Save SMR

On the SMR web site a relatively new posting entitled, Water-21st Century Gold – An informed, fact based discussion tells members:”Do not rely on second hand news, misinformed statements, and he said, she said commentary.”  I take that and other things there in as a challenge to my integrity and what I have said and written, so here the incontrovertible  facts in a nutshell:

1. Skyline Mountain Resort Notice 2012-01 and the ballot, so blatantly misrepresented what would happen if the membership choose Option 2- that the UDDW through Mr. Michael Grange ordered them to: “Skyline Mtn SSD must draft a new public notice and ballot and remove any and all references to DDW taking over any water system responsibility or establishing water system costs or user rates.” (read the actual letter below there is more)

2.  Skyline Mountain Resort Notice 2012-01 correctly states: “We have been assessed 50 points against our system every year since then.”  Then, quoting paragraph 4 line 4 “While we can’t be certain, we are fearful that a system wide evaluation would find additional deficiencies in the following areas:” then list 13 areas.  The impression left by this enumeration and their explanation of the point system above is that the SMR system is close to, or over the 200 demerit points and in danger of loosing our approved system status, and a close examination may leave us in an even worse situation (fear-mongering? You be the judge read on).

The Utah Department of Environmental Quality Sanitary Survey of October 13, 2010, upon which the Warning of Pending Treatment Technique Violation Water System #UTAH20043, is based contains 23 pages of assessments of system components, management and staff training, emergency response preparedness and much else which was evaluated and rated (hundreds of items).

The sanitary survey made 1 recommendation that SMSSD “start an ongoing maintenance program to check all screens, gaskets, air vents, drain line and appurtenances on a regular schedule (bi-weekly/weekly).” No points.

The following deficiencies were noted and demerit points were awarded during the sanitary survey: a. Awarded 10 demerit points for no written Emergency Response Plan. and b. Awarded 50 demerit points because the system does not supply a minimum of 20 psi at all points of connection.  Total demerit points awarded in this sanitary survey was 60. The sanitary survey then contains this language, beginning Last phrase Page 1 into first full paragraph page 2 (This is telling).

“This deficiency should be corrected within 90 days of notification.  ———An exception may possibly be granted for this deficiency and the 50 demerit points may be removed from the current and future surveys.  John Chartier the District Engineer for Central Utah can assist you with this process if you so choose.”  Just spoke to Mr. Chartier: he called back from his cell phone and said he was never approached by SMR.  He also said that on the pressure they do not often grant an exemption, but they would work with the organization and would accept an array of solutions, for what ever time it took as long as there was not an immediate health threat, which is not the case here. 

The above mentioned source also states: “The 2012 Water System Plan is a current engineered plan approved by the Utah Division of Drinking Water. Any reference to the 2007 Water System and its plan, have no relevance in today’s world.”  The BOT kept everything secret and will unveil the plan 4 days before the ballots are due in a forum where only a small percentage of the Class A members can attend.

Some things that we do know. The 2007 plan and the 2012 plan will contain a contingency of approximately 10% (source Michael Grange UDDW), my request for the updated cost figures was denied because I did not refer to it as the 2012 plan, but referred to it as updated engineers, estimates. (Members are held to a higher standard than BOT i.e. know the unknowable secrets).

The 2007 plan contained essentially the same amount of trenching, pipe, etc. so it is at least instructive in an environment where so much has been withheld from the members.  Depending on the site of the well, the transmission line to the main tank may be shorter, but the cost of the 2nd source, tank, and transmission line were pro-rated between all 3 areas in the 2007 plan.  Here the total cost is borne on area 1.

The above referenced article on the SMR web site contains the following: after referring to 2007, “Since then, there has been a dramatic decline in development, with little new home construction, and tremendous unemployment within the building trades. Conditions are dramatically different in 2012, than were in 2007″.  I assume that is directed about my statement there there is a probability that there will be significant cost over-runs.  Fact: the cost of poly and PVC pipe is closely related to the price of crude oil, that is the starting product.  In 2006 the cost of crude oil averaged $58.30, in 2011 the price averaged $87.04 and for January crude averaged $102.41 and Brent averaged $118.16 (source: Oil Price.net).  The price of C900 PVC is up approximately 400% from the end of 2006 and January of 2007.

Per my conversation with Michael Grange this morning if there is a cost over-run on the 3.1 million there may be a chance for additional funding, though not likely (would increase your monthly bill).  If the cost over-run was large that would be between SMR and the contractors, translate that to lump sum assessment on the members to meet short term debt.

