LAKE MOOVALYA KEYS, INC.
Board of Directors
Annual Meeting
La Paz County Board of Supervisors Meeting Room, Parker
APRIL 7, 2007 @ 9:30 A.M.

CALL TO ORDER
Vice-President Chuck Baker called the annual meeting of the Lake Moovalya Keys Board of Directors to order at 9:30 a.m.

PRESENT
Vice President Chuck Baker; Board Members Joe Price, Bob Stroud, Gary Svider, Joe Maxwell, Jack Sweeney, William (Squeak) Kossnar, Richard Jaschke & Larry St. George

ABSENT
President Bill Risen; Secretary/Treasurer Chris Chambers

OTHERS PRESENT
Sue Thomson, Business Manager and Recording Secretary; Cheryl Shockley, General Manager; John Churchill, Legal Counsel; Cliff Edey, District 2 Supervisor; Lt. Alan Nelson, La Paz County Sheriff’s Office Boating Division; Beth Shamburg, Betty Hunter Realty Property Manager; Carla Faulkner, Security Real Estate Property Manager

PROPERTY OWNERS PRESENT
The sign-in sheet of those present at the Annual Meeting is on file with the Association. The number of owners present at the meeting was 76. The number of members who voted either by regular ballot or absentee ballot was 161.

INTRODUCTIONS
The Board members, legal counsel, Business Manager and General Manager introduced themselves to the membership. The owners and meeting guests introduced themselves.

MINUTES
The Minutes of the 2006 Annual Meeting were approved by the Board of Directors on July 10, 2006.

FINANCIAL STATEMENTS
Mr. Baker reviewed the current Balance Sheet. The members previously received the 2006 financials with their meeting Notice. Bank balances for each of the five bank accounts were announced, with a collective balance of $198,890.

Mr. Baker answered Ms. Pollett’s (lot 43) questions regarding budgeted street repairs, sinkholes, clicker sales, towing fees and security guards and citations. Another homeowner asked about our reserve program for capital improvements, and Mr. Baker stated it was set up about five years ago. He reported that the Association’s bridges are in good condition, with only ongoing maintenance needed. Kenko, the sewer installation contractor, is out of business. Ms. Carlisle (lot 110) questioned why the security guard budget item was reduced, and Ms. Thomson stated that we cut back the holiday night shift.

Mr. Baker discussed the increased County property tax assessments. Being a real estate appraiser, he went to Phoenix, with Cliff Edey, and met with the Arizona Department of Revenue after doing his own study of appraised values countywide. Outlying areas are substantially under assessed as compared with properties in the Keys and upriver. Fair market values for 2007 assessments should be based on values or sale occurring between January 2005 and June 2006 but can also be based on sales price figures to January 1, 2007. Assessed values should be between 74-90% of actual value. The Department of Revenue is supposed to oversee the Assessor with a Sales Ratio Study, where they look at, and compare sales with, assessed values. An 80% ratio of assessed value to current market value is acceptable. La Paz County was assessed at approximately 30% last year; this year that number climbed to 60% for properties in the Keys and upriver. Of the 15,000 county parcels, 10,000 are in outlying areas, and 5,000 are in Parker and upriver. Analysis of 2007/2008 assessed values for the 10,000 outlying area parcels increased only 7%, while Parker and properties upriver increased 32%, with some properties in the Keys increasing 42%. He also noted that Vista del Monumento properties (on the river inside the gate) were not increased at all. Because of these large inequities, Mr. Baker encouraged owners to appeal their assessments. The first step is to appeal with the Assessor, then one can proceed to the Board of Supervisors, with the final appeal process being the tax court. This year the State will have a designated person to make recommendations to the Board of Supervisors.

Mr. Baker stated that reasons for an appeal include (1) an assessed value higher than the fair market value; (2) a good sales-ratio argument compared with other properties in the County; (3) a property valuation being increased more than once during the typical three-year cycle of review; and (4) a house not valued consistently with other like houses in the neighborhood.

Mr. Leek (lot 114) expressed his appreciation to Mr. Baker for a good job.

