ACC Rule of the Month

Architectural Control Rules, Section 13, Boat Docks

13.16 Boats docked year-round, may only use white shrink- wrap and must only be wrapped from September 15th through May 15th

Please provide this information to your Boat Service Professional

NO

YES

TKPOA NOVEMBER 2022 CALENDAR + BEYOND

NOVEMBER 2022

1 Board of Directors Special Executive Session – Management Firm Interviews TBD 2 Board of Directors Special Executive Session – Management Firm Selection TBD 8 ACC Meeting 9:00 a.m. 9 Finance Committee 10:00 a.m. 15 Town Hall Forum – CMT Project 6:00 p.m. 16 Board of Directors Executive Session 3:00 p.m. 16 Board of Directors Regular Meeting 5:00 p.m. Water Quality Committee TBD Bylaws and CC&Rs Communication Subcommittee TBD TKPOA Visions Ad Hoc Committee TBD Water Conservation Ad Hoc Committee TBD Tahoe Keys Waterways Restoration Fund (TKWRF-501 (c) 3) – El Dorado Community Foundation TBD

DECEMBER 2022

13 ACC Meeting 9:00 a.m. 14 Board of Directors Executive Session 3:00 p.m. 14 Board of Directors Regular Meeting 5:00 p.m. Water Quality Committee TBD Finance Committee TBD Bylaws and CC&Rs Communication Subcommittee TBD TKPOA Visions Ad Hoc Committee TBD Water Conservation Ad Hoc Committee TBD Tahoe Keys Waterways Restoration Fund (TKWRF-501 (c) 3) – El Dorado Community Foundation TBD

Note: All meetings will be held at the TKPOA Pavilion, 356 Ala Wai Blvd, South Lake Tahoe unless otherwise noted. Until further notice, member meeting attendance will be limited to conference call and/or Webinar. Links and call in information for meetings are posted on the TKPOA website ahead of each meeting. Please contact the TKPOA front desk at (530) 542-6444 for details on member attendance.

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2023 BUDGETS AND

ANNUAL DISCLOSURE

By Heather Blumenthal, Operations Manager

The 2023 Annual Budget was approved at the August 24th, 2022 and September 7th, 2022 Board of Directors Board Meetings. Preparation of the budget that was approved followed six months of work that began in April and is the result of significant efforts by the Tahoe Keys Property Owners Association (TKPOA) Staff, the Finance Committee, the Cove Advisors, and the Board of Directors.

The “Budget” actually consists of 19 operating budgets and 20 reserve funding plans. The operating budgets address the planned operating revenues and expenses for the four major funds (Common, Water Company, Water Quality, and Channels & Lagoons), 12 townhouse subdivisions, and four single-family subdivisions.

Each year, the Association must distribute an "Annual Budget Report" and an "Annual Policy Statement" these items and additional required items are included in TKPOA Annual Disclosure. According to TKPOA Bylaws ARTICLE XII, Member assessment Obligations and Association Finances, Section 5: Budgets and Financial Statements: (a) A pro forma operating budget for each fiscal year consisting of at least the following information shall be distributed to Members not less than 45 nor more than 60 days prior to the beginning of the fiscal year:

(i) Estimated revenue and expenses of the Association on an accrual basis. (ii) The amount of the total cash reserves of the Association currently set aside for the future repair or replacement of, or addition to, those major components of the Common Areas and Common Facilities which the Association is obligated to maintain and for contingencies; (iii) An estimate of the current replacement cost of the estimated remaining useful life of, and the methods of funding to defray repair or replacement of, or additions to, those major components of the Common Areas and Common Facilities which the Association is obligated to maintain; (iv) A general statement setting forth the procedures used by the Board of Directors in the calculation and establishment of reserves to defray the cost of repair, replacement, or additions to major components of the Common Areas and Common Facilities which the Association is obligated to maintain.

The TKPOA 2023 Annual Disclosure will be mailed out to all property owners in November 2022. All these required Disclosure documents must be distributed by "First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier." (Civil Code §4040.), however upon written consent of members, associations may distribute documents and disclosures electronically.

The TKPOA will be sending out 459 2023 Annual Disclosures electronically to those members at a savings of approximately $3,500 to the TKPOA after the remaining 1,069 Disclosures were mailed.

