2022 Dam Project Special Assessment

2022 Special Assessment Community Vote - Dam Safety Fish Passage Project
Between July 25 and August 8, 2022, in a written ballot in lieu of a meeting, the membership of Fishhawk Lake Reserve and Community (FLRC) will be asked to vote and approve a proposed Special Serial Assessment to cover the increased costs for construction of the Dam Safety Fish Passage project.  The following information will serve as a voters pamphlet with links to relevant information regarding your vote.
 
Background
On July 12, 2020 in a special membership meeting, the FLRC membership put forth and passed the following motion:
 
 "Do you approve the proposed dam and fish ladder project with the understanding that once the final budget numbers have been submitted they will be presented for assessment(s) to the membership to be voted on at a separate membership meeting?"
 
Roll Call. Yes 154  No 13  The Motion was approved by 92.2% of the voters present or by proxy.
 
On August 21, 2021 at the annual membership meeting, the FLRC membership approved a Special Serial Assessment effective January 1, 2022, to cover the budgeted costs for construction of the Dam Safety Fish Passage project. The Assessment was approved by 87.6% of the voters (Yes 114, No 16). Based on the results of that vote, FLRC received approval from Alliance Association Bank for a $4M construction loan.
 
Between the August 21, 2021 vote and today, FLRC received bids for the project, and the resulting costs were significantly higher than budgeted. FLRC worked with the lowest bidder, Stellar J Corporation, to further reduce costs, and then entered into a contract with Stellar J Corporation. Construction began in June 2022.
 
In late June 2022, Alliance Association Bank (FLRC's lender) informed the Board that the $4M construction loan could not be closed until the FLRC membership agreed, via a vote, to pay for the increased costs of the project. On July 25, 2022, the Board held an emergency meeting to discuss this new requirement with legal counsel. Legal counsel then drafted a proposed Special Serial Assessment resolution, based on the actual construction contract with Stellar J Corporation and other estimated costs related to the project, and sent it to the Bank for approval.
 
On July 14, 2022, at a regular meeting of the Board, the Board reviewed the proposed Special Serial Assessment resolution and moved to send the resolution to the FLRC membership for a vote, subject to final approval by legal counsel and Alliance Association Bank. Final approval was received on July 26, 2022.
 
History and other relevant details of the project have been posted and shared with the community on the Solutions Committee page of the Fishhawk Lake website.
 
 
The Special Assessment
Click here to Download as a PDF
 
RESOLUTION OF THE MEMBERSHIP IN SUPPORT OF THE SPECIAL ASSESSMENT AND LOAN FOR THE FISHHAWK LAKE DAM PROJECT
 
BACKGROUND
 
1. In 2021, Fishhawk Lake Reserve and Community, Inc. (“Association”) settled a lawsuit with the State of Oregon and other agencies. As part of the settlement, the Association agreed to construct a new fish ladder, spillway, and related improvements (“Project”) by the end of 2023. The Project is contingent upon receiving all necessary federal, state, and local permits or authorizations, and based upon the assumption that the settlement would not undermine the Association’s ability to obtain grant funding.
 
2. To fund these improvements, the Association secured a $4,000,000 bank loan from Alliance Association Bank. In order to repay the loan, a special assessment of the membership was required. In August 2021, the members of the Association approved the Project and a special assessment based on the engineer’s estimated costs for $4,655,804, which includes a delinquency contingency. At that time, the total project cost was expected to be $4,232,549. (Total project cost = contract price + all other associated costs related to project).
 
3. Since August 2021, the total project cost has increased to $6,017,527.
 
4. The Association has liquid funds, in both the reserve fund and operating account, that could potentially cover the difference (or a large portion of the difference) between the original total project cost and the new total project cost.
 
5. According to the bank, the Association’s liquid cash is irrelevant from a credit standpoint, and the Association cannot use all of its liquid funds to cover the new price, because the loan agreement has a liquidity clause requiring the Association to have at least 20% or so of the total loan balance in liquid funds.
 
