submitting briefs. With the Plaintiff’s attorney requesting numerous time extensions, the process took much longer than any of us would have hoped for. Oral arguments were held in Seattle on June 12th before a three-judge panel of the 9th Circuit Court of Appeals. Our attorney, Jessica Goldman, did a great job at the hearing. Jessica had estimated that it might take as long as 6-8 months for a decision. THE GOOD NEWS, as many of you are probably aware by now, is that the 9th Circuit judges came out with a decision in just over a week denying the Plaintiff’s appeal and upholding the rights of LISE to impose and collect dues. In short, of all the myriad claims brought by Plaintiffs (the complaint was nearly 70 pages long), they were unable to get past summary judgement on a single claim. The 9th Circuit ruling is available for viewing at the LISE website (www.LISECC.com/legal) along with other documentation related to the case.
As has previously been pointed out, one of the consequences of the lawsuit was that our insurance carrier, Arch Insurance, dropped our coverage in 2016. Since that time, we have had to piece together an insurance package with coverages from several companies (including Lloyds of London) rather than having all coverages through one company (i.e. Arch). The cost of LISE’s insurance coverage increased from approximately $11,000 a year to approximately $55,000 starting in May of 2016. The 2019 budget year will be the fourth year that LISE will have paid the higher insurance cost. With 399 dues paying members, the increased insurance cost amounts to approximately $100 per year per dues paying lot. To put it another way, LISE has already paid approximately $130,000 in additional insurance cost, and through the 2019 budget cycle the total approaches $175,000. We remain hopeful, now that the the lawsuit is resolved, and litigation comes to an end, that our insurance costs will eventually go down and we’ll be able to achieve all coverages through one insurance company. We have been advised by our insurance broker that only one other company provides the “full meal deal” type of insurance package that we had with Arch. We’ll just have to wait and hope.
Breaking news
At the time that this newsletter was being finalized, we received the following message from LISE’s attorney, Jessica Goldman: “Proving that he is truly incapable of taking no for an answer, Charles Ortego has requested a rehearing by the same three-judge panel that rejected his claims and has requested rehearing by the entire Ninth Circuit, which is rarely granted even in meritorious cases. We expect that both of these claims will be summarily rejected.” The Plaintiff’s request for rehearing document can be viewed on our website (www.LISECC.com/legal).
RESERVE SUMMARY
A portion of the 57-page Reserve Consultants LLC July 2018 Reserve Study update is enclosed for your review; the entire report is available on our website here. According to RCL’s disclosure, this reserve study complies with the requirements of the recently enacted Washington Unified Common Interest Act (WUCIOA) Section 331.
This report highlights the usefulness of the reserve planning/funding process in trying to avoid a situation where current lot owners defer needed improvements to keep dues low only to burden future lot owners with the total cost of replacing or upgrading big ticket items. Please note that the level of reserves and the percentage of funding is something that will fluctuate over time as we continue to add to reserves and as projects costs are withdrawn from reserves. The important thing is that based on the most recent reserve study the enclosed summary concludes LISE should have sufficient money to meet its obligations over the next 30 years provided it continues to make its recommended reserve contribution (adjusted for inflation). In short, the current board is trying to take a reasoned and prudent approach to reserve funding.
PLEASE ATTEND THE AGM
Finally, we’d like to encourage all members to attend the August 25th meeting, give us your input, and if possible volunteer to join us in helping to keep this community valuable to all. If you can’t attend, please participate by mailing in your Absentee Ballot (instructions are included with your mailing). This is a wonderful small neighborhood on a lovely small island – good things are happening here! We hope to see you in August,
The Scenic Estates Board of Directors