Based on the above items who should you believe now?  You know how you understood the Notice and Ballot.  You be the Judge.  There is much more to follow soon.   /s/ Earl J. Seeley

It has come to my attention  that UDDW has been in contact with the President of the Board of Trustees of Skyline Mountain Resort about inaccuracies and misrepresentations contained in Notice 2012-01.  They are significant, extensive and the Board of Trustees owes UDDW an apology and owes the members a lot more than that. I will give the BOT until 3 p.m. on 2/15 to publish, on the SMR web site the communication and apologize to the members of SMR.  At that time I will comment or publish here the UDDW communication with comments.

The following has been posted on the member section of the SMR web site recently (Water-21st Century Gold – An informed, fact based discussion).  Read it, read the following then go back and read your notice, (there may be more coming on the use of the SSD in this manner) and you be the judge of who you can believe.

Unfortunately, because of the compressed time frame, i.e. less than 30 days between the members being informed and the deadline for the votes to be in, it is difficult if not impossible to do the research I would generally do before posting anything.  The following is generally correct, and you are in a good position to judge what is right.  Use this information, your intelligence and make your decision.  Feel free to make comments, or suggest corrections and I will address them as quickly as possible. (see note on credibility at the bottom of these articles).

AFTER EXAMINING THE SITUATION CLOSELY, I WOULD RECOMMEND YOU VOTE NO ON THE PROPOSED SYSTEM. WE WOULD BE MUCH BETTER OFF DEALING WITH THE SSD.  WE COULD BE INFORMED AS THE PLAN IS DEVELOPED, AND BE ABLE TO ACTUALLY VOTE.   (Read on)

I hand delivered 2 letters, requesting documents and information addressed to Joe Hanks and the BOT to the organizations office on Friday Feb. 10, 2010 asking for clarification of what appears to be direct conflicts between notice 1012-01 and sources such as Mr. McCandles’s letter to the membership of Feb 12, 2010.  Also other pertinent information, including the minutes of the 2011 business meeting and the 2011 SMR Board Meetings, which are not available on the member section of the Web site.  I’ll keep you posted and hopefully I will have to correct or add to some of what is written below.  If not the members are in deep trouble (I’m sure the BOT will say I am just stirring up trouble. See section on credibility at the bottom of this post, read the documents critically, then you be the judge.)

BEFORE YOU (VOTE?) ON THE WATER SYSTEM, YOU WILL WANT TO CONSIDER THE FOLLOWING ITEMS: I WISH THIS WAS NOT NECESSARY;  Wouldn’t it be wonderful to live somewhere that, when there was a problem, everyone was made aware of it, had a chance to have their opinions and input considered, and then were privileged to make a choice between the various options?   In case you have not noticed, we no longer live there(See: Note 1 below).  There were and are several much better options in this case that you have no right to know about, much less to vote for (their doing not mine).

We now have the privilege, on very short notice, to vote for the Boards Plan, or the world will end (not). The time is so short it is nearly impossible for the membership to gather the information needed to make an informed decision.  There are readily apparent problems with the plan.  Consider:

WHAT’S WRONG WITH THE FIGURES? The HAL plan presented to the SSD in January 2007 had a total construction and engineering cost, for the same area, equal  to or slightly higher than the $3,102,000 (See: Note 1) (The real figure of available funds for the new project is $3,007,000 as the $95,000 is already sunk costs, i.e. already spent).

Since January 2007 the cost of pipe, PVC or Poly, has increased by 375% to 450% depending of diameter (see Note: 2).  Pipe is a major portion of the total construction costs and almost all other materials costs have also increased substantially.  So how do you make those numbers reconcile?  The answer is a high probability of a significant cost over-run (see Note: 3).  What is the contingency plan if such an over-run happens?  Will HAL fore go part or all of their 15% ($465,300) fee?  A 10% over-run would amount to $310,200 divided by the 284 lots equal $1092.25 per lot (20% = $2184.50).  That money would be due toward or at the end of the construction period, but where does it come from?  The type of bond being used does not readily allow one to go back for seconds, or have secondary loans which would be nearly impossible to get any-way.  The most probable answer is spelled “Special Assessment”, due immediately (see: Note 4).  Hopefully I am wrong and the Board has a good contingency plan.  I made a written request for that plan and some other important documents on Friday (2/10/12) and will keep you posted when I receive it.  These items will be updated frequently as time allows to make up for the inconsiderately imposed time frame involved (see: Note 5)

Note 1:  Normally, my concept of due diligence requires a significant time for gathering information and double checking facts and assertions.  BOT imposed an extremely (unreasonably) short time frame for members to consider their options, when the discussion could have been going on for several months or even years, if they had not treated the situation as a secret.  Also, I have been told that the plan deadline, as to how the situation was to be resolved, was not really due until April.  I will check that out and let you know if that is the case or not.  It would really be useful if the BOT minutes were on the web site.

