BHHOA – TRUSTEE SEARCH COMMITTEE
Summary of Activities – April to August 2007
Trustee Search Committee Members
Tom Swan, Jr.
Allys Futerman
Edmond Vea
Callie Price
Wendy Ashby
Background
Initial Meeting with Attorney Jim Nanovic.
The reason for forming the committee was at the suggestion of Jim Nanovic. He said it was doubtful that a Trustee could be found for the community given the current Trust Document, but that the community ought to perform due diligence by contacting banks in the area and soliciting them. The committee of people listed above was formed to conduct this work.
When the committee was formed at least three of the members where not apprised of the meeting or the details of the meeting with Jim Nanovic. They did not know that Jim had suggested that the outcome was not likely to be positive. In other words the committee diligently pursued and was always hopeful of finding an independent Trustee for the Community.
Furthermore, at least three members if not four did not know that the Trust Document permitted the Homeowners Association to be the Trustee. The mantra was always that this was not possible. It was only later when Wendy Ashby found the references in the Trust Document that identified the Homeowners Association as a potential candidate for the position that this option was even considered. In the meantime and even after this was known, the committee diligently pursued a separate independent Trustee as the best option.
Only when it became apparent that no independent organization was available or willing to take on the liability and financial responsibility of the Trustee, did the Committee consider and then decide to nominate the Homeowners Association for the role.
Letter to Prospective Trustees
The Committee first met on April 28th and then proceeded to author a letter of solicitation and methodology for finding and vetting potential Trustee Candidates”
The Generic Letters were similar to this model:
May 1, 2007
Bank Name
Bank Address
City, State. Zip Code
Attn: Bank Officer
To Whom It May Concern:
We represent the Blue Heron Homeowners’ Association (herein referred to as “BHHOA”) of owners of 126 houses located at Big Boulder Lake, Kidder Township, and Carbon County, Pennsylvania. We are conducting a search for a new Trustee and your bank/trust company is being viewed as a potential Trustee candidate.
The Trustee Search Committee, appointed by our community, has been formed to initiate the selection process. Its members are responsible for contacting banks and trust companies, meeting with potential candidates and send recommendations to the Board after the interviews are completed.
We are looking for a Trustee to represent the interests and act on behalf of all homeowners. Trustee’s major duties and responsibilities include, but not limited to: operating and maintaining the Common Areas and Facilities; collecting and enforcing collection of common charges, assessments and other costs as deemed appropriate; negotiating and procuring services of contractors and managing agents; enforcing rules and regulations governing the use, maintenance and exterior appearance of houses and Common Areas; maintaining FDIC insured bank account and providing comprehensive investment management of our reserves; and exercising other critical powers as granted under the provision of current Trust Document.
If you are interested in pursuing this opportunity, please respond to this e-mail and we will be able to forward you a complete electronic copy of current Trust Document for your review and further consideration.
Sincerely,
BHHOA Trustee Search Committee
And a Process was established and agreed to for handling the letters:
1) The letter that we are releasing now is only the initial offering to solicit all interested and qualified candidates within the banking community. I am going to incorporate Ed’s revision as provided in his e-mail earlier today. All others – please fax over your revisions to (718) 793-1692 or send a revised version via e-mail.
2) Only after we get responses from interested parties, we will then proceed with full disclosure of the Trust Document to those we choose. Hopefully, we can get at least several good candidates to choose from, though the Trust Document is very detailed and I foresee that some banks would not want to take on the full scope of the responsibilities outlined in the document for the price we can afford.
3) We, as a committee, would then prepare a detailed questionnaire for interviews with potential candidates. We would ask questions, such as “What other communities of homeowners in PA do you represent as a Trustee?”, “What practical steps can you incorporate into your operating procedures to ensure that homeowners’ interests are considered first and foremost?”, and other questions similar to those Wendy posted earlier today. This would be the time for us to brainstorm on the right number of relevant questions to get the ideal balance of trustee-homeowner relationships into place. I think that this is what we all want, a collective decision-making process that involves open communication and feedback between the Trustee and the homeowners.
4) If we are lucky and find such a candidate, it would save us time, and would allow us to get a “new sheriff” without taking extra steps (and resources) towards legal amendments to the existing Trust Document.
I going to distribute in a separate e-mail a scanned copy of the Trust Document, “hot off the press”, which actually came out nicely, considering the number of copies made from it over the last twenty years. Wendy, this will give you additional resources for your review.
Allys
And in the early part of May Letters were sent to the following banks and in many cases these individuals contacted directly by phone to discuss and promote the Blue Heron Community and the position of Trustee. The work was shared amongst all the Committee members, but Allys Futerman really did a Herculean effort in getting the letters authored, addressed and calling most of the banks.
