Question 1

How Will RCW 64.90 Affect Borrowing Authority in Our Community?

Accepted Answer

Starting January 1, 2028, community associations in Washington will fall under new changes to Washington State’s RCW 64.90, including ours. Under this law, the Board of Directors will be required to present any proposal to borrow funds to the membership for ratification. Similar to the budget ratification process, the Board will be authorized to proceed with borrowing unless a majority of homeowners in the association vote to reject the proposal.

This means that even if changes were made to reinstate direct homeowner voting rights on borrowing in 2025, RCW 64.90 will automatically override any conflicting language in our governing documents once it takes effect in 2028. The statute will remove any requirement for an upfront vote to approve borrowing, shifting the process to the new ratification model.

While the law takes effect no later than January 1, 2028, the association could choose to opt in earlier if approved by a membership vote.

Question 2

What did the Board vote on December 17, 2024? What's next?

Accepted Answer

At the 12/17/24 Board Meeting, the board voted to “Continue with discovery and explore permitting process toward Plan A upon which the Board will approve a final plan.”  With this vote, the approved spending approximately $309,000 in 2025 to continue with exploration and planning for the potential Community Center project at Mountainview.  This exploration process will include hiring subcontractors who will help with the development, design and engineering, and preconstruction process for the project.  These experts will help pinpoint the exact scope and cost of the project. 
  
At the end of the exploration phase, likely in the third or fourth quarter of 2025, our Owner’s Representative, Gary Lin, will present a final plan for the project, including specific project plans and costs, to the Board for their review.  The Board will then have the chance to vote on whether to move forward with the project plan as presented, or to explore other options.

Question 3

What is a Reserve Study, and what does it have to do with the Office Replacement?

Accepted Answer

A reserve study, which is done annually by a third-party consultant, helps the Association plan for the repair and/or replacement of the Association’s assets and amenities.  It is a forecasting and planning tool used by the Board, and it includes a very detailed calculation on how much the Association should save in the Reserve Fund for the upcoming repair and maintenance of the Association’s assets and amenities, or components, as they are called in the report.  The reserve study lists the major components of the association, their expected useful life, remaining useful life, and current replacement cost.

When a reserve component is repaired/replaced, the cost of that repair/replacement does not need to immediately be replenished in the Reserve Fund.  Since items have useful lifespans, the total cost of that item does not need to be available until the useful lifespan is over.  This allows the Association to save for future projects over time and means that they do not have to have money in savings to be able to repair/replace all components at the same time.

For example, let’s say a storage shed has a useful life of 20 years and was purchased in 2024 for $12,000 to replace an old shed.  The storage shed was already listed on the reserve study as a component, and since it is new, the useful life will be reset for the shed to 20 years.  Since the Association should not have to replace the shed again for 20 years, only a fraction of the cost of the shed needs to be saved for in its first year of its useful life. In each of the next twenty years, more and more money is saved for this shed, and after 20 years, enough money is saved, and a new storage shed can be purchased.

The fully funded balance of the Reserve Fund, as outlined in the Reserve Study, changes each year, depending on the projects that have been completed (expenses) and the income that is allocated back into the fund to offset the expenses.  When large projects are completed, the fully funded reserve balance may actually go down, since those repairs/replacements won’t need to be done again until they reach their useful life again.  The reserve report helps the Board save for the future, so funds are available for repairs/replacements when they’re needed.

You can find a copy of the 2024 Reserve Study on the Resident Portal.

According to the 2024 Reserve Study, the Association Office building will reach the end of its useful lifespan in 2025, and $779,710 has already been saved in the Reserve Fund for its replacement.  The reserve study is not binding, so if the board decides not to use this money in 2025 for the office building replacement, they can choose to defer the project to a future year, and/or use the money for other reserve items in future years.  Since the building does need to be replaced, due to its condition and age, it would not likely make sense to reallocate that money to a different project.

The reserve study is a guide, and the board has the authority to spend the reserve money on reserve items as they see fit, as long as they are abiding by their duties outlined in the Bylaws, section 4.6.11 “the Board shall continue to make expenditures in such amounts necessary to fully implement their duty to the Association to fully and completely maintain, repair, replace, improve and otherwise manage all of the Common Areas so as to keep all of the Common Areas in good order, repair and condition and in a clean, healthy and attractive state at all times.”

Question 4

Why Is the KHOA Board pursuing this project now?

Accepted Answer

• The Klahanie Board has the obligation, as outlined in governing documents, to maintain and Klahanie’s common areas and amenities. This includes our trails, office, courts, green spaces and pools.

• Specifically, for the past five years, the Board (under at least 25 different board members) has worked with various consultants in conjunction with the Building and Special Projects Committee and Finance and Operations committees to develop these options.

• The current Klahanie office is a manufactured building that was built as a temporary sales office for the Klahanie developer in 1985. We need to vacate our current space because of the building’s structural deficiencies and zoning of the property on which it sits.

