ASSOCIATION ISSUES 


Project IV Urban Development

Project IV, the middle third of Kohala Ranch, has an urban land use classification which allows for at least 1490 lots and condos (41 lots have been developed so far), a golf course and a shopping center. The other 2/3 of the Ranch, by contrast, has 478 lots, or one-sixth the density.

There is no understanding as to whether the public will be allowed to come in to shop or play golf. Developer Bob Acree owns the roads in neighboring Kohala Estates, which connect through a presently locked gate to the Project IV area, but there’s no requirement that it be used as a third entry to the Ranch when Project IV is developed. In fact, in order to do that, the consent of a majority of the owners in Kohala Estates would be required. Depending on how the development is laid out, it would be possible to use that entry to allow public vehicular access to the facilities, but still require a pass to go further into the Ranch.  

Probably the biggest question about Project IV is where the water will come from, and to see more on that, use the navigation bar above to check out “WATER ISSUES”. 

There are also questions about whether lots and condos in Project IV will be annexed to our association. For further discussion of that, click on “ANNEXATION”.

Project IV Impacts Thus Far

In 2006, when Acree annexed Heathers II, the first – and so far, only – subdivision in Project IV, he entered into a completely improper agreement with the Association Board to excuse him for up to two years from paying part of the dues on those 41 lots, in exchange for not voting the lots in Association elections. This is a deal a whole lot of owners would love to have, but there’s no provision for anything like that in our governing documents.

The September 2000 reserve study estimated that Kohala Ranch Road would not have to be repaved for almost fifteen years. In March of 2004, however, a consultant working for Acree on Heathers II infrastructure told the Board that Kohala Ranch Road was deteriorating badly, and that it was important to resurface immediately in order to avoid severe damage. This claim was accepted without an independent second opinion, and the same company that Acree was using to do his paving was hired to repave Kohala Ranch Road.

This should have raised some red flags. Was the company that did the reserve study really that far off? Was Acree working a bargain on his Heathers II paving job? Did the fact that the Ranch would look nicer when he went to market his new lots have anything to do with it? He has said that he won’t pay for impacts to our roads from his infrastructure development activities in Project IV, even though our CC&Rs allow us to charge him for that. But that became moot, at least for the time being, when the repaving we paid for removed any impacts to the road from his Heathers II development activities.

One director called in a State highway engineer to evaluate the work that was being done on the road, and found several problems. The contractor was required to fix the problems but, in the meantime, he billed the Association $5000 for having some of his equipment sit idle during the repairs…and the Association paid it!

There have been other questions regarding the awarding of contracts and the quality of the work, but we are not in a position to comment without additional information. (We can definitely say that in the early days of the Ranch, maintenance contract bids were rigged, and the Association overpaid by hundreds of thousands of dollars over the years. We fought hard on that issue, and eventually prevailed by sending the original developer back East a long list detailing the actions of their local representative.)
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Acree installed a lot of landscaping in the common areas of Heathers II, which became our responsibility when the subdivision was annexed to the Association. At one time we were paying more to irrigate plantings installed in connection with that 41-lot subdivision than for all the other landscaping in the Ranch. (And keep in mind that Acree owned the water company.) 

The shoulders became so lush in Heathers II that they attracted wild pigs, which tore up some of the grass. Eventually the watering was cut back and Acree did start paying for some of it.

A reasonable position for the Board to take would be to make it clear that the Association will not agree to maintain plantings installed in our common areas unless the developer has shared his landscaping plans with us and gotten our agreement. This may not be a very strong protection, given the Board’s history and the developer’s dominance on it, but it should be done anyway.

Board Weaknesses

The Board is not likely to stand up to the developer any time soon. A major reason for that is that he owns about 20% of the lots, and therefore votes, and generally less than half of the other owners participate in elections. And some of those who do, give their proxy to the developer-dominated Board.
  
This gives the developer great power to influence who gets elected or appointed and what they do. Legally, his fiduciary responsibility as a director is to act in the best interests of the Association, but you can imagine how that goes. (Ironically, Acree started out as a supporter of ours, but that quickly changed when he bought out the original developer at bargain basement prices after it had been bogged down in litigation for years.)

The developer is also in a position to reward (and perhaps punish) people. One year, we had no sooner announced our candidate than Acree showed up at their door inviting them out to a meal. They declined, he then offered to give the man’s wife a job – which was also declined. But there have been other directors who have worked for Acree, or members of their family have. One long-time director, Bill Moore, is not even an Association member. He’s Acree’s paid consultant…one with former ties to Country government.

Beyond that, it’s hard for people to be steadfast in that kind of environment, and faced with the type of personalities it draws. Newcomers think they don’t know enough, they don’t want to stick their necks out, they cave to the admonition to change their vote so the Board can make “a show of unity”. And most of them lack the time or inclination to become familiar with our governing documents, and often give too much credence to what they’re told by others.

In addition to that, the Association attorney, Bob Triantos, is a very close family friend of Bill Moore, the director who works for Acree.  On the face of it, this is not an ideal situation. 

