Kahler Glen Community Association

1. Kahler Glen Community Association Annual Meeting May 14, 2011

2. Agenda • Welcome – call meeting to order • Special recognitions • Introduce 2010/2011 KGCA Board member and committee reports • Review/vote on the budget for 2011/2012 • Presidents Report • Vote on new Board members for 2011/2012 • Vote on Proposed Bylaw changes • Resort report • Adjourn

3. Call meeting to order • Call meeting to order--Do we have a quorum ? • Welcome to all of the new Kahler Glen owners! • How many new owners are present? • Please introduce yourself! • Welcome to our beautiful mountain community! • Approve 2010 minutes

4. KGCA 2010/ 2011 Board Members • Rex Lund President (Home owner) • Dave Reynolds Treasurer (Home owner) • Darren Stober VP (Home Owner) • (Lynn Withrow) VP/Secretary (Condo owner) • Rob Casad Communications Committee (Home owner) • John Summers Septic Committee (Condo owner) • Steve Johannesen Roads (Condo Owner) • John Killian Architectural Committee (Home owner) • Pete Petesch Secretary/Water Committee (Home owner) Resort Representatives • John Bennett Resort Rep (Condo owner)

5. KGCA Board – Code of Conduct As Board members we will: • Attend all board meetings--in person if possible. • Participate openly and activity in issue resolution. • Use all forms of communication to resolve issues. • Treat all Kahler Glen residents with respect, dignity, appreciation, fairness and trust. • Have open and honest communications between ourselves and among the community in all activities. • Build good will and better friendships in the community. • Above all be proactive in identifying and working KGCA issues for the good of the community and not for personal or individual agendas or causes. • Be a single voice to the community. • Pledge our assistance and commitment to each other as board members.

6. KGCA Special Recognition • Thank You to all who served KGCA Board in 2010/2011 • Thank You to Esther Christian our bookkeeper. • Thank You to the KGR, Resort employees • Thank You to the Vision Committee

7. Kahler Glen Community Association Architecture Report(John Killian) ArchCom Committee: John K, Bev, John G, Marion “THANK YOU” for your service!

8. HOME AND LANDSCAPING PLANS:  There were no home plans submitted last year nor do we have any submitted for the current year.  There were some small landscaping projects accomplished last year.  Owners are reminded to contact Bev Carlson if they are planning to build a home and they will be mailed a building packet for the builder and home owner specifying what steps need to be taken before starting. DEAD TREES:  A dead tree survey was done in September 2010 which identified over 30 trees that need to be removed.   Bruce was able to remove the most serious ones that could have caused damage to people or property.  Owners of lots were notified to remove any dead trees on undeveloped lots, especially where adjoining properties could be impacted.

9. EXTERIOR LIGHTING;  Outside lighting needs to be at a minimum to preserve the ability for people to enjoy the night sky.  Consider lower wattage, motion and/or light sensors, turning them off unless needed for safety entering and exiting your property,  and leaving them off when you are not in residence NOXIOUS WEEDS;  Undeveloped lot owners are responsible to control noxious weeds on their property.  Landscaped lots also may need some control as seeds from other areas often like to improve their environment.    Contact Bruce if you need your lot "mowed" before it gets out of control and goes to seed. Please contact the Architecture Committee if you have questions.

10. Kahler Glen Community Association Communications Report(Robert Casad)

11. KGCA Communications • Up-to-date, two-way communication, • On-going Communication • Quarterly updates via email • Community website: www.kahlerglencommunity.com • Board minutes posted online • Community roster distributed annually • Community Communications • Verify your contact information • We want your feedback: board@kahlerglencommunity.com • Welcome to new Home and Condo owners!

12. Kahler Glen Community Association Roads, Trash & Special Project Report(Steve Johannesen)

13. Roads, Trash • Roads • Budget for summer 2011 road repair/maintenance work will be approximately the same as the last two years ($45,000 pre tax). • Preliminary survey of repair/maintenance work needed has been completed. Based on bids to be received in June, vendor will be selected by the new Board and Bruce Week will oversee work scheduling & coordination. • Private driveway repair/resurfacing work may be coordinated with the road work by contacting Bruce. Or, homeowners may separately contact their own vendor. One that has been used in the past: • Black Rock Asphalt & Concrete Coatings • 211 Loan Street, Wenatchee, WA 98801 • Contact Brian Snyder: 509.665.9769 • Waste Management service (trash) • An additional bin has been installed at the restaurant site during the season that the restaurant is open. • Remember – break down all boxes; no furniture, appliances, brush.

