Notes from the August 16, 2018 GHI Board Meeting

hands-people-woman-meeting

Note: The following is a summary of key issues discussed at the GHI Board Meeting on August 16, 2018. This summary is followed by a brief discussion of some of the other items on the agenda.

Key items discussed at the Board meeting included:

  • Review of the ARC’s Proposed “Forever Homes” Flyer;
  • Finance Committee’s Recommendations re: GHI’s Replacement Reserves Plan;
  • Board Consideration of the 2017-18 Audit Committee’ s Recommendation; and
  • Review of the Updated Strategic and 12-Month Action Plan Reports.

Review of the ARC’s Proposed “Forever Homes” Flyer

Lola Skolnik, Chair of the Architectural Review Committee (ARC) attended the meeting to discuss a new project to encourage members to view their homes as Forever Homes.  The idea behind the project is to encourage members to make changes to their homes that allow them to live in one home through changing life stages. To help publicize this effort, the committee developed a flyer asking members to share what they have done to their homes to accommodate their changing needs.

The ARC plans to compile and share with members descriptions, floorplans, photos, and sketches of members’ adaptations to accommodate their changing needs.  An archive of these ideas will be made available to all members while maintaining the members’ privacy.  The ARC hopes to provide the archive on the GHI website and in a book form that would be available in the GHI Administration Building.

The flyer presented to the Board of Directors for approval shows photos of a brick town home where the members enclosed the service entrance, creating a 9 x 7 foot addition. This space was used for a powder room and extra closets.

In discussing the flyer, the ARC Chair made it clear that the members have given permission for photos of their addition to be used. The committee plans to use some of their committee budget to advertise the project.  There was also discussion of providing flyers for GHI’s Information Day table at the Labor Day Festival.  ARC would also like to work with the GHI Member Outreach Committee to advertise the project and to encourage members to share their improvements.

The GHI Board thought this project was a good idea and passed a motion to accept the flyer for the promotion of GHI’s Forever Homes.

Finance Committee’s Recommendations Concerning GHI’s Replacement Reserves Plan

This agenda item involved more discussion and clarification than anything else on the agenda. DMA, Inc., the reserves advisor hired by GHI for the current Replacement Reserves Study, was not in attendance for this discussion. The Plan is still in draft form. The Finance Committee had finished their review of the Replacement Reserves Plan and presented their recommendations to the GHI Board.

The Finance Committee proposed two recommendations to the Board of Directors.  The first recommendation was made to avoid large increases in members’ contributions to the Replacement Reserves the first year of the new plan. The worst case would be a proposed 25% increase for the larger homes.  The Finance Committee’s recommendation stated:

The Finance Committee to recommend to the Board of Directors that the annual projected percentage increase in each group’s replacement reserves be constant each year until the replacement reserve reaches its lowest projected balance.

The Finance Committee vote on this recommendation was four members for the recommendation, one against with no abstentions.

The second recommendation evolved out of the Committee’s discussion of minimum thresholds (the minimum amount that would always be available for each home category) for the Plan.  The Finance Committee recommended a zero dollar or 0% threshold for each of the housing categories instead of a 2% threshold for each category. Instead they proposed allowing one home category to borrow from another home category if one category needed more funds for a big expenditure.  The Finance Committee stated:

Use a zero dollar threshold instead of the 2% threshold for each category of homes. For any year in which the fund balance for one category would be projected to be at zero dollars, the other categories would have sufficient funds for a cushion.

Board Member and Finance Committee Member Bill Jones stated that the draft Replacement Reserves Plan indicates that this should work as the timing for big expenditures by home category differs. Each home category could borrow from the other category if they needed more funds. This would work because eventually the borrowing category would build their reserves back up and could pay back the other category. The Finance Committee recommendation to the Board of Directors stated:

The Finance Committee to recommend to the Board of Directors that a zero dollar threshold  or a 0% threshold be established for each home category.

The Finance Committee vote on this recommendation was three members for the recommendation, one against with one abstention.

