By LEWIS DELAVAN
At the first of three local town hall meetings, property owners gained insight into major changes that could be coming to Hot Springs Village.
Property Owners’ Association chief executive officer Lesley Nalley, board chairman Tom Weiss and attorney Scott Schallhorn last Tuesday discussed proposals to be decided on by property owners in good standing on Nov. 30. The meeting was held in Woodlands Auditorium.
The POA will ask owners to update the articles of incorporation to Arkansas’ 1993 law. Proposed amendments could also bring many changes.
POA officials say updating HSV’s governing documents “will eliminate or replace obsolete and confusing provisions, equalize unbalanced voting provisions, and will tailor the documents to fit the current living experience and expectations of property owners.
Conversely, they say, “Not casting an affirmative vote could mean the continuation of voting imbalances, burdensome development timelines, insufficient assessments, and financial liabilities imposed on property owners by for-profit entities.”
Ballots will be mailed to owners in good standing on Oct. 26. Owners may cast ballots in person on Nov. 30, the day that final proxies and ballots will be counted. If approved, the amended articles of incorporation would go into effect next January.
Notice of approved amendments would be made next April, with the amended Declaration going into effect in April 2020.
Local town hall meetings will also be held Sept. 17 and Oct. 29. With the majority of owners living outside the Village, POA representatives are also traveling to regional meetings to discuss the proposals.
The 1993 Arkansas non-profit incorporation law is much more detailed than the 1963 law that the POA was incorporated until in 1970.
Slides summarized key points of each proposal, including the POA’s stated goal.
Highlights of the proposed amendments include:
• Separating the Declaration’s duration and amendment provisions –- as permitted by a recent Arkansas Supreme Court decision – allowing future amendments as approved by property owners (Article XIV, sections 1, 6).
• Amending the Developer’s (Cooper Communities Inc.) Class B vote, giving all property owners equal voting rights (Article III, Section 2). If approved, the developer’s class B vote would go from 10 to 1. While the Village’s creator, CCI, has held declaratory rights since it created HSV in 1970, CCI has the right to assign it to another company or entity.
• The POA would have no obligation to begin construction of water and sewer until at least 24 months from property being subject to the Declaration (Article VI, Secs. 1). This hardship would cover land potentially brought into the Village, not land already in HSV.
• Removing the reference to a specific index (the Southern Region-Consumer Price Index) as the cap on any increase in annual assessments and replacing it with maximum of percentage (5 percent), unless otherwise determined by property owner vote (Article X, sections 3-6).
• Requiring potential new common properties such as streets, golf courses and other amenities and infratructure constructed by a developer to satisfy construction specifications established by the POA. The POA must accept the improvements as common property. (Article VI, sections 1-3) Weiss said certain infrastructures might not have been constructed to acceptable standards.
• Creates a process by which the Association can sell or abandon certain minor common property and establishes related property owner notifications and vote requirements (Article VIII, Sec. 3)
• Outlining POA architectural control committee standards and processes (Article XI, Sec. 1)
• Updating the articles of incorporation. The POA would be governed by the Arkansas Nonprofit Act of 1993, rather than the Arkansas Nonprofit Act of 1963.
Nalley and Weiss urged owners to study each proposal carefully and to make their own decision on how to vote.
Here are proposals, as outlined:
• Article II, Sections 2-3. Additions to Existing Property
This amendment removes the current exclusive right of the developer (currently held by Cooper Communities Inc.) to expand the boundaries of Hot Springs Village and requires the POA’s consent to expand boundaries.
Goal: To ensure additional property and infrastructure obligations are not imposed on the POA without its consent
• Article III, Section 2. Voting Rights
This amendment equalizes Class B voting rights (the developer) with other property owners’ Class A voting rights. Both classes will have one vote per lot or living unit.
Goal: To give all property owners an equal vote.
• Article VI, Section 1. Plan for Construction and Maintenance of Common Properties: Water System and Sewer System
This amendment provides that the POA is not obligated to begin water and sewer improvements until at least 24 months after property is made subject to the Declaration and permits for-profit entities to contribute to the cost of that construction.
Goal: To reduce unplanned financial liability.
• Article VI, Section 2. Plan for Construction and Maintenance of Common Properties: Ways of Access for Vehicles
This amendment retains the property developer’s obligation to construct and pave streets. The POA would have no obligation to accept the permanent maintenance responsibility for a street unless it is built to standards adopted by the POA.
Goal: To reduce unplanned financial liability.
• Article VI, Section 3. Lakes, Golf Course, Permanent Parks and Permanent Recreational Plots
This amendment requires a neighborhood’s developer to maintain at its expense for a five years any golf course, lake or park constructed by it. The POA could create construction standards for the amenities that must be satisfied by the developer before the POA is required to accept it for permanent maintenance after the 5-year period expires.
Goal: To reduce unplanned financial liability.
• Article VIII, Section 3(j). Extent of Members’ and Associate Members’ Easements
This addition creates a process to permit minor portions of common property to be abandoned or sold after specified property owner notification and approvals, and POA approval.
Goals: To permit minor portions of common property (not to include golf courses, lakes, water, and sewer system) to be sold or abandoned and protect approval rights of property owners adjacent to such properties when changes are being considered.
• Article VIII, Section 3(c). Extent of Members’ and Associate Members’ Easements
This amendment allows penalties to continue as long as the infraction continues.
Goal: To clarify the duration of the penalty
• Article VIII, Section 3(i). Extent of Members’ and Associate Members’ Easements
This amendment changes the approval required to transfer common property to eliminate separate approval by the Class A members and by the Class B member (currently CCI). A majority vote of the combined Class A and Class B members will be required.
Goal: To provide all members in good standing an equal vote with regard to dedicating or transferring common property.
• Article X, Section 3. Basis and Maximum of Annual Assessments
This amendment changes the cap on the amount the annual assessment may be increased from the percentage increase in the Consumer Price Index, to a stated maximum amount of 5 percent, unless otherwise determined by property owner vote.
Goal: To clarify annual assessment increases and stabilize financial planning.
• Article X, Sections 4-6. Covenant for Maintenance Assessments
This amendment eliminates separate approval by the Class A members and by the Class B member (currently Cooper Communities) to authorize a special assessment or increase the annual assessment greater than the applicable cap. A majority vote of the combined Class A and Class B members will be required.
Goal: To secure the right of property owners to equally determine funding mechanisms and remove the veto of one class over another.
• Article XI, Section 1. Architectural Control Committee
This amendment strengthens the standards and processes related to architectural control.
Goal: To protect property values.
• Article XIV, Sections 1, 6. Duration
This amendment separates the Declaration’s combined duration and amendment provisions into separate sections. The duration will remain at seven years, while amendments may be approved by property owners at any time and become effective as designated by property owner vote. The requirement of approval by two-thirds of those voting in the amendment election was not changed.
Goal: To allow property owners to make amendments at any time and determine the effective date of said amendments
• Articles of Incorporation
This amendment updates the articles of incorporation for the POA to be governed by the Arkansas Nonprofit Act of 1993. It currently is governed by the Arkansas Nonprofit Act of 1963.
Goal: To provide clear and complete rules for corporate governance and establish modern standards of conduct for directors and officers.
After the presentation, Nalley read questions submitted on cards and by email.
At the end of the meeting, property owner Brian Darst arose and asked interested owners to meet with him in the lobby.
A white paper outlining the proposals has been mailed to all property owners. It can also be viewed online.
Questions can be emailed to email@example.com.