14. Snow Removal & Winter Support Services • Last year’s Feasibility Study of outside vendors was extended this Spring to solicit cost proposals (bids). • Two were received and were compared to Resort cost information provided during The Board’s service contract negotiation. • The comparison was inconclusive: • Resort does not have detailed labor & cost tracking records sufficient to provide a breakout of ‘snow removal’ versus ‘other winter support services’. • Resort committed to tracking labor & other costs in more detail next year. • Board conclusion • One or both of the outside vendors appear able to provide services if needed • Without definite evidence of a clear benefit to KGCA to use outside vendor, there is ‘continuity’ & community financial benefit to contracting with the Resort for the 2011-2012 year • Review of this service area should be continued by next year’s Board

15. Kahler Glen Community Association Water Report(Pete Petesch)

16. Kahler Glen Community Association • Water monitoring and reporting is a critical governance obligation • Cary Eller manages monthly & annual reporting to Department of Health • Monthly monitoring for different levels of chemicals & coli form • Annual comprehensive tests for 90+ chemicals & quality measures • 2010 Permit lists Kahler Glen as having a “Green Permit” which is the best operating permit available

17. Kahler Glen Community Association Water Report • Three State Agencies involved in regulatory control of water resources • Dept of Ecology: • http://www.ecy.wa.gov/pubs/961804swr.pdf • FAQ’s about Water Rights in Washington • Dept of Health: • http://www.doh.wa.gov/ehp/dw/mwl-legal.htm • Legal Challenges to Municipal Water Law • Dept. of Ecology: • http://www.ecy.wa.gov/pubs/971804wr.pdf • Focus on Assessing Your Water Right • http://www.ecy.wa.gov/pubs/0411010.pdf • Important Information about Your Water Right Permit • Future challenges and planning – metering requirements

18. Current status – KG Resort domestic water • All domestic water is supplied by one well • Resort also owns surface & ground water rights for backup systems & irrigation • Three agencies regulate water - (Rick Finnigan, UTC Attorney) • UTC (Utilities & Transportation Comm)-regulates the economics • DOH (Dept of Health)- regulates quality and safety • DOE (Dept. of Ecol.) - regulates water rights, environmental issues. • Systems supplying 100 customers are “jurisdictional” under UTC • Resort currently supplies water to one customer, KGCA • “Your water quality is incredible; it is really, really good” • Cary Eller, Water Quality Program Coordinator, Chelan County

19. What has changed? • Washington Municipal Water Law • Passed in 2003 • Challenged but unanimously upheld by State Supreme Court (10/28/10) • Regulations and guidelines are changing as a result of new law • Additional metering required • DOE requires source & master meters to track losses (<10%) • Meter required (to replace data logger) at wellhead - Eller • Master meters will be required at delivery points by 2017 – Eller • Irrigation system is separate • Overflow to separate irrigation system not considered a loss • No backflow preventer required by design • KG has not been placed under UTC Jurisdiction -Eller • No record of issues, “perfect” system with “green permit” • The Resort “wholesales to one customer”

20. What the experts say • KG “should avoid falling under UTC jurisdiction as long as possible” – Eller • KG may be exempt if continues to “wholesale” to KGCA - Finnigan • Still need meters, but potentially fewer • What if we do become “jurisdictional” under UTC? - Finnigan • Plans must be prepared, submitted, and approved • “Rate case” (to establish rates) must be presented to UTC • Cost of rate case itself can be significant and is included in rate structure • Separate accounting and billing systems required • Lots of time and effort complying with “consumer rules” • Other options (if we become jurisdictional) • Sell system to manager such as WWS or PUD • Sell to HOA • Do not install meters yet – Eller • Kachess Community Association – “jurisdictional” system example

