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KCSA Legal Fees Explained

27 October 2016: KCSA Treasurer, Ron Lynde, provided the following breakdown of legal fees from 2014 through August 2016. He explained that, in developing the 2017 budget for legal fees, the Budget & Finance Committee has separated out the one-time, non-recurring expenses and has eliminated those from consideration in the 2017 budget.
After Ron Lynde’s presentation, incoming KCSA President, Christine Rose, called for the creation of an Ad Hoc Committee to look at KCSA’s legal representation and to consider options for the future.

Declaratory Judgment lawsuit
$211,000
Kingsmill Development issues (2014)
$52,000
KMPD setup as a separate corporation (2015)
$63,000
HOA Management Contract negotiation (2015)
$46,000
Negotiations with Developer on community additions
(Spencer’s Grant and Burwell’s Bluff)
$6,000
TOTAL Non-recurring expenses
$378,000
 
 
General Legal Fees
$107,000
KMPD FOIA Responses
$9,000
Common Interest Community Fees
$25,000
Homeowner Disputes
$82,000
Accounts Receivable Collections
$51,000
Covenant Enforcement
$6,000
TOTAL Recurring Expenses
$280,000
 
 
TOTAL Legal Expenses 2014 – Aug 2016
$657,491
 
 
Proposed 2017 Budget for KCSA Legal Fees
$115,000
Proposed 2017 Budget for KMPD Legal Fees
$15,000

2017 Trash Collections Reduced

27 October 2016: At this evening’s KCSA Board meeting, the Board decided to reduce trash collections for 2017 to once per week. 90% of respondents to the recent KCSA Survey indicated that they were satisfied or very satisfied with the current Trash Collection service.
The current contractor has proposed an increase for 2017 to $442,952 from the current annual contract of $360,000 for twice-weekly collection. The Board unanimously agreed to reject this proposal and another proposal of $587,328 for twice-weekly collection in favor of reduced service of a once-weekly collection at a annual cost of $330,792.

New KCSA Officers

27 October 2016: Without any prior discussion, the KCSA Board voted unanimously this evening to appoint a new slate of Officers:

President:
Christine Rose
Vice-President:
Rick Thompson
Treasurer:
John Hudson
Secretary:
Kevin Kolda

Election Results

17 October 2016: At this evening’s election for two vacancies on the KCSA Board of Directors, the winning candidates were John Hudson and Rick Thompson. Congratulations to the winners!
Both have indicated that they are in favor of more open and transparent Board deliberations, so we may be able to look forward to a time of more inclusive governance, fewer secret meetings, and reduced legal expenses for the community.

A total of 2,150 votes were cast, indicating a turnout of approximately 48% of all eligible votes:

Meet the Candidates

5 October 2016: Four of the five candidates for the upcoming KCSA Board of Directors election spoke at the Meet the Candidates night this evening to KCSA members filling around three quarters of the room at the Mounts Bay recreation center. John Hudson was unable to join the group due to a commitment to be out of the country made long before the election was scheduled. Instead, the evening began with a showing of his video that can be viewed on this page.

Then each of the candidates gave an opening statement, followed by answers to eight questions posed by members of the audience and read out by moderator, Ed Connors, and ending with a closing statement.

Time for a Homeowner Majority on the KCSA Board?

The number of KCSA directors to be elected by KCSA Members is determined by a formula laid out in the KCSA Articles of Incorporation (AOI), Article VI(a) third paragraph, which reads:

six weeks prior to [subsequent] annual meetings, the Board of Directors shall determine the number of directors to be elected at the annual meeting so that the number of elected directors shall be equivalent to one director for each 1500 Class A and B votes, or fraction thereof, outstanding as of sixty days prior to the annual meeting date, but in no event shall there be less than three or more than seven elected directors.

