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).
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).
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).
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.
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.
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.
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).
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