Note 2: Some may ask; Why have prices increased so much?  Pipe prices are tied to the price of crude, which now is $100 per barrel plus or minus.  The relative prosperity in developing countries have also increased demand for oil, oil derived products, metals and other basic raw and finished materials.  The economic down turn slowed the growth of the demand following 2008, but for example in 2008 the price of C900 PVC pipe increased 300%.  The second question is: On what do you base those figures.  The answer: The Highland Partnership significantly expanded our irrigation system between the 1300′ and 2100′ elevations at Arrowhead in 2006 and again in 2011.  Those percentages represent what we experienced.  In addition, the pipe buyer for one of the largest pipe suppliers in Utah confirmed those figures on Tuesday 2/7/2012. In another instance I purchased hundreds of 300′  rolls of 1/2″ poly drip tubing each year for: 2010 $0.10 per foot, 2011 $0.145 per foot, 2012 low bid $0.1953 per foot.

Note 3: Unless the construction cost figures in the 2007 HAL document were grossly padded, which I doubt, due to the reputation of the company, there is a very high probability that there will be a significant cost over-run.  I requested a copy of the latest cost updates to compare with the 2007 estimates. There are some factors that could account for some of the apparent difference, but these would be relatively minor compared to the total.   For example:  If materials costs for the projects were equal to 50% of the total and the average price increased 100%, the net increase in the project cost would be 50%, or in this case to over 4.5 million dollars (Remember when your water bill was increased? The letter announcing that increase said it was necessary because materials costs had increased 200% to 300%).

Note 4:  The loan arranged by BOT is a revenue bond, or in other words, it is secured by the revenue streams flowing into SMSSD.  As such they will be in the primary position to receive payment.  If there is a cost over-run, any potential secondary lender would be in at least a secondary position, i.e. would not get paid until the bond payment was satisfied, hence it is extremely unlikely that any-one would lend money to SMR under that set of circumstances. But the bills have to be paid, read that as increased rates or a special assessment due immediately.

Note 5:  As with what happened to SMR’s water rights, BOT ignored or neglected something until it reached the point they could treat it as a crisis, and in a crisis you can justify anything, “or you can’t let a good crisis go to waste” (President Obama’s chief of staff).

Note on: Credibility, Consider the following 4 items then: You Be The Judge: 

Item #1: The document you received about the installation of the new water system states emphatically: “Because of this, we are not required to have a vote of the membership.^9” It appears that the “this” they are referring to is the fact that there is no mortgage involved. This appears to be a direct contradiction to the contents of Mr. McCandless’s letter of February 12, 2010: Page l, bottom paragraph: “Second, a water system, even if necessary, could not be funded without a vote of the members.”  Also in the same document, Page 4, top full paragraph: “From my perspective, this claim is incorrect.  Based on Board resolutions, the president has no authority to enter into an agreement for a resort-wide water system. Further, the procedure for voting on a bond to fund special water systems and other improvements is well established in state law.”

Further: The BOT uses footnote 9 which references the CC&R’s; from the body of a letter I delivered to the club addressed to the BOT and Manager: “Given the citation used CCR’s 5.2.3 and your reference that this is not a mortgage of any property one can only assume that those words are the basis for your statement referenced in the preceding paragraph.  I would remind you that section 5.2.3 reads: “Borrow Money:  To borrow money and with the approval by vote or written assent of a majority of the voting power of the association, mortgage, pledge, deed in trust, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred.”  Your lot or home will be hypothecated to either Sanpete County, or SMR depending on who is responsible for the flow of cash from you to the bond holders.  Either in the form of a potential tax lien or a lien under the CC&R’s if you do not pay your fees.  (more on this later)

Hypothecation is the practice where a borrower pledges collateral to secure a debt. The borrower retains ownership of the collateral, but it is “hypothetically” controlled by the creditor in that he has the right to seize possession if the borrower defaults. A common example occurs when a consumer enters into a mortgage agreement, in which the consumer’s house becomes collateral until the mortgage loan is paid off. (the creditor here is either SMR or SMSSD, probably the latter because they are sponsoring the bond)

