Hawaiian Paradise Park Owners Association Unapproved Minutes of the General Membership Meeting
February 25, 2007
Call to Order: The meeting was called to order at 3:10 p.m. by Frank Annin, President.
Board Members Present: Frank Annin, President; Ron Phillips, Vice President; Lloyd Cabral, Secretary; JoAnne Backman, Treasurer; Bill Carlson, Alan Medeiros, Robin Wright, and Les Pedersen. (Luke Clebsch was absent.) Suzanne Mayhew, General Manager, was also present.
Lot Owners Present: Perry and Sandi Strong, June Conant, Robert M. Kovacs, Manny Mattos, Kash and Margaret Czernicki, James D. Sloan, Michael Dziatko, Walter and Norma Bell, Paul Whitman, Jim Brown, Barbara Kahn-Langer, Warner MonKlmh?, Floyd Lundquist, Richard D. Litchen ?, Paul Grebinar, Paula and Bob Simmons, Doris Carlson, Judi Correa, Alison Awonz, Kile Golden, Elizabeth Hillman-Salfen, Donald R. Haren, Allan Deehr, Karl Seebruck, Bob and Kate Metz, Patricia Sims, Elmer Pasta, Tom Picher, Erhard Autrata, Gresny and Beverly Vritonlt?, Barhz Awteo?, Maurice Aehadeff?, Tanya Suznessaziar?, Richard and Guylen McGrady, Al and Cindy Horwila, Clyde Puana, Ivan Van Leer, Steve Kratke, Judy Bird, Mamifla Wallace, Steve Backman, Michael McMillan, Elin Sand, Darrell and Vivienne Houghton, David Fithian, John Mullin, Joan Galante, Madge Crow, Jim ORoae, Axi Lintvnen, Daghild and Erhard Rick, Randal and Nancy Bruckner, Kerry Burrell, Carolyn Lum-Bellem, Mary Marvin Porter, Warren Derbyshire, Michael Brown, Kathleen P. Boyd, Cameo Mead, Cariag Crelly, Anne Svaty, Chuck Webb, Cliff and Diana Schommer, Royce Wilson, Dennis and Michelle Higins, Norm Paik, Beverly and Lynn Young, Bobbie Alicen, Howard Powell, Janice and Carrol White, Mark Abeyta, Elizabeth Weatherford, Bryan Christ, and Patrick Walsh.
Guests: Faye Hanohano.
Welcome: Frank Annin welcomed first-time members to the meeting and introduced staff members Morgan Sky, Sara Wheatley and General Manager Suzanne Mayhew.
He said that five members are needed to volunteer for the Nominating Committee for the election in May; new Directors will take office on the last Sunday in June.
Frank also read the ground rules for the meeting, which limit speakers to three minutes and one question per person per topic.
35th Anniversary Celebration Committee: Norma Bell said that a committee is needed to plan the celebration of Hawaiian Paradise Park's 35th birthday. It will include a party, food, entertainment, prizes, acknowledgment of members who make things happen in the community, and dancing under the stars.
Patrick Walsh added that ten years ago the community celebrated its 25th anniversary with a big party. He said the tentative date for the 35th anniversary is Saturday, July 7. Walsh said, Five hundred dollars bought you a lot in 1963 and the Park has proven to be a good investment. He asked for volunteers to join the committee, which intends to invite Governor Lingle to the celebration, which will be a great opportunity to meet your neighbors.
Introduction of Board Members: Frank introduced the Directors who were present.
Approval of Minutes: Bobbie Alicen moved to approve the minutes of the general membership meeting of June 25, 2006, as written. Michael McMillan seconded; the motion passed unanimously.
Bobbie Alicen moved to approve the minutes of the special general membership meeting of October 29, 2006, as written. Barbara Kahn-Langer seconded; the motion passed unanimously.
Treasurer's Report: JoAnne reported that as of January 31, 2007, the balance of primary accounts was:
This total does not include a $364,194 carry-over from the previous fiscal year.
January's income was $59,144; expenses for the month were $207,409. In the first half of the 2006-2007 fiscal year 27% of the non-roads budget and 47% of the roads budget had been spent.
The auditor's report of 2005-2006 showed no noted deficiencies or suggested changes in financial record-keeping.
JoAnne said the Association will pursue a third action of foreclosures on delinquent accounts in the coming months.
General Manager's Report: Suzanne requested that persons with signs on the power poles remove them. She said the road crew will remove remaining signs as time permits.