GUEST SPEAKERS
Mr. Edey talked about the meeting with the Department of Revenue, and he said they admitted wrongdoing, but that they don’t want to get involved. He also stated that he worked with the Assessor three times prior to going to the State. He also said that we should have been able to bring blank assessment appeal forms to the meeting today, as it is not breaking any law to do so, but the Assessor has been reluctant to issue blank assessment appeal forms to anyone but the property owner. Mr. Edey also discussed the inequity between county regions, where outlying areas are at 11-15% of fair market value, and they are not getting any increases within the three-year cycle. There is a Prop. 13-type initiative in the works, currently in lawyers’ hands, and petitions will hopefully be out soon. He stated that elderly people are getting pushed out of their homes, and while admitting certain service and education districts need some growth, it should be done in a controlled fashion, and we may need a bond issue. Mr. Edey urged those interested in tax reform to make a donation to the cause at www.arizonataxrevolt.org. The organization was close, but fell just short, in getting the Prop. 13-type measure on the ballot last time, and they need help getting it on the next ballot. Interested property owners can learn more about their tax situation through the Board of Supervisors, which has a good history of fiduciary responsibility. He encouraged people to get involved by attending Board of Supervisor meetings, sewer district and fire district meetings, so we can get our taxes under control.

Mr. Edey gave an update on proposed improvements to Riverside Drive by stating that they have had 4.2 million dollars ready to be used since 1999/2000 when funds were approved. The County is just waiting on the sewer project. The sewer engineering is done, and as soon as the sewers are installed, the County will go in directly behind their work, focusing on improving the shoulder on the east side of the road, and improving drainage in the ponding areas. He has received pleas to increase the 25 MPH speed limit, and to remove the stop sign at Cienega, which he will work on once the improvements are done.

A homeowner questioned Mr. Edey about new cell sites, and he stated that a Sprint site is going in, as is another site by Havasu Springs, and they should have started already. Another owner stated he thought a Verizon site was going in.

Mr. Edey concluded his tax discussion by stating that the County receives 3.7 million dollars in total tax revenue, which is not a lot. La Paz County is 4,500 square miles.

Lt. Nelson talked about tax dollars for Boating Safety Division and State Parks. He said that 100% of the cost of the Sheriff’s boats, maintenance, fuel and salaries is paid via State grants, which monies come from marine fuel taxes and boat registration fees. They acquired two additional new boats, and individual property taxes did not pay for them. The new boats replaced boats aging from 7 to 14 years, with the goal to modernize their fleet.

A homeowner questioned golf cart rules, and Lt. Nelson stated that no unregistered, unlicensed vehicle is allowed on a state road. The law states that an unregistered/unlicensed vehicle must be at least 40’ from the centerline of the road. Common sense is encouraged, and the Sheriff’s Office encourages folks to register them to keep them legal. Deputies may or may not condone riding on the shoulder, as it is up to each officer’s discretion. Common sense is urged—be considerate, be safe. A homeowner questioned the legality of registered and licensed carts on the regular section of Highway 95. Lt. Nelson stated that the DPS decides that issue, but it is allowed. If the vehicle is backing up five or more vehicles, it must pull over to let them pass. Lt. Nelson answered a question regarding protective eyewear by stating that a windshield or eye protection is required for all drivers and passengers on state roads. In addition to that, persons under 18 must wear a helmet whether they are on a state road, or off road. Lt. Nelson stated that the Sheriff’s Office has no jurisdiction to enforce state laws in the Keys. There is no Arizona law against wave runners operating at night if they have proper lights. However, California law prohibits the operation of a PWC between sunset and sunrise, and California has jurisdiction on the entire river. San Bernardino County does not have as much of a presence on the river but will have increased presence upriver by rock island. He said it is difficult to meet the lighting requirements on a PWC (red and green lights visible for one mile and a white light visible for two miles). California also has additional laws on PWC’s, such as turning sharply.

OPEN DISCUSSION ON SHORT-TERM RENTALS
Mr. Baker reported that 25-30 homes in the Keys offer short-term rentals, approximately 10% of all properties. At the June 2004 membership meeting, rules and fines were established. Also established was a rule that short-term rental properties shall deposit $1,000 as a security deposit for any tenant damages, and a Tenant Information Sheet was formulated and to be completed and submitted to management for each short-term rental. Fifteen renters submitted their deposits, and very few have submitted Tenant Information Sheets. Five sued the Association. Last year several rental property owners wanted to run for positions on the Board. Three came to a regular Board meeting. Mr. Baker said he asked them to come up with a plan. On June 2, 2006 the Association was sued, and that is the last we heard from them. Because of thefts last summer, perpetrated by tenants, and other problems by tenants, the Board decided a few months ago to throw out the present initiative to the owners so they can vote on whether or not short-term rentals should be prohibited. If the owners vote to prohibit rentals, then the Association has a problem enforcing it. If the initiative fails, then the Association still has a problem enforcing the rules it has established.

