Annual Meeting Minutes May 29, 2021
NORTH SHORES ANNUAL MEETING
Saturday, May 29, 2021
Call to Order and Quorum
The North Shores Homeowner Association Annual Meeting was called to order by President Bruce Wilson at 10:09 a.m. In compliance with the Delaware State of Emergency, the meeting was held by audio-teleconference. President Wilson introduced the members of the current board; Debbie Director, Helen Hoart, Louisa Hollman and Evan Thalenberg.
President Wilson welcomed homeowners attending the meeting and thanked them for their patience with the check-in process. Mr. Wilson instructed homeowners how to be recognized by the operator using their phones, for voting and question and answer sessions, during the meeting. He reminded attendees who had already submitted proxies that voting for any matter at the meeting would cancel their proxies for all matters.
Secretary Debbie Director confirmed a quorum was established for the meeting, allowing business of the community to be conducted.
Minutes
Secretary Director reminded homeowners they had received the Annual Meeting Minutes from the 2020 meeting in a mailing and by email. The floor was opened for any comments or questions. Following a test question from the operator administering the meeting, homeowners were asked to vote on the 2020 Minutes as submitted. The 2020 Annual Minutes were unanimously adopted as submitted.
President’s Report
President Wilson announced to homeowners that operational changes relating to the COVID pandemic for the summer of 2021 would be less restrictive than last year, based on CDC and Delaware Department of Health and Human Services guidance. In addition, CDC masking requirements and State of Delaware guidance, applicable to our operation, have been relaxed. Guiding principles for opening additional North Shores operations, as well as decisions to relax restrictions, will be determined when there is clear guidance from the CDC and the Delaware Department of Health, to permit the community to modify its more restrictive approach to summer operations. The decision and timing of easing restrictions will continue to be cautious, in an effort to minimize the community’s exposure to illness and liability.
Mr. Wilson continued to outline how the new requirements would affect community amenities. Masks would no longer be required for those who are fully vaccinated, in accordance with CDC guidelines. The summer will begin with umbrella service on the beach without chair service. Providing chairs at the beach this summer will be reevaluated as the season evolves. The North Shores pool will be open at 100% capacity. Those who are fully vaccinated will be asked to present their vaccination card and complete a waiver form that will be used for the entire summer. Those who have not been vaccinated will be required to sign a liability waiver and complete a symptom check screening each time they visit the pool. Mule service for the beach as well as the beach wheelchair will resume this year. Riders will be required to wear masks.
President Wilson informed homeowners that for the past 15 months, the North Shores Board had spent hundreds of hours meeting and reviewing COVID-19 information to make well informed decisions about how the community should be operated. Decisions about the North Shores operation were made to balance the desire to reopen our facilities and to protect the community from liability and prevent the illness or death of a resident, lifeguard, staff or tenant. NSBG will continue to monitor guidance from the Governor’s office and other sources to ease more operating restrictions as the summer progresses.
Personnel Changes
President Wilson welcomed Jeff Sellman as the new Community Executive. Jeff has been working alongside James Allen for the past year, and we are delighted to have someone with Jeff’s experience transition into a fulltime position with us. James Allen will be continuing with us as a consultant, but remains in Australia for family reasons working remotely. Mr. Wilson also welcomed the new North Shores Beach Manager, Captain Kent Buckson. Captain Buckson served as head of the Rehoboth Beach Patrol for over 20 years, and we are very fortunate to have someone with that level of professionalism as part of our team. Mr. Wilson also recognized Phyllis Donovan, the North Shores bookkeeper for many years, as a stalwart of our operation.
Beach Umbrellas
President Wilson reported that for the past several weeks, as the COVID restrictions have eased, Beach Club Manager, Captain Kent Buckson, and our Community Executive, Jeff Sellman, have worked hard together, developing a new umbrella system. Many homeowners had expressed an interest in returning to the legacy beach set-up system used before the pandemic. Captain Buckson brings a host of new ideas to the North Shores beach operation and many years of professional experience with a primary focus on safety. The new hybrid system is designed to promote a safer beach environment by reducing the number of unused umbrellas. Safety concerns about the large number of unused umbrellas, some days over 100, and the safety threat from a sudden storm, was a primary focus. As the season begins, the hybrid system, similar to past years’ legacy system, will be used for seasonal umbrella orders submitted on the website. The modified system involves both the “on demand” element as well as the website location requests for seasonal umbrella orders. Reserved umbrellas that are not used for a full day will require a resubmission request on the website.
President Wilson responded to several questions from homeowners with questions about the beach operation and umbrella service.
Rental and Construction Fees
President Wilson presented two regulation proposals intended to help defray costs that are incurred by the entire community for home rentals and construction. Both measures are intended to reverse long standing subsidies for the support staff needed to administer summer rentals, architectural review and inspections for construction, drainage and landscaping costs associated with major construction applications, and vehicle damage to roads and the North Shores rights-of-way. Mr. Wilson further explained that the rationale behind the new (or increased) fees was to impose on those directly benefitting from the administrative and overhead support needed for short term rentals and construction a greater share of the community’s costs incurred in administering those activities.
Rental Fees
Focusing on the proposed short term rental fees, President Wilson stated that the current system used by North Shores to manage access to amenities such as beach rentals, admission to the pool and parking, uses a dual verification system by name and address to eliminate fraudulent use of pool and parking passes. Staff and administrative support have increased considerably in recent years to administer the needs of rentals in the community. The proposed fee of 2.5% of gross rents is lower than the fees currently imposed by the surrounding communities. A survey of the surrounding communities indicated North Shores was out of step by not imposing fees to cover costs associated for revenue generating rentals. Local realtors advised the Board that owners of rental properties managed by realtors will not see any change in the income they receive. Realtors will advertise the property and collect the rental fees as part of their agreement for the rental. Mr. Wilson stated that the Board believes as a matter of fairness that costs associated with administering rentals should be borne by the tenants, rather than the community of North Shores. Currently owners who rent their homes do not pay the full costs incurred by the community.
President Wilson instructed the operator to open the floor for questions from homeowners. There were no comments or questions made by homeowners concerning the proposed 2.5% gross rental fee. Mr. Wilson indicated that there were some details of the rental fee proposal still to work out to include comments received by email, and he asked the community to vote for adoption of the proposal, with the Board to finalize implementing details of the regulation. The conference call operator then stated the question for the community: Should the Board adopt a regulation implementing a rental fee of a percentage of gross rents, effective for rentals with occupancy dates on or after January 1, 2022? The proposed regulation was adopted with 112 voting in favor and 21 opposed.
Construction Fees
President Wilson explained currently NSBG charges a nominal fee for major and minor construction applications that are reviewed by the ARC. There is currently no separate charge to cover the direct costs incurred for: architectural review of plans by an outside consultant, inspections for plan compliance, drainage consulting and improvements to accommodate major projects, paving and right-of-way repairs associated with heavy construction vehicles. The current level of fees was justified when former ARC Head, Paul Salditt, selflessly gave his time to the community by undertaking covenant reviews of building plans at no charge. NSBG now incurs real costs associated with the review of plans and the management of construction projects and should not promote further development by providing subsidies to promote new construction. Surrounding communities charge significantly higher construction fees, with building permits for houses costing tens of thousands of dollars. The Board is proposing new construction fees based on a percentage of gross floor area, rather than a fixed fee. Based on comments received from the mailing, prior to the meeting, there are some areas that will require more thought, including the substantial rehabilitation of an existing home by a current North Shores owner and the treatment of longtime owners who have not yet renovated their original homes. President Wilson asked for the community’s reaction on the proposed new fees to take effect in January 2022, before seeking a vote of the basic outline. The conference call operator opened the floor to homeowners for comments. Several homeowners had comments and questions about the proposed fees. President Wilson thanked homeowners for their valid and thoughtful comments, stating that all comments made would be considered in the final development of the detailed regulation for construction fees.
The conference call operator requested that homeowners vote on the proposed construction fees, stating the question for the community as follows: Should the Board adopt a regulation implementing a construction fee based on the total gross floor area of the proposed construction, effective for construction applications submitted on or after January 1, 2022? The proposed regulation was adopted, with 107 voting in favor and 27 opposed.
Treasurers Report
Treasurer Helen Hoart reported the finances of the community were impacted in 2020, requiring a special assessment of $250 to cover the unbudgeted COVID-related expenses caused by the pandemic. The annual assessment will remain at $2400 per household in 2021. Bath and Tennis Club income was $78,224 below budget, resulting from the Board’s decision not to rent beach chairs last summer over virus contamination concerns. Lower interest income and a decline in cash reserves in 2020 also impacted the budget. Expenses in 2020 were $93,600 over budget based on the decision to finish most of the paving in North Shores, rather than the smaller portion included in the budget. Concerns about the faster-than-expected deterioration in our older roads led to the decision to accelerate the paving. Some savings were gained as a result of the COVID restrictions; most social events that had been included in the budget were not held. 2020 ended with an operating deficit of $209,000. Treasurer Hoart noted in the three previous years (2017-2919) there was an aggregate operating surplus of $279,700.
Ms. Hoart presented an overview of 2021, with budgeted income of $988,871 and expenses of $1,039,360, resulting in a $50,000 deficit. Ms. Hoart noted that the budget was prepared with uncertainty about income from beach chair rentals, and no chair rental income was allocated in the budget. However, restrictions from the governor continue to be lifted with some possibility of rental chair service being permitted, which would lead to some amount of rental income in 2021.
Expenses for 2021 include office operations and administrative personnel. The budget includes $75,000 (about one-half of the expected overall cost) for the marina dredging project, currently scheduled for the fall of 2021 and continuing into 2022. The marina access roads are scheduled to be paved after the dredging in 2022. Hourly Bath and Tennis Club salaries will increase in 2021, but our budget assumes less overtime and a slightly reduced headcount, resulting in an overall budget for salaries that remains at 2020 levels.
Treasurer Hoart opened the floor to questions. There were several questions from homeowners that were answered during the question and answer session. The conference operator then asked for approval of the 2021 budget, requesting the homeowner vote as follows: Should the 2021 Budget as proposed by the Board be adopted? Ratification of the 2021 Budget was approved with 83 voting in favor and 2 opposed.
Security Report
North Shores has experienced an increase in traffic from bikes, cars and pedestrians since the election. Our first summer with President Biden and his family will result in road closures at the north end of the neighborhood and an increased security presence.
Bath and Tennis
Club manager, Captain Kent Buckson, greeted homeowners and welcomed everyone for the season. Captain Buckson commented he is excited to be part of the North Shores community and is a longtime member of the Rehoboth area beach community. He reported he has an outstanding staff this year with many lifeguards he has worked with in past years. A junior lifeguard program is planned for children 5-15 years of age, with the focus on learning and safety.
President Wilson reported Dr. Dave Marshall and his associates will be offering tennis and swim lessons this summer. Group and private lessons will be available, as well as for pickleball.
The floor was opened for questions from the community. President Wilson responded to several questions from homeowners.
Election of Board Members
President Wilson introduced the three candidates, Debbie Director, Steven Hollman, and John Scarry, further clarifying there were two seats open in this year’s election. He asked each candidate to give a short statement, and each candidate did so. Biographies for Debbie Director, Steven Hollman, and John Scarry had been included in the April Annual Mailing. Mr. Wilson thanked the candidates for their interest in serving on the Board.
President Wilson then reminded homeowners about the voting process, indicating that the two candidates with the highest numbers of votes would be elected. He then reminded homeowners that if they had voted on any matter earlier in the meeting, their proxies were deemed to have been revoked by their participation in those electronic votes, and that they should vote at the meeting electronically to make their votes count for the Board election. Mr. Wilson further reminded those present that there would be two voting sessions, and although homeowners could choose whether to cast one or two votes, if a homeowner sought to vote twice for the same person, the second vote would not be counted.
The conference call operator then conducted the two voting sessions.
President Wilson announced that the voting results would not be available for a few days after the certification of the election.
[Following the meeting, on June 4, 2021, the Board announced by email that Debbie Director and Steve Hollman had been elected as directors. The voting certification from the community’s Inspector of Elections is attached as an Exhibit to these minutes.]
In Memoriam
President Wilson reminded homeowners of his tradition each year, remembering the importance of Memorial Day weekend and the military service-members who have given their lives in defense of our country. This year, with combat fatalities down, he wanted to remember many good friends and neighbors that had passed away over the past year. After a reading of the names, the community observed a moment of silence in memory of the following community neighbors:
Jack Boorman
Patricia Coan
Sue Ellen Gallamore
Diane Mesirow
Roy Parks
Paul Salditt
Dr. James Stallings
Dr. Hans Wilhelmsen
John Wilson
There were no further questions or comments. The meeting was adjourned as 12:19.
Respectfully submitted,
Deborah M. Director
Secretary
NORTH SHORES BOARD OF GOVERNORS, INC.
CERTIFICATE AND REPORT OF INSPECTOR OF ELECTION
In my capacity as the duly appointed Inspector of Election for the Annual Meeting of Members (the “Annual Meeting”) of the North Shores Board of Governors, Inc., a Delaware corporation (the “Company”), held on May 29, 2021, I hereby certify that:
FIRST: The Annual Meeting was held on Saturday, May 29, 2021 at 10:00 a.m. local time.
SECOND: The number of members of the Company present, by attending virtually or by proxy, at the Annual Meeting, constituting a quorum, was 203.
THIRD: A total of 102 unrevoked proxies were received. 21 otherwise valid proxies were revoked by the attendance and participation in the electronic vote by the issuer of those proxies, and those 21 proxies were not included in the totals. All proxies were voted in accordance with any specific instructions indicated on the proxy and otherwise in accordance with the instructions of the proxy holder.
FOURTH: I inspected or caused to be inspected the unrevoked signed proxies and electronic voting records created during the Annual Meeting and found the same to be in proper form. The following is a record of the votes cast at the Annual Meeting:
Election of Directors:
Nominee Votes
Deborah Director 132
Steven Holman 130
John Scary 54
THE TWO NOMINEES RECEIVING THE HIGHEST NUMBER OF VOTES ARE ELECTED AS DIRECTORS.
- Proposal to accept Minutes of 2020 Annual Meeting:
For Against
126 0
REQUIRES AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS AT THE MEETING.
- Proposal regarding implementation of rental fee:
For Against
112 21
REQUIRES AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS AT THE MEETING.
- Proposal regarding implementation of a construction fee based on total gross floor area of proposed construction:
For Against
107 27
REQUIRES AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS AT THE MEETING.
- Ratification of Annual Budget:
For Against
83 2
BUDGET IS RATIFIED UNLESS A MAJORITY OF THE MEMBERS VOTE AGAINST BUDGET.
/s/ Robert J. Valihura, Jr., Esquire
Robert J. Valihura, Jr., Esquire
Inspector of Election
Dated: June 7, 2021