She said that the postmaster has promised more mailboxes if the Association takes full responsibility for them. She is waiting for written confirmation from federal postal authorities that the Association must take responsibility for the boxes. There is a plan under consideration to move the mailboxes on Maku`u Dr. to the hui property at 16th and Maku`u. The boxes will be off the main road, covered and lit. If successful, the boxes on Kaloli will be moved to a similar area on Association property off Kaloli Dr., but HPPOA does not own property on Paradise Dr.
12th and Maku`u flood area bids will be considered at a special meeting on Wednesday, February 28.
Presentation by State Representative: Faye Hanohano said that she is on the State Finance Committee, Tourism and Culture Committee, Economic Development and Agriculture committees. She said she is working on the $6+ million financing needed for the Pahoa gymnasium. Another concern is the safety of Highway 130. The Department of Transportation is looking at alternate routes, the possibility of widening 130, and will probably open a shoulder lane during the evening rush hour. They are also considering signal lights at the intersections of Shower, Orchidland Dr. and Ainaloa Blvd.
She has also voted on a bill to require the federal government to clean up the pollution caused by depleted uranium at Scofield barracks, creating a health hazard on the island.
She welcomed visitors to her office as well as phone calls and emails from concerned constituents.
Ron Phillips expressed concern about the lack of health care in the district. Faye said she attended a meeting in Hilo with Mayor Kim and the doctors' group, seeking solutions to the lack of physicians throughout the State.
Ivan van Leer asked about the alternative road access through Hawaiian Beaches. Faye said the House of Representatives and the Senate are looking at the funds for capital improvements to connecting roads, possibly Beach Rd. or 10th Ave.
Alan Medeiros asked about the problem with ethanol in the gasoline. Faye responded that there are two bills before the legislature, one to reduce ethanol content from 10% to 2%, and the other to provide the option of ethanol-free gasoline. The high fuel costs throughout the State are also being examined.
Margaret Swink asked about the time frame for improvements on Highway 130. Faye said she has been in contact with that department, making sure they are looking at the issues and moving along. She said the County must also take some responsibility; she has been working with Emily Naeole in support of Mayor Kim's bills.
Manny Mattos asked about the medical situation on the island. Faye said she visited Maui Memorial Hospital, which has a vascular imaging center for heart and stroke patients. She said the hospital has been serving neighbor islands.
Bryan Christ said more HPP tax money should be spent in the community.
Committee Reports
Parks Committee: Carole Mullin reported that after meeting for one year, it is the committee's recommendation that the Association deed one of its six 20-acre parcels to the County for the development of a park. The committee met with Councilwoman Emily Naeole and County Park and Recreation Department representatives.
The park survey showed that 70% of the respondents want a covered picnic area; 60% want a children's playground, and 60% want a swimming pool.
An owner asked whether the park would be open to the public, and if so, who pays for the increased traffic on the roads. Carole responded that the park will be open to the public, and it is her understanding that the County will maintain the roads leading to the park. The County will survey and clear the land, work with the Parks Committee in designing the park, install the facilities and take responsibility for liability. Security will be coordinated with HPPOA.
Emergency Notification and Evacuation Team (ENET): Manny Mattos displayed the orange shirts and caps ENET members will wear during an emergency. Radios have also been received to keep members in contact with one another and other emergency agencies. He said that HPP is the only community in the State with an organization like ENET. A two-day informational meeting will be held March 10 in Kona and March 11 in Hilo at Waiakea High School to educate the community about tsunami preparedness.
Coqui Frog: JoAnne Backman reported that the committee has a local sprayer program, lending a 300-gallon sprayer on a first-come, first-serve basis. The contact number is 866-8187. The committee has also issued vouchers for citric acid and hydrated lime, but the funds for the program are almost depleted. The committee no longer holds regular meetings, but information is available at the Aloha Hour during the Swap Meet on Saturdays at the Activity Center.
Bus Stop: Dennis Higgins, committee chair, said that materials are available through the County if residents provide labor. The committee needs to decide how many bus stops are needed and their locations. Volunteers may contact him at dennyhiggins@hawaiiantel.net.
Unfinished Business
School Site Committee: June Conant explained that the committee was formed to develop guidelines for private schools inquiring about leasing Association parcels. At the June meeting the proposed guidelines were tabled until the Department of Education could be asked whether the conditions met with their approval. The DOE informed the committee that at present it has no plans to locate schools in the subdivision, and will not unless it owns the property and a reliable water supply is available.
