Community Third Mutual residents raise concerns at board meeting

In two hours of public comments, Third Mutual residents criticized leadership during a regular meeting of the board last week.

After an email from the Good Governance Coalition, a recently formed community watchdog group, residents raised concerns over legal costs and board priorities.

Residents called for the replacement of the board attorney and delay of filling a vacancy on the board. Many in the meeting Oct. 19 referenced a lawsuit this past year that - after insurance reimbursement - cost residents around $150,000 in legal fees, with an additional $24,000 in out-of-pocket expenses, board President Robert Mutchnick said.

"The exploding legal costs … are asinine. There is no reason for it," said resident

Kathryn Freshley, a former treasurer on the Third Mutual board. "You need to find another attorney."

Mutchnick said the information provided by the Good Governance Coalition was intended to rile residents. For example, legal costs are actually declining, he said.

Mutchnick said the email from the Good Governance Coalition failed to mention that the current attorney cost is set at $240,000 - half of the previous year's rate, which was also lower by about $200,000 from the year before.

The board said some of the issues listed in the email - such as the hiring of a personal secretary to the board president - were incorrect. The position is for a Village Management Services corporate secretary, responsible for operations of board meetings, VMS CEO Jeff Parker said.

Even so, both the board and representatives of the Good Governance Coalition agreed that the rising costs of living for Third Mutual are a threat to fixed-income residents.

"I do not know anyone in my area who is doing well," said resident Dale Moon, a widower who is retired. "I can't continue living in Laguna Woods for paying more and receiving less."

New director

Third Mutual appointed Lynn Jarrett to fill a board vacancy for a term ending in 2022, left open by the departure of Steve Parsons.

Parsons resigned from the board conditionally - that his seat be given to the former director.

Although several directors and residents spoke out against the request, likening the "outrageous" action to "nepotism," Mutchnick said it was not against the bylaws and that there is a precedent of conditional resignations.

No reason was given for Parsons' resignation.

The board voted in favor of Jarrett's appointment 7-4-0. It takes immediate effect.

Reserve plan

Third passed a resolution that approved the 30-Year Reserve Plan, which provides a road map of anticipated revenues and expenditures from the reserve fund, according to a staff report.

Each year, Third contracts a vendor to approve adjustments in the plan.

The recommended annual full funding contributions for 2022 were quoted at $13.26 million in the staff report. Comparatively, the most recent reserve contribution rate was $11,130,048.

Third Mutual's current reserve fund strength is "fair," at 36.8%, with a "medium" risk of special assessment and deferred maintenance, according to the Reserve Study Executive Summary.

Rankings below 30% are considered "weak." The "strong" category is 70% or higher.

Director Jim Cook said there is progress to be made.

"I'm not going to vote no on this, but … it's disappointing," he said. "We really need to look at our expenses to bolster up the long-term percentage of funding for this community. Over this next year, all of us here in the committees can find some money somewhere."

The board unanimously passed the resolution. It will take effect in January.

COVID-19 update

The latest COVID-19 daily case rate for Orange County, as of Tuesday, Oct. 26, was 6 cases per 100,000 residents, according to the OC Health Care Agency.

In the city of Laguna Woods, there have been 540 cumulative COVID-19 cases as of Tuesday - up about 50 since the same time last month. No additional deaths were reported in the city as of last week, remaining at 56 since September.

Testing rates have leveled off to 2.3% for both the testing positivity rate, the number of swabs and spit tests that return with traces of the coronavirus, and the health equity quartiles positivity rate, the test positivity of disproportionately impacted neighborhoods.

Termite policy

Third passed a resolution that would allow residents to fumigate their units outside of the regulated maintenance schedule.

The policy would only apply to single, free-standing units, Mutchnick said. Owners who wish to fumigate on their own time would be expected to cover all expenses, including lodging costs for occupants residing in the unit at the time of fumigation, a staff report said.

Director Cush Bhada said most units that would qualify for this policy are inside Gate 11, with the rest near Gate 10.

The board passed the resolution. It must now satisfy a 28-day notification requirement for member review.

Resale report

The average resale price for a unit in Third Mutual in September was $458,643, up from $477,137 in September 2020, according to a VMS staff report. Resales year to date numbered 354, up from 237 the same time last year. Sales volume in September was $20.6 million, compared with $14 million in September 2020.