Item #2:  Page 3, Option 2- “This default will force SMSSD and UDDW to step in——-Obtaining compliance will be funded by assessing members whatever amount SMSSD and UDDW determine is needed to bring the system up to code.  We would not have the benefit of financing the improvements over a long period of time.”  While the first sentence is probably correct the steps they would take are strictly described in administrative rule and provide for consideration of all options, public input, and a true vote.  The underlined portion is blatently untrue.  The bond that the BOT plan depends on is sponsored by SMSSD and that bonding authority would be available to SMSSD if one of the other options (which won’t be considered now) was selected.  For example:  During 2009 and early 2010 the SMSSD at their board meetings was discussing a staged development of the water system to address the problems.  One part (the first step) of that plan was to develop a 2nd well, a large storage tank which would have been sufficient in size and at the proper elevation to supply enough water at the proper pressure to all of area 1 and a transmission line from well to tank with the proper inter-ties to connect it to the current system.  This would have addressed 7 of the 13 deficiencies listed on page 1 of Notice 2012-01.  Two of the 13 are items which do not warrant any points. This “step” would place the system in good standing for a long period of time and would cost less than what the BOT proposes to pay the engineering company under their plan (assumes the engineering fee is the same as in the 2007 plan).

Item #3: Paragraph 1 states: “We have been assessed 50 points against our system every year since then (2003)”—sounds like we have 500 points against the system from that one deficiency, particularly with the sentence which follows.  That is not the case, the points are not accumulative, 50 points is the maximum.

Item #4:  Remember Mr. McCandless’s update on the deeding process of 2/13/2010?  Twice in that letter (last paragraph of page 1 and the 2nd from last paragraph of page 3) Mr McCandless emphatically states “Because the “dry lot” ordinance will continue to govern the resort after completion of the subdivision process, there will be no more pressure on SMR and the members to agree to a resort-wide water system than exists right now” (language quoted from 2nd reference). Well, it turns out that what I have told you from the beginning is true and the BOT has now engaged the retired zoning supervisor to help them with the negotiations to obtain an agreement so they can submit the plat (pay him now as a “consultant” to do what he was anxious to do as the zoning supervisor 2 1/2 years ago).  The board had began negotiations between 2000 and 2003 on this issue (I was a member of  the BOT and we met at least 3 times with the county commission, zoning committee and the zoning administrator in the regularly scheduled County Commission meeting), but apparently between then and very recently there had only been the erroneous  assertion by members of the BOT, and their advisers, that our status would remain unchanged.

Now that the Board of Trustees of Skyline Mountain Resort have adopted resolutions which assure us that they will withdraw the plat if we can not continue as a dry subdivision after the deeding process is over; and Mr. McCandless has assured us that he will not accept a change in our dry subdivision status; I am recommending to the members who have been withholding their signatures from the “Consent” agreements to go ahead and sign them so we can move forward.

The problems that might arise from the changes in the CC&R’s discussed on this site can be handled after the deeding process is completed.  The resolutions adopted to this point make it possible for me to recommend the above course of action, and I will be signing our papers in the next week to 10 days, and would encourage everyone to do likewise.  Please pass the word.

This means that we will all be working together to obtain the deeds that we have wanted so badly for a long time,  now that the most important issue has been resolved.

Following Mr. McCandless’s latest letter and The Board of Trustee’s latest resolutions (posted at Skyline Mountain Resorts home page), I called Mr. Hanks and asked him to inform the Board of Trustees that with the resolutions just adopted,  I could accept the process as modified with one condition.  That condition is that the Board of Trustees adopt an additional resolution (or 3 depending on the language used) that would:

1. Restore our existing Bylaws and commit to the membership that they will not change them except with a true signed, dated ballot as currently required by the existing Bylaws and CC&R’s, instead of reserving that right to the ” Class A members or the Board” as allowed by the proposed CC&R’s and resolution #8.

2. Restore the provisions of our current CC&R’s which deal with the requirements for the approval of the majority of the voting power of the organization, through a signed, dated ballot process before debt can be incurred, and the real and personal property of the organization used for security for that debt.

3. Restore the provisions of our current CC&R’s which deal with the amount and frequency of any special assessments which do not require a vote of the membership.

I realize that the above can be done by the membership if someone will take the leadership, gain the necessary number of signatures on a petition and “force” the Board of Trustees to hold a true vote, but that burden should not be shifted to the membership by The Board of Trustees as they have done through the current process.  This should be easily done, and would lay the foundation for many more members of this organization to sign the Consent, and Escrow-Consent forms.  I will, and will recommend to those who are of like mind to do so.  This would greatly increase the organizations chances of a successful deeding process.

As to the lamenting of Mr. McCandless over the necessity of spending resources on these problems, let me emphatically state that I agree.  These matters should have been dealt with at an earlier stage of the process so they did not become a “part of the deeding process”. Members should have been allowed a true vote as required by the Bylaws and CC&R’s of this organization on the unnecessary, but highly significant changes that were included in the proposed CC&R’s; and the Bylaws amended in the proper manner if the Board of Trustees felt it necessary (I realize that Mr. McCandless and the Board of Trustees maintain that these changes were minimal and necessary, but I disagree on both counts and am certain that many members share my point of view). Have you noticed: on every legal question there is an attorney on both sides?