Michael McMillan moved to approve the Covenants, Conditions and Restrictions for Public, Private or Charter School Use of Hawaiian Paradise Park Owners Association Properties as written. Barbara Kahn-Langer seconded; the motion passed unanimously.
Bylaws Amendments: Suzanne explained that both amendments passed by large margins. One provides for a third annual membership meeting in October; the other revised the realignment of voting districts in the Park.
New Business
Nominating Committee: June Conant, Ivan van Leer, Joan Galante, Annie Svaty and Vivienne Houghton volunteered to serve on the committee. Frank asked them to select a chairperson at the end of the meeting.
Jim Brown moved to approve the Nominating Committee. Alan Medeiros seconded; the motion passed unanimously.
Paving Referendum Results: Frank said 1201 responses were returned; 85.2% voted in favor of paving the roads.
Paving Committee Update: The committee was composed of Les Pedersen, Chair, Luke Clebsch and Lloyd Cabral. Les Pedersen said that in 1985 when he purchased property in the Park, the roads were in better condition than other rural subdivisions. He said that is no longer the case; although the road fees have been increased 10% every year, the roads are deteriorating.
The committee submitted four defining principles to the Board, which were accepted and approved. First, the road maintenance funds shall be expended to provide the maximum benefit for all members. The interests of the members are best served by paving as many roads as possible as quickly as possible, saving the loss of materials and constant regrading. Except for areas with drainage problems, roads deteriorate fastest which carry the most traffic and weight. Therefore, the roads with the most axle loads should be paved first, increasing resources to maintain unpaved roads.
The committee recommended conducting a traffic study to determine which roads are most heavily used. The Board has purchased traffic counters; the study will begin in the next week or two. The data gathered over the next 6 to 8 weeks will demonstrate which roads should be paved first. Frank Annin will coordinate the traffic study; once the data is collected and analyzed, priorities will be determined. Les said those roads with legitimate drainage issues also must be addressed because of the expense of maintaining them.
The committee was also asked to develop a request for proposals form to be used as contract documents for the paving project. Les said the paving contract will be open to all contractors capable of doing the work.
Les said that although the Board was pleased by the results of the paving referendum, legitimate concerns were expressed by those not in favor of the project regarding insuring the quality of the work. Les said the Association has limited funds and cannot attempt to construct roads to Department of Transportation standards. The question is how best to use the financial resources available.
Because the roads have solid rock foundations, despite poor preparation they have lasted twenty years and are still in fair condition. With new technology to measure and control the quality of the compaction of materials, the newly-paved roads should last even longer. He said that the County uses 2 inches of asphalt. If we could afford thicker pavement, it would be worthwhile, but 65-70% of the cost of the project will be the materials. Les said it is better to pave the roads with what we can afford, reducing maintenance costs, and hopefully future Boards will elect to resurface the roads before they are completely destroyed.
Bryan Christ said that the asphalt could be one inch or less; two inches will be the average. He also questioned buying a $200,000 compaction machine for the project and a paving contractor writing the paving specifications.
Les responded that the better the preparation, the more consistent the thickness of the asphalt. The alternative to the compaction roller is laboratory testing of materials, which would be much more expensive. He added that he disclosed his association with Yamada & Sons to the voters in his district, which elected him by 88% of the votes. Some might see this as a conflict of interest; I see this as an opportunity to help the Park. Frankly, I think the Park needs somebody with my experience and knowledge on the Board. He was appointed to the Paving Committee by the Board of Directors and asked to develop the paving specifications.
Lloyd Cabral said that the Association will not be buying a $200,000 compaction roller; rather, it will be a requirement written into the contract that the contractor be required to use that piece of equipment. The contractor will need to purchase or lease the roller.
Bob Metz asked about walls and trees in the road easement. Les said the contractor will be expected to remove grass, brush and trees under two inches in diameter, and to notify the Association of specific conditions which keep him from properly performing the work. The manager will give the contractor direction on those conditions.
Patricia Sims said that clearing trees off neighboring lots has caused water to run into her yard when it rains and making a huge ditch.
Eline said she was told owners will need to provide concrete aprons from their driveways to the road. Les said there has been no discussion by the Board requiring lot owners to provide aprons. He said on other paved roads this has not been an issue.
Michael McMillan asked if there are different grades of asphalt material. Les said there is a formula which can be required. Of the government specifications, federal are for superhighway construction; state specifications with six test criteria are best.