21. Kachess Community AssociationWater System Example

22. Water Tower Monitoring

23. Branch Metering Box

24. Residential “T” Metering

25. System Schematics & Data

26. “T” to Home Leak

27. Frozen Pipe Leak

28. Kahler Glen Community Association Septic Report(John Summers)

29. Septic Issues The 68 lots on the back nine (Phase 3) are served by eight original septic systems designated “T” thru “Z” plus system “J” and two new systems 196 and 209. Twenty of the lots are not connected to septic at this time. Each system has an assigned number of lots, these vary from two to twelve per system. The 2 new gravity systems, 196 and 209 are locate in the 14th fairway. Recent analysis indicates that the systems do not have the design capacity to accept all 20 lots. The twenty lots in this discussion are dispersed over all eight of the systems, and six lack capacity. Conversations with Lakeside Engineering indicates that there maybe the need for an additional 10 systems to reach full service. Preliminary studies have been authorized this year to determine where within our community these fields could be located. It has been rumored that the shortfall in capacity is due to too many 3 bedroom homes approved when the design capacity was to average 2.5 bedrooms per home. The Covenants clearly indicate that 3 bedroom homes are allowed on all lots. Even when the systems are calculated at 2.5 bedrooms per lot, the systems do not have the capacity to service all 68 lots. It is estimated that each of the nine systems will cost approximately $10,000 per system plus design. This can be offset to some degree by charging a connection fee as done to date with homes at Kahler Glen. This number is $3,000 per lot. A $90,000 figure is suggested in future budgeting. Addressing this matter is urgent as to our knowledge there are no pending applications for permits for new homes at this time. The County may not accept further applications until the septic capacity is resolved.

30. Kahler Glen Community Association Secretary’s Report(Peter Petesch)

31. Secretary Report Minutes are available for all board meetings online, including date/time for the next meeting. Vote to Approve Minutes from 2010 annual meeting

32. Kahler Glen Community Association Treasurer’s Report(Dave Reynolds)

33. Kahler Glen Community Association Treasurer’s Report(Dave Reynolds)

34. Kahler Glen Community Association Full Budget

35. Kahler Glen Community Association Income

36. Kahler Glen Community Association Expenses

37. Kahler Glen Community Association Total Income

38. Kahler Glen Community Association Bank Balances

39. Agenda • Welcome – call meeting to order • Approve May 2010 KGCA annual meeting minutes • Special recognitions • Introduce 2010/2011 KGCA Board member and committee reports • Review/vote on the budget for 2011/2012 • Presidents Report • Vote on new Board members for 2011/2012 • Resort report • Public forum--community items and comments • Adjourn

40. Vote • 2011-12 KGCA Board Members • Proposed Governing Documents Changes

41. KGCA President’s Statement regarding the election of Directors Several members of the community have voiced objections to the procedures for today’s election under which some candidates are listed as running for two-year positions and some for the remaining year of vacant positions. The basis for this objection is that the KGCA Bylaws speak only of directors serving two-year terms and do not mention the staggered terms of four positions each that historically have provided continuity to the KGCA Board. These objections have been raised despite the fact that all candidates for one-year positions specifically requested to be nominated for one year. None has voiced an objection that they were prevented from running for two years. However, the Community Association’s attorney has advised us that the filling of a vacancy in an unexpired term is not only reasonable but is supported by state law:

42. “Taken together, the provisions [of the Bylaws] indicate that board member positions are for two year terms and that a vacancy applies to that term and does not create an additional term…past practice may be relevant in interpreting these provisions.” “As further authority for the board’s position, you have the following provision in the Nonprofit Corporation Act: …A director elected…to fill a vacancy shall be elected for the unexpired term of his predecessor in office.” My sense, after talking with board members, is that it would be unwise to change the previously announced procedures for the elections. To do so would be to disenfranchise those having cast proxy ballots, since they might have voted differently had they been told they could vote for any seven candidates. It would also second-guess the willingness of all candidates to serve for two-year terms. Therefore we will proceed as previously announced.

