Southern Highlands Community Association                          

11411 Southern Highlands Pkwy, Ste 100

Las Vegas, NV 89141

 

January 18, 2017

 

Subject: Declarant Control Period termination complaint

 

Dear Southern Highlands Board of Directors;

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I write you again concerning the BOD’s continued refusal to address NRS 116.31032 and therein effect declarant control change.  By my calculations (shown below) the Declarant Control Period (DCP) of the Southern Highlands Community Association (SHCA) has expired. 

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In November 2015, per Nevada statutes, I submitted a complaint to the BOD dealing with the failure of the SHCA BOD to act and effect declarant control change.  My complaint was subsequently placed on the agenda of the January 2016 executive board.  The complaint asked the Board for an accounting of conveyed and maximum units used in their monitoring and determination of the DCP.  I also asked the board to provide an explanation as to why appropriate actions post-DCP have not been taken.  During January’s agenda discussion, excluding a discussion as to the number of occupancy certificates issued in SH, which is unrelated to my complaint, no explanation was provided in answer to my complaint.  The complaint was simply dismissed as being without merit and no further action was directed.   

 

I once again I ask the Board to provide for my review 1) an accounting of conveyed and maximum units used in the determination of the DCP and 2) provide an explanation as to why appropriate actions post-DCP have not been taken. 

 

The Southern Highlands CC&Rs (article 2.19), SH Bylaws (article 4), and Nevada statutes (NRS 116, prior to October 1, 2015) establish the termination of the declarant control period 60 days after conveyance of 75% of the units created to unit’s owners other than declarant.  The 2015 SH Master budget notes 8,240 conveyed units (not counting 456 commercial units and additional units conveyed in 2015).  The applicable maximum units are 9,000.  The resultant 91% exceeded the control termination trigger prior to 2016.

 

I also submit, despite the amended statute and language contained (“Regardless of the period provided in the declaration…”), the terms of the SHCA CC&Rs are nonetheless controlling-i.e. 75% threshold not 90%.  Nonetheless, I believe the 2015 unit count exceeded the 75% threshold while the current count (per 2017 budget) of 8,267 all exceed a 90% threshold established under NRS 116.31032 as amended in October 2015. 

 

DCP calculation:

Per the CC&Rs (dated January 6, 2000, SH Master Declarant) Article 2.19 defines "Declarant Control Period" as the period of time during which Declarant is entitled to appoint and remove the entire Board of Directors (or a majority thereof). The Declarant Control Period shall terminate upon the first to occur of the following:

(a) 60 days after Declarant has conveyed 75% of the Maximum Units;

(b) five years after the Declarant has ceased to offer Units for sale in the ordinary course of business; or,

(c) five years after Recording of the most recent Annexation Notice or Supplemental Declaration to add any additional property to the Declaration as provided in Section 10.1.

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The numerator in the DCP calculation is determined (per NRS 116.30131) using a count of units “…created to unit’s owners other than a declarant”.  Note, this is not the same as “annexed” units.  The transfer of units to a residential owner and/or builder/developer, even if not yet annexed by the purchaser, would constitute a transfer to “other than a declarant” and counted in the DCP.

 

The denominator used in calculating the DCP trigger is the maximum units reserved in the CC&Rs.  NRS 116.2105(d) provides that the declaration includes “[a] statement of the maximum number of units that the declarant reserves the right to create…”  The “Maximum Units” approved as of the date of the original Declaration was 9,000 (see Section 2.32).

I recognize Exhibit B from the original SH Master Declaration was deleted and replaced in its entirety by the Second Amendment to the Master Declaration dated 9 October 2000.  This Amendment attempted to update the “Maximum Units” to 10,400.  However, the total unit count of 9,000 annexable units is applicable, established in original Article 10.1 of the Master Declaration. 

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NRS 116.21222 is determinate in establishing the appropriate denominator (9,000 of the original CC&Rs not 10,400 as amended).  It provides as follows: “Addition of unspecified real estate. In a planned community, if the right is originally reserved in the declaration, the declarant, in addition to any other developmental right, may amend the declaration at any time during as many years as are specified in the declaration for adding additional real estate to the planned community without describing the location of that real estate in the original declaration; but the amount of real estate added to the planned community pursuant to this section may not exceed 10 percent of the real estate described in paragraph (c) of subsection 1 of NRS 116.2105 and the declarant may not in any event increase the number of units in the planned community beyond the number stated in the original declaration pursuant to paragraph (d) of that subsection.  So, we look to the original declaration (9,000 units), not any amendments, to determine the maximum number of units. 

 

Respectfully

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Michael Kosor

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