VILLAGE GLEN HOMES HOMEOWNERS ASSOCIATION FAQs
The purpose of this document is to provide existing VGHOA homeowners and potential buyers of a Village Glen home in escrow, with a summary of the primary obligations, responsibilities and functions of the Board and homeowners described in the CC&Rs, along with amendments, modifications and clarifications (as identified in italics below) associated with the CC&Rs which have been established over the years by a majority vote at Board and annual homeowners meetings. As a supplement to the CC&Rs, this document represents an up-to-date, easily accessible and comprehensive single source of information necessary for a homeowner to develop an extensive understanding about the operating rules and governance of the VGHOA. This document will be updated at the end of each calendar year for any Board or annual homeowner meeting decisions which are related to the CC&Rs.
1. Why was the VGHOA created? The VGHOA was created to satisfy the City of Arroyo Grande and developer requirements specified in the Village Glen Subdivision Development Plan that was prepared by the developer and approved by the City. Specifically, the City did not want legal responsibility for the maintenance costs associated with the drainage basin belonging to Lot 38 (#420 Canyon Way private access drive) and wanted legal assurances that all the hillside homeowner properties along James Way, Hidden Oak Road and along the entry way of Village Glen Drive from James Way would be properly established and consistently maintained with plants and vegetation to prevent erosion and unsightly bare soil hillsides. The developer wanted legal assurances that of the 40 lots created by the Development Plan, all 36 lots off of James Way would be built out and sold by the developer using the home models specified by the developer in the Development Plan.
2. What is the legal status of the VGHOA and how is it governed? The VGHOA is a not-for-profit corporation established under the legal authority and requirements stipulated in the California Davis-Stirling Common Interest Development Act and Amendment—the legislation that creates and regulates Common Interest Developments (CIDs), such as HOAs (see California Civil Code §1350-1378 and as amended by Civil Code §4000-6150). In accordance with the Davis-Stirling Act, the VGHOA was established and is governed by the Declaration of Covenants, Conditions & Restrictions (CC&Rs), which represents the rules, responsibilities, duties and obligations to be followed by the homeowner members and the Board of Directors.
Large complex HOAs which collectively own, operate and maintain real estate or physical assets (e.g., land, buildings, streets, pools, etc.), generally have articles of incorporation or by-laws in addition to their CC&Rs, which provide numerous more detailed operating rules and procedures. Since the VGHOA only has three basic straightforward duties to be performed—common area basic landscape maintenance, drainage basin maintenance and approval of modifications/expansions to the exterior of a homeowner’s house and property—the CC&Rs provide the necessary guidance for implementing these duties. (A helpful one page “Summary of Legal Status & Official Functions” of the VGHOA is posted on the website.)
Annual homeowner meetings are required by the CC&Rs with the invitation notice of date, time and location and the agenda to be mailed to homeowners at least 30 days in advance. Unless an issue arises requiring the Board to hold a formal meeting any time during the year, the Board normally meets during each September to establish the agenda, location and homeowner notification for the November annual homeowners meeting.
On October 9, 2011 the California legislature passed a law that requires all existing HOAs to formally add a cover page to their CC&Rs with the following statement, which has been added to the VGHOA CC&Rs:
"If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status." (California Government Code S12956.1, 9Oct2011). Although the VGHOA CC&Rs do not contain any of the aforementioned restrictions, the above statement is included as a cover sheet to the VGHOA CC&Rs sent to title companies handling escrow on a Village Glen home.
3. How many members are on the VGHOA Board and when are elections held? Section 5.5.A of the CC&Rs established a Board to consist of seven homeowners. Due to a lack of homeowner interest and ongoing difficulty in filling all seven Board positions, a majority of homeowners in the November 2011 annual meeting voted to formally amend Section 5.5.A to reduce the number of elected Board members from seven to five homeowners. Since formal amendments to CC&Rs are required to be recorded with the county clerk’s office, Amendment Document #2000-47636 reducing Board members from seven to five was officially recorded with the San Luis Obispo County Clerk on December 30, 2011.
