Collected Wisdom

I believe that our Covenants, Bylaws and Master Plan represent the collected wisdom of the founders and all members of our community. They were created by the founders, voted on and accepted by the people and are occasionally amended by the land owners. They should be strictly adhered to and interpreted with the original intent of the people in mind. All members of the board should read, study and routinely discuss the Covenants, Bylaws and Master Plan. Those documents should frame the debate at the monthly meeting and guide the results of GLA decisions.

An alternative view is that the Covenants, Bylaws and Master Plan are simply a guide rather than a rigid structure used to frame debate and decisions. As a guide they only need to be referenced when needed. In this view the GLA has the power to define laws and create new ones on a case by case basis.

In 2007 when I was Vice-president of the Board the past due assessment issue was brought to my attention. As I recall the total amount outstanding was approximately $60,000.00. At that time our annual budget was approximately $100,000.00. I was disturbed by the amount outstanding and suggested that we turn the accounts over to an attorney for collections and possible foreclosure as our Covenants required. My suggestion was characterized by the President, Laura Boise, as a "clenched fist" approach. Regardless of what the Covenants stated she felt that we needed to show compassion towards our neighbors and designed what she called a "velvet glove" method. A new rule was made that encouraged delinquent land owners to voluntarily enter a payment plan that would forgive all future interest and allow them to determine their minimum monthly payment while promising to stay current with their future assessments. The prevailing Board wisdom was that if we acted compassionately people would do what was "right" and step forward to pay their bills. As to the lost revenue to the land owners it was determined that "something is better than nothing".

The 2007 GLA policy that offers to freeze the interest on past due assessments if the delinquent landowner stays current and makes regular monthly payments has cost dues paying landowners over $35,000 in lost revenue. According to the GLA March 7th, 2011 Liens Filed report only two people have taken advantage of this offer.
Debtor number one owes $8,000.00 and makes monthly payments of $100.00 and is charged NO interest. She will have her bill paid in full in 80 months, 6 years and 8 months or October of 2018. The land owners will have collected $8,000.00.
If the covenants were followed and 18% interest was charged for the life of the loan then with land owner number one making $100.00 monthly payments the total amount collected by the land owners would be $36,000.00 and it would take debtor number one 360 months to pay in full. By waiving interest the land owners lose $28,000.00.
Debtor number two pays $35.00 a month on a loan of $2,289.00. It will take them 65 months, until August 2016, to pay off the loan. The land owners will receive $2,289.00. If the covenants were followed debtor number two would pay 18% interest on the life of the loan. They would make $35.00 monthly payments for 267 months and pay $9,345.00 in total. Because the loan is interest free the land owners end up losing $7,056.00 on debtor number two's loan while providing full services to them.
If all of the 41 remaining parcels who owe approximately $151,000.00 chose to set up an interest free payment plan with $75.00 monthly payments for each parcel the total amount paid to the land owners each month would be $3,075.00. The bill would be paid in 50 months, July of 2015 and land owners would collect a total of $151,000.00. If the Covenants were followed and each loan carried 18% interest then the land owners would collect $276,750.00 over a period of 90 months. Waiving interest charges would cost the land owners $125,750.00.

The interest free policy is injurious to land owners and does not treat them all equally. It is in violation of Covenant 11.05, 11.06 and 12.01.

Note: I originally wrote this article in 2011. THE GLA Collection Committee tackled this problem in early 2012 and wrote an excellent piece of legislation which was passed by the board. Collections of past due amounts should commence in late 2012 or early 2013.

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