Further:  I have reviewed the information on this web site and will stand behind what is contained here-in and has been passed by the letters and petitions to the membership.  Mr. McCandless and The Board have accused me of “scaring the members unnecessarily” and have challenged my figures and some of the statements.  One of these challenges concerns the costs and impacts that the organization and members would experience if a new water system were built.  Let me remind everyone that the source of those figures was the engineers estimates submitted to SMSSD by their engineering firm in January of 2007. The figures contained there-in were adjusted for cost inflation at a 5% per year rate for construction costs and a 3% per year monthly rate increase.  These figures are only a fraction of the cost inflation rates used by SMSSD to justify the latest water rate increase (“It might interest you to know that during the decade the SSD has been functioning there have been NO increases in
water rates while costs of pipe, electricity, fuel, machine time etc have doubled and tripled” from SMSSD update published on SMR’s home page).

Statements as to the necessity of a binding agreement between SMR and Sanpete County if we are to continue as a dry subdivision were based on statements of exactly the same nature received from the County Zoning Administrator, which were reiterated on several occasions and the instructions of Mr. Blackham (Sanpete County Attorney) that the answer to this question belonged with the zoning administrator.

The time is now, give the membership their right to (knowingly) vote on the changes to the Bylaws and CC&R’s and lets move forward.  The choice is with The Board of Trustees of Skyline Mountain Resort.

In Mr. McCandless’s last letter he is still maintaining that the changes to the CC&R’s are minimal and necessary.  I agree with him that you should read the current and proposed versions, and make your own decisions.  What I believe to be a major change (one of several) you will find on page 10 of the existing CC&R’s under Article V (5.2.3) which currently reads: ” Borrow Money:  To borrow money and with the approval by vote or written assent of a majority of the voting power of the Association, mortgage, pledge, deed in trust, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred.” Compare this with Article V (5.2.3) of the proposed CC&R’s (page 9) which reads: Borrow Money.  To borrow money and upon the approval by the affirmative vote of a majority of the Class A Members present in person or by proxy at a duly called meeting of the Class A Members, to mortgage, pledge, deed in trust, or hypothecate any or all of the Association’s real or personal property as security for money borrowed or debts incurred.

Quite different. Go to SMR’s web-site and to the Members page.  Click on Board of Trustees under the Leadership title and you will find the minutes of the Monthly Board of Trustees meetings. Click on the 8/5/2009 meeting and see who was present at that meeting.  I count 5 board members and 5 Class A members for a total of 10 Class A members.  Is this a duly called meeting of the Class A members?  So how many votes would be needed to “mortgage, pledge, deed in trust, or hypothecate any or all of the Association’s real or personal property as security for money borrowed or debts incurred”?

In your opinion is this a significant change?  I believe it is, and the only vote on the change is in the consent documents, where very few of the members realize they are voting for this change, and the others of equal or greater significance.  When I pointed out to Max Henrie, that of all the people who responded to the origional questionaire that I mailed out, not a single one was aware that these changes had been made and that they were voting in favor of them, his response was, “It’s their fault.”  If you read all the documents closely, it is all there.  The question is; what do you think of doing business this way?

On November 11, 2009 the Board of Trustees of Skyline Mountain Resort passed and signed 8 resolutions as they “attempted  to fix”(?) some of the problems with the deeding process in response to some of our concerns.  Resolution #7 reads   “The Board of Trustees hereby resolves that the president of the Association or such other persons as he shall assign shall pursue a memorandum of understanding with the Skyline Mountain Special Service District indicating that the president of the resort can in no way approve, or encumber the resort for a resort-wide water system.”

In an attempt to determine how the Board of Trustees regards the commitments made by themselves, in and through the resolutions that they have passed,  I requested, on January 29th of 2010, a copy of the memorandum of understanding, or in the alternative, a progress report as to how the process was moving.  By Utah State Statute they should have responded within 5 business days.  If they had been working on such an agreement as “promised” it should have been a simple matter to present us with a copy of the memorandum, or if it was in progress, they could have informed us.

To this date, (February 17th), we have heard nothing from them.  Does that tell you something about how committed The Board of Trustees is to being bound by their own resolutions? They may work real hard on this one now in an attempt to embarrass me, but remember, in over 90 days they apparently did nothing, so how much are their resolutions worth going forward?

