BACKGROUND INFORMATION FOR QUARTERLY MEETING, JUNE 5, 2014

The Board of Directors encourages all members in good standing to attend the June Quarterly Membership Meeting, scheduled for Thursday, June 5, 2014, at 7:30pm, to authorize the Paving Project to proceed. A vote by the members is required for the funds that have been saved up for refurbishing our infrastructure, to be committed to the contract for repaving our streets.

Members and visitors to Cabin John Gardens have become increasingly aware in recent years that our roads are in a terrible and dangerous state. They are well past their serviceable lifespan and can no longer be effectively repaired. After approximately four years of Board efforts to identify the best alternatives for replacing our roads, raise capital to fund the replacement, develop a plan and specification, and to solicit and review bids from paving contractors, the Board finally has a proposal from a reputable firm which meets all our requirements and which comes in at a cost that is in line with our expectations. The Board of Directors hopes, with approval from the Community, to begin actual reconstruction of the roads this summer. We have until June 23, 2014, to finalize the contract so that the work can begin.

The winning bid, from Ruston Paving Company, Inc., is for a total fixed price of $929,000. The bid, as our specifications require, is for (a) a new 12-inch thick road-bed using soil stabilization/full-depth reclamation with cement;  (b) a new 3-inch thick asphalt surface; (c) installation of concrete curb and gutter on nearly all sections of the roads (as shown on the site plan), to permanently improve stormwater drainage; and (d) remediation of adjacent walks, driveways, fences, and soil that have been disturbed or dislocated. The contractor is also responsible for surveying and testing to ensure that the finished product meets specifications.

In spring of 2012 Cabin John Gardens was able to sell two of its five rental houses to raise additional capital for the road-paving project. These sales resulted in a net increase in capital reserves of $727,194. Thanks to these sales and many years of saving up required monthly capital contributions from the members, our capital reserves now amount to approximately $996,000 as of April 30, 2014. This would be enough to cover the cost of the Ruston bid and the additional project management expenses that we expect to incur in the course of completing the project. It does not, however, provide enough of a cushion to account for any unforeseen contingencies. The Board strongly believes that there must be additional funds available to be able to deal with such contingencies, which often arise in any project so large and complex, and a conservative rule-of-thumb for how much should be budgeted for this purpose is 10% of the total. The proposal from Ruston Paving is for a fixed-price contract, so if everything were to go completely according to plan the additional funds would not be spent. The Board stands strongly behind the detailed and thorough specification, which will go a long way toward ensuring success. However, it would be imprudent, after waiting so long and working so hard to get this far, to begin construction without any ability to accommodate changes if and when something unexpected crops up. 

In order to ensure that our reserves are adequate to accommodate any changes which turn out to be necessary during the course of construction, so that there is no forced work stoppage that would likely lead to much higher eventual costs, the Board recommends that the members vote in favor of collecting a temporary increase in the capital contribution. The proposed motion would increase the capital contribution by $105, to a total of $130 per member, per month, from July through December 2014. This is a total cost of just $630 to each member, spread out over six months.

The Board has taken the precaution of obtaining a legal opinion from the Corporation’s attorneys, concerning whether or not any requirements imposed by the Bylaws on maintenance of reserves (specifically Article VIII, Section 7) may constrain the use of our current capital reserves to fund the paving contract. Their opinion reinforces the Board’s view that the Bylaws do not require cash reserves sufficient to repurchase a membership, and in fact, previous Boards have not maintained such cash reserves as sale prices have risen. The Corporation does have assets, such as the three remaining rental houses, which could, if necessary, be sold or leveraged to meet the requirement of Article VIII, Section 7. It is also the Board’s view that once the current infrastructure projects are complete, the Corporation’s entire infrastructure will be in better condition than it has been in several decades, and in general, the need for cash reserves will be dramatically reduced. The infrastructure issues identified in the recent reserve study will have been addressed. Nevertheless, the Board anticipates that the Community will need to discuss and decide on alternatives for replenishing the reserves to a sustainable level for the long term. There will be time at the end of the June Quarterly Meeting to discuss such alternatives.

The Board recognizes the need for timely and effective communications with the members during the course of this project. The Cabin John Gardens web site (http://www.cjgardens.org) will be the primary source for the most up to date information about the project, and project managers will rely heavily on email to communicate with members about schedule details, closures, vehicle issues, commitments, etc. However, there are still a number of residents who do not have reliable email, so they will need to be contacted by phone or in person. The Board is beginning a search for volunteers who would be willing to serve as “Block Captains” for their section of the neighborhood. There will also be a paid project manager to coordinate keeping people apprised of the schedule, parking of vehicles, and resolving issues with residents. Block Captains will facilitate communication between their neighbors and the project manager. If you are able to volunteer for this important responsibility, or know someone on your block who you think would make a good Block Captain, please send an email to paving@cjgardens.org.

The condition of the roads in our community has, for several years, been the most pressing issue that our members have been concerned about. The Board of Directors is very excited to finally be in a position to solve this problem this year, before another winter arrives. It will take a lot of effort on the part of those involved, as well as cooperation on the part of everyone in the Community. We strongly urge every member to show his or her cooperation by attending the Quarterly Meeting on June 5.