October 25, 2020 - Annual Meeting
Flying Acres Homeowners Association (FAHA) Annual Meeting
Zoom (hosted by Andy Karmy) participants include approximately 45 different locations with at least 75 participants
The meeting was brought to order at 3:33 by Jeff Miller.
Janet Gundlach supplied a Treasurer’s report:
Balance on Jan 1, 2020:
Expenses (lawyer, PO Box fees, CPA fees, Office Depot):
Jeff Miller welcomed some new members to our community, as three homes sold this last summer:
· On taxiway E: Bartlett’s home to Ty Frisby and Sunny Reifel with their daughter, Stella
· On taxiway G: Havasreti’s home to Kevin and Britney Mayes with their two children, Jameson and Emelia
· On taxiway I: Fisher’s home to Bob Moate. Bob will be renting the house but flying out of Crest with his airplane hangered at his home.
Election of officers: On the even year, 5 of the 9 positions on the board are up for election (for a two-year term). Jeff Miller, Janet Gundlach, Rex MacLean, and Mike Werner have agreed to remain on the board, while Robbi Broussard, having served eight years, is stepping down. Jo Wiggum has volunteered to take her place. Jeff Miller asked for further nominations, and having heard none, offered this slate of candidates for a vote. All of the replies were “yes”, so these five will serve on the board for the next two-year period.
Jeff Miller offered a short background on the history of the airport acquisition and on the progress that has been made. The board is pleased with Ledger Square Law for the work they have done for our community. Because the airport purchase includes income revenue generating businesses (gas sales and hangar leases), Ledger Square Law advised us of a possible need for a prospectus to advise home owners of financial risks regarding the airport purchase. They also recommended a lawyer specializing in securities law to advise us. An email contact with the securities lawyer demanded quite high fees that the board deemed unacceptable at this time.
The board has found other avenues to accomplish our goals. The Seattle chapter of SCORE has connected us with 3 different business mentors. A number of business questions and legal questions were discussed. These relationships are continually available and have been a valuable source in determining our next steps. The board has also been in contact with lawyers at the Department of Financial Institutions (DFI) and has been given encouragement regarding our expectation of an Interpretive Opinion-No Action letter deeming our efforts exempt from Washington State security law requirements. This will be an important step once we get documents ready for presentation.
Jeff Miller offered information sessions to any new home owners regarding purchase background (or anyone who needs a refresher). Contact him (h. 253-639-1915) if you would like more information.
John Tomlinson made a PowerPoint presentation covering the boards efforts to develop a Purchase Participation Memorandum (PPM). The PPM is intended to be a tool that will allow FAHA, as a first step in the process, to comprehensively describe the airport purchase and get commitments from homeowners to proceed with the purchase. The PPM is based on a concept used in the investment world called a disclosure memorandum although in our situation is do not serve the same purpose. The next step, once we are confident that enough homeowners commit, is to have homeowners sign the association agreement that will empower your association to buy the airport. When complete, the PPM will include the association agreement and LLC operating agreement. The attached presentation provides additional information about the PPM and homeowners are encouraged to contact Jeff Miller to arrange a time answer any questions they may have.
Several Questions were received in the “Chat Room”:
Doesn’t the current owner make a profit? We believe so, but without figures, we don’t know how much. Our expectation is that there will be revenue to offset some of the expense. However, the years of neglected maintenance will probably mean capital expenditures for many years into the future. A walk through the metal hangars reveals that some of the doors don’t open and some of the timbers supporting the buildings are rotten.
Will there be a flight school? The Board and we assume many homeowners would love to see a flight school and airplane rentals at Crest. It is not, though, a business that the current board would recommend for the association to manage. This does not mean that the association should not be open to a lease or some other arrangement with a flight school.
What if Ricki sells early? John presented a slide to show the purchase timeline spelled out in the 2nd lawsuit. Even with a short notice, there are time windows that are built in to the purchase process that the board feels will allow home owners enough time to put all the paperwork in place and collect the funds necessary to make the purchase.
What is the time frame for the homeowners to come up with the purchase money? John reviewed the timeline to show how much soon homeowners would need to fund the purchase. Presented here is a revised description of what was said to make the explanation clearer (hopefully). From the time homeowners receive the notification that the airport is for sale, the following periods of time along with expected funding will pass:
Max Days to Execute
Funding Required per Homeowner
FAHA agrees to buy
Unknown, but seems unlikely it would take less than 30.
Enough to pay 50% of appraisal (under $500)
Parties sign purchase agreement
No cash, but the association signs a 2.5% promissory note
FAHA agrees to proceed w/purchase
Promissory note replaced with cash (most likely about $1,000)
Believed to be in the range of $35,000 to $40,000
The total maximum is greater than 120 days with the appraisal step being the unknown.
The concern expressed by this question is the issue of freeing up funds that could be tied up in certificates of deposits (CD), stocks, retirement accounts, etc. This can be mitigated by arranging ahead of time for home equity line of credit (HELOC). They cost nothing unless funds are drawn against it. They can be used as the final source for a homeowner to make their funding commitment or as a bridge loan while waiting for CDs to mature, stocks to be sold, etc.
What about pooling money in ahead of time? The board feels that a better approach would be for individual homeowners to be prepared. An excellent avenue might be to secure a home equity line of credit as discussed previously.
What would be the estimated annual cost when we own it? There is no way of knowing for sure without figures from Ricki although estimates were prepared and are being refined. (Editor’s note: The PPM will present three scenarios ranging from all hangars rented and offsetting costs to no revenue from operations at all.)
Can the land be rezoned to allow smaller than 5 acre lots? According to a county official, it rarely happens. When it does, it is always when a city extends its boundary and sewers are brought in. Absolutely does not happen without sewers.
Do our current annual airport assessments include taxes? Yes. In keeping with the Neslund Easement, our annual fees to the airport (last year $621.76) pay for one half of the taxes, fees, and maintenance on just the taxiway and the runway.
If a Homeowner chooses not to participate, can neighbors still taxi across their property to go flying? The Homeowners taxiway easement was registered with King County at the time of the original platting. This easement is perpetual.
What about liability insurance? Yes, the board has investigated insurance. From two different sources, one being our own Brad Hernke, liability insurance today costs from $7,500 to $8,500 per year.
What about the Surface Water Management (SWM) fees? Rikki Birge has been in contact with the King County office that manages SWM fees. There has been some adjustment but not appreciable considering the large increase. As a reminder, fees went from $4800 to $28,000 last year. SWM fees will be a consideration in any airport improvements that require an increase in paved area. The board made its own calculations and confirmed the new fees for the runway and taxiway are accurate. The SWM fees for the airport office, hangars and tiedown parcel could change. The board has no way to independently estimate what they should be.
Does anyone know of a house for sale or rent? Contact the Littlefields.
Jeff Miller adjourned the meeting at 4:34.