The Davis-Stirling Common Interest Development Act is the California Civil Code and (Section §5300 and §5570) contains the detailed Disclosure requirements and the deadlines for most of these required items. In addition to the required items the TKPOA has included some additional information to further lend explanation to the documents required. The following items are included in the 2023 Annual Disclosure the TKPOA Property Owners will be receiving by mail:

1. Disclosure Documents Index - Civil Code §5300 2. Pro Forma Operating Budget - Civil Code §5300 3. Notice of Assessment Increases - Civil Code §5615 4. 2023 Budget and Assessment Summary- Civil Code §5300 5. Assessment Collection Policy - Lien and Collection

Policy Civil Code - §5730, §5310 6. Notice of Assessments, Foreclosures and Payment

Plans - Civil Code §5730, §4040(b) 7. Arbitration/Mediation of CC&Rs Disputes - Civil

Code §5925 8. Membership Lists - Civil Code §5210, §5200 (a) (9) 9. Member Contact Information - Civil Code §4041, §5650(a), §5660 10. Secondary Address Notification Request Civil Code §5650(a), §5660 11. Electronic Communication Authorization Form -

Corporations Code §20 12. Insurance Coverage Summary - Civil Code §5300 (a)-(b) 13. Architectural Changes Notice - Architectural

Guidelines and Procedures - Civil Code §4765 14. Notice of Intention to Adopt or Change Rule - Civil

Code §4360 15. Monetary Penalties Schedule - Civil Code §5850 16. TKPOA Fee Schedule - Civil Code §5850 17. Board Minutes Access - Notice of Right to Minutes of Board Meetings - Civil Code §4900 18. Notice of Document Request Costs - Civil Code §5210 19. Official Communications for the Association - Civil

Code §5310 20. Notice of Regular Board Meetings - Civil Code §4920, Corporations Code §5016 21. Disclosure requirements of Business & Professions

Codes Section 11500 – 11506 22. Assessment and Reserve Funding Disclosure

Summary - Civil Code §5570 23. Annual Update of Reserve Study - Civil Code §5570 24. Online Payment Method – Information

IN CLOSING

The 2023 Annual Disclosure, complete detailed budgets [that include all Townhome/Cove Budgets] and reserve fund reports are available from the Association’s business office located at 356 Ala Wai Blvd., South Lake Tahoe, CA 96150, Telephone (530) 542-6444. These reports will be provided to property owners within five (5) working days of their request, at the expense of the property owner.

Questions on the 2023 Annual Disclosure, budget, reserve funds, or other information can be provided by contacting the TKPOA Office, at 356 Ala Wai Blvd., South Lake Tahoe, CA 96150, Telephone 530-542-6444, or email at hblumenthal@tahoekeyspoa.org, or on the TKPOA website www.tkpoa.com.

Potential Consolidation of the

STPUD & TKPOA WATER SYSTEMS

In 2021, after the water crisis that seriously impacted the entire community, the Tahoe Keys Property Owner’s Association (TKPAO) completed a Long-Term Facilities Plan (LTFP). The LTFP identified short and intermediate term projects intended to improve the TKPOA water system and its reliability. The LFTP also identified potential options for operating and maintaining (O&M) the TKPOA Water System.

Early this year, TKPOA retained Farr West Engineering to evaluate the O&M options and in July, Farr West presented a non-economic evaluation to the Board. The evaluation compared five scenarios with different water purveyors, using various criteria and metrics, including:

• Remaining Independent • Consolidating with the South Tahoe Public

Utilities District (STPUD) • Consolidating with the Lukins Brothers Water

Company • Consolidating with the Golden State Water

Company, and • Consolidating with Liberty Utilities

The results of the Farr West Evaluation concluded that a consolidation with STPUD ranked equal to, or higher than, the other alternatives in every major criterion evaluated. Following two separate reviews of the results, the TKPOA Board directed me to engage with STPUD to further evaluate the potential for consolidation. The Board also assigned two Board Members, Ken Silveira and Joby Cefalu, as a working group, to assist me in that engagement.

