PRESIDENT'S MESSAGE

By Dave Peterson, Board President

2024 Budget. The board approved the 2024 budget at the September 20 board meeting. As I mentioned in last month’s Breeze, the board opted to limit dues increases to 20% in order to avoid a member vote, primarily out of concern for our ability to get the 50% member quorum required for a valid vote. Cove budgets include extra dues for their additions, but all coves remained within the 20% threshold. HOWEVER, as of the date of the board meeting, we did not yet have a bid for insurance, so we plugged in a 35% increase assumption, which proved to be wrong (see discussion below).

Insurance. The association carries insurance on our common facilities, things related to running the organization, and for townhome buildings. The bulk of the insurance costs are borne by the coves. About the end of August, our carrier cancelled us, which started a scramble for our broker to find a new policy before our coverage lapsed on 9/30/23. Unfortunately, the insurance industry has somewhat imploded in California, and all insureds, not just HOAs, are getting the shocking news. Our broker contacted 47 companies, and 29 declined immediately. Of those that responded, the best proposal was an amalgam of carriers for various line items, at a cost of over double what we paid last year. And here’s the kicker: our building coverage maxes out at $25M, which is far less than the total structure value of $109M. The board received the bid at an emergency executive session on Thursday 9/28/23, and voted to bind the coverage. We were between a rock and a hard place, as coverage expired 9/30, during the weekend. The board held a special open session meeting on 10/2 to explain the decision, and to discuss further actions needed to deal with this. Our brokers think it’s possible to buy up our limit to $65M (60% of total value), but is less certain about the market’s ability to insure us to the full 100% value. But they’re working on it. The board will consider increasing coverage at future meetings, as proposals become available.

The good news is that the upper limit in coverage does not mean fractional coverage of losses. Each building has a given dollar value in the policy (the sum of which adds up to $109M), and losses are fully covered on a first come first served basis, not to exceed a total of $25M in a year. An example would be if we have 8 buildings valued at $3M each and all burn completely in 2024, they would all be fully insured for replacement. So our real exposure due to the top line shortfall, is if we have a catastrophe that involves more buildings. Nevertheless, the board is working with staff and brokers to address this issue. Those in the know tell us that this will be a several-year industry shakedown. In the process of dealing with this, the board will be reaching out to members for input, and we may be putting the issue of additional coverage out for a vote. In the meantime, the board authorized an emergency special assessment for the coves to cover their insurance budget overrun; our 35% increase guess in the 2024 budget didn’t cut it.

Special Assessments. As mentioned above, the board approved an emergency special assessment at the 10/2/23 open meeting for townhome owners to fund the insurance overrun for our $25M policy. The assessment for each townhome varies, but will be in the $1500 range. Other special assessments for Tahoe Marina Shores and Cove 2 were approved by member votes. The special assessment vote for Cove 2A was extended to try to get to a quorum.

At the September meeting, the board authorized a common area special assessment vote to fund year 3 of the CMT. The CMT is a very important 3-year experiment to give us and the regulatory agencies the data needed to prescribe a long-term weeds management plan. No data, no basis for a plan. This is really year 8 of a 10-year project. The special assessment ballot should be in your mailbox, and I hope everybody votes!

Bulkheads. Collections for the Cove 3C bulkhead special assessment are still at about $3.8M of the $4.8M total, but we’re working to collect the remainder. The project is getting underway in the background.

We received the draft engineering report on the St. Moritz and Bavarian Isles bulkhead assessment. It is posted in the 9/20/23 board packet. The findings and recommendations are a little tough to decipher, so we’re trying to schedule a plain-english meeting with the engineer. So unfortunately, I can’t summarize the results here; perhaps next month.

Bear Boxes. You probably received notice from South Tahoe Refuse of their plan for mandatory issuance of rolling totes. Next spring they plan to issue each single family home 2-3 new totes: a 94 gal recycle tote, a 94 gal yard waste tote, and maybe a 65 or 94 gal “animal resistant” garbage tote. You can opt out of the garbage tote if you have a bear box. STR will continue to service bear boxes. I’d encourage everyone to still get a bear box. If a bear can smell a stick of gum in a car, I don’t have confidence that an “animal resistant” garbage tote will be safe in your garage. I opted out of the garbage tote, but I have no idea where I’m going to put the 2 other giant totes in my garage; it’s pretty full already. This is a State law mandate, so we can’t blame STR.

Board Election. Ballots were counted 9/20/23, and Joby Cefalu, Michelle Pandori, and Sabine Litton were elected. My thanks go out to all of the candidates, all of the members for voting, and to Ken Silveira for his outstanding service during the last term. Ken has agreed to stay on with the hard-working finance committee. Thanks Ken!!

I hope you all enjoy your autumn. Hiking right now is outstanding, with the fall colors, cool temps, and reduced crowds. I love autumn!