6. Even if the Association did have liquid funds to cover the new total project cost, the bank is still requiring another vote of the owners. The bank’s primary concern and objective is for the owners to agree via a vote to be liable for their pro-rata share of the total project cost ($6,017,527 divided by number of lots).
 
7. The purpose of this Resolution is two-fold. First, the owners must agree to be liable for their pro-rata share of the total project cost. The bank is requiring this. Second, the owners must approve an additional special assessment in light of the new total project cost.
 
8. The amount of the new special assessment is based on: Total Project Cost minus Prior Assessment.
 
RESOLUTION
 
1. Pursuant to Article 9.3.4 of the Bylaws of the Association, the Board shall have the power to levy a series of individual special assessments, plus applicable interests and costs, equally against each of the 255 Lots, the sum total of the special assessments being $1,361,723. This is a new special assessment in addition to the prior special assessment approved in August 2021.
 
2. In addition, the ownership has voted and agreed that each Lot and respective owners shall be liable for their pro-rata share of the total project cost, irrespective of the loan amount.
 
3. The Board President is duly authorized and directed to execute all documents necessary to obtain the Loan on the Association’s behalf, and take any other action reasonably necessary to consummate the Loan closing.
 
4. An Owner may elect to pay the entire assessment against their Lot on or before January 1, 2023. If an Owner pays the entire assessment by January 1, 2023, no interest or bank fees will be charged to the Owner as to the Lot for which the assessment is paid in full.
 
5. An Owner may instead elect, on or before January 1, 2023, to pay the assessment in the form of monthly serial assessments for each or all of the Owner’s Lots (“Payment Plan”). There shall be levied 132 separate and distinct individual serial special assessments commencing on January 1, 2023, and continuing monthly for a period of eleven (11) years. Each assessment is a separate and distinct monthly serial special assessment. If the Owner elects to pay the assessment pursuant to the Payment Plan, interest, bank fees, and loan management fees will be charged to the Owner for the Lot(s) for which such election is made.
 
6. If an Owner does not make an election between payment in full and the Payment Plan on or before January 1, 2023, the Owner will be assessed serially according to the Payment Plan.
 
7. The sale, conveyance, or transfer of a Lot will not affect the date upon which each assessment is due, and the Association shall have a lien against each Lot until the assessment, interest, bank fees, and loan management fees for that Lot are paid in full.
 
8. An Owner enrolled in the Payment Plan may pay in full the balance of the assessment, interest, and fees due under the Payment Plan, which payoff balance will be based on the amortization schedule and calculated for the end of the month. Partial payoffs will be accepted but will not adjust the monthly assessments. Such deposits will remain in an Owner’s account and be attributed to each monthly assessment as it is charged.
 
9. Upon the sale or other transfer of a Lot, the new Owner will continue to be assessed serially on the terms of the Payment Plan if that Lot was enrolled in the Payment Plan, unless upon sale of the Lot, the balance of the assessment, interest, and fees due under the Payment Plan is paid in full.
 
10. In the event the total project cost is less than anticipated, the balance of the assessment shall be deposited in the Association’s reserve account for future maintenance, repair, and replacement projects.
 
11. In the event that the total project cost is more than the amount assessed, the Board may elect to call a further special meeting to seek a vote for a further assessment or, if sufficiently funded, rely upon the Association’s reserves to pay for the balance of the total project cost.
 
12. The Association’s community management firm and/or agent is hereby directed and authorized to send a notice of assessment along with a copy of this Resolution to each Owner advising each Owner of the levying of the special assessment by the Association, the amount of the assessment levied against the Owner’s Lot, and the right of each Lot owner to pay the assessment in full or through the Payment Plan to be financed by the Loan.
 