CITIZENS & NORTHERN BANK Debbie
COLUMBIAL COUNTY FARMERS NATIONAL BANK Matt Beagle
COMMUNITY BANK AND TRUST COMPANY Mark Rezini
COMMUNITY BANKS Charles F. Few
EMBASSY BANK No Trust Department
ESSA BANK & TRUST Don Page
FIDELITY DEPOSIT AND DISCOUNT BANK (THE) Mary McNichols
FIRST COLUMBIA BANK & TRUST CO Victoria Bartlow
FIRST NATINAL BANK OF PALMERTON (THE) Brenda Kowalsky
FIRST NATIONAL BANK OF BERWICK (THE) Jim Szewc
FIRST NATIONAL BANK OF MINERSVILLE (THE) James T. O'Brien
HARLEYSVILLE BANK Diane Joof
HONESDALE NATIONAL BANK Raymond Pilch
JIM THORPE NATIONAL BANK No Trust Department
KEYSTONE NAZARETH BANK & TRUST CO. George Kurtz
LUZERNE BANK Ronald Honeywell
M&T BANK Alfred Vogel
MERCHANTS NATIONAL BANK OF BANGOR Terri Snyder
MIFFLINBURG BANK AND TRUST Patti J Zimmerman
NATIONAL PENN BANK Jim Hughes
NEFF'S BANK Trust Department
Northumberland National Bank' Ms. Reichenbach
OMEGA BANK Chantel Klosner
PENN SECURITY BANK AND TRUST COMPANY William J Caplin Jr
PRUDENTIAL TRUST COMPANY 30 Scranton Office Park
SOVEREIGN BANK WEALTH MANAGEMENT Charlene Hoffman
SUSQHUEHANNA BANK Bill O'Leary
TRIPOLI BANK Trust Department
WACHOVIA BANK Jared Schneider
WAYNE BANK Wayne Wilcha
And in general this was their response
Many banks asked for the Trust Document. Others declined right off the bat, saying that either they were too small or did not offer property management services. Subsequently all the banks declined.
On June the 1st.Wendy, having contacted a number of banks and also having a chance to review the Trustee Document made the following observations:
You may want to review the definition section of the trust document for the "trustee" definition. It defines trustee as First Eastern Bank, N.N., its successor or successors as Trustee hereunder and any homeowners or similarly association appointed by the owners of the Building Sites and Houses to perform functions similar to those of the Trustee.
To me this says, if the homeowners can agree to appoint a homeowner or group of homeowners to manage the property management company, collect the dues and hire a bank to hold the trust, things may be much simpler. The other local homeowner groups have already figured this out. We may even be able to save money and apply toward cost to update the siding.
[Based on the banks she talked to] It certainly is looking like the days of banks behaving as a trustee, as required by our Trust document are gone.
Throughout the Summer
The Committee met at least two times during the summer. We kept going back to a number of banks that did not close the door on us including Wayne Bank, Jim Thorpe Bank, Keystone National, and even Mauch Chunk. Wayne Wilga from Wayne bank (apparently he does not own the place ) said they would like to work with us but that the Trust Document was too cumbersome, he had never seen one like it, and in any case some one else would have to do the property management and services. His response was typical.
In late July with the 30 day window for getting a Proxy out, Ed Vea called Jim Nanovic who confirmed that he thought we would not be successful in finding a Trustee until the document was changed. He confirmed that the Homeowners Association could be the Trustee and that this was our best solution for the time being. This information was shared with the individual members of the Committee who were not able to meet formally given the season.
Linda Snyder was on vacation during the last week in July, but eventually a meeting was held at Mauch Chunk on August 3rd where the Proxy was discussed and all agreed to recommend to the Homeowners that the BHHOA be appointed Trustee.
Other Potential Trustees / Options
Appletree was floated as a possible trustee but rejected based on the following reasoning and consensus:
If Appletree is the Trustee, it is not a good situation for them to also be the property management company. This is a clear conflict of interest since under the current Trust Document, they would have AUTHORITY to do everything. Form the advisory board, collect fees, make disbursements, hire contractors, set budgets, and judge the quality of the work performed to name just a few things. They nonetheless propose to be both Trustee and Property Services Company. There is no good argument for giving any entity this type of authority regardless of performance.
One other argument for making them Trustee that was rejected by the committee is that in that role they can help the Community rewrite the Trust Document. However, there is no reason that they have to be Trustee in order to offer advice; moreover they would then have undue influence on the process. The task of rewriting the Trust Document should be up to the Homeowners with the assistance of our attorney Jim Nanovic. Jim has experience with many communities in the local and a number of model Trust documents and ideas to review.
Proxy Sent to Homeowners:
Proxy for Meeting of the
Blue Heron Homeowners Association
(Note: Beneficiaries who do not expect to attend the meeting are requested to sign and return this proxy in the enclosed stamped envelope addressed to Kathy Shamenek at Box 676 Lake Harmony, Pennsylvania 18624.)
PROXY
Known All Men By These Presents, that the undersigned hereby constitutes and
appoints Thomas Palangio, with power of substitution, attorney and proxy to appear and
vote my share in the Blue heron Home Owners Association at the meeting of the members/beneficiaries to be held on September 9, 2007 at 11:00 a.m. at the Lake Harmony Fire Company, Lake Harmony, Pennsylvania and at any all adjournments thereof, and the undersigned hereby instructs the attorneys to vote:
Proposal(s)
1. To appoint and elect the Blue Heron Homeowners Association as Successor Trustee to act in the fiduciary capacity for the remaining portion of the 99 year term of the Trust.
Yes_____ NO_____
2. Upon any other business that may properly come before the meeting
or any adjournment thereof.
If no instructions are given above, the undersigned hereby authorizes the proxy named herin to vote in favor of the matter set forth in paragraph 1 above.
_______________________ ____________________________ ___________
Signature(s) of owner(s) Date
Unit Number ___________________