It seems clear that the original drafters of the AOI on October 3, 1973 anticipated that, as the number of homes in Kingsmill grew, the number of elected directors would grow from three to, perhaps, seven.
According to the AOI, Class A members shall be all Owners of Lots, excluding the Developer, who shall be entitled to one vote for each Lot owned; and Class B members shall be all occupants, either owners or lessees as defined in Article III, of all structures constructed, on Lots in the Properties and shall be entitled collectively to one vote for the Living Unit they occupy; where Article III defines a lessee: Every lessee of a Living unit constructed on any Lot who holds a written lease having an initial term of at least twelve (12) months shall likewise be a member of the Association provided he notifies the Association of his tenancy in writing.
(Note also that the Webster’s New World Law Dictionary defines an “occupant” as “One who inhabits or exercises direct control over a certain piece of property or premises, as distinguished from the one who has ownership of the property, although the same person(s) may do both.“)

In 2014, there appeared to be a little less than the magic number of 4,501 combined class A and class B votes, so the formula would appear to mean that there would be three elected directors.

Some members asked why we were electing four directors if the formula only called for three elected directors. They weren’t objecting to the apparent over-representation of homeowners, but just asking for an explanation. No explanation was forthcoming and, without even attempting to meet with those members, KCSA filed a lawsuit against them on August 7, 2014 and canceled the scheduled 2014 election. KCSA included, with the filing of the lawsuit, minutes of an KCSA Annual Meeting held in 1990 that explained why we have been electing four directors for all of the intervening years but, at no time prior to the filing, had these minutes been produced or even referred to!

Some two years and more than half a million dollars in legal fees later, the lawsuit was settled on June 30, 2016 in the first ever meeting of the parties to discuss the issues in the lawsuit!

The Decree settling the question of the number of elected directors stated that: “The parties agree that the Class C member has permanently and irrevocably consented to the election of four directors by the Class A and B members, and the Class C member has permanently and irrevocably waived the right to appoint one (1) of the directors allotted to it in the Articles of Incorporation”.
The Decree also stated that: “The formula contained in the third paragraph of Article VI(a) of the Articles of Incorporation remains unchanged other than as expressly set forth herein”.

So the question becomes: if the combined total of Class A and B votes reaches 4,501 (which seems very likely with the building out of Burwell’s Bluff and Spencer’s Grant), what happens then?

The Decree (and the formula) would then call for the election of four directors other than as expressly set forth herein, where the additional condition that the Class C member has permanently and irrevocably waived the right to appoint one (1) of the directors allotted to it in the Articles of Incorporation should mean that homeowners would now get to elect four directors plus the one given up by the Class C member, for a total of five directors, or a majority of the KCSA Board members.

Now, some seem to be arguing that the Class C members agreed to the election of only four directors. But there is no inclusion of the word “only” in the Decree and the wording could just as easily be construed as “at least four directors“. The statement that “the Class C member has permanently and irrevocably waived the right to appoint one (1) of the directors allotted to it” seems to be quite clear and unconditional.

Meanwhile, the Settlement Agreement signed by all parties on June 30, 2016 included the requirement that “KCSA shall take all reasonably necessary steps to propose an amendment to its Articles of Incorporation (“AOI”) to conform its AOI on record with the Virginia State Corporation Commission to the terms set forth in the Decree addressing and dismissing Count I (“Amendment”). The Amendment shall be presented to the membership as a single issue vote. KCSA shall take such steps to present the Amendment to its membership as soon as reasonably possible“. So, more than three months later, we are still waiting for KCSA to present this amendment to the membership.

But, perhaps we can look forward to a majority of homeowner-elected directors on the KCSA Board after the 2017 election?

Candidates Announce

1 September 2016: At the deadline for submission of nomination petitions for the October 17, 2016 election for the KCSA Board of Directors, five candidates had submitted petitions. They are, in alphabetical order:

  •    John F. Hudson
  •    Mark M. Jakobowski
  •    Clyde Kestner
  •    Andrew Lloyd-Williams
  •    Rick Thompson

You can read the biographies that each candidate has submitted by clicking here.

There are two vacancies on the Board and neither of the incumbents, Frank Dooley and Jim Zinn, are standing for reelection.
At the October 17 election, all homeowners will be able to cast “Class A” votes for any two candidates. Similarly, all “occupants” will be able to cast “Class B” votes for any two candidates. (An “occupant” being a homeowner who “occupies” his own home, or a renter with an initial lease period of at least twelve months).