Over the next day or two there are some important points brought up by Mr. McCandless in his latest letter (2/12/10) to the members which deserve some attention.  I would encourage the members to do as he asks and look closely at the changes in the CC&R’s that are proposed.  I have brought to light several of these changes which are neither minimal nor necessary, and will do it again over the next few days.

To Mr. Mcandless  changing the amount of a special assessment which the Board of Trustees may assess the membership, without a vote of the members, from $25 per lot to $120+(?) per lot is a “minimal and necessary” change, but is it minimal from your standpoint?  Why is it necessary?  Why could it not be voted on as a change in the CC&R’s as required by Article XII of our CC&R’s,  instead of being ‘hidden’ in the proposed CC&R’s so most members do not know it is there, and even fewer realize that by signing the Escrow and Consent Agreement they are voting for this change along with the several other major changes that are neither minimal nor necessary?

Another point that needs immediate answer is found in the last paragraph of page 3 of the above mentioned letter.  This same critisicism of me can be found in Mr. Henrie’s letter. To quote Mr. McCandless: “Interestingly, some of those who are critical of the resolutions were invited to draft resolutions they were comfortable with, but declined to do so.”  Mr. McCandless knows that it is an illegal act to practice law without the proper authority, and if I had drafted some proposed language I would be opening myself to a charge that I was doing so. In addition: it has been our position that since the Board of Trustees created these problems it is their duty to resolve them.  Both Mr. Henrie and Mr. McCandless know that I did submit, via email (to Mr. Henrie and Mr. Hanks to be carried to the Board of Trustees as agreed), suggestions to remedy the major problems, that apparently were ignored in formulating the 8 resolutions adopted by the Board of Trustees.

You, as members have a good chance to judge who you can believe by examining closely Mr. McCandless’s most recent letter and comparing what he and The Board of Trustees say about the changes they have made in the CC&R’s, with what you know and can read as you make these comparisons. You may wish to reference the post entitled: WHAT ARE THE “MINIMAL AND NECESSARY” CHANGES IN THE CC&R’S AND BYLAWS?  below on this website.  More to follow!

Mike:  Signature of the consent and Escrow agreements is being considered by Mr. Henrie and The Board of Trustees as your vote, in the affirmative, for all the changes in the CC&R’s, for the extinction of our By laws, and as permission for the board to establish new Bylaws without member input. It is all there if you read it real closely, and according to Max Henrie, ” if the members do not read it, it is their fault”.  Of course there is the; do this or you don’t get your deed aspect, which boarders on fraud and/or extortion in my book.  I’ll make this clear with a post that lists the major changes we have never heard discussed, but are “voting” on (for, there is no chance to vote against) tonight in a new post.  To this point the Board of Trustees have done nothing to remedy these problems.  They passed some resolutions which required them to do some things, as of yet they have done none of them.  I have requested a progress report on the agreement with the SMSSD they promised as #7 in the resolutions and still have not had a response 17 days later (Utah Law requires a response within 5 business days).

After talking to many of the people who feel as I do, looking again at the situation as it really is, and in accordance with good business and “real-estate” practices, I can define what we need before I would not be a defendant in the deeding process quiet title action (and what it would take before I would recommend to anyone that they should not be a defendant in that action). In short:  We still have the same 2 issues. First, we need binding agreements and assurance that we will be a dry subdivision after the process is complete; This agreement must be in place before the Quite Title Action!   Second, we need to be guaranteed that we will have input and a real paper ballot, signed, dated vote on the major changes in the CC&R’s and Bylaws. Counting the signatures on the consent and Escrow documents as that vote, in no way suffices.  If either one of these areas are not addressed we will be better off as we are, than with what would probably result.

VARIANCE: We must have a binding agreement, whether called a variance or what ever, in place before we sign the consent and Escrow documents.  If the Board and their attorney can draft documents that guarantee that there will be a timely with-drawl of the plat should this not occur before the signing and recording, and if such guarantees include personal guarantees by and of the Board of Trustees sufficient to satisfy our counsel many of us will probably participate.  This is a requirement.

1. During the preliminary plat approval process:  Negotiate a Variance Agreement (which removes requirement of a connection to a state approved water system before a building permit is issued) that will survive the actual filing of the plat and issuance of the deeds.  Without such a variance there will be a very high probability that we would end up being a Sanpete County Subdivision—subject to all zoning ordinance requirements. The conditions that would result without the variance are not acceptable to the vast majority of the members.