The current Board is comprised of a president, secretary, treasurer, ARC representative and Canyon Way representative. As stipulated in the CC&Rs, Board members are required to serve on a voluntary basis, without any direct or indirect compensation, for a minimum period of two years without any maximum limit specified. The board has solicited volunteers to replace resigning board members. All willing homeowners are encouraged to volunteer for all positions of interest to them. Please let existing board members know of your interest.
CC&Rs Section 5.5.G grants the Board the authority to appoint a new Board member whenever a vacancy exists to serve without requiring a majority vote of the homeowners; and, Section 5.5.H provides for removal of any Board member by a formal process of submitting written ballots where at least 51% of the homeowners vote to take such an action.
4. Are there any written Board policies issued as operating rules for homeowners in addition to the CC&Rs? Yes. Currently two written policies exist which add implementation clarity to two sections of the CC&Rs. At an August 2007 meeting the Board issued a one page policy to clarify Section 9.11.B&C by defining the step- by-step process to be followed by the Board for the collection of delinquent dues (see point 7 below for details). In a March 2010 meeting the Board issued a one page policy to clarify Section 9.2.A.2 by defining the VGHOA’s basic maintenance practices and responsibilities for the commonly maintained landscape areas (see point 11 below for details). Both of these written policies are located on the VGHOA website.
5. What financial statements exist for the VGHOA and how are dues calculated? The CC&Rs only require an annual estimated budget to be prepared 45 days prior to the beginning of each new year and made available to all homeowners to justify the amount of dues being collected each year. However, with the goal to better inform homeowners about the VGHOA’s current and future financial status, each year three different financial documents are prepared, approved by the Board and made available to homeowners.
At each annual homeowners meeting, the Board presents (i) the estimated operations income statement for the current year ending December 31st, (ii) the proposed budget for the upcoming new calendar year and (iii) a five year budget projections statement. During the first two weeks of January, both the new year’s budget and the previous year’s operations income statement are finalized and posted on the VGHOA website. The actual amount of dues invoiced each year is calculated to cover the amount of budgeted expenses and maintain funding of the reserve at the established target level.
6. How much are the annual dues and when is payment required? The dues allocation structure created in connection with the CC&Rs established a 64/36 ratio between a homeowner among Lots 1 thru 36 and a homeowner among Lots 37 thru 40, respectively, by which 94% of total dues revenue comes from Lots 1-36 and 6% from Lots 37-40. Since 2008 the official annual dues for Lots 1-36 (Village Glen Dr., Hidden Oak Rd & Quail Ridge Ct.) and Lots 37-40 (Canyon Way) have been established by the Board annually. For more information, please contact the Board at vghoadirectors@gmaill.com.
The annual dues invoice is mailed to each homeowner via the Post Office during the first week of January each year. In accordance with the CC&Rs, the invoice provides the opportunity for two payments, one half by January 31st and the other half by July 31st. At a meeting in August 2007 the Board decided to offer a $50 discount, effective starting in 2008, to be noted on each year’s dues invoice for the benefit of those homeowners who decide to pay the full year dues amount by January 31st. Whenever the draft budget for the new year indicates an operating surplus amount above estimated expenses and the amount needed to maintain the reserve target level, the final budget authorized by the Board will incorporate a credit for the excess surplus amount, which is included on that year’s homeowner invoice resulting in a reduction of the official dues payment required for that year.
7. What happens if a homeowner is delinquent in paying their dues or refuses to pay their dues? At an August 2007 meeting, the Board issued a one page policy which provides for a slightly more favorable treatment of a delinquent homeowner compared to the procedures specified in CC&R Section 9.11.B&C regarding the collection of delinquent dues and associated late payment fees and interest charges. Briefly, the changes represented by this policy include: (i) a 30 day delinquency grace period beginning upon expiration of the original net-30 day payment term within which to make a delinquent dues payment without incurring a late payment fee and interest charges and (ii) a delinquent payment not received by the end of the grace period will incur a 10% late payment fee and a 12% annual simple interest charge calculated from the first day after the original net-30 day period until the date full payment of dues, penalty fees and interest is made. Overdue invoices are sent by registered mail to the homeowner at net-31 days, net-61 days and every 30 days thereafter until full payment is received. (see “VGHOA Policy and Procedures For Collection Of Annual Dues” posted on website).