Most residents both own and occupy their home so will be able to cast both “Class A” and “Class B” votes. In that case, they can cast their “Class A” and “Class B” votes for the same two candidates or, if they choose, can vote their “Class A” votes for two candidates and their “Class B” votes for a different two candidates.

If you will be unable to attend the election, which will be held at 7:00pm on October 17 at the Mounts Bay Recreation Center, or if you prefer not to attend, you can vote by proxy — by just returning the proxy forms that you should receive in the mail on or around September 20. The proxy forms will each have the letter A for the “Class A” votes or the letter B for the “Class B” votes in the top right corner. You only need to mark each form with your selected votes (not more than two on each form) and have each owner sign and date the forms. (You do not need to enter anything where it says WRITE IN NAME AND ADDRESS OF THE KCSA MEMBER TO WHOM YOU ARE GIVING THE PROXY unless you want to.) Return the completed forms to KCSA in the envelope provided or hand them in to the KCSA office. If you think you should have received the proxy forms but did not, please call the KCSA Office at (757) 645-3454.

If you would like to know more about the candidates, please join us for the “Meet the Candidates Evening” on Wednesday October 5, 2016 at 7:00pm at the Mounts Bay Recreation Center.

Election on October 17

27 July 2016: In yet another “secret” meeting, with legal counsel present for two and a half hours, the KCSA Board decided to further delay the election until October 17, 2016. Why? Because, according to legal counsel, they can. Even though the Bylaws call for the Annual Meeting and election to be held on the second Monday in September.

This is the community’s election and not the Board’s election. The Xanterra-controlled Board should not be continuing to make all the decisions about our election in secret. It is even arguable that it is a conflict of interest for the Board to make any decisions about the election rather than deferring to an independent Election Commission. There is no reason not to hold all discussions about the timing and format of the election in an open meeting, at which legal counsel can be in attendance to give advice if it is considered necessary. In fact, the spirit of the Virginia Property Owners’ Association Act § 55-510.1C, that allows the Board to “convene in executive session to consider personnel matters; consult with legal counsel; discuss and consider contracts, pending or probable litigation and matters involving violations of the declaration or rules and regulations adopted pursuant thereto for which a member, his family members, tenants, guests or other invitees are responsible; or discuss and consider the personal liability of members to the association” clearly excludes matter of public interest, such as the election process. “Consulting with legal counsel” is clearly not intended to be used as a catch-all excuse for holding closed meetings. Yet, that is what the Board has done eighteen times in the past two years, racking up close to one hundred hours in legal fees for those closed meetings alone.

Additionally, the Board preempted the Articles of Incorporation by deciding that the election would be for just two vacancies.
Article VI(a) of the Articles of Incorporation states that: “six weeks prior to subsequent annual meetings, the Board of Directors shall determine the number of directors to be elected at the annual meeting so that the number of elected directors shall be equivalent to one director for each 1500 Class A and B votes, or fraction thereof, outstanding as of sixty days prior to the annual meeting date“. Given that the total of Class A and B votes is now likely to be close to a multiple of 1500, a homeowner requested in the forum preceding the closed session that the count be formally audited. Should that total reach 4,501 or greater, the formula would entitle homeowners to elect four directors, and Xanterra’s formal written agreement of February 24, 2016 to “permanently and irrevocably waive the right to appoint one of the directors allotted to it in the Articles of Incorporation” would increase that to five elected directors, meaning that, at last, homeowners would be able to elect a majority of members of the KCSA Board. However, it is not clear from today’s decision how the extra seat would be elected.

The Board decided to make Doug Haller the Election Committee Chairman in his absence, and Jim Zinn was appointed Chairman of the Candidate Search Committee.

Lessons Learned?

One might hope that we have all learned that the courts are no place to find a solution to intra-community differences.
The experience of the past two years has surely taught us that the only way to resolve differences is through communication!

