A must read before the TIHOA AGM. Where has the money gone.....? Letter from Max & Janneke Diethelm (E18)

17 December 2014
Dear Trustees and Homeowners,                                                                                
I have taken note of the content of the e-mails sent to all homeowners of TI by Brian Sears (Chairman) dated 21 November 2014 and dated 01 December 2014.

From the above letter from the Chairman dated the 21 Nov.2014, I was very surprised to read that the budget for the "Reserve Fund" (in the financial reports it's called Accumulated Surplus) is increased by only R 200 000 namely from R 5.3m to R 5.5m for the financial year of 2014/5, in spite of the fact that the "New Homeowners levy" of approx. R 450 000 and the "3% Levy" of R 270 000 combined already adds up to R 720 000 per year! A similar scenario happened in 2012 and 2013 although the R 720 000 income was less.

This abnormality concerned and persuaded me to look into the past financials. I herewith want to share my findings with you the homeowners of Thesen Island and hopefully I made it easy to understand!

At our AGM in 2010, we the TIHO decided in good faith to introduce a "New Homeowners Fund" and a "2% Levy" in order to prop up our reserves to R 10m (R 10 000 000) by 2021.
Our Treasury subsequently collected "New Homeowners Levy" and "Extra Levy of 2%" from date of inception up to the 31st of October 2014 just short of R 1,6m. If you add this R 1.6m to the existing reserves of R 4.94m we had in 2011 it would take us to R 6.54 by October 2014. Providing we feed the fund as envisaged, our "Reserve Fund" will be in the region of R 14m by the year 2021. (inflationary-escalation and interest after tax included).

But it did not happen!

Our "Reserve Fund" since inception in 2011 to October 2014 grew only by a meagre R 120 000 (from R 4.94 in 2011 to R 5.07 in Oct. 2014)

Our good intended collection of R 1.6m has been gobbled up with among others, new projects and considerable spending in excess of budgets. For some reason since 2011, our "budget overruns" were not considered in "our standard levy increases" and our "Reserve Fund income" had to come to the rescue.

In the financial year ending October 2014 alone, total expenses exceeded budget by close to R 1.3m.

For instance we exceeded the budget for Eden Telecom which does the security installations (not to be confused with our Security Contractor "Allsound Security" that mans our gate) in the last 3- years, by a hefty R 1.1m alone!

Our total Security budget which was in 2011  R1.6m, is for the year of 2015 a staggering R 3.36m, that is 33% or 1/3 of our total budget or R 5 900 per year for each Homeowner on Thesen Island in Knysna.

The Pezula Estate with 3-security gates manned for 24-hours and 25-cameras has a budget of R 1.4m for same period. Maintenance on the installation is seldom needed hence there is no contract required.

Is our security installation here on the island unreliable or too fragile that we need a maintenance contract of almost R 400 000 per annum in place?

Now we have only 2-options to solve the backlog;

Treasury prudently curtails spending, or increases the income!  
My suggestion is to apply both options and to vote in the upcoming AGM for an average of R 300 per month special levy to make up the shortfall in our "Reserve Fund". This adds R 2m per year and would take us less than 2- years (providing spending is kept within budgets) to recover. In my view this is the cheapest way out and it comes with no further burden and luggage attached.

But only if;

a) Treasury adjusts the standard levy to cover budget needs without compromising the "New Homeowners Levy and the extra levy".
b) Treasury controls and adheres more strictly to budgets.In 2014 out of 71 itemised budgets, 49 were exceeded.
c) Possibly change the constitution to include that spending above a certain amount requires the approval of the homeowners. (quite common ruling)
d) Possibly change the constitution back to the original which says "any resolution of the trustees shall be carried by a simple majority of all votes cast".
e) Safeguard our wet-and parkland in the constitution.

Summary;

A  shortage of money in the "Reserve Fund " was in my mind unnecessarily created. It has triggert a search for other income, causing questions and animosity.
Financially it make's no difference to our pockets. Provided spending was justified, we paid and still pay too little standard levy and we now have to make up for it.