If payment has not been received after three delinquent notices have been mailed and the Board has not received any communication from the homeowner concerning payment of the delinquent dues, the Board can pursue a civil judgment with the SLO Superior Court to enforce collection of the delinquent dues, late payment penalty, accrued interest, court filing costs and attorney’s fees. Even without obtaining a favorable court judgment, if a homeowner who has delinquent dues decides to sell their home the Board has the legal authority to request the title company to pay such delinquent dues plus penalties and fees out of the escrow funds since it will be very difficult for the new owner to obtain a clear title of transfer without the VGHOA’s claim being paid from escrow.
8. What is the purpose of the VGHOA reserve and how is the reserve amount determined? The Davis- Stirling Act requires all HOAs to establish a reserve for large infrequent asset replacement and major upgrade expenses which can be identified and planned to occur at a future time. Examples of planned major expenses include replacement of commonly held/maintained assets such as a furnace, A/C system, roof, elevator, repaving of roads, sidewalk replacement, etc. The Act also specifies that the amount of the ongoing reserve should not exceed the level of funds determined necessary to cover such expenses. Although the CC&Rs permit the funding of a reserve there is no requirement for creating a reserve fund since the VGHOA does not have common ownership of or responsibility for fixed assets, land or other property as described above for which a future replacement or upgrade major expense would need to be covered by a planned reserve fund as defined in the Davis-Stirling Act.
However, in a March 2010 meeting the Board decided to establish a target reserve amount of $10,000 based on cost calculations associated with the potential risks from a major earthquake and a 100 year flood scenario. The calculations supporting the $10,000 level, which were developed in consultation with the VGHOA landscape maintenance contractor and engineers from Toste Construction who provided an assessment of the drainage basin, are as follows: (i) major damage to/replacement of the common irrigation controller and stainless steel box at corner of Hidden Oak and James Way ($1,000), (ii) rebuilding the Village Glen entryway sign/stucco wall ($1,500), (iii) fixing broken common irrigation pipes/sprinklers/valves/drip lines ($1,500), (iv) replacing up to 20 galvanized steel posts of the drainage basin fence along the more vulnerable west and north side slopes ($2,000) and (v) re-grading the slopes on the west and north areas of the drainage basin fence ($2,000). The total estimated calculation of $8,000, which conservatively assumes all the aforementioned risks and costs would occur in the same calendar year, was rounded up to $10,000 and established as the official reserve amount to be maintained by the VGHOA. A three percent annual increase in the target reserve balance is incorporated into the annual budget to account for inflation.
9. The VGHOA insurance policy represents a major cost in the annual operations budget—why is this insurance needed? The Davis-Stirling Act and the CC&Rs require that the VGHOA must carry two insurance policies. One is a general liability policy covering the HOA (collectively covers all homeowners who also must carry their own individual homeowners insurance per CC&Rs) for a minimum of $2 million and the other is a Directors & Officers (D&O) professional liability policy for a minimum of $500,000. The VGHOA carries a $2 million general liability policy and $1 million D&O liability policy that are reissued annually based on the submission of a new application and an on-site visit by an insurance company agent to verify the information provided on the application. Without these two insurance policies no homeowner would volunteer to serve on an HOA board in California and all individual homeowners would assume greater financial risks for actions taken by the HOA Board which potentially could result in a liability claim.
10. As a not-for-profit corporation why does the VGHOA have to file tax returns with the IRS and the California Franchise Tax Board (FTB)? The Davis-Stirling Act requires all HOA’s to file a tax return with the IRS and the FTB. Although the VGHOA is a not-for-profit corporation and doesn’t pay taxes on dues and other monies received from its homeowners, any other income earned by the VGHOA (e.g., interest on savings accounts, dividends on investments, etc.) which exceeds $100 annually is taxable. The deadline for HOA filings with the IRS and FTB is March 15th following the end of each calendar year.