But, in spite of the dismissal of the Complaint for Declaratory Judgment on July 8, clearing the way for the community to hold elections that have not taken place for almost three years, the KCSA Board of Directors is now planning to hold another secret meeting on July 27 instead of a regular monthly meeting.
The Virginia Property Owners’ Association Act § 55-510.1A states that: “All meetings of the board of directors, including any subcommittee or other committee thereof, shall be open to all members of record”, but the KCSA Calendar shows the planned meeting as a Closed Executive Session meeting, to be held at the KCSA Office, where there is little provision for members to attend, even if they turn up.

Was it worth it?

  • This lawsuit produced no winners. Everyone in the Kingsmill community is a loser.
  • Our monthly dues have been used to pay the hundreds of thousands of dollars in legal fees.
  • We can and should ask KCSA to publish a detailed accounting of all costs for this lawsuit.
  • We haven’t had an election for the Board of Directors in almost three years — since September 2013.
  • At this time, we have no proper representation on the KCSA Board of Directors with a current mandate from the members.
  • Realtors say that the publicity has hurt our property values.
  • Why did the KCSA Board exhibit such haste in filing this lawsuit two years ago?
  • Was it bad advice from an overzealous legal counsel?
  • Why didn’t they call a community-wide meeting to discuss what they saw as the issues before filing the lawsuit?
  • Why didn’t they meet with some or all of those they intended to cite as defendants?
  • Why didn’t they try mediation in the first place? (as suggested on this site on Oct 21, 2014) — after all, mediation produced the final resolution.
  • Why didn’t they give even the slightest hint to anyone that they were considering filing a lawsuit?
  • After spending hundreds of thousands of dollars, would it make sense to spend a few more dollars for an independent inquiry into why this all happened?
  • What alternative measures could have been taken? and whether the decisions made were in the best interests of the community?
  • Did we get the best legal advice for those hundreds of thousands of dollars in legal fees? Should we be looking for new legal representation?

What happens now?

An election for the Board of Directors should take place soon.
KCSA’s Bylaws, Article IV, Section 2 states that: “The annual meeting of the Members of the Association shall be held on the second Monday in September” and Section 3 states that: “At each annual meeting, there shall be elected, in the manner provided in the Articles and these Bylaws, one or more Directors“.

There is no clear reason why an election should not take place on September 12, 2016.

But, for that to happen there are a number of preconditions that must be met:

  • The terms of all elected directors have expired. Should we fill only those vacancies that would have existed for the 2014 election and extend the term of the directors elected in 2013 for one more year? Or should we elect a full complement of elected directors, some with two-year terms and some with one-year terms? The former solution would provide better continuity — the latter solution could result in a complete change of elected directors.
  • Article VI(a) of the Articles of Incorporation states that: “six weeks prior to subsequent annual meetings, the Board of Directors shall determine the number of directors to be elected at the annual meeting so that the number of elected directors shall be equivalent to one director for each 1500 Class A and B votes, or fraction thereof, outstanding as of sixty days prior to the annual meeting date“.
    That means that the Board must make that determination by August 1, 2016 and the determination must be based on voter data as of July 14, 2016.
  • Article VI(b) of the Articles of Incorporation states that: “At least three weeks before the annual meeting, candidates for election shall file a petition of candidacy, signed by not less than ten members“. That means that candidates must file their petitions by August 22, 2016.
  • The Virginia Nonstock Corporation Act, § 13.1-845B states that: “The members’ list for notice shall be available for inspection by any member, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting“. So, if we are to have an election on September 12 with a members’ list dated July 14, the announcement can be made any time after July 14, and KCSA will have two days to prepare the list for inspection after the announcement.

What does the future hold?

Hopefully, the Kingsmill community will be able to quickly put the past two years of turmoil behind us and get on with making our community the best it can be. But we should all learn from the unpleasant experience of the past two years.