I want to be clear that the Board has made no decision on any consolidation at this point. Rather, the Board has simply directed that this working group explore the matter and return to the Board with additional information at some later date. In fact, all options remain on the table and the TKPOA Board may ultimately determine that one of the other options is best for the Members of Tahoe Keys.

Our working group has now engaged several times with three members of STPUD as a 3x3 Committee. The 3x3 is presently working with other staff and attorneys to determine how a consolidation must be done. A fundamental issue is that a consolidation can be successful if, and only if, there are no subsidies. By that, I mean that a consolidation cannot result in the STPUD customers subsidizing the TKPOA Members and the TKPOA members cannot end up subsidizing the STPUD customers.

Earlier this year, the TKPOA and STPUD also commissioned two studies to evaluate if/ how STPUD could supply water to Tahoe Keys. These studies, referred to as Phase 1 and 2, were prepared by Carollo Engineers and they evaluated numerous water supply options and the required upgrades to the STPUD water system and costs associated with each option. The costs associated with these options, that would need to be borne by the Tahoe Keys Members, range from $6.3 million to $26 million. STPUD staff also made a presentation about this study at the open Board meeting on October 19.

Given the relatively recent direction to explore a consolidation with STPUD, we need to move forward with the Phase 3 evaluation. Phase 3 will analyze the deficiencies of the TKPOA system to determine what improvements are necessary to bring the system up to appropriate levels as required by STPUD. Phase 3 is anticipated to cost between $100-$200 thousand and the TKPOA is proposing that STPUD share some of that cost. The TKPOA and STPUD are also working with the El Dorado County Water Agency to pursue

grant funding for Phase 3, as well as the physical upgrades that will ultimately needed from the Phase 3 study.

There are many advantages to both parties if a consolidation were to occur. Tahoe Keys cold benefit from having an improved, and more reliable, water system that would prevent another crisis like what occurred last year. STPUD could also benefit from having a larger water supply portfolio and a larger customer base.

With that said, many of our members have posed the following questions that I will do my best to answer here. Take note that the information provided below are my thoughts only and may not reflect the positions or opinions of our Board. I share my thoughts with you to be as transparent as possible, understanding that water matters such as this can invoke deep concerns.

Will this consolidation cost me money?

Yes – In two ways. First, it will cost money to complete the required studies, such as Phase 3, as well as to complete the required administrative and legal activities necessary to facilitate a consolidation. We presently estimate that this will be about $250,000 over the next two years.

Second, upgrades will be necessary to our water system, and these will be costly. How much we don’t yet know as this will be determined from the Phase 3 study. It is important to note however that, in my opinion, these upgrades will be needed regardless of whether we consolidate with STPUD or anyone else. The fact is that we have not kept up with the appropriate repairs and improvements and this has caused the deteriorated water system that we have today.

Would STPUD buy our water system and how much would they pay us for it? Will STPUD increase our water rates?

This is likely, but your water rates would likely increase regardless. STPUD would logically have to increase our rates if they have to construct the necessary upgrades in Phase 3. On the other hand, if we construct those improvements, you will incur assessment increases to fund those improvements as well.

Will the Members be allowed to vote on this?

Yes. Our legal research indicates that any such transfer (or consolidation of assets) would be subject to a vote by the Members. It is also my sense that our Board would want you to have that say, irrespective of the law or what our Bylaws might require.

What is the timing for this consolidation?

First, I want to reiterate that no decision has been made to consolidate. We are only exploring the matter to determine if this may be in the best interests of our members, and how it would be done. If this option is determined to be viable, and if the Board and Members were to approve such a consolidation, it is my estimate that it will take 12-24 months from now to complete.

In the meantime, our water system has been stabilized and provides safe drinking water. However, it will be operating at reduced capacity until long-term improvements can be made.

Once again, this information is provided to provide you an update on this matter. We recognize how important this is to everyone and it is imperative that you stay informed going forward.

Probably not, and here is why. Say we complete an asset evaluation and determine that the total value of our assets is $10 million. If STPUD, which is a public agency, has to pay us for that, then they would have to turn right around and bill you back for the cost of that expenditure. Remember, STPUD cannot legally require their customers to subsidize TKPOA Members.

Mark J. Madison

Interim General Manager