And finally something to ponder about;
a) A once off levy is always more transparent to work with and saves tax. At today's tax rate, a R 10m saving in the Homeowners account attracts a payment of R 280 000 to SARS annually.
b) To irrigate 1-square meter of garden/lawn with 10-mm of water requires 10-litres of water. For 48 000 sqm you would require 480 000-litres ( 10x48000). That is 48 of the biggest tanks (10 000-litres) available on the market. So by watering only once with 10-mm the tanks will be empty and I now leave the rest to your imagination. (However your own harvesting at home for a small garden is probably worthwhile).
c) Coral Trees grow up to 90cm (3-foot) in Diameter. Look up on Google "coral trees" and familiarise yourselves with the characteristics.

Wish you all a happy festive season.
Max and Janneke Diethelm E-18

NB. figures are based on financials year ending 2010/1/2/3/4

 Max Diethelm

Trustees "Blatantly wrong to say Development will not detract from views or negatively affect their lifestyle..." Read Brian & Gill Robert's (P89) letter

I wrote in my letter to the Trustees:

I don’t know the owner of P89 but this stand borders the Parkland and has wide views over it. It is a lovely position and I considered buying it. You now plan to build a house on the Parkland next to his home.  Do you not realize that the enjoyment and value of his home would be substantially diminished?

Gill Roberts, the owner of P89, came around to my house yesterday. She had found this blog, and wanted to thank me for opposing the Trustee's plan to build houses next to them. She told me of the sleepless nights she and her husband, Brian, had had when they got the proposal from the Trustees. In her recent email to me she wrote:

I wish that we had been in the loop right from the beginning – it would have alleviated a lot of stress on our side. Thank you yet again for taking such a firm stand in this matter. As I said yesterday we felt like we were going to be fighting this all on our own.

Here is their letter, (emphasis added by me in bold):  

Dear Peter and Trustees,

I refer to the letter from the Trustees and our telephone conversation regarding the proposed development of the additional 15 erven in the South East corner of the island.

First and foremost the letter (entitled “Motivation as issued”) is blatantly wrong and misleading in stating:

"The Development will not

• Detract from existing members’ views or negatively affect their lifestyle..."

Nothing could be further from the truth as far as we are concerned. At P89 we have unrivalled views and a lifestyle second to none on the island, both of which will be destroyed if this development is allowed to continue.

We have been coming to Knysna for almost 20 years for holidays, most of which were spent in a small apartment which we bought in the early years. In 2004 we decided to start looking for something a little better and more in line with a possible retirement venue. We spent seven long years looking, including looking at many properties on Thesen. These were always rejected for lack of privacy and views.

Finally in 2011 we discovered P89 and it was everything we dreamed of, and only one direct neighbour. We have the Thesen lifestyle, but with privacy, we have views and most of all, we have somewhere to retire to in the future.

The view from our bedroom balcony at sunrise is something we marvel at every day and we like nothing better than to have our early morning coffee while watching the sun come up over the hills. If the proposed development goes ahead then all we will have is a view into other peoples’ bedrooms and living rooms and a view over the trailer park. Even sitting outside in our garden or on the patio will mean that we will have neighbours peering down on us.

We were told that we need never fear that our view would be compromised in any way because not only was all development on the Island completed, but that the land in front of us was contaminated and could never be utilised other than for landscaping and gardens.

It will be so very unfair to put this vote to all the homeowners as they will most likely vote “Yes” to something that will not have the slightest impact on their lifestyle or on their pockets.

We on the other hand have everything to lose – our lifestyle will change dramatically. Our beautiful view and privacy which we hold so dear will be taken from us permanently. This is indeed asking a very high price from us.

We feel that the fairest way to achieve the target of R10 million would be to impose a special levy on everyone so that each homeowner has equal responsibility towards attaining this very important and very necessary goal.

In conclusion we would like to emphasise that we are vehemently opposed to your proposal to build 15 properties in front of our dream house.

We trust and hope that you will seriously consider our heartfelt concerns in making your decision.