The KCSA Board is there to make decisions in the best interests of the community. We should all support those decisions unless we have good reason not to and, in that case, we should be ready to provide a full explanation of the reasons.
But, in turn, the Board must be open and transparent in all but those very few cases where secrecy is permitted, as defined in the Virginia Property Owners’ Association Act § 55-510.1C. The frequency with which the KCSA Board has met in closed session in recent years justifiably leads some to question whether they are being as open and transparent as they should be.
Every member has a right to ask questions and the Virginia Property Owners’ Association Act § 55-510 gives members extensive rights to examine and copy books and records — provided that it is for a proper purpose related to his membership in the association — but the latter condition must not be used to deny legitimate requests.

And, finally, perhaps we should amend our rules to ensure that KCSA never again sues its own members for issues not involving compliance without first seeking independent mediation.

The Final Resolution

8 JULY 2016: The Williamsburg / James City Count Circuit Court today approved the final settlement of KCSA’s Complaint for Declaratory Judgment, filed on August 7, 2014, in response to questions asked by the defendants about the procedures for the Board of Directors election scheduled for September 8, 2014. The settlement was reached in a meeting of the parties with the assistance of a court-appointed mediator, thus avoiding the need for a trial that had previously been set for August 15. The matter is now closed and KCSA can be expected to announce that elections will take place as soon as possible.

Count I concerned how many of the nine-member KCSA Board of Directors should be elected by the homeowners — the remainder are appointed by the Developer (Xanterra). Based on past voter data, the formula in the governing documents says three but, for 25 years, the homeowners have been electing four directors. Defendants asked why this was. The answer lay in Minutes of the 1990 Annual Meeting at which the Developer, then Busch Properties, verbally agreed to give up one of their appointed seats. The Defendants were unaware of the existence of these Minutes or of this agreement. And, despite the questions raised, KCSA made no mention of these Minutes or of the agreement prior to filing the Complaint, but then attached the Minutes as an Exhibit to the Complaint.
The resolution of Count I affirms that the Developer, now Xanterra, has formally agreed to “permanently and irrevocably waive the right to appoint one of the directors allotted to it in the Articles of Incorporation” in a written agreement dated February 24, 2016. But, because this agreement is not in accordance with the governing documents, KCSA has agreed to propose an amendment to the Articles of Incorporation, to be voted on by the membership as a single issue up-or-down vote, to align the agreed procedure with the governing documents.

Count II concerned an allegation by KCSA that there was a dispute concerning the permissibility of “cumulative voting”. While there had been a question about this issue, there was never a dispute, and the question had been fully resolved a full two weeks before the Complaint was filed. This Count should not have been included in the Complaint and, accordingly, it was dismissed.

Count III concerned the fact that, according to the Articles of Incorporation, owner/occupants in Kingsmill have two votes for each vacancy and, in previous elections, they have been compelled to cast these two votes as a “double vote” — i.e. both votes for the same set of candidates. Defendants asked whether owner/occupants could cast their two votes separately if they wished to do so.
The resolution of Count III provides that, in future elections, owner/occupants will receive two proxies or two ballots — one as an owner (Class A Member) and one as an occupant (Class B Member), allowing them to cast their two votes separately. It will also give joint owner/occupants the option to complete a form which will allow one person to cast the Class A votes and another to cast the Class B votes.

It’s over . . . after 693 days

30 JUN 2016: At the mandatory settlement conference today, presided over by Judge Walter Ford and attended by all five of the defendants, five members of the KCSA Board and six attorneys, the parties reached a settlement on all counts and issued a statement: “The Declaratory Judgment Action filed by KCSA has been resolved by agreement of all the parties. All parties look forward to moving ahead with an election of directors as soon as possible.
This will be welcome news to all Kingsmill residents, who have been living under the cloud of this lawsuit for almost two years, and will now be able to vote for their representative directors on the KCSA Board after three years with no elections.

More details to follow soon . . .

Light at the end of the tunnel?

