May, 2005

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The Neighborhood Associations Boards of Ram's Hill have approved the First Restatement of the Ram's Hill Community Declaration. The changes include updating its provisions to meet the requirements of current law and reinstatement of Declarant's rights for Borrego Investors, LLC to allow continued development of the property. The following is a summary of the key provisions:

  1. Reinstatement of Declarant. Borrego Investors LLC has been reinstated as the Declarant in the Community Declaration (Section 2.3). Declarant status includes preferential voting rights as a Class B member (Section 4.4.2) and control of the Community Association Board by having the right to appoint three of its five directors. Two directors on the Community Board will be required to be owner representatives (Section 4.5.3).

  2. Owner Control in Event of Declarant Default. The two owner representatives on the Community Association Board will obtain control in the event of a Declarant default. This would include failure to pay any of the fees or assessments which are provided for in the Association's Governing Documents into the Community Association. Shifting of control from the Declarant to the Owners will allow the ownership to take appropriate collection action against the Declarant in the event of the default. It will also motivate the Declarant to cure the default as soon as possible. Once the default is cured the Declarant's control will be reinstated (Section 4.5.4).

  3. Enforcement of Bonds for Common Area Improvements. This Section has been reinstated in the Community Declaration for the members' protection. Borrego Investors are planning to make capital improvements to the Association's common areas. In the event Borrego Investors fails to pay for or complete those improvements, there are performance bonds which are required by the Department of Real Estate for the Association's protection. These provisions set forth the procedure the Association is to follow in enforcing these bonds in the event of a default (Section 4.7.15).

  4. New Requirements for Adoption of Operating Rules. Section 4.8.1 has been revised to include new legislative requirements for the adoption of operating rules by the Community Association. Prior to adoption of operating rules, the proposed rule needs to be prepublished to the Neighborhood Association Boards for their review and comment.

  5. Distribution of Annual Financial and Other Notices to Owners. Section 5.11 has been updated to reflect the legislative requirements for distribution of financial, reserve, insurance, budget, collection and other required annual disclosures to the membership.

  6. Architectural Control. Borrego Investors will have control of the Rams Hill Architectural Committee. Although each of the Neighborhood Associations are authorized to have their own Architectural Committee, the Community Association's Architectural Committee controls. In order to maintain the status quo with regard to "built out" communities, language has been added to Section 9.5 which prohibits amendments to the architectural guidelines that impose new or burdensome standards on the built out Neighborhood Associations without the consent of their respective Boards of Directors.

  7. Limit on Assessment Increases. Borrego Investors has entered into an agreement with the Community Association which guarantees that assessments to the members of the Community Association will not increase more than 5% per year. Under existing law, assessments in a community association may be increased up to 20% if warranted by the pro forma budget. Under a separate Contribution Agreement, Borrego Investors has contracted to subsidize any shortfalls in the budget in the event that the 5% increase is insufficient to cover expenses. The Contribution Agreement also provides that capital improvements and new amenities added to the common area by Borrego Investors will not be paid for by the membership via special assessments (Contribution Agreement).

  8. Protection of Reserve Funds. The Community Association has built up a sufficient reserve account for replacement and repair of its facilities. In order to assure that these funds will be used for the purpose for which they were collected, the expenditure of reserve funds must be approved by at least one of the two owner representatives before they can be expended. This guarantees that the members reserve funds will not be expended without approval of at least one of their elected officials (Section 5.1).

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