Director Jones began the discussion on the first recommendation.  He suggested that to avoid a large bump in Replacement Reserve fees in any one year, it would be better to have members pay a slightly higher amount each year.  He also said that it might make sense to delay some of the plumbing replacement project for two years. Staff could assess the pipes in members’ homes and identify the best 20% of the masonry pipes and the better half of the frames’ pipes. He then proposed that the start date for the best 20% of the masonry group’s pipes and the better half of the frames group’s pipes could be delayed two years.

As to the recommendation about maintaining a 0% threshold for each home category, he suggested that instead of a threshold for each reserve category, the approach would be a 2% threshold overall.  This overall 2% threshold floor would help mitigate times when one home group or the other was needing funds.  He also made the point that the funding of the reserves was moderately conservative so if ever there was a need for more money GHI could rely on GHI’s contingency reserves. GHI can pay back the threshold, in this case, when GHI has more funds in the replacement reserves.

The point was made that neither Finance Committee recommendation was unanimous.

Director Hess said that the Replacement Reserves never dictate when we do repairs, rather we do them as needed. We can plan to extend further when we begin, but if repairs are needed prior to the start date, GHI would make the repairs.

Some more discussion ensued about the suggested threshold approach and how that would work. Board Members who serve on the Finance Committee replied that in looking at the Replacement Reserves Plan it appeared that in most cases the increases in expenditures for one housing group occur when there is a decrease in expenditures in the other housing groups.

Prior to the Committee’s recommendations, staff had reached out to DMA to find out how much it would cost to have a meeting to discuss the recommendations. The prices provided by DMA indicated that an in-person meeting would be more expensive than an  an online meeting. This was followed by a statement by the General Manager that the online meeting would be held using Go To Meeting. There was some discussion about whether an online meeting would facilitate what the Board needed to discuss. Also it was mentioned that based on the Committee’s proposed motions, GHI would have to go back to DMA as there might have to be some adjustments made to cost. Some of the Board and Committee members believed that for the most part the recommendations would be more a matter of just changing numbers in DMA’s model which could be done easily.

There was some concern that Director Jones’s suggested change about moving project  starting dates out might result in DMA adjusting the price.

Audit Committee Chair Molly Lester was concerned about the recommendation to delay the start of the plumbing project by a couple of years past the useful life of the pipes. She was also concerned there may be no contingency funds available for the replacement reserves due to the asbestos remediation project. Also if we utilize a 0% threshold there will be no interest building up from our investments. GHI could end up with a multi-year project with no resources.  She asserted that we should use the expert’s advice.

The Audit Committee Chair continued by stating that the investment returns used by DMA do not match the actual return on investments this past year. One area of GHI’s investments had a negative return in 2017 and the return on the other was less than 1%. The Chair felt that using a 2.9% investment return in the Replacement Reserves Plan was too high. The Chair also stated that GHI should not go to a 0% threshold when there are lots of expenditures coming up as the expenditures may exceed the Replacement Reserves expected expenditures.

Director Hess agreed with the Audit Committee Chair on the rate of investment return being used. However, he said that we need to look at the replacement reserves as a whole and, if so, then a 2% reserve threshold was adequate. The point was made again that as one home category goes negative then the others would be there to fund it. The home categories could borrow from the other categories and then pay back when that home category had more money than it needed.

Director Jones pointed out that with the current plan, the frame homes hit a low in 2028. The masonry hits a high in reserves at this time. In 2034, the masonry homes hit a low and the frames have a lot of money in their reserves.

On the other hand, if projects are bumped out a couple of years, the annual increase in the replacement reserves portion of members fees for the frames home category will be 3.9 instead of 5-5.5%.  For the masonry home category, the increase will be 3.7% instead of 5- 5.5%.

Questions were then asked about how often the Replacement Reserves Plan is reviewed.

