The agenda for the regularly scheduled Board meeting Thursday at 2:00 has been posted on the MCA Member portal.
This is proceeding despite the known lawsuit that states that approval of such a contract requires the consent/approval of MCA members.
The 3 Action Items are approval of the Ground Lease Agreement, Additional prepayments on our existing debt, and set the date of the Annual Member meeting on March 12.
Although the Promissory Note draft is included with the Board materials as a separate agreement, there is no motion to approve its terms.
What is the Board being asked to approve?
The Board is being asked to “authorize the Association President to sign the MCA Benderson Ground Lease Agreement (“Lease”) once the final amendments are made,”
It appears that it means the President can make whatever amendments they want afterward the Board has “approved” it. That means the agreement is not yet final and Board members don’t know the full content of the contract they are considering for approval. Under Chapter 720, the board’s authority is to act in the association’s best interests using reasonable business judgment. Approving something that is still “to be determined” can undermine that duty because directors can’t evaluate cost, risk, or obligations if the material terms are missing.
There is no indication that the President’s right to amend is limited to minor or clerical details (which would commonly be allowed).
Loan Prepayments
The second amendment seeks approval of making $738,000 of loan prepayments. Why are we doing that?
- If the contract is approved, and BRDI exercises the CE option the interest rate will soon go down to 3%, and we will no longer have a balloon payment in a year (so no need to accelerate payments)
- The new loan terms indicate we will have to make our first annual payment on March 16 2026, and we estimate it is over $300,000 (see Footnote 1)
- Our Replacement Fund is underfunded by $5.4 million and we are supposed to be adding $500,000 per year to the fund, not $50,000.
- Once the CE’s are in place we won’t be able to borrow against the 500 acres or sell any portion if we need significant funds.
- Once the loan is in place we can’t borrow against our assessments without the permission of Benderson (this was just added in the latest version).
Once these prepayments are made we cannot get that cash back and we don’t have any way to replace it (other than Special Assessments).
If you are an MCA Homeowner* and would like to discuss this and other MCA matters with your fellow Homeowners*, join the “For The Meadows” Facebook group. Please provide your address in your request to join the group so your ownership can be confirmed. (* or spouse of a Homeowner)
Footnote 1 –
First paragraph from Payments section of the Promissory Note:
Consecutive Annual payments of principal and interest at the rate of interest set forth above based on a thirty (30) year amortization period shall commence on March 16, 2026, and shall continue on the third Monday in March of each year thereafter during the term hereof until February _, 2033. All payments received by Lender shall be applied first to interest, then to principal, then to escrows, then to late fees, then to any other fees, then to insurance then to other collection costs or in any other order as determined by Lender, in its sole discretion, as permitted
by law
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