11. Who performs the maintenance of the commonly maintained landscape areas? The Board maintains a written contract with an established landscape company for the commonly maintained landscape areas. The maintenance is performed on one day each week. During the rainy season winter months the irrigation controller for the sprinklers and drip systems is turned off.
In a March 2010 meeting the Board issued a one page policy to clarify CC&Rs Section 9.2.A.2 by defining the following basic services as provided by the VGHOA for the commonly maintained landscape areas related to Lots 17 through 31, Lot 1 and Lot 36: (i) clipping and irrigation of the designated strip lawns and trees, (ii) trimming bushes, trees and plants and monitoring the drip irrigation on hillside areas and (iii) performing repairs as required with strip lawn sprinklers and the hillside drip tubing and heads. Each homeowner of the aforementioned Lots has the responsibility to cover the cost of materials and labor for their hillsides by (i) replacing and planting trees, bushes and plants which die and the planting of additional new greenery when so desired and (ii) replenishing ground cover over areas where the underlying soil has become exposed/bare to mitigate erosion and maintain uniformity of ground cover appearance. (see “Landscape Maintenance Responsibilities” posted on website).
12. What is the ARC and what does it do? The CC&Rs established an Architectural Committee (ARC) consisting of three homeowners for the purpose of the VGHOA having a review and approval role over individual homeowner proposed modifications/alterations to the exterior of their house and physical improvements to their property. The CC&Rs provided the developer with control over the ARC until the last Village Glen Subdivision lot/home was built and sold, at which time the ARC would automatically terminate in its entirety unless 75% of the 40 homeowners at the time voted in a duly constituted meeting of the VGHOA to continue the existence of the ARC—at that time 75% of the homeowners did vote to continue the ARC’s existence.
At the end of the September 2010 annual homeowners meeting, which involved discussions of a resolution to dissolve the ARC, coupled with the new insurance company policies providing liability and D&O coverage only for Board members (which in effect requires the Board to formally make any ARC decisions), the Board decided to (i) directly assume all responsibilities and duties of the ARC by designating Board members to also serve as ARC members and (ii) appoint one Board member as the ARC representative to serve as the primary contact for communications with homeowners and obtain ARC/Board review and approval of the modification proposals.
Homeowners should contact the ARC representative listed on the VGHOA website prior to implementing any proposed modifications to the exterior of their house or property which may need an AG City building permit, as well as other proposed modifications such as repainting the exterior of one’s house, installing solar panels, etc. The ARC representative will collaborate with the homeowner to determine the type of design plan needed for ARC/Board review and approval and ensure nearby homeowners are provided an opportunity to express their views and suggestions on the proposed modification, with the goal of mutually reaching an amiable outcome for implementing the proposed modification. These discussions with the ARC Representative and nearby neighbors contribute to maintaining a “good neighbor” policy which allow for individual property modifications while also addressing concerns for maintaining the overall economic and aesthetic value of the Village Glen neighborhood.
13. Do I need to get approval for the color I paint the exterior of my house? The CC&Rs require homeowners to get prior approval before painting the exterior of their homes. And while the CC&Rs do not mandate or identify specific colors for repainting the exterior of one’s house prior approval of the proposed color is to be approved by the ARC. However, to maintain a compatible and attractive look in the neighborhood, the Board recommends muted “earth tones” be used whenever possible. It is highly recommended that before homeowners start painting their house exterior they apply large sample patches of their chosen paint to several exterior walls to ensure what one thinks is being selected on a paint color chart will in fact be the desired outcome. Please support the “good neighbor” policy of communicating with nearby neighbors for their feedback before undertaking an exterior house painting project.
14. What do the VGHOA CC&Rs say about homeowners wanting to install a solar energy system? The CC&Rs do not contain any specific language regarding restrictions or limitations regarding solar energy systems. The California Solar Rights Act (Civil Code §714 & §714.1) prohibits HOAs from broadly banning solar energy systems for aesthetic reasons--whether through an explicit ban or through architectural restrictions that significantly increase the costs or greatly reduce the performance of a proposed solar energy system. However, the Solar Rights Act as amended by AB 2188 effective January 1, 2015, does allow an HOA to request design changes which do not increase the cost above $1,000 or decrease efficiency by more than 10% of the solar energy system specifications and installation proposal prepared by the solar system provider.
