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GRF Facility Fee effective Jan 1, 2012

GRF Facility Fee effective Jan 1, 2012
The Golden Rain Foundation Board of Directors
In the GRF meeting of 8/2, a plan to institute a $1500 facility fee on new buyers was presented. The room was filled to capacity with members, most there to protest. Speakers were very emotional and unfortunately many were inspired by information circulated by e-mail which was incorrect. There wasn’t time for the Board to respond to these concerns, so the following is a written response.

The Facility Fee will be effective for sale contracts and/or open escrows beginning January 1, 2012.

The single most important duty of a director of any of our corporations is to maintain and perpetuate our respective corporations (i.e., the United, Third and Mutual 50 housing and the GRF amenities). As our community ages, the need and cost for maintenance becomes greater. If, in addition, we choose to update or improve existing facilities, this will come as an additional cost.

All of the directors of GRF and we believe the directors of the housing mutuals, recognize this. We must be concerned about the inevitability of increasing costs and maintaining affordability.

At the same time, we recognize that the future, even the very near future, is dependent on attracting new members who appreciate the benefits of Laguna Woods Village living and are willing and able to share the cost. If we fail to attract these members, our service levels and, more importantly, our quality of life here will go down.

The facilities fee is offered as a partial solution to these two powerful demands of affordability and attracting new members. But it is not the entire solution. To the extent that facility fees are collected and placed in reserve funds for maintenance, it reduces the need for reserves to be funded entirely from assessments. Consequently the monthly assessment would be reduced.

Many see this as less painful than paying for reserves on a monthly basis. Two “sister” communities, Rossmoor Seal Beach, and Rossmoor Walnut Creek, have collected these fees over many decades. The residents are happy with the plan and it has not negatively affected their sales volume or values.

Claims that this plan would reduce the value or volume are bogus. There is no evidence of that. To the contrary, a facility fee could increase both volume and values. A major fear of prospective buyers in considering a common interest development (HOA) is that the community may not be able to sustain itself, resulting in the risk of being hit with unplanned special assessments. A facility fee reduces that risk.

A number of speakers at the board meeting spoke to the low prices and low sales volume currently within our Village. And some supplied statistical data to make their point.

The fact is that our sales volume and values have gone down. But this is not unique to our Village. Most housing in Southern California has had similar experience, although this supplies little comfort. But we must be careful in how statistical information is used.

Many a case is made by using statistics inappropriately, even though well intended. Choosing statistics on a selective base can almost prove any point. Mentioned many times in the meeting was that the median selling price of our manors has gone down. Median price is a valid measurement of value but that median can change dramatically from month to month.

The major reason for dramatic monthly change is that we have a huge range of manor values, arguably from less than $100,000 to over $1 million. This range is significantly greater than a typical zip code. In one month, more expensive homes may have been sold; next month, less expensive ones are sold.

A more meaningful measure would be to compare similar manors, e.g., by manor model. The local realtors could do a service by compiling the information in that way. And instead of relying on monthly medians, look to more quarterly, semi annual and annual figures.

Housing values are determined by the “market.” Comparisons must be made with similar or competitive housing in our nearby neighborhoods such as Costa Del Sol. If our market values are down disproportionately from the greater market, why? We who live here view Laguna Woods Village as perfect. But do prospective buyers view us through the same set of eyes?

Does the Village meet the expectations of our prospective buyers? Potential buyers near our present median age may see us as we do; however, younger buyers may not. Which age group do you believe is our most likely target? It’s wonderful how fresh paint, nice landscape and comfortable reserves affect younger buyers’ eyes.

It was disturbing that many of our members in attendance questioned the capability of our board directors. But of greater concern was their questioning of our ethical behavior. How sad.

Board members should be selected based on prior experience, a commitment to giving their full attention to sustaining our community, and, of course, a record of ethical behavior. Board members do not represent specific interest groups no matter how powerful or large.

As difficult as it is, a director’s duty of loyalty is to the corporation. That often puts board directors in the difficult position of condemnation by some residents, but that is the law and it is essential if our or any community is to thrive and protect our individual investments.

We hope this has given you the information you need to understand why the GRF board is unanimous on the importance and benefits of a facility fee to our corporations and our members. We believe it will reduce monthly assessments, make affordability more predictable to prospective buyers, and in time, increase both sales volume and value. If we didn’t believe in this, we would never suffer the pain to implement it.

Click here for a copy of the Resolution under consideration by GRF.

Composed: 08/15/2011 | Modified: 08/15/2011

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