In our last message we announced the fees that will be necessary to support our plan of reorganization as it currently stands. The first fee, in the form of a special assessment, is $2,000 and would be due in 2022.
We understand that most of us need to plan for this kind of expense and this message is intended to provide guidance in that direction. Although there are several steps that must succeed before these fees become a reality, we want to share what we know at this time with the hope that it might be helpful for planning purposes. Everything in this message is an estimate that depends on court-related events that are subject to change.
At this time, we expect that the special assessment would be due by June 1, 2022 or approximately 60 days after the reorganization plan is approved, whichever date occurs later. If a member is unable to pay the entire amount by the due date, the special assessment can be paid over two years with eight (8) quarterly payments of $261 (which includes 5% interest). The first payment would be due the same day as the due date for the special assessment. Any member requesting to make payments must notify the Association in writing prior to the due date of the special assessment.
Some of you have asked why the association is charging 5% interest for Owners paying the Special Assessment in payments. The timing for implementing the reorganization plan depends on the association receiving the funds when they are due; however, we are sensitive to the fact that not everyone can pay the special assessment when it is due. We based the interest charge on the proposed renegotiated loan with Sunwest which has a 5% interest rate.
This message focuses on one of the two fees that will be required for our reorganization plan to succeed. The second fee, annual dues increase, will be phased in over three years beginning in 2024. If the reorganization is successful, we will have time to plan for that increase.
So, what must happen before these fees become reality?
- First, the court must approve our disclosure statement. The next hearing for that step has now been rescheduled for Tuesday, 12/21, but because of some changes that will be required before it can be approved, we now expect the disclosure statement to be approved by approximately mid-January.
- Second, after the court approves the disclosure statement, we will send our members a ‘Notice with Plan & Disclosure Statement and a Notice of Public Meeting for vote’ as well as the ballots for the two fees. Our members will have at least 30 days to submit their votes.
- Third, the association will conduct a meeting of the members to vote on the dues increase and the special assessment. We are preparing a detailed message on the voting process, so the information contained here is more general.
- Fourth, if our members approve both fees, the court will review the reorganization plan.
- Finally, if the court approves the reorganization plan, then the association will have appropriate resources to emerge from Chapter 11 having addressed the three reasons for entering into bankruptcy: reserve funds for aging facilities, debt restructuring, and resolution of the Lake Elaine matter.
As you can see, there is a lot that needs to happen – one step at a time – before the fees can be scheduled. In the meantime, we hope that this information can be useful to help all of us plan for this possible expense.
We appreciate hearing from you. Please continue to send your opinions, comments, and suggestions to board@continentalflagstaff.com.