Capital Improvement Fund ~ ?

  1^st memo in response to first revision of resolution written in 2000:

From: Jonathan Jones
Sent: Wednesday, May 02, 2012 12:58 PM
To: Rick Noffsinger
Cc: Sarah Dawson
Subject: Re: For review.

Rick,

Pursuant to our telephone conversation yesterday, the Proposed Revision by Mr. Porter fails for a multitude of reasons.
Primarily, the Bylaws of the DPOA create and delegate powers to the Board of Directors, the Officers contained within said Board, and the Membership as a whole. Article VI, Section 1, sub-sections (h) through (l) deal with the financial duties of the Board. Specifically, I focus on sub-sections (h), (j), and (l).
All three allow the Board to create a sub-committee to assist in the general financial affairs of the Board. However, Mr. Porter's proposal is seeking to place a duty on the Board itself, not to establish a sub-committee to make proposals or recommendations. As clearly seen in his proposal, he recommends "to establish a fund" and create "procedures for administering it". Thus, sub-section (j) says it best that, "however in no event will the committees be allowed to contractually obligate the DPOA to expend funds". This is exactly what the establishment of a fund, and procedures relating thereto, would do.
Again, Mr. Porter's intent to change how the Board performs its financial business is essentially a request to amend the Bylaws and would be governed by Article XIII (which deals with amendments to the Bylaws as a whole) and requires a majority vote of a quorum of the Membership, at regular or special meeting, after notice of the proposed amendment was properly given.
Let me know if you need anything else or have any questions.

Regards,
JONATHAN D. JONES
Attorney at Law, P.A.
424 Ouachita Avenue
Hot Springs, AR 71901
_____________________________________

2^nd memo in response to John Porter’s letter to Mr. Jones:

From: Jonathan Jones
Sent: Thursday, May 31, 2012 9:20 AM
To: Rick Noffsinger
Subject: Re: FW: Letter to Jones
Rick,
I reviewed Mr. Porter's response and I agree with him that the existing wording is in need of correction. However, to state that the proposed amendment "in no way changes the way the Board performs its financial and fiduciary duties", I cannot agree with.
I am confident his stance is bolstered on the fact that "the current Financial Committee did not create this rule". Mr. Porter is correct in this regard, but that does not make the original creation of same any less concerning or improper. It is this fact, I am confident, that is the key issue at hand.....the current committee may have not, but a previous committee did. Thus, any clarification of its existing wording is superficial and the intent remains.
As I cited in my May 2nd email, "...sub-section (j) states, "however in no event will the committees be allowed to contractually obligate the DPOA to expend funds". This is exactly what the establishment of a fund, and procedures relating thereto, would do." By imposing such language, it would restrict or bottleneck the Board's financial governing power.
Thus, when the proposed amendment cites that (f)unds cannot be obligated for any project until available in the Capital Improvement Fund account" that is a change from the Board being able to spend what it wants, when it deems necessary (obliviously within the existing bounds of the Bylaws). If one affects how money is acquired, held, invested, and spent, that is a change in "the way in which the Board performs it's financial and fiduciary duties".

Regards,

JONATHAN D. JONES
Attorney at Law, P.A.
424 Ouachita Avenue
Hot Springs, AR 71901

 Memo to Board President from John Porter stating his disagreement with the attorney:

From: John Porter
Sent: Friday, May 18, 2012 5:30 PM
To: Rick Noffsinger
Subject: Letter to Jones

Rick,
 Attached is a letter that I sent to Jones regarding his comments about the Cap Improvement fund. I am in disagreement with his analysis and believe he is way off base.

Personally, I have no idea why you are opposed to clarifying the wording of a rule that was passed by the Board back in 2000. And, what is the problem with having a Cap Improvement fund?
Let me know your thoughts.

John (Porter)

Below is a link to an article entitled Keep the HOA Capital Reserve Fund Robust for Long-Term Economic Health written by Pam Concannon:
http://diamondheadcommitteereport.blogspot.com/2012/05/capital-reserve-fund-treasurer-john.html

What do you think about this?