One thing we’ll give Triantos credit for, though: he put a stop to the financially irresponsible tradition of having the attorney sit though sometimes interminably long board meetings, in case something came up that we needed to consult him about. At least one attorney we had could be seen to sleep though parts of the meetings. We had advocated stopping this waste of money but, as usual, we were not listened to. Was someone getting a kickback? We don’t know.

More Examples of Dysfunction

The example above of the developer being excused from part of his dues is pretty glaring.
So was the expenditure of Association funds for the Board to mail a packet to the Association members containing an all-out attack – replete with falsehoods – on our candidate for the Board. Although it helped us get way more proxies than we needed, it was totally inappropriateAlso glaring are two items we reported on in our Feb. 2012 newsletter and proxy solicitation:

 In 2006, when Acree’s water company was applying for a rate increase, we were told by the Board majority that it would not be appropriate for it to testify in the PUC hearings, because this was not an Association matter. Keep in mind that all Kohala Ranch residents were customers of the water company, and the Association itself was the largest single user. And though it supposedly wasn’t an Association matter, the Association newsletter was used to justify the rate increase. 

This kind of arbitrary mandate was not repeated in the most recent rate case, but it does point up the importance of electing directors who, even if outnumbered, will stand up for the members against such conflicts of interest.

We’ve also been told that it would not be appropriate for the Association to discuss issues related to the Project IV urban development because, again, it’s not an Association matter. They even allowed a letter be read at the annual meeting attacking us over Project IV issues…but would not allow us to respond, because Project IV is not an Association matter!

The truth is that under our Articles of Incorporation, anything that relates to our welfare as Kohala Ranch property owners is a legitimate Association concern.

In 2007, Bob Acree, Marcia Wishnick, Karl Delaney and their allies were pushing for a second entry gate at the bottom of the Ranch. We were given false information about how bad the traffic situation was becoming. But the residents didn’t see any problem…or at least none that wouldn’t be solved when the mailboxes were moved from the entrance.

Since a new entry gate would require lots of prep work like moving pipes and wires, it would be an expensive capital improvement, and therefore should require a vote of the members. But, in order to avoid such a vote, the people pushing for it claimed that it qualified as merely a road maintenance project. The CPAs we consulted disagreed with that, and somehow we managed to stop it.

Eventually more than ¾ of the traffic will be generated by Project IV, but Acree was expecting our association to foot the entire bill for a new entry gate that was not yet needed. A rationale was given that a new lane would allow residents to get around cars stopped at the guard station…but they already could.

That same group is very much focused on having our association help to finance a community center. But that doesn’t seem imminent, given today’s economy and the lack of enthusiasm on the part of many owners.

Transparency & Participation

Openness is especially important in our association, because we are not a local democracy in the traditional sense. We vote, yes, but it’s not “one person, one vote”. Our nation got rid of property ownership as a prerequisite to voting early on, but at Kohala Ranch it’s the entire basis for voting. And the more lots you have, the more votes you get. That’s what we signed on for, but we should keep in mind that we are not, in the standard sense, either a democracy or a republic.

That’s why we’ve always advocated for a residents’ advisory committee and/or an ombudsman position to advocate for concerns of the members and aid the Board in liaison with the community.
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We proposed that the Association maintain a file of all policies passed by the Board which won’t show up in our governing documents. Such decisions tend to quickly get lost from consciousness, and there is no good way for anyone to find out about them. It would have been easy enough to keep such a file and make it readily available. But, apparently because it came from us, it seemed to be a controversial proposal. The solution proposed by then-President Marcia Wishnick was than anyone wanting to know what our policies are should just read the minutes of all the meetings! [Going back how many years??]

When we proposed at a recent Board meeting that residents should be encouraged to serve on committees, one director reacted with something approaching derision. President Delany did respond by adding a note to his statement in the next Association newsletter inviting members to participate in committees…but he gave no information about how to find out what committees there are and who to contact if they’re interested.

This information should be permanently posted on the bulletin board and Association website, and committee chairmen should be encouraged to post notices of meetings and agendas, when feasible, and invite interested members to attend. Maybe the usual apathy will prevail, but it doesn’t cost much to make a small effort.

Meanwhile, the Board has been stacking the Architectural Control Committee with directors, even though the CC&Rs specifically provide that none of the three members has to be a director.

The Fire Station

The Association paid to build the volunteer fire station, with the understanding that over two acres of land would be provided by the developer, and the County would someday expand the facility into a full-time career station. The County later changed its mind, however and we're left with a twenty-year lease to the County on the station and the 10,000 sq. ft. of land it sits on.

We have no idea what Acree plans to do with it when the lease is up, but he could easily make a permanent donation of the land to either the County or the Association. It’s a tiny fraction of his Project IV holdings.

Kohala Ranch Park

Acree designated the Polo Field to be the park which the Country required as part of his Project IV approvals. As far as the County knows, it’s open every day during daylight hours. Only it isn’t. We haven’t been able to get the Board to stand up for us and ask Acree to work with them on appropriate rules and shared responsibilities. So if you want to go to the park on the weekends, you’ll need to climb over or through the fence. During the week, when the gate is open to allow access to Acree’s office and the maintenance area, we don’t know whether you’ll encounter any problems or not.

[Page last updated Feb. 2012]