  • The staff reviews it briefly each year when the new budget is prepared.
  • About halfway through the external review of the Replacement Reserves Plan, staff looks at the Plan to see if anything looks haywire.
  • The Audit Committee is correct about the investment return rate used. If the investment returns continue to be low, a new amount would be plugged in and might affect everything.
  • Expected increases in expenditures are examined and compared to GHI’s actual experience with these expenditures.

The following points were also made during this discussion:

  • When pushing the start times of projects out, GHI can run into situations where  items are pushed beyond their expected life which could result in failures and in unexpected expenses.
  • If the decision is made to go with pipe relining instead of pipe replacement, the actual cost will be the lesser of the two scenarios in the Replacement Reserves Plan.
  • There also have been cases where windows are failing earlier than projected in the larger townhomes.
  • Finally, some changes in the replacement reserves are more important than others when considering the overall Plan.

The Board President stated that the idea of pushing projects out by two years was a new topic for discussion by the Board. As a result, no action was taken on the proposal. Instead it would be placed on a future agenda.

The Board did pass a motion to accept the Finance Committee recommendation to have DMA provide an analysis of fee contributions to each home category based on a zero balance threshold and constant annual fee increases for each category until the year that projected fund balance for an individual home category reaches its lowest level.

Board Consideration of the 2017-18 Audit Committee’ s Recommendations

This agenda item addressed recommendations made to the Board of Directors by last term’s Audit Committee, not the current Audit Committee. 

The 2017-2018 Audit Committee made two recommendations in their Annual Report to the Membership concerning the GHI Board of Directors:

  • For the Board to obtain a legal opinion on the separation of GHI and its subsidiary, Greenbelt Development Corporation, as recommended by the 2016-2017 Audit Committee.
  • That the Board make itself aware of, and comply with, all applicable GHI bylaws when considering the expenditure of GHI funds not included in the current fiscal year’s budget. For example, the Board’s recent consideration of acquiring a solar energy system, involving a potential expenditure of nearly $280,000 (including contingencies), using un-budgeted funds without first obtaining the GHI membership’s approval, as required by GHI’s bylaws.

When the 2016-2017 Audit Committee made its recommendation to the Board of Directors to obtain a legal opinion on the separation of GHI and its subsidiary, the Board decided not to obtain a legal opinion. The 2017-2018 Audit Committee felt strongly about the 2016-2017 Audit Committee’s recommendation and, therefore, included it in their Annual Report.

The current Audit Committee made the point that past Audit Committee member Jonathan Gordy (who is an attorney) believes that this is an important issue. He feels strongly that a legal opinion should be obtained. The current Audit Committee also stated that in Mr. Gordy’s  professional life as an attorney, he works on issues similar to this issue.

The Board President was against obtaining a legal opinion and believed that this issue had been addressed previously when the Board voted in 2017 not to obtain an opinion.

On the second recommendation, the Board President stated that an attorney is currently drafting bylaw changes to provide the Board of Directors with more authority to look into other business opportunities.

The Audit Committee suggested that going forward, the Board of Directors should consider having Board training that includes a review of the bylaws.

A suggestion was made by a Board member to make a motion recognizing the report with these recommendations thus acknowledging that the Board looked at these recommendations as required by the bylaws.

The Board President did not feel this was necessary as the Board had already accepted the Audit Committee’s Annual Report. He was inclined to take no action.

Another Board member stated that it would be a good idea to get a legal opinion concerning risk. He thought that there might be some liability exposure to GHI as a result of injury. Would be good to find out if claims stay with GDC and whether enough has been done to maintain the separation between GDC and GHI.  He stated that he was in favor of asking the simple question, is there liability exposure based on what we do?

The Board President replied that since 1952 there has never been a problem.  He referred to his business experience, and remarked that he is reminded of the adage that if it is not broke, don’t do anything.

Another Board member thought that this issue should be brought up as a GDC issue.

The Board President stated that no action would be taken.