Yours sincerely,

Brian and Gill Roberts

89 Plantation Point

My Reply to the HOA Trustee's to their email pulling the plug on their Parkland stands scheme - 11 December 2014

11 December 2014

Dear Brian and the other Trustees of the TIHOA,

In reply to the email sent to all home owners withdrawing the Trustee’s proposal to build houses in the Parkland, I want to make the following points (excepts from the email are in Italic):

Preparatory work was necessary to bring a clear proposal to the AGM. The Trustees could hardly come to the AGM saying we have a proposal to build additional houses, we don’t know where and we don’t know how many and we don’t know how much money could be generated. To undertake a proper investigation, the Trustees have approved expenditure of R108 000 to bring the proposal to a state that it can be communicated to the Members and presented to the AGM

Who is buying this? Not me. An email could have been sent to every home owner saying “…. we are exploring avenues for raising income to fund the infrastructure maintenance fund. We have identified an area at the eastern end of Plantation Point and overlooking the beach to add about a dozen stands. What do you think of this?”

How far would R108,000 go with ePap Children’s Feeding Project, the Knysna feeding scheme for preschool children? It would give 450 kids a meal each school day for a year.  

The suggestion that the Trustees are trying to sneak this through is simply not true. The idea was first brought to the Trustee meeting, by myself, in April 2014 and has been worked on since then. The Trustees had discussed the Project at each of the Trustee meetings on 3rd June, 12th August, 7th October and at a special meetings called to discuss the development on 17th November. The minutes of 3rd June and 12th August are on the Members web site, while the minutes of 7th October and 17th November will be posted on the website once approved at the Trustee meeting on 9th December 2014

The April, June and August meeting's minutes were only posted on the HOA website on 31 October, 2014.  See the screen shot below.

There was no recorded discussion on the matter in the minutes of the April meeting. Just a reference to looking to other avenues for income.

I was not invited to the special meeting on 17 November. It appears it was by invitation only to a few home owners.

Your proposal was sent to all the homeowners on 22 November, 2014. 3 weeks after the minutes were posted! This is assuming home owners read the minutes on the day they were posted.  

Aside from the few home owners who you identified as “directly affected” who were notified on 30 October, the vast majority of home owners had 3 weeks’ notice of the plan. I live full time on Thesen Islands and I heard about the scheme in a coffee shop on 14 November.

The Trustees, also, do not wish to create a rift, disunity or animosity in our community. The Trustees believe that this would inevitably develop between Members if a vote is called.

This is a bit rich. The Trustees were the ones proposing a vote on cutting up the Parkland. Hindsight is perfect but how about some foresight? You couldn't anticipate that “a rift, disunity or animosity” would be caused when you called for a vote?

On a personal note, I wish to express my concern with the tone of some of the opinions. The Trustees have been called corrupt and there have been suggestions that they should be voted off. I wish to remind all Members that the Trustees give of their time, without any compensation, freely and without complaint.  

Surprised that people get hot under the collar when you propose building stands in the Parkland and boardwalks in front of their houses?  Adding 13 houses to the end of their cul de sac? Having to face more building and trucks in and out through the Gate House, all day, every day during the week for a few years? 

The Trustee’s lack of foresight caused a period of tension and unhappiness among home owners on Thesen Islands. Sadly, there is now distrust of the current Trustees. Many home owners were forced to spend hours of their time and lots of their energy fighting the proposals.  Also without compensation.

The best way to avoid criticism is to make no suggestions. I do not think this is what Members would expect from their Trustees.

No one would say that the Trustees should not come up suggestions. But this scheme was the wrong scheme, handled the wrong way, cost R108,000 and caused distress, tension and distrust on Thesen Islands.  

And no hint of an apology from the Trustee’s for this fiasco.

I am very sorry this has happened. It has been very unpleasant for many home owners, for you and your fellow Trustees. I look forward to starting the new year with a clean slate.  

Yours sincerely,

Ken Rutherford

P79

More Egg on Trustee's faces - Gray Rutherford responds with the Arcus Gibb Map to HOA dismissal of his statement regarding Parkland contamination

The area inside the highlighted border are the "Contamination Zones". See Map Key for details. This map formed part of the Arcus Gibb report that detailed the contamination of Thesen Islands.