Based on feedback from homeowners, the ARC/Board recommends that homeowners considering a solar energy system respect the following installation restrictions taking into account the aforementioned impact on costs and efficiency: (i) the solar panels should be limited to the roof on the back or side of the house, (ii) the solar panels should be below the sight line of the height of the roof line and (iii) the solar panels shall not be installed on the hillside and strip lawn areas or interfere with the drainage basin for which the VGHOA has maintenance easements and responsibility. Contact the ARC Representative for ARC/Board review and approval of the proposed design prior to signing a solar contract to resolve any issues and ensure nearby neighbors are made aware of the proposed installation.
15. Who is responsible for maintenance of the Canyon Way private access drive used by Lots 37- 40? The Village Glen Subdivision Development Plan created two separate Declarations of shared maintenance and repair obligations for the Canyon Way private access drive. One Declaration (County recorded Instrument #2000- 047637) establishes driveway maintenance and repair obligations for homeowners of Lots 37-40 and the other Declaration (County recorded Instrument #2000-047638) specifies maintenance and repair obligations for homeowners of Lots 39 and 40. Maintenance of the entire Canyon Way private access drive also includes three homes/property owners who do not belong to the VGHOA but share part of the Canyon Way private access drive, which is the section from the end of the public Canyon Way Street to the corner post of the drainage basin.
16. How do I test my fire sprinkler system? All VGHOA homes have an installed interior sprinkler system in case of a fire. This system allows for discounts on most home insurance policies. However, to receive this discount the insurance policy normally requires that the homeowner runs a test on the system at least once a year. Instructions for testing this system are as follows: locate exterior main water line going into the house with an on/off valve handle next to the house. Connected to the main line is a separate line with a water pressure gauge and a second valve handle on a short open-ended outlet pipe. Move this second handle 90 degrees which discharges water from the outlet pipe. Water may be brown at first but once clear turn handle off. While water is running the alarm on the outside of your house will sound but should stop when the water outlet handle is turned off. If you have a security system installed in your house you should call the security company before testing the fire sprinkler system.
17. With the VGHOA not owning any real estate property or physical assets, coupled with having only three minimal functional responsibilities, why wouldn’t it make sense to dissolve the VGHOA by having the relevant individual homeowners assume the common landscape and drainage basin maintenance responsibilities and thus eliminate annual dues payments for all homeowners? This question has been raised at past annual homeowners meetings. Based on the research completed by the Board a number of factors make it highly unlikely that the VGHOA could be dissolved, including (i) reconfiguration/reconnection of the sprinklers and drip irrigation network system of the commonly maintained strip lawns and hillsides to all the individual homes would involve a major undertaking with substantial costs, (ii) the City of Arroyo Grande would not be willing to assume maintenance responsibility for the drainage basin and thus not approve dissolution of the VGHOA, (iii) unlikelihood of obtaining agreement from all homeowners to dissolve the VGHOA and (iv) difficulty in satisfactorily resolving various complex legal issues associated with dissolving an HOA in California. For a summary of the overall challenges see “Issues To Be Addressed When Considering To Dissolve An HOA” posted on the website.
18. What is available on the VGHOA website and how does a homeowner gain access? Recent VGHOA financial statements, annual meeting minutes, Board policies, homeowners directory and this Q&A document are posted on the website: www.villageglenhoa.com. To request the website password send an email to: vghoadirectors@gmail.com.
19. Who should I contact for suggestions or other VGHOA inquiries? Please contact any of the Board members--names and contact information are provided in the homeowners directory on the website. Homeowners may submit additional questions by email to vghoadirectors@gmail.com and the Board will endeavor to provide answers by email and when appropriate, add the information to this Q&A document posted on the VGHOA website. For other information on the neighborhood another good resource would be to contact your neighbors.
Board of Directors Village Glen HOA
December 30, 2015