Review of the Updated Strategic and 12-Month Action Plan Reports

Becky Roberts, the facilitator for the Board’s Strategic Planning Work Session submitted her updated Meeting Report to GHI which included the Strategic Plan and the 12-Month Action Plan. The General Manager, Board President, and Board Vice President had previously reviewed and made revisions to the report. It was placed on the Board agenda for discussion and action.

After a brief discussion with no major revisions recommended by Board members, the motion was made and passed to accept the report.

Committees and Homes Improvement Program Reports

HIP Report

The HIP Report was presented first:

  • Windows have been installed in 212 units out of 303 (70%).
  • Siding was installed in 50 units out of 205 units (24%).
  • Doors have been  installed in 145 units out of 303 (48%).
  • Electrical items have been installed in 299 out of 303 (99%).
  • HVAC has been installed in 38 out of 93 (41%).
  • Attic work has been completed in 72 units out of 125 (58%).
  • 49 out of 93 buildings have had the asbestos pipes removed.
  • The first frame building has had the crawlspace improvement completed, including the installing of the 12 mil vapor barrier.

Bicycle Committee

The Committee has completed their task on bicycle racks and is ready to make a recommendation to the Board.

Woodlands Committee

The Woodlands Committee has come up with a reforestation recommendation for the storm management area behind the GHI administration complex. It calls for soil testing to be preformed prior to the Committee making a decision about what trees to plant. Trail work is focusing on the Yoga Trail.

Companion Animal Committee (CAC)

The Committee is about to schedule several more intercept events for dog walkers and other members walking through GHI.  Focus will be on the importance of cleaning up after companion animals and dog walking etiquette for companion animal parents and members walking without dogs. The first events last year were held in the north end of the GHI. These upcoming events will be held near Gardenway and in the area near the inner walkway that runs into the tunnel that leads to Roosevelt Center. The Guide for Members with Companion Animals will be completed by the end of September. The CAC will also have a table at the Labor Day Festival’s Information Day.

Architectural Review Committee (ARC)

Currently the ARC is looking at an exception for a side yard fence.  There is an issue that has arisen with the requirement that fences be “harmonious.”  It needs to be defined better.  The Board President asked the Chair of the ARC if she would like to make a recommendation to the Board about the issue. She said that she should talk to the committee first to see what they think.

Other Board Actions

  • Approved Minutes of the Special Open Session Meeting held on July 19, 2018.
  • In Executive Session, approved Minutes of Executive Session Meeting held on July 19, 2018.
  • Approved Minutes of the Regular Open Session Meeting held on July 19, 2018.
  • In Executive Session, approved a contract with Wegner CPA’s to conduct an independent audit of the 2018 consolidated financial statements and prepare federal and state tax returns for GHI and GDC for the year ending December 31, 2018 for a cost not to exceed $ 18,500.
  • In Executive Session, approved a contract with B&P Utilities to undertake storm drain repairs at 56-C Crescent at its bid of $17,850, plus 10% for contingencies, for a total not to exceed $19,635.

Items of Information

  • The GHI Offices will be closed on Monday, September 3, 2018.
  • Smoke detectors have been installed in all units.
  • The Board President checked to make sure that air conditioning units being discarded by members and picked up by the City of Greenbelt were being disposed of properly. He is satisfied that this is the case.  PG Scrap, a licensed recycler, recycles the freon, steel, and copper from the units.
  • The Board President also invited the Board and Audit Committee to the GHI’s Employee Picnic to be held at Allen Pond Park in Bowie on Friday, August 31, 2018.
  • The Board Secretary stated that the City’s Public Safety Advisory Committee has completed a report surveying cell phone usage problem in Greenbelt. He wondered if a cell tower in GHI would violate current zoning. He said that when it was considered in the past, the company was willing to pay GHI $20,000 a year.
  • The Audit Committee thanked staff for the recent Open House and for the amount of time that staff spent. The Committee said the Open House was very beneficial.
  • The General Manager commented that there would soon be a meeting with WSSC. He asked the Board President to let him know who would be representing the Board at the meeting.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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