I have highlighted the outline to make it easier to see. Looks like the outline of the Parkland, doesn't it? Read Gray's letter below and draw your own conclusions. 

Press "Control" and  the +" key to increase size of map. To reduce size, press "Control -"

 

"The Trustees and Dr Chris Mulder are well aware of the contaminated areas and the proposed development would not be located on contaminated land." 

- Excerpt from the letter from HOA Trustees to home owners, dated 2 December, 2014.

"The area shown for potential future houses is not contaminated and were not part of the previously identified contaminated areas. " 

- Excerpt from letter from Dr Chris Mulder, CMAI to Brian Sears, Chairman of the TIHOA, dated 28 November, 2014, and sent to home owners in letter dated 2 December, 2014.

Here is Gray Rutherford's letter:

To : Chairman, Thesen Islands Home Owners Association Trustees

Re : Parkland Contamination

I refer to my previous e mail to you dated 26 November 2014.  As I have not had the courtesy of a direct response, I am taking as your response the dismissal of my statement in the email you sent to Thesen Islands home owners on 2 December 2014.

I had thought that, in the interest of good governance, you would have independently investigated my statement that the full extent of the Parkland is a remediated contaminated area. Despite not wanting to become further involved in this sorry saga, your public rebuttal requires me to substantiate my statement.  (Bold added)

I attach a (reduced) contaminated areas plan ref J90299B – 3 dated June 2001 by consultants Arcus Gibb that identified the different contaminated zones on Thesen Islands.  It encompasses the full Parkland and includes the areas where you planned to develop 15 more residential stands.  This plan formed part of a report that detailed the contamination on Thesen Islands and the remediation plan and strategy agreed with the environmental authorities.

If you choose, you can verify this information with the records of the Department of Environmental Affairs and Tourism, the Department of Water Affairs and Forestry, the Knysna Municipality and the contamination consultants, Arcus Gibb.

In our increasingly urbanized world I believe the protection and preservation of our green spaces is the most important legacy we can pass on to our children, grandchildren and future generations.  

"We do not inherit the earth from our ancestors, we borrow it from our
children"   -  Native American proverb

Gray Rutherford
10 December 2014

Upcoming AGM - Elect Trustees who will push for the long term protection of the Parkland; Get/Give proxies for home owners who won't be at the AGM

I asked the HOA for a report on the current Trustee's terms of office:

Dear Ken

With reference to your e-mail dated 1 December 2014.

The following Trustees have resigned as from the date of the AGM:
Richard Wilkinson, Roel Goris and Mike Hennessy

The following Trustees have to stand down in terms of the rotation policy per the Constitution: 
Brian Sears, Hendri van der Merwe

Lester Day was co-opted as a Trustee during the year and has to stand down as a Trustee at the AGM. 

The following Trustees remain in office:
Suyenne Botha, Remia Eksteen, Noel Meier and Peter Hudson. 

I trust this answers your question.  Please feel free to contact me should you have any further queries.

Yours faithfully
Wiekie Smit

In summary, there are 10 Trustees of which
3 Trustees  will be resigning at the AGM; 
3 Trustees have to stand down;
4 Trustees remain in office. 

So according to this, 6 new Trustees are going to be elected at the AGM. Assuming the "co-opted" Trustee has to be replaced. I think that the 2 Trustee's who have to stand down, can offer themselves for re-election. 

Georgie Hudson (B7) has written that John Jacobs (H35, husband of Sustra), who was opposed to the cutting up of the Parkland may be willing to stand for election. 

Is there anyone else who will be willing to serve as a Trustee? We need to come up with a list of 6 preferred candidates that we will all vote for. 

Georgie also makes the good point that we need to get proxies from owners who will not be at the AGM. I have already got one from my neighbour. I should also be getting one other one. 

Let's all go on a proxy hunt! Ask your neighbours if they are going to the AGM and if not, ask for their proxy. Proxy forms were sent with the AGM material a few days ago. 

We can increase our clout by collecting as many proxies we can.