Warren Mastenbrook said that acceleration lanes are needed off Paradise and Kaloli.
Erhard Autrata said that the resurfacing on Paradise was thicker. Les said that a leveling course was put under the asphalt to create an impermeable layer between the old asphalt and the new to prevent reflection cracks from damaging the new surface.
Michele Higgins asked whether the bidding will be open to other contractors. Les said all of the paving contractors are fully capable of doing the job.
Les said it would more than double the cost of the project to pave to County standards. He said drainage problems on the roads can be difficult to solve, since water cannot be diverted onto private property.
Don Herron said that the Paradise Dr. paving left large bumps at every intersection, and asked whether the new project will address this. Les said this will need to be discussed by the committee.
Les was asked whether the contract will be fixed fee or cost plus; he responded that this has not been determined. He said a third option is a uniprice bid, with fixed rate for the asphalt. Contractors almost always bids higher to cover risks on a fixed fee bid. The base prep may be bid on a cost-plus basis because of the difficulty of defining and specifying the work.
Norman Paik said that the referendum gives the Board freedom to proceed with the paving project; he asked that oversight be created to keep owners advised step-by-step. Also, if the roads are not paved to County standards, they remain the responsibility of the Association forever. Les responded that building them to County standards requires the County to assume responsibility; otherwise it becomes a political question. At some point, voters will have enough clout to insist that the County assume responsibility.
Jim Brown asked whether already-paved roads will be resurfaced under the project. Les said the project provides for paving 120 miles of road; only 112 miles are currently unpaved, so some funds may be available for resurfacing, if needed.
Finance Committee: Allan Deehr acknowledged the efforts of the committee members Ron Phillips, Les Pedersen, JoAnne Backman, and himself, and Walter Moe when he was on the Board of Directors.
Last Wednesday the committee recommended a financing plan of a $12 million issuance of insured and rated bonds from Piper Jaffray, to be repaid over twenty years, and this plan was approved by the Board of Directors.
History: In the spring of 2004, the Board pursued County financing by qualifying as an improvement district, create a tax increment district, or establish a community facilities district. Interest rates were 4.5-4.75%, with repayment over thirty years. On July 15, 2004, a draft resolution went to the County Council subject to the approval of bond counsel. Although the Board attempted to establish public purpose such as access to police and emergency vehicles, on August 29, 2005, Corporation Counsel held that HPP's private roads did not qualify for public financing.
In February, 2006, arbitrage Scott Marlin was introduced to the Board, who suggested several other avenues, including US Department of Agriculture Rural Developmetn loans. His second suggested avenue of funding was a securities issue such as sale of bonds, and the third was taxable municipal bonds. The Board felt that the third suggestion would not be accepted, but pursued USDA loans and securities.
In May of 2006, Hawaiian National Bank offered a $2 million loan guaranteed by the USDA. The Board tentatively accepted the offer to establish a credit rating, with the hope of borrowing more later. Drawbacks of the offer included that the 8% interest rate was fixed only for the first 42 months, and liens would be placed on the Association's property, revenues and expenditures. By the closing date of June, 2006, the bank had not accepted the additional conditions required by the Board of Directors.
In October, 2006, Marlin proposed an issuance of bonds ranging from $5 to $30 million through Piper Jaffray, an investment company ranked fourth in the country for total bond issues underwritten. That month members of the Finance Committee also met with representatives from the USDA. The loan would not require collateral and the interest rate was 4.5%; however, the loan could be obtained only by going through a bank first. If the bank declines, then the USDA monies become available. Hawaiian National Bank offered two $2 million loan increments, with the USDA providing the $8 million balance. However, the USDA reserved the right to require the Association to approach other banks.
On November 8 the Board discussed the various alternatives. It met again on November 15, at which time it passed a resolution to circulate a referendum to determine the will of the community regarding the proposed paving project. It also decided to pursue a $13.5 million loan request through the USDA, as well as a bond issue for $12 million. It rejected Hawaiian National Bank's proposal for six loans over a six-year period in $2 million increments, largely because of the complicated application process which must be repeated six times, as well as uncertain interest rates and extensive collateral contracts. A further consideration was that only $167,000 per month would be available; the cost savings to the Association accrues from an aggressive paving plan (completed within three years or less) which would significantly reduce road maintenance costs.
In December Scott Marlin was hired at the request of the Finance Committee, to help locate monies and explain the intricacies of the investment loans. He was paid an initial retainer of $2500 plus expenses, with the assurance of 1⁄2 of 1% of the loan, which equals approximately $73,000, once the monies are deposited in HPPOA's account.
