POA reaches Lake Lease agreement with EVMWD

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The Board of Directors of the Canyon Lake Property Owners (POA) met in regular session on Tuesday March 7.

The biggest stories out of Tuesday night’s meeting were the announcements of a Lake Lease agreement being reached between the POA and Elsinore Valley Municipal Water District (EVMWD), the appointment of a new POA general manager and assistant general manager, the vote to not raise dues and the approval of the $269,000 Pickleball Project.

One of the biggest announcements came from Mayor Dawn Haggerty who informed the Board that Fire Station 60 will reopen July 1. (See page A3.)

The POA’s Legal Counsel, Howard Silldorf of Silldorf Law, LLP, announced that the POA and EVMWD, through their counsels, have reached an agreement as to the terms of the Fifth Amendment to the Lake Lease.

“We are hoping that they will approve and sign the agreement. We are hopeful that Friday morning we have an executed Lake Lease. says Howard, “We can not answer questions now but on Friday we will release more information on the Lake Lease agreement in the form of a joint statement by both EVMWD and the POA.”

EVMWD was expected to execute the agreement Thursday night after The Friday Flyer had gone to press. Check fridayflyer.com for updates.

The actual litigation began in February 18, 2015, when the POA filed a lawsuit stating that the POA’s payment to EVMWD, under the “Lake Lease,” is an unconstitutional “tax” as defined in Article 13C of the California Constitution.

The complaint noted that the unconstitutional tax has been imposed and collected by EVMWD since Article 13C was enacted in 2010 by a vote of California citizens to enact Proposition 26. Therefore, all lease payments collected since September 2010 qualify as an unconstitutional tax. The premise (explained in detail in the “Lake Lease” link at canyonlakepoa.com) is that, as a government entity, EVMWD is not entitled to charge more than what is necessary to cover the reasonable cost of its governmental activity.

The POA compiled budget figures showing that the amount Canyon Lake pays to lease the surface rights of the lake far exceeds what EVMWD spends to operate the lake.

The Lake Lease website explains the POA’s position by stating, “Under California’s constitution, government entities such as EVMWD must prove that lease fees are not a tax and that the amount charged is ‘no more than necessary to cover the reasonable costs of the governmental activity.’ In this case EVMWD’s actual costs range from about $20,000 to $185,000 per year, a drop in the bucket compared to the $1.44 million it charges Canyon Lake property owners.”

Why did the POA pursue this case to begin with? The POA contends, “Under the current lake lease, which expires at the end of 2022, the annual fee paid by each Canyon Lake property owner would climb from $303 per year to as much as $519 by 2022. EVMWD also wanted to delete its current promise to keep the lake water level at 1,372 feet  and force the POA to defend and indemnify EVMWD if a homeowner sues over water level drops.”

Given the inability of the POA and EVMWD to come to a long term agreement to extend the lease, the POA sought the ruling from the Court that tells both parties their respective rights and obligations at the end of the lease.

The current Lake Lease expires on  December 31, 2022. For more information about the Lake Lease, visit the POA’s website at canyonlakepoa.com.

POA President Bruce Yarbrough announced the appointment of Eric Kazakoff as the POA’s new general manager, effective Tuesday March 7.

Eric was hired four months ago for the operations director position. According to the POA, Eric has more than 35 years of experience in the construction and facility management and has spent the majority of his career in senior business management roles.

“We are very excited that Eric has accepted the general manager position,” says Bruce. “Eric has a dynamic background and from day one we saw his exceptional leadership skills as he took control of the management of multiple projects.”

Bruce also announced that the POA has reorganized and created a new assistant general manager position. Executive Administrator and Clerk of the Board Lynn Jensen has been appointed to the position.

“The Board  has been looking for some period of time about a restructure and the way the POA does business,” says Bruce. “We found that there were too many departments reporting to one specific individual and that no matter how good that person was he or she could not keep up. So what we’ve done is we’ve taken the opportunity to reorganized and we now have a new position called the assistant general manager.”

Lynn will be responsible for overseeing four departments: Food and Beverage, Member Services, Planning and Compliance and Activities.

A spokesperson for the POA says, Lynn began working in the Member Services department in 2001, and throughout her years she has worked in almost every department for the POA.

“She has developed strong leadership skills and has a great working relationship with staff, management, vendors, the membership and the Board of Directors,” says the spokesperson.

Eric Kazakoff says, “I’m excited to start this new journey serving as the association’s general manager, and knowing I have someone as experienced and qualified as Lynn to help me lead made my decision to take the role even easier.”

The Board announced that they received three bids, ranging from $270,000 to $450,000, for the Pickleball Project. The contract was awarded to Ferandell Tennis Courts, Inc., at a cost of $269,000 for a four-court pickleball complex. The complex will be built in the lower level of the East Port parking lot.

The Board plans to proceed with the project as soon as the City issues the permit. Eric Kazakoff says the POA is expecting the City to issue the permit “in a about a week or so.”

Also up for vote was a $4 assessment increase. The reserve study done in 2015 recommended the contribution of $1,514,240 to the reserve and replacement for the 2017-2018 Fiscal Year. The recommendation from the Finance Committee to the Board was $1,300,00. In order to avoid the $4 assessment increase, the Board would have to fund the reserve and replacement for $750,000, which is less than the recommended amount. The Board of Directors were divided on this issue.

Director Welty says, “I think the reduction of the repair and replace reserve is probably not the wisest thing for our future. The projected amount of money we’re suppose to put in according to the reserve study a few years ago is around 1.5 million. The last couple years we’ve been putting in 1.3 million, and now it’s dropped down to $750,000. Now we’re putting in half the funding into the reserve and replacement that was scheduled to be put in by the reserve and replacement plan. We have a lot of things coming up in our future that we have to be careful of.”

Director Welty further stated, “We have a road reserve study coming up that may tell us we need a lot more money for our roads because they deteriorated more rapidly than we anticipated. Minimum wage is going to continue to impact our budget line. About four million dollars of our budget is heavily impacted by minimum wage, which is going to continue going up. We also have a problem with the dredging. We have no funding and no plans set aside to address that problem. The reality is we are just kicking the can down the road if we go to a zero (assessment) increase. I would rather have gradual increases that represent the real state of our finances.”

Director Horton said he agreed with Director Welty and that he would prefer to take a small increase now and not put the burden on next year’s Board to take it all in.

“Kicking the can down the road is a good description,” said Director Horton.

Director Queen stated that the repair and replacement reserve currently has a little over eight million right now.

“The last guy who did the reserve study said most HOA’s are funded 20 to 30 percent. We are at 60 percent. I would rather not have to do it this year if we don’t absolutely have to because we’re probably looking at having to do it over the next several years. My thinking is we can fund the repair and reserve a little bit less this year and not have a raise (in assessments), and that way we might have four years of raises instead of five,” he said.

After discussion, a vote was take. Directors Yarbrough, Spitzer and Queen voted to fund less than the recommended amount in order to avoid the $4 assessment increase. Directors Welty and Horton voted against reducing the contribution to the fund.

In a statement after the meeting, Director Queen said, “We did the right thing for the members of the community.”

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Donna Ritchie
  • dougeducate

    Kicking the can down the road for a measly $4/mo is NOT doing the right thing.