Treasurer’s January Website Article In the January newsletter I wrote about the new requirement from the Colorado legislature for an annual budget meeting. This comes from Colorado Statute 38-33.3-303 (4) (a) and it refers to the executive board passing an annual budget and then having a meeting to present the budget and allowing “discussion” regarding the budget. This regulation starts July 1, 2018. It does not make any mention of making changes to the budget as a result of the “discussion”. At first glance, this does not appear to make much sense. Why have a “discussion” and then not make changesa according to the “discussion”? After some thought I think I know why.
The executive board should be, and in the example of our board is, knowledgeable of the requirements of first and foremost, the declarations and bylaws of the HOA corporation and second, changes made by the legislature in HOA regulations. It is a balancing act to effectively administer between the two. Then you add to the mix, an individual or a group of people who may wish to do something else with funds of the HOA rather than what are the basic requirements first established under the declarations which established the ensuing HOA corporation and its bylaws. According to the original declarations that led to the creation of our 501 (c) HOA corporation and its bylaws, the primary task is to protect the water rights that allow us to have wells on our individual lots.
Colorado water law is different than every other state in the Union. It is based upon prior use of water and not on riparian (proximity to water) rights. This legal concept is what allows those with more senior (first come, first served) rights to have those with lesser (junior) rights to forego their use of certain waters. To compensate for this usually temporary loss of water, those with junior rights that are tied to their groundwater wells are allowed to have some water “in the bank” in the form of an augmentation plan that refers to a reservoir with water in storage released from the reservoir to flow to those with more senior rights. Our Buffalo Creek Reservoir is our “water bank”. The water rights we have are administered in the water court in Greeley and our water rights requires our reservoir to have a liner along the bottom to precisely contain our water against leakage into the ground for purposes of accurate metering the volume of water we are allowed to capture and store in our water bank.
This liner was installed back in 1987 and has a service life. We are already beyond its service life. One of the reasons the liner has lasted this long is because we have taken good care of it by not allowing fishing in waders, boating or swimming. We did have a problem back in the late 90’s when a tear was discovered due to an issue with ice. Fortunately we had the funds to repair it. The annual dues were also increased at that time from $90 to $110 per lot so that we could then prepare for the eventual replacement or continued patching of the existing liner if patching is possible.
Replacing the liner will not be cheap and will eventually have to be done. Depending on how the water court allows us to replace the liner, current estimate costs run from a low of $500,000 to $3,000,000! We now have funds closing in on the $500,000 end of replacement cost in CD’s and liquid savings. In the event we are required to go with the $3,000,000 end, we would have to come up with a one-time assessment of about $1,666 per lot; and that includes the funds on hand making up the difference on the $3,000,000 total.
I hope this short lesson in Colorado water law, HOA regulations and the primary purpose of our Ranch of the Rockies Association provides an understanding of why we have funds which we are continuing to grow that cannot be spent on other things we might like to have. We will have a discussion on our next year’s budget after July 1, but please understand we do not have room to undertake other major tasks and wishes.