One of the problems is over-occupying homes with too many people, cars and boats, which results in increased damages, theft and a general disregard for the rules. 42% of fines result from tenants’ actions. Complaints result in a decrease in property values. Mr. Baker’s background as a local, residential real estate appraiser, who has appraised lots of properties up and down the river, has shown that values in a PUD (Planned Unit Development) increase when they have more restrictions. Potential homeowners want their privacy respected. Mr. Baker stated he wouldn’t vote on the initiative if he thought the property values would go down. He stated he realizes that owners themselves are sometimes as bad as tenants, but at least we can talk to the owners.

Mr. Derby (lot 85) asked what the renter’s lawsuit has cost the Association. Mr. Baker clarified to Ms. Pollett that the security deposit was not just for common area damages. Mr. Churchill said that the security deposit was intended to be used primarily to cover damage to common property, but not exclusively. Other direct or indirect expenses, such as additional security or staff time to track down things could be paid as damages from a security deposit. He said the Association has never had a claim, and the security deposit could conceivably be used to reimburse a homeowner who incurred damage.

Mr. Baker stated that the Board recommended a much lesser amount for the required security deposit in 2004, but the members voted for $1,000. Mr. Stroud reported that a tenant crushed his paddleboat a few years ago, and a security deposit could have been used to reimburse him for that damage. The $500 deposit that the tenant made when he rented the property was not for damage reimbursement to other’s property.

Ms. Hoffer (lot 31) stated she has a problem with the rental owners not having a solution to these problems. Her family has had to leave their property because of chaos with renters. She suggested that the folks who rent their properties come up with a suggestion on how to control tenants. She is a real estate agent, and she said rentals negatively affect property values.

Mr. Warden (lot 131) stated this issue is splitting the community, and compassion is needed on both sides. We can’t take the homeowners’ rights away. He said he is not happy that Board meetings are held on Mondays. The realtors need to come up with a game plan. He said he has packed up and left due to homeowners’ noise. He said he got rid of bad renters, and there are crimes committed by non-renters. This is a vacation community, and we need to come up with some rules. He felt the Board has not been good about communicating with owners, even though he admits it is their responsibility too.

Mr. Ogland (lot 22) purchased his home in 1972 as a second home. It was okay to rent then, and it helped him defray costs. He said he had 44 short-term rental nights last summer, and his property manager collects $1,000. The CC&R’s already require the owners to have their renters comply. In addition renters generate local revenue. Prohibiting him from renting his property on a short-term basis would be a severe financial hardship, and a long-term rental would preclude him from using his home on occasion. He does not feel that a rule should be placed that would affect properties purchased prior to the passing of the rule.

Ms. Northcutt (lots 73/102) stated that renters should not be lumped into one big, bad group. Property managers are now screening people better, and occupancy is limited to 10 people. She said she pulled hers from an agent in order to screen renters better. The majority of renters are okay, but there are a few bad ones.

Mr. Smet (lot 166) said that he and Ms. Pollett would like to work with the Board. Ms. Pollett stated that these issues are not unique to renters, and the damages and crimes are not just by renters. She stated that none of the security deposits have had to be used for damages, and there is no criteria on how the money is being managed, with no statements to owners who paid. She also stated that there are Board members who are missing too many meetings and not being removed. Ms. Pollett mentioned Mr. Kossnar’s going off title and coming on title again to his property. Ms. Pollett said she wants to represent the owners and try to make the Keys fun again.

Mr. Tozer (lot 194) said he has lived here since 1971, and the Board should investigate solutions. He said he personally has never had a problem with renters.

Mr. Leek said we need to blend the mixed demographics. This is an ‘unwind’ area, and he has enjoyed it for 18 years, having remodeled his house, which was made financially feasible by renting it. It has increased his property value. New potential buyers should not be deterred because they can’t rent. We are in a unique situation, so let’s fix the problems and not make a snap decision. Relax, enjoy and be respectful of your neighbors.

Ms. Burke (lot 122) said she appreciates and agrees with Mr. Leek, and she sympathizes. She said that Ms. Pollett’s idea of getting together was to file a lawsuit and that Ms. Pollett doesn’t come to Board meetings.

Mr. Richards (lot 208) has been a real estate broker for 14 years, and passing this proposition would decrease property values. He supports the security deposit rules and has recently spent $150,000 remodeling his property. He does not allow party animals, and he screens his renters. He stated he is not comfortable with discriminating between short-term and long-term rentals. He cited problems with long-term renters, which he has witnessed. Short-term rental owners should be accountable, but a ‘yes’ vote to prohibit short-term rentals would adversely affect property values.

Mr. Barbanell (lot 216) suggests dialog and sharing telephone numbers with neighbors so long-distance owners can be made aware of problems as they occur. Noise is a problem.