18 MAY 2016: During a Docket Call hearing today, Judge Michael McGinty set a trial date for KCSA’s Complaint for Declaratory Judgment to be heard on August 15, 2016 at 8:30am. He also ordered that a Mandatory Settlement Conference be held between all parties prior to the trial in an attempt to resolve any outstanding differences.
The Settlement Conference has been scheduled for Thursday, June 30 at 9:30am, presided over by Judge Walter Ford. KCSA and counsel along with all Defendants are expected to attend.
If all parties are in agreement after the Settlement Conference, the trial becomes a mere formality and, hopefully, there will be nothing to prevent KCSA moving ahead with the long delayed elections for members of its Board of Directors.

Which election will come first?

Will the Kingsmill elections for the KCSA Board of Directors happen before Tuesday, November 8, 2016?

Sunshine comes to Kingsmill?

On too many occasions, KCSA has arbitrarily denied Member requests for access to books and records, despite the Virginia Property Owners’ Act, §55-510B, which states that: “Subject to the provisions of subsection C, all books and records kept by or on behalf of the association, including, but not limited to, the association’s membership list and addresses, which shall not be used for purposes of pecuniary gain or commercial solicitation, and aggregate salary information of employees of the association, shall be available for examination and copying by a member in good standing”.
Subsection §55-510C then details nine very explicit exclusions, such as personnel matters.
Following a formal complaint made to KCSA by a Member that KCSA was in violation of the above Virginia State law, the complaint was submitted to the Virginia Common Interest Community Ombudsman, who ruled that KCSA was wrong and that: “the Association must provide access to the records requested by the Complainant”.
Hopefully, this will lead to more transparency on the part of KCSA and the Board of Directors in the future.
“Sunlight is the best disinfectant for a democracy” Justice Louis D. Brandeis

KCSA News is recruiting

We are seeking volunteers to help make this website more informative for KCSA Members.
In our first post we said that this site was not intended to be competition for the official KCSA website, but was planned, in September 2014, as a “temporary, unofficial website, intended to fill some of the gaps in the current site and, at the same time, to provide some ideas that could be incorporated into the new community website”.
KCSA Members have paid nothing for the creation and maintenance of this site. But we all pay through our dues for the official KCSA website — setup and monthly fees to AssociationVoice,the company that developed and hosts the site, as well as the salaries of KCSA personnel that maintain the site.
And yet, the new official KCSA website has proven to be a disappointment for many Members, who were expecting so much more.
In announcing the new website, KCSA said: “We’ve put our association online to provide you with more convenience and a wealth of online services and opportunities to share ideas and information; get news and announcements; access an online resource center for important association documents and forms; join discussion forums; utilize the member directory; and much more”. But where are the news and announcements, discussion forums, opportunities to share ideas?
Until much more is added to the official KCSA website, it seems that this unofficial website is needed more than ever — so we plan to keep it going for now.
There are many tasks required to maintain a website like this but, most of all, we need contributors of upbeat stories — we would much prefer to be spreading good news than bad news! If you would be willing to help, please contact us at news@kcsanews.com.

It’s a NEW Year!

. . . and KCSA starts 2016 with:

    • No elected Directors having a mandate from the Members
      The terms of all elected Directors have expired, and there hasn’t been an election in more than two years
    • No plans to hold an election at any time soon
      The lawsuit will be heard again by the Circuit Court in the coming months and then what?
    • No Executive Director
      Tim O’Connor resigned on December 31, 2015 and hasn’t been replaced
    • No LifeStyle Director
      Karen Ashby resigned on December 31,2015 after only eight months at KCSA
    • A new management company, Associa
      Along with all the inevitable changes, disruption and costs
    • A restructured Police Department
      Kingsmill Police are no longer part of KCSA.  They are now part of a new, separate company, KMPD, Inc.
    • No Communications Committee
      All committee members resigned en masse in March 2015
    • A new website that, despite promises made, has less information for Members than the old site
      Many important documents are no longer accessible to Members, such as Committee Charters, Emergency Preparedness Manual and more
      Where are the “discussion forums, up-to-date news and announcements, and the wealth of online services” that we were promised in July 2015?
    • An ongoing lawsuit filed by KCSA against its Members who questioned the proposed election procedures
      Action that has already cost KCSA Members hundreds of thousands of dollars in legal fees