Meeting Notice – March 14, 2022
To: Members of the Board of NSBG, Inc.
Date: March 10, 2022
NOTICE OF BOARD MEETING
Notice is hereby given that a regular meeting of the Board of NSBG, Inc. is as follows:
NORTH SHORES BOARD OF GOVERNORS
Meeting of Board of Directors
Monday, March 14 at 5:00 p.m.
By Teleconference
MEETING SUMMARY
NORTH SHORES BOARD OF GOVERNORS
Meeting of Board of Directors
March 14, 2022
A regular meeting of the Board was held on Monday, March 14, 2022. Notice of the meeting was announced and posted in advance on the North Shores website in full compliance with North Shores governing documents and DUCIOA. The meeting was called to order and a quorum was declared. Attending the meeting by teleconference were: President Steve Hollman, Secretary Debbie Director, Treasurer Helen Hoart, Assistant Secretary Evan Thalenberg and board member Bruce Wilson. The meeting also included Community Executive, Jeff Sellman.
The first item on the Agenda was the review and ratification of votes taken by email taken since December 13, 2021. A complete list of votes was included in the meeting Agenda and reviewed by the directors. President Hollman asked the Board if there were any questions or comments. There were no questions or comments. Bruce Wilson moved to ratify the votes taken by email, the motion was seconded and approved by all.
Review and ratification of votes taken by email:
- Construction Application (minor) 69 Anchor Road – Approved
- Construction Application (minor) 7 Farview Road – Approved
- Meeting Minutes December 2021 – Approved
- Construction Application 61 Ocean Drive – Approved
- 2022 Pool Service Contract – Approved
- Community Rules 2022 (minor modifications) – Approved
- Drainage Contract Holly Road – Approved
- 2022 Flea and Tick Control Contract – Approved
- Dune and Sand Fence replacement – Approved
- 2022 Landscaping Contract – Approved
- Construction Application (minor) 19 Bayberry – Approved
- Construction Application (minor) 87 Anchor Road – Approved
- Construction Application (minor) 18 Cedar Road – Approved
- Construction Application (minor) 34 Harbor Road – Approved
The next item of business, the 2022 Proposed Budget, was presented by Treasurer Helen Hoart. Previously, the details of the proposed budget had been circulated to all Board members and posted on the North Shores website, complying with the advance notice requirement that took effect in late 2021. Mrs. Hoart discussed in her report to the board that the audit engagement letter, received in February, had been initiated and received prior to recent homeowner interest in the financial statements. Treasurer Hoart indicated the financial statements have evolved over several years to be more transparent to clearly present the financial status of the community. Financial management operates consistently with best practices, using excess funds for capital expenditures.
President Hollman complimented Treasurer Helen Hoart and Bookkeeper Phyllis Donovan on the preparation of the 2022 budget report that included numerous assessment scenarios. Treasurer Hoart explained to the Board that the marina dredging project had been deferred while the contractor undertook a search for an appropriate site and to obtain permitting to deposit the dredging spoils. The impact was to shift a substantial portion of the dredging costs from 2021 to 2022, the effect of which was to create a budget surplus in excess of $90,000.00 for 2021. Applying the surplus to the projected $190,000.00 deficit for 2022 would result in a significant reduction of the projected deficit. Treasurer Hoart presented three scenarios for increasing the 2022 assessment to offset the remaining deficit. Mr. Sellman reported to the Board that the permitting process for the marina dredging project was underway with a target date of this fall to begin the work. Costs associated with the project will be apportioned over a two year period in the budget.
President Hollman explained that the proposed 2022 budget did not restore some expenditures to pre-COVID levels. Expenditures for replacement of the North Shores truck and the storage building were not included in the budget, resulting in a reduction of the projected deficit. Both are exceeding their useful life and in need of replacement. All social activities, the annual Memorial Day community party and the July 4th community events, previously included in the budget pre-COVID, were reduced in scope or eliminated until the revenue shortfall issues are resolved. President Hollman indicated that an update to the community’s capital reserve study, when completed, likely will require a significant increase in the projected capital costs from their current projected levels. The last capital reserve study was completed in 2014. The capital survey recommendations will be included in the 2023 budget process. Currently, the community has approximately one year of operating expenses in excess cash reserves to use in the event of unexpected demand for investment, but there are no specifically allocated capital reserves established to make beach or community repairs following coastal storms. Historically, beach repairs are financed in part with excess cash reserves and in part a special assessment.
The Board then engaged in a discussion regarding whether to increase the current level of the annual assessment to homeowners in light of the projected 2022 deficit. Rising expenses could not be offset entirely by the previous years’ surplus, and an increase in the assessment is warranted for financial planning that addresses rising wages, aging infrastructure capital planning, and restoring items normally included in the budget to pre-covid levels.
President Hollman recommended the lowest increase of the three presented scenarios, a $200 increase in the annual assessment, until the community has an opportunity to vote on the two fee proposals at the annual meeting in May. The proposed fees for construction and rentals, if approved by the community, would recover certain costs now being financed by the annual assessment. A construction application fee increase was implemented in February to capture direct costs associated with building projects and the construction of new homes, but the increase was significantly lower than originally had been proposed. Metrics and data for costs associated with rentals, including variables for occupancy usage by property, are currently being developed for information gathering purposes in the 2022 season. The voting outcome of the fee proposals and the reserve levels recommended in the capital study are likely to be factors that influence assessment levels for the 2023 assessment. After a board discussion, the most modest increase scenario of $200.00 was approved unanimously, leaving the budget with a deficit of $140,759 (further offset to a $48,939 deficit after applying excess cash from 2021). A review of the assessment level history indicated that the assessment had not increased since 2019.
The Annual Meeting was the next item on the agenda. Community Executive, Jeff Sellman, reported preparations for the meeting and the annual mailing were well underway. The meeting will be held at the Rehoboth Convention Center on Saturday, May 28, 2022. Changes to the proxy will be made to accommodate voting by homeowners on the two fee structures and the election of two board candidates.
In other business, the board considered hosting an informal community gathering on Memorial Day weekend. Mr. Sellman will present the board with some financially conservative options to continue the tradition of a party at the pool, now permitted by COVID regulations, but at a significantly reduced scale and cost.
The next item on the agenda provided an opportunity for homeowners to participate and comment at the meeting. No homeowners were present at the meeting.
All agenda items having been covered, the meeting was adjourned.
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Deborah M. Director
Secretary
dmdirector1@gmail.com]