DOCUMENTS: (written assent as required by current founding documents, and as required by precedent,  is only obtained by the voting of a dated, signed, and returned ballot by the individual member of the organization (no proxies) ARTICLE XII of Skyline Mountain Resorts’ CC&R’s.  It is  the “written assent of two-thirds (2/3) of the total voting power of the Association.” Let the Board argue, and they do, that the current process is that written assent if 2/3 rds of the members choose to sign the Consent and Escrow Agreement; given the extent and importance of the unnecessary changes,  it shows their true colors. To move forward the Board of Trustees Must:

1. The Board of Trustees must enter into a binding agreement to ‘restore’ CC&R’s and Bylaws to the form and content of the current documents within 7 days of the filing of the plat, except for the 1 section mentioned in the Consent agreement and the 4 changes specifically mentioned in the Escrow Agreement (related question: who is the Board if the CC&R’s and Bylaws under which authority they were created and elected are extinguished in the process? How can that question be dealt with?)
2. The Board of Trustees must enter into a binding agreement to not proceed with the Quiet Title action unless a durable variance, which allows for the issuance of building permits without a connection to a state approved water system, is obtained before the Quite Title is initiated.
3. The Board of Trustees must enter into a binding agreement that the CC&R’s and Bylaws will not be amended except following the written assent of 2/3rds of the voting power of the membership of this organization as required by ARTICLE XII of our current CC&R’s.
4. The Board of Trustees must enter into a binding agreement which defines the terms, conditions, and requirements necessary to record the plat and issue deeds, and submit such terms, conditions and requirements to the membership for their written consent before the president or other representative of the organization signs the plat and associated documents.
5. The Board of Trustees must enter into a binding agreement giving personal guarantees that the above agreements will be adhered to.  Failure to perform will result in individual board members being required to pay the plaintiffs attorney fees and damages if they fail or default as to the performance of the above requirements.

The binding agreements must be just that, contractually enforceable, and non-revocable.  Resolutions, which can be amended, revoked, or ignored will not suffice.  Have you wondered as to what has happened to further the resolutions that were adopted by the Board of Trustees?  What about #7 which reads 7.  The Board of Trustees hereby resolves that the president of the Association or such other persons as he shall assign shall pursue a memorandum of understanding with the Skyline Mountain Special Service District indicating that the president of the resort can in no way approve, or encumber the resort for a resort-wide water system. It has been 60 days, have you heard how this memorandum of understanding is progressing?  I requested an update on 1/29/10 and am still waiting for an answer.  Would you like to bet your property on a resolution?

It is up to the Board of Trustees to remedy the problems that their actions have created.  This is not a problem created by one, or a group of members.  We are waiting!

At the request of several members of SMR we held a meeting on 2/3/10 at 6:00 pm in the Mt. Pleasant City Building.  It was well attended (room comfortably full) with a broad spectrum of SMR Members there, including 2 SMR Board members and Max Henrie.

We discussed the issues that are discussed on this web site, including the overly broad authority sought by the signature on the consent form.  This authority grants to the president authority to; “take such further action as may be deemed necessary or advisable to record the amended DCC&R’s”—-”and to execute any documents necessary to implement subdivision approval, and execution and delivery of undivided interest deeds in Skyline Mountain Resort”;  and  “Finally, the undersigned consents to any subdivision conditions required by Sanpete County, including conditions regarding the use of water.  This broad authority granted to the President, and the grant of authority to Sanpete County to require what ever they want of the Membership, amounts to a several page, blank “real estate agreement” that you are asked to sign, have notarized and allow the President of SMR and the County to fill in as they see fit.

I pointed out that the first 3 paragraphs appear to lead one to believe that the existing CC&R’s are to be amended in one section (Article 12.1).  I also pointed out that the Escrow Agreement contains an additional 4 changes in the CC&R’s, 2 of which are related to changing Article 12.1 of the consent agreement, one which restricts occupancy to 180 days per year in the upper elevations, and one which adds to the CC&R’s the Architectural section of the CC&R’s.  All other changes are referred to as “stylistic changes”.

For a partial list of these “stylistic changes” see the post entitled: What are the “Minimal and Necessary” Changes in the CC&R’s and Bylaws below.

When we began discussing the fact that the CC&R’s were not amended, but were replaced and significantly changed, including a clause in the “Recitals” section that extinguished our Bylaws, one of those in attendance “castigated” all of us at that meeting for not attending the Board meetings, and annual meetings where these things were discussed.  Some of the members present pointed out that they had been to every board or annual meetings and had never heard any discussion of these matters.

I asked that member and Max to cite when those discussions had been held and why nothing appeared in the minutes of the Board and Annual meetings about these “stylistic changes”.  Of course, there had been no ‘public’ discussion.

