Detailed info about roof project and upcoming vote

Dear neighbors, 

As communicated, we have a special meeting scheduled at 6 p.m. on Wednesday, September 11, 2024 at the Legion in Mound to vote on the channel-side roof replacement project. Below we are providing some history and insight into the roofing replacement project so everyone can attend the meeting informed and prepared.

History – The eight lakeside home roofs were replaced approximately five or so years ago after numerous leaks -- but the channel-side 12 homes were not replaced at that time. It is our understanding this decision was made to spread out the cost. The roofs at the addresses of 4768 and 4766 were subsequently replaced a couple of years later, after they began leaking (but only the main house roofs, not the garages). So we are left with 10 main home roofs to replace and 12 garages. There was discussion around replacing the remaining roofs several years ago, but it was decided to push that out as we continued to save and hoped for a hail storm that could justify an insurance claim. A number of leaks in recent months has resulted in us having to replace the roofs now, as we can no longer push this out any further.

Scope of work and bids for the project – 

• Grizzly Construction, working on a homeowner garage remodel, submitted an all-inclusive proposal for $166,400. 

• We obtained a second proposal from Royal Roofing -- who did the previous roof replacements -- coming in at $114,633. 

• Peter reached out to the roofing specialist at his work to look at the Royal bid. While Gittleman could do the same work at cost plus 20%, our cost would be $10-20k above the Royal bid for the same scope (indicating the Royal proposal is very competitive). So Gittleman would come in somewhere between Royal and Grizzly. 

• Included in the proposals is approximately $20,000 for replacing the sheathing on the garage roofs which is currently the thinnest OSB and is compromised on all of the garages, sagging between the joists and spongy/water damaged in several places. The replacement sheathing will be thicker and stronger. 

• There will be unforeseen issues that come up during the project, as always, so for budgeting purposes we are including a 10% contingency (funds that we set aside for extras but keep what is unused). To be clear: if the 10% contingency is not needed for the project, it will lower the cost of the assessment to homeowners and can be refunded.

• Using the Royal proposal $114,633 plus 10% contingency ($11,463), our budget for this project that we need to fund is $126,000.

Ice dams, attic insulation and ventilation chutes – Some homes are missing attic insulation and vent chutes that keep air circulating on the underside of the roofs to minimize the impact of ice dams, while others have been addressed by homeowners over the years. This will need to be addressed by homeowners at their expense when the roof is replaced on the garages. When replacing the sheathing on the garage roofs, we are planning on adding to or replacing vent chutes for all garages, as they are typically stapled to the underside of the sheathing. Homeowners with inadequate or missing insulation should address that at this time. We will try to source someone willing to do this insulation for those homeowners that need it.

Funding – Historically projects have been funded by special assessments at Seton Village, keeping HOA dues abnormally low. As you are aware and we've discussed at the last several Board and homeowner meetings, your current Board is trying to encourage future planning and financial responsibility by creating and funding a Reserve Plan to lessen the impact of capital projects such as this. We have made some headway already.  

Our reserve account -- including the previous roof fund and recent contributions -- currently sits at $40,400 (including our roof fund: $29,925), and we are contributing $1,000 per month to reserves. We have three practical payment options to fund this project that the Board is presenting for your consideration, based on the Royal Roofing proposal, which was the lowest cost:

• Option 1 - Special assessment for the full project cost to keep our current reserve account balance so it continues to grow. $126,000 divided among 20 homeowners is $6,300 per homeowner. To be transparent, the Board discussed not presenting this as an option, because we have the benefit of already earmarking some of our reserves for the roof project we know was coming. But for the sake of discussion, we present this as an option for full assessment and to show what costs could be per homeowner when we are not funding a reserve. 

• Option 2 - Use all of our reserve account balance $126,000 – $40,000 = $86,000 divided among 20 homeowners is $4,300 per homeowner. This includes delaying the driveway sealcoating again, which we had earmarked $5,500 for -- this would be used for the roofs to lessen the roof cost per homeowner. 

• Option 3 – Use part of our reserve account balance, e.g., the portion of the account balance we had earmarked for the roof fund: $126,000 - $30,000 = $96,000 divided among 20 homeowners is $4,800 per homeowner.

Approval process – It is more common for HOA docs to be written that a Board approves projects and funding. But being a small, self-managed HOA, our governing docs require a 65% majority of homeowners in attendance/present at a vote and represented by proxy for all projects over $5,000 or to make any changes to our rules and regulations. This is typically handled once per year at our annual meeting or can be brought before our members to vote at a special meeting (September 11 at the Legion upstairs). At that meeting, we will first take a count on the three funding options presented. The funding option with the highest number of votes will then be voted on for approval and will require 65% of those present and represented by proxy to approve.We have attached the proxy document. 

Questions & Answers -

What happens if we don’t get 65% approval on funding the roof replacement project? 

This is essential work necessary to preserve the integrity of our homes, versus discretionary spending, so not approving the project will have dire consequences for all.

• We would have to declare deferred essential maintenance in any disclosure/resale documents, which could affect appraisals, sales and overall home values as it emphasizes a lack of financial planning and responsibility.

• If a homeowner has a leaking roof compromising their quality of living and impairing the enjoyment of their home and were to take legal action against the HOA, we would need representation to defend litigation, which would be costly.

• The Board cannot spend money we don’t have, so we would be forced to cut all non-essential items from our operating budget to make temporary repairs as we can afford them, increasing the overall cost. In other words, the pool would close, lawn service would cease, etc.

  
  
  
  

Why is the cost of roof replacement double what was estimated a few years ago? 

Our roofing fund that we borrowed from for the water main repair two years ago was set at $40,000. This was an unrealistic budgeting number, given the current cost of the roofing without the garage sheathing replacement is $93,000. Cost increases are generally 4% to 5% per year, so the $40,000 estimate was unrealistically low.

What if I can’t afford any of the special assessment options?  

Unfortunately, we are all living with the consequences of not saving for capital replacements over the years. However, the Board is sensitive to individual situations and will help in any way we can.

• If you have a lender, contact them and they may be able to accommodate a Home Equity Line Of Credit (HELOC) to spread your cost over a longer repayment time.

• Investigate a personal loan with a bank or credit union.

• Talk to the Board. We anticipate needing all funding within two months, but in cases of financial hardship, we may be able to stagger the cost over a few additional months.

How will this affect our long-term funding and planning?

We've updated the planning spreadsheet Peter created -- it's on the Information tab/folder of setonvillagehoa.com, if you'd like to see what our funding plan looks like when we back out the roof fund from our reserves. Please feel free to download the spreadsheet and enter different funding and expense scenarios. 

What if I have more questions? 

Please reply to  setonvillageboard@gmail.com and we will do our best to answer questions. We can also schedule an informal discussion at the firepit, if homeowners would like to talk in person.

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Seton Village Board4732 W Arm Rd, Spring Park, MN 55384setonvillageboard@gmail.comPresident: Jennifer BeersVice President: Peter Ralph

Treasurer/Secretary: Ben RimoldeMember at Large: Marshall Weber

Seton Village Webpage