43. KGCA Board of Directors 2010/2011 Continuing members Rob Casad Completed 1st year of two-year term John Bennett Appointed by Resort Resigning members Pete Petesch Completed 1st year of two-year term Rex Lund Completed 1st year of two-year term Completed Terms Dave Reynolds Completed 2ndyear of two-year term John Summers Completed 2nd year of two-year term John Killian Completed 2nd year of two-year term Steve Johannesen Completed 2nd year of two-year term Darren Stober Completed appointed partial term

44. KGCA Board of Directors 2011/2012 Candidates Thank YOU for volunteering to serve!! • 1 year Term to fill vacancies (3 positions to fill) • Darren Stober • Owen Roberts • Bud Olsen • Nancy Miller • Jim Farmer • Mark DeMeritt • 2 Year Terms (4 positions to fill) • John Ward • Dave Reynolds • Carol Billesbach • Carol Pierce • Mike Wandell • Nominations from the floor?

45. Ballot Proposition #1 Section 1.21.4 of the Protective Covenants of Kahler Glen Community Association, Resort Restaurant, shall be rescinded. Section 3.12.9 of the Bylaws of Kahler Glen Community Association, Restaurant Operations, shall be rescinded.

46. Proposition #2 Background Section 9.1 of the Bylaws presently reads: "9.1 These Bylaws may be altered, amended, repealed, or added to by the affirmative vote of members holding seventy-five percent (75%) of the voting rights in the Corporation. Section 3.7 of the Covenants presently reads: "3.7 Amendments. Amendments of these covenants shall be by seventy-five percent (75%) of the votes. Amendments shall be in writing and recorded in the same manner as these Covenants."

47. Ballot Proposition #2 (A) Section 9.1 of the Bylaws of Kahler Glen Community Association shall be amended to read as follows: "9.1 These Bylaws may be altered, amended, repealed or added to by affirmative vote of 51% of the total votes in the Corporation together with the affirmative vote of 75% of the votes cast at an Annual or Special Meeting." (B) Section 3.7 of the Protective Covenants of Kahler Glen Community Association shall be amended to read as follows: "3.7 These Covenants may be altered, amended, repealed or added to by affirmative vote of 51% of the total votes in the Corporation together with the affirmative vote of75% of the votes cast at an Annual or Special Meeting.”

48. Proposition #3 Background The second paragraph of Article IX of the Articles of Incorporation, Section 2.2 of the Bylaws, and Section 3.1.1 of the Covenants all contain essentially the same provision: " There shall be one vote per acre or a fraction of a vote for each faction of an acre owned. For condominium owners, the owner of one unit of an eight-unit condominium would have voting power equal to one-eighth (1/8) of the acreage of the condominium project. No voting rights shall be attributable to the ownership of garage condominium units. Acreage and voting power shall be determined by the Board."

49. Ballot Proposition #3 (A) The second paragraph of Article IX of the Articles of Incorporation of Kahler Glen Community Association shall be amended to read as follows: "The voting rights of the members shall be based on the number of platted lots or residential condominium units owned by the member (one vote per lot or unit); provided that the owner of Kahler Glen Golf Course shall have ten (10) votes, which shall be in accordance with each member's assessment obligations. The Board shall have the authority to suspend the voting rights of any member not in good standing." (B) Section 2.2 of the Bylaws of Kahler Glen Community Association is rescinded and replaced by the following: "2.2 Voting Power. There shall be one vote for each platted lot and residential condominium unit owned by a member in Kahler Glen; provided that the owner of Kahler Glen Golf Course shall have ten (10) votes, which shall be in accordance with each member's assessment obligations. The Board shall have the authority to suspend the voting rights of any member not in good standing." (C) Section 3.1.1 of the Protective Covenants of Kahler Glen Community Association is rescinded and replaced by the following: "3.1.1 Voting Power. There shall be one vote for each platted lot and residential condominium unit owned by a member in Kahler Glen; provided that the owner of Kahler Glen Golf Course shall have ten (10) votes, which shall be in accordance with each member's assessment obligations. The Board shall have the authority to suspend the voting rights of any member not in good standing."

50. Kahler Glen Community Association Resort Report(John Bennett)