 
Assessment FAQ's
 
What happens if the assessment is not passed?
If the special assessment is not approved, FLRC will not be able to secure a construction loan from Alliance Association Bank. In addition, FLRC will not be in compliance with the 2021 FLRC v Oregon settlement agreement.  This would lead to substantial legal fees to renegotiate the settlement agreement and additional costs to extend the construction permits. It would also risk FLRC's selected contractor from continuing work if FLRC is unable to pay invoices without support from a lender. At the end of the day, this would end up costing FLRC members more money due to legal fees, potential fines, and possible future increases to construction costs.
 
Does the community have to vote on the assessment?
Per our governing documents, the membership must approve a special assessment for a capital improvement project.
 
Why are we voting now, rather than waiting until the annual meeting, or waiting until final costs are known once construction has been completed?
Alliance Association Bank (FLRC's lender) is requiring a vote to assess the increased costs of the project, before finalizing the $4M loan. FLRC is currently paying the construction contractor with funds pre-paid from the prior special assessment, but those funds will only last a short time. In order to meet the construction timeline specified in the settlement agreement, approval is needed now.
 
What are the assessment payment options?
The Assessment will have two payment options. Note that FLRC is not a bank and does not have the ability to provide sophisticated payment methods that may be available from lenders.
  • Paying the assessment in full on or before the due date.
  • Making monthly payments based on the terms of financing obtained by FLRC.
When will this new assessment start?
For those choosing to pay in full, the due date is January 1, 2023. For those selecting the payment plan, the first monthly installment will be assessed on January 1, 2023. Further details are included in the resolution.
 
Do I need to choose the same payment option as I did for the prior special assessment?
No. This special assessment is independent of the prior special assessment.
 
For those who can’t pay upfront or choose not to, why is the assessment more?
The special assessment is the same for all. However, costs related to financing (e.g. interest and fees) will only be passed on to members who elect to use that financing. FLRC’s financing is being provided as an option for members who do not choose to pay the assessment in full through their own savings or financing methods.  All members are encouraged to choose the financing or payment method that best suits their needs.
 
If there is a 3rd assessment for this project, will there be financing options available?  Even for members that paid the 1st and/or 2nd assessment in full?
Should the project require more funds than collected in this Special Assessment or the earlier Special Assessment, the Board would determine the source of those funds including, but not limited to, an additional Assessment.  Obtaining financing options for such an assessment would be determined at that time.  Any additional assessment would apply to all members, including those who paid the 1st and/or 2nd assessments in full.  

If I sell my property, do I have to pay off the Special Assessment in full?
No. Similar to the prior special assessment, sellers with accounts on the Payment Plan may choose either to transfer responsibility for future payments to the new owner, or to pay off the remaining balance of the special assessment. It is expected that seller and buyer will negotiate the disposition of the special assessment as part of the property transfer process.
 
What is the procedure for recovering delinquent funds if a property is sold with some or all of the assessment unpaid?
The FLRC Collections Policy and FLRC’s Collection Attorneys will be used to pursue all delinquent accounts. Note that under Oregon state law (ORS 94.712), the buyer of a property is jointly and severally liable with the seller for all unpaid assessments owed to the Association.
 
Who do I contact if I have other questions? Please submit questions via email to CMI at communitymanager@fishhawklake.com. If you do not have access to email, you may call CMI at 503-233-0300.
 
Schedule of Events
7/14 Board approved motion to send special assessment to community for a vote
7/15 Notice of vote sent (email and USPS)
7/16 Town Hall to answer questions about special assessment
7/20 Last day to update your voting preferences as digital or paper
7/25 Earliest day for paper and digital ballots to be sent
7/26 Paper ballots mailed via USPS
7/26 Digital ballots emailed via Vote HOA Now
8/8 Paper ballots must be received at the CMI office by 3pm
8/8 Digital voting closed at 3pm
8/9 Paper ballots counted
8/9 Earliest the Election Results may be announced
*NOTE: The board reserves the right to extend the duration of this special assessment vote due to participation of community members