Hi everyone. Mike Konrad here with some important Vellano updates.
The last time I reached out to you, I was warning you about a proposed new set of rules by the Vellano Board of Directors, which would allow the Board to fine any homeowner who made any statements to board members, vendors, or other homeowners which they found upsetting / disturbing. A number of you reached out to the board, reminding them of our First Amendment right of free speech, as well as the high potential for litigation those draconian rules would have brought upon us. The Board even received correspondence from an attorney, representing one of our homeowners, threatening legal action if their proposed rule was enacted. Your efforts convinced the Board of Directors to drop those proposed rules. Nice work everyone! Sometimes, it takes a village!
I’m reaching out to all of you today to bring you up to date with some of the activities of the Vellano Board of Directors. Activities which I find concerning.
First, in my opinion, there seems to be some self-dealing going on with some of the Vellano Board members. I would like to think we are all subject to the same rules and regulations within our community. Apparently, if you are a Board member, you can exempt yourself from these rules. I have two examples:
One current Board member was assessed about $46,000 in fines due to multiple landscape violations. The current Board of Directors has refused to enforce the collection of those fines. I can only assume it is because the fines are owed by a member of the Board of Directors.
Here’s another current example of yet another Board member. This Board member submitted an application to the architectural committee for modifications to his home. The architectural committee (a professional architect contracted with Vellano) denied the Board member’s request. This Board member reportedly asked Board President Lily Chang to override the architectural committee’s decision and allow the modifications to be installed as requested. It’s important to note that one of the conditions of approval is that all improvements comply with building codes and city ordinances. A majority of the Board of Directors voted to approve the other Board member’s application “as is”, even though it violated local building codes.
The city of Chino Hills sent the homeowner / Board member a violation notice, and confirmed the following:
The wall in front of the house exceeds 4' in height (a violation of building codes).
The impervious surface exceeds what is allowed (impervious surfaces, are surfaces which do not absorb water). Too much impervious surface area can create excessive water runoff to either the street or a neighbor’s yard).
And for the cutting into the curb without a permit from the city’s engineering department.
Homeowners have complained that the home looks like a “compound”.
It’s troubling to learn that a majority of the Board of Directors voted to allow their fellow Board member to add these modifications to his home, even though they violated city codes and Vellano architectural guidelines. Neither you nor I would be afforded the ability to build whatever we wanted whether or not it complied with Vellano or city codes. I guess that’s another benefit of being a Board member!
Another concerning item, as if that’s not enough, is the new proposal to remove the speed humps throughout the community. Several years ago, the number one concern expressed by homeowners was the number of speeders within our community. To address this concern, the Board commissioned a traffic safety study. Professional engineers conducted a comprehensive study within our community, which included the monitoring of traffic flows and speeds on nearly every street. The result of that traffic study was alarming. The study concluded that we had a speeding problem within the community. In the time leading up to the commissioning of the traffic study, our community witness four separate vehicle accidents, all a result of excessive speed. Within a relatively short period of time, two homes were hit by speeding cars, and two gates were destroyed by speeding cars.
After consulting with homeowners, the board voted unanimously to approve the installation of speed humps in order to lower the safety risk within our community and protect homeowners. Keep in mind, Vellano has no sidewalks. Homeowners, children, and guests routinely walk on the street. Now, the board President has asked for bids to remove all the speed humps, including the one in front of her house. This is the same Board member who voted twice to approve the installation of the speed humps.
I can’t express strongly enough the amount of liability this decision would bring upon this community and its homeowners. The Board was made aware of the dangers the speeding drivers present. As a result, the Board approved thousands of dollar’s worth of expense to install the speed humps strategically throughout our community, per the engineers recommendation. If we remove the speed, humps, and an accident results, the HOA can be accused of gross negligence as we were aware of the dangers. While we carry insurance, it would not come close to covering the results of an accidental death or serious injury. If this occurs, all homeowners could be liable for any judgment in excess of our insurance limits. Vellano spent considerable amounts of money (thousands of dollars) with the safety study and the resulting installation of the speed humps. Now, some of the Board members wish to spend thousands of additional dollars to remove these speed humps and expose us to tremendous potential liability. If this concerns you, let the Board of Directors know. They plan on voting on the speed hump issue this coming Monday, with almost no notice to homeowners.
Here's another troubling concern. The developers who purchased the golf course and clubhouse, are required to pay Vellano based on a monthly cost-sharing agreement to help maintain the roads they use. These are roads owned by the HOA (you). The developer has not paid one penny as required by the cost sharing agreement in 19 months. Why has seemingly no action been taken to pursue the 19 months worth of payments owed to us by the developer? Why are we still allowing the clubhouse to operate by allowing their guests to drive our streets. The streets, which they refuse to pay for.
Let’s talk more about money for a moment. A recent study of the Vellano financial statement reveals that we pay $500,000 a year for our guards. That is by far the largest single expense we have. Not water, not landscaping… guards. The roaming guard alone costs homeowners $260K every year. It’s my opinion that a single expense of half a million dollars a year for 205 homesites is incredibly excessive. Perhaps, that is the reason why we ignored scheduled street maintenance, apparently diverting that money to a roaming guard. Perhaps that’s the reason our streets are in such bad shape, and now require expensive repairs, in excess of our emergency reserves. It is my understanding that Vellano is operating a deficit budget. That means, we are spending more money than we are bringing in. The Board has recently reduced its emergency reserve funding, which adds more risk to our community and its homeowners.
And finally, still on the subject of money, on a recent report I sent to everyone, I stated that our auditors discovered $106,000 they could not account for. It turns out, the Board of Directors decided to invest that money in the form of a CD with a lesser-known bank called CIT. Our former treasurer, Tom Hamblin, a former bank President, was extremely conservative with our finances, only investing our funds into major institutions, such as Morgan Stanley. The reason our auditors flagged this $106,000 amount was because the bank, CIT, has failed to confirm our balance, even after multiple requests. While I am confident, we will be able to withdraw that money eventually, it poses the question, why are we investing homeowners money in relatively lesser-known institutions? The recent failure of Silicon Valley Bank, and others, demonstrate the need for money to be invested in sound, very well-known institutions. There is absolutely no reason to put homeowner’s funds at risk.
Perhaps instead of spending time and energy granting favors to fellow Board members, allowing other Board members to not have to pay their fines like the rest of us, threatening homeowners who say anything upsetting, pursuing pet projects with little value to the community with money we don’t have, and picking fights with homeowners who disagree with them, they should concentrate solely on their fiduciary responsibilities. I believe it is time to replace some of the Board members with new members who put the community first and protect the financial integrity of our association. If the Vellano HOA runs short of funds, that would result in a special assessment, payable by every homeowner. There’s absolutely no need for this to occur. During the 12 years when I was the Board President, we had largely a very proactive and engaged Board of Directors, the majority of whom put Vellano first and vigorously protected the financial stability of our community. We operated with a positive cash flow and had no rate increases for 11 consecutive years. Now, just a few years later, we seem to have issues such as self-dealing, excessive budgets, and negative cash flow. This cannot continue.
If any of this concerns you, let the Board of Directors know. You can send an email to our Property Manager and she will forward it to the entire board.