On December 13, 2006, Allan, JoAnne Backman and Scott Marlin met with the USDA. They found that the Association barely qualifies for the loan, which would be 90% guaranteed. The blended interest rate would be approximately 6%. Since Congress has not passed a budget for the USDA for the current fiscal year, it has no funds for loans; monies would not be available until 2008, at the earliest.
The committee assumed that an aggressive paving program (three years or less) would save considerable monies; that the road fees would be increased 10% annually; and that future Boards will be committed to the project.
The bond issue provides that the funds be deposited with a trustee, probably a commercial bank, which signs the checks and releases funds only for the paving project. Remaining funds may be reinvested, reducing the overall interest cost of the loan.
If the fees are increased annually, by 2014 HPPOA will have an additional annual income of $700,000 above the cost of repaying the loan, which can be applied to paving more roads or to a second loan to complete the project, if necessary.
Allan said the bond issue could close by the end of May or sometime in June. The $12 million plus a debt service fund equal to one year's payment will be on deposit.
The interest is 6.04%; reinvestment savings reduces it to a net interest of approximately 5.9%. The next debt service will total $21 million, but the bonds can be paid without penalty after the ten years.
For the first three years, only the interest will be paid. This retains funds for contingencies, paving preparation costs or to expand the paving project. Only the Association's stream of income is being pledged as collateral on the loan.
In the event that an owner does not pay his fees, the property may be liened or foreclosed upon, which is the current fiscal policy.
Allan said incentives may be written into the paving contract to encourage the contractor to complete the work ahead of schedule. Penalties for late completion will also be included. He estimated that 80% of the roads will be paved during phase one of the project; the remaining 20% will be paved as monies allow. The total paving cost has yet to be determined, but it is expected to be more than $12 million. The amount of the loan was determined by the maximum debt service the Association can reasonably repay.
An owner asked whether the encumbrance will be added in the event of selling a lot. Allan responded that there is no additional encumbrance. Each owner is responsible only for his share of the obligation, which is his annual road fee. Encumbrances apply only if the fees are not paid. The Association will assume the responsibility to make the payments and to collect road fees by whatever measures are available. If it defaults on the loan, Piper Jaffray will assume the Association's right to lien and foreclose on delinquent properties.
An owner asked whether cost-per-mile paving data is available. Allan said the paving done on 28th in 2005 cost $83,000 per mile, but the cost of asphalt has increased since that date. $100,000 per mile was used for the original cost estimate.
Owner Input: Bobbie Alicen acted as facilitator. An owner asked when the community will know about a possible alternative route to Highway 130. JoAnne said the Puna Community Development Plan Steering Committee is currently reviewing the working group reports. The Transportation Committee has made numerous recommendations. However, Highway 130 is under the jurisdiction of the State, not the County. She added that the next Steering Committee meeting will be March 15 at 5:30 p.m. at the Kea`au Community Center.
Les said that heard a State highway engineer speak at a meeting at the Maku`u Farm Lots. He said the DOT is considering keeping the shoulder lane open all the time and putting signal lights. An environmental study considering widening 130 versus an alternate route will be completed in 2009; it will be seven years before any work will be done.
Suzanne recognized the dedication and hard work of the current Board of Directors.
Adjournment: Jim Brown moved to adjourn; JoAnne Backman seconded. The motion passed unanimously.
The meeting was adjourned at 6:00 p.m.
Respectfully submitted by:
Kirstie Goin, Recording Secretary
Lloyd Cabral, Corporate Secretary
Motions Log 2-25-07
Approval of Minutes: Bobbie Alicen moved to approve the minutes of the general membership meeting of June 25, 2006, as written. Michael McMillan seconded; the motion passed unanimously.
Bobbie Alicen moved to approve the minutes of the special general membership meeting of October 29, 2006, as written. Barbara Kahn-Langer seconded; the motion passed unanimously.
Michael McMillan moved to approve the Covenants, Conditions and Restrictions for Public, Private or Charter School Use of Hawaiian Paradise Park Owners Association Properties as written. Barbara Kahn-Langer seconded; the motion passed unanimously.
Jim Brown moved to approve the appointments to the Nominating Committee. Alan Medeiros seconded; the motion passed unanimously.
Adjournment: Jim Brown moved to adjourn; JoAnne Backman seconded. The motion passed unanimously.