At least to me, this portion of the meeting reflected very negatively on the credibility of the documents, the individuals responsible for the documents, and the individual that had castigated the members for not being better informed.  The fact is that there was no possible way for any of the members, with the exception of the Board, Max and a very small group of supporters to have known anything about these “stylistic changes” before they received their packets. Even then, many of the members had no means of discovering that these changes existed, and most others relied on the communication contained in the Consent and Escrow Agreement that reasonably led people to believe there were very few (4 or 5 at the most) changes dealing with a very limited range of matters.

Even at that, Max defended the extinction of the Bylaws and the language contained in the Recitals section and resolution #8, by pointing out that the section of the Utah Code Annotated referenced in the Recitals section allowed such procedures.  He further pointed out that 10% of the membership could draft alternative Bylaws, present them to the Board and a vote of the membership would have to be held on whether to accept the proposed Bylaws.   Ask yourselves; is that the kind of an organization that you thought you were or want to be part of?  One where each member must be familiar with the Utah State Code Annotated to be informed about what is going on in the organization.  Also ask yourselves: Can you trust anyone who would defend actions such as these and not recognize that there were real and valid expectations in the membership that they be able to cast informed votes on these highly important issues and changes.

We then discussed what is probably the most important issue involved, that of; what will our status be after the plat is recorded and the deeds issues? I think that I speak for a majority of the membership, including Max, Joe and the individual members of the Board of Trustees when I say;  “If we can not be assured that we will continue as a “dry subdivision”, i.e. as we are now,  in regards to obtaining a building permit without the requirement of a water connection to a state approved water system, we do not want the deeding process to move to completion”.

For myself and a significant portion of the membership let me say; we need some binding agreement, that we will not have to go to court to enforce, before I (we) change from defendants in the quiet title action to plaintiffs.

In short:  We still have the same 2 issues. First, we need binding agreements and assurance that we will be a dry subdivision after the process is complete, and Second, we need to be guaranteed that we will have input and a real paper ballot, signed, dated vote on the major changes in the CC&R’s and Bylaws.

The members in attendance at the meeting last night seemed to be startled when they found out that if they signed the Consent and Escrow agreement that was their chance to vote on these changes.  Not acceptable to me, what about you?

We would like to thank B.J. Wright for setting up and beginning a Finance Account (And the sizable initial contribution ($500). We would appreciate any amount that you can donate to cover future legal, mailing and other expenses.  Make Checks payable to Savesmr.com and write in your Lot Number in the (For) line at the bottom left of your check.  Mail the Check to:  A+ Tax and Accounting, P.O. Box 308, American Fork, UT 84003.

Watch here on Thursday, February 11 (late pm) for a status report, and analysis:

The “Consent Form” refers to an amendment of Article 11.1 of the current DCC&R’s and states: The amendment will change the Declaration of Covenants Conditions and Restrictions to a form consistent with individual ownership of lots within Skyline Mountain Resort.

In item #8 of the Escrow Agreement further “changes” are mentioned “to allow for members holding individual interests, these changes include but are not limited to. a. Delete references to “undivided interests” and “Assigned Areas”—– b. Restrict occupancy of dwellings on any upper elevation Lot to 180 days—– c. Add the Architectural Committee Restrictive Covenants and Regulations —– d. Deleting restrictions on partition and making other stylistic changes.

So what are the “other stylistic changes”.

A. The CC&R’s are not amended, but are canceled and superceded by the newly proposed CC&R’s.  Recitals C (1).

B. The Bylaws of Sports Haven International, Inc., (SMR) are “extinguished” Recitals C (2).

C. The Board or the Class A Members shall have the right ——to adopt new Bylaws to replace the Amended Bylaws referred to in paragraph C (2) above.

D. Oil, Gas, Minerals, Water, and Geothermal Resources that now are attached to ‘your property’ will be reserved to the association in the new deeding process. Article III (8).

E. No outside watering on any Lot is permitted except by the use of irrigation water shares acquired in the future for such purposes ——- Article III (9).

F. The Board is empowered to Borrow Money and, upon approval by the affirmative vote of a majority of Class A Members present in person or by proxy at a duly called meeting of the Class A Members, to mortgage, pledge, deed in trust —— see complete discussion of this change below. Article V (2.3)

G. Special Assessments: The limit on a special assessment that does not require a vote of the membership is changed from the current $25/lot to 33 1/3% of the Regular Assessment (would be equal to $120) Article 6 (4.2)

Lets Examine one of these “Stylistic Changes” which are minimal and necessary in detail.

Proposed  CC&R’’s:  5.2.3. ( page 9) “Borrow Money. To borrow money and, upon the approval by the affirmative vote of a majority of the Class A members present in person or by proxy at a duly called meeting of the Class A Members, to mortgage, pledge, deed in trust, or hypothecate any or all of the Association’s real or personal property as security