Ms. Sternberg (lot 139) co-owns a house across the canal from Mr. Baker, and the teens that stole the liquor last summer were friends of theirs. She didn’t find out about the incident for two months. She paid her security deposit, and she just wants to be made aware of future incidents involving their property. She said she drove from California to Parker to apologize. No money has been deducted from her security deposit.

Mr. Churchill stated that he is torn on how to vote on the proposition. He stated that the tenants are the major source of problems, and that the CC&R’s are being ignored, such as the single-family occupancy rule. Tenant Information Sheets are not being used by everyone. He hears from other owners, “Please do something—enforce the CC&R’s.” The landlords are not complying. He referenced one 50’ wide rental property as having a capacity of 14 people. Based on linear footage, Mr. Churchill said he could accommodate 37.4 people at his house. Where else can you party for $30 per person? He said this proposition is a compromise by stating that some Board members wanted to prohibit all rentals (short term and long term).

Ms. Meinen (lot 44) said she loves the river and is moved by the amount of passion in the room. This vote will divide us further. She said that they are barely holding onto their property, and that they are one of the five plaintiffs in the lawsuit. They joined the lawsuit because the Board was moving in a direction they opposed. The lawsuit was filed to say, “Please stop, pay attention.” They did not attend last year’s annual meeting, because it was at Easter, plus they were complacent because things in the Keys were going well, but she stated that they do take personal responsibility, and they do not want to go through this.

Mr. Baker ended the discussion by stating the Board is asking the homeowners for their vote on what they want to do. He stated that if the Board complies with a prohibition vote, they face getting sued. The Board has mixed feelings, and it spent a lot of time on this issue.

Mr. Baker stated that the CC&R’s were last amended in 1995. They call for regular monthly Board meetings to be held on the first Monday of each month. That can be changed, depending on Board makeup. Mr. Baker described Ms. Thomson’s Business Manager job duties, and Ms. Shockley’s General Manager job duties. In the 30 years he has been in the Keys, it has never looked better, has never been run better, and it has the best people. The Association’s website contains lots of general information as well as meeting minutes. We have a good gardener, three vacant lots for parking, and a 10-year plan for streets and bridges.

NOMINATIONS

Tricia Pollett nominated Jim Richards (lot 208).
The incumbents each gave a short biographical statement.

The following write-in candidates each gave a short statement:
Rosemary Carlisle (lot 110)
Steve Green (lot 12)
Norm Hutchins (lot 97)
Tricia Pollett (lot 43)
Dale Smet (lot 166)
Robert Spangler (lot 34)
Lori Warden (lot 131)
Jim Richards (lot 208)

The nominations were closed.

ELECTION RESULTS

Board Members:

Risen 97
Baker 114
Chambers 104
Stroud 92
Price 102
Sweeney 115
Svider 94
Maxwell 94
Kossnar 94
Jaschke 84
St. George 105
Carlisle 38
Green 48
Hutchins 48
Pollett 46
Smet 43
Spangler 38
Warden 41
Richards 27

Prohibit Short-Term Rentals:
NO: 83 votes; YES: 77 votes; ABSTAIN: 1

OTHER BUSINESS
A homeowner inquired about the possibility of web conferencing regular Board meetings. Mr. Baker stated that no major decisions are made at monthly meetings without throwing out the issues to the homeowners. He also stated that many of the items discussed at monthly meetings, such a maintenance problems, can’t be anticipated in advance.

Mr. Leek suggested that the local rental agents attend meetings. Mr. Baker pointed out that Beth Shamburg is here today representing Betty Hunter Realty. He stated that some don’t want to participate.

Mr. Churchill advised that CC&R’s enforcement is the only way to curb violations, and we should not be renting to anyone but a single family. Tenant Information Sheets must be filed with the manager, and if the rental agencies violate rules, the Association could seek legal action, although that has not been done yet. Increasing security service is another option.

Ms. Meinen asked that we enforce CC&R’s for those who violate rather than make blanket proposals.

Ms. Carlisle stated she would be willing to serve as the neutral, go-to person. Mr. Anslyn (lot 113) asked why we don’t enforce the single-family occupancy regulation.

Mr. Baker discussed the reason for having annual meetings at Easter as historically being the best time to get a good turnout. Since there have been complaints about having it at Easter, the Board will revisit the date in the future, also possibly reviving the former barbeque, informal setting.

ADJOURNMENT

The meeting adjourned at 1:00 p.m.
Submitted by Sue Thomson, Recording Secretary

APPROVED BY BOARD OF DIRECTORS JUNE 4, 2007