• The Mountain View Pool has significant structural issues that need addressing including drainage, compromised pool liner and a settling deck.

• The Board considered addressing the pool and office issues separately but determined that it would be more fiscally responsible to combine these projects. Additionally, our residents have expressed a strong interest in providing a community gathering space and now is the time to consider this option.

Question 5

How does an HOA work?

Accepted Answer

When purchasing a property in the Klahanie Association HOA, buyers agree to adhere to the governing documents of the association. The board oversees the funds and operations, utilizing dues and other raised funds to manage tasks. Members convene annually to elect directors and discuss relevant topics. Generally, the association's assets, such as the pool, courts, and trails, must be maintained within the budget. The board strives to maintain, repair, and replace these assets, with opportunities for capital improvements when possible.

Question 6

What are reserve accounts in an HOA and how is a reserve report used?

Accepted Answer

A reserve report is conducted by a skilled professional, and state regulations mandate that it be completed annually. Klahanie has utilized two different companies over the past two years and is looking to hire a new expert this year to provide more detailed information in a report that will be received in the spring.

Question 7

Why don’t we rent space by QFC or somewhere else?

Accepted Answer

Our current office building is about 40 years old. When considering a 20-year period, renting for a 10-year term at the quoted rate would cost approximately $900K. With expected rent increases, the cost for the second 10-year term would be around $1.3M, bringing the total to approximately $2.2M for 20 years. Over 40 years, rent would total approximately $7M. If we invest in our own building, we can maintain and upkeep it diligently, ensuring we have a viable building after 40 years without remaining loan payments.

Question 8

Why don’t we just keep the Mountainview Pool as it is?

Accepted Answer

The pool is dangerously shallow, the liner needs replacement, the deck is sinking, soil reports are required, and the pool is 30 years old. Investing in repairs for such an old pool is fiscally irresponsible.

Question 9

Why do I pay for a pool I’ve never used?

Accepted Answer

As a member of Klahanie, you are required to pay dues for the maintenance of all amenities. While using the amenities is optional, financial support through dues is mandatory. Many people find that the amenities positively impact their property values.

Question 10

Why do we need a bigger pool? Will the width be 25 yards and length 25 meters? For both long course and short course competitions? Will it be Olympic-sized?

Accepted Answer

The expansion aims to increase our offerings to Klahanie residents. We are currently at the capacity for swimming lessons due to limited pool space and cannot meet peak demand with only 4 lanes, resulting in long waiting lists. The new pool will be 25 yards long, in line with updated pool standards. The width will depend on the number of lanes. For reference, an Olympic or long course pool is 50 meters long by 25 meters wide. We are proposing a pool about half that size.

Question 11

Why do we need a community hall?

Accepted Answer

Currently, our board meetings, committee meetings, and staff meetings take place in a 360 square foot room, which is insufficient for groups larger than 10 people. An indoor meeting space would allow us to host events for Klahanie residents and provide rental space.

Question 12

How does swim team usage play into this decision?

Accepted Answer

Most of the pool usage by residents involves swim lessons and lap swimming, so lap swimmers are not a smaller interest group. The teams that rent our pools provide more value than they receive, as the association earns more from them than the costs incurred. This benefits even non-swimming owners by helping cover these pool expenses, reducing the burden on dues.

Question 13

Why do you need a new building right now? Why not just wait 5-10 years and then save for it over that time period instead of raising dues by so much now. Why the urgency?

Accepted Answer

The Board is trying to move forward with this project now, rather than waiting 5-10 years, to avoid having to pay to make costly repairs now, only to tear them down and build something in 5-10 years. This has been an ongoing discussion since 2008, and has been revisited by multiple Boards.  There are major deficiencies at the Mountainview Pool Complex, including insufficient drainage due to the settling of the soil and foundation, leading to frequent flooding of the deck and the building, cracking of the pool deck and parts of the building, raising structural concerns and requiring significant remediation.  We cannot wait 5-10 years to address these issues, and since they will be costly to remediate, it made sense to consider rebuilding and potentially combining the office building into the rebuild.  The Association plans to contract industry experts to evaluate the condition of the Mountainview Pool Complex to help us catalog the numerous issues and give us cost estimates for repairs.  This will help the Board determine whether repair or replacement is the best path forward.

The current office building is a portable structure that was originally intended to be a temporary showroom and sales office for the first homes built in Klahanie and was originally located at the old Klahanie entrance next to Sutter's Pond before being moved to its current location.  This means the building does not sit on a proper foundation, causing structural instability. Although we have been using this building for almost 40 years, the lifespan of this type of structure is limited, and the building has ended its useful lifespan according to our 2024 Reserve Report. Since there is no foundation, moisture pools under the building, causing the joists to show signs of rot. This situation presents a liability for the HOA. We are currently working with third-party professionals to obtain full official assessments as to the state of the office building, and these assessments and their associated costs will help the Board determine the best way forward.

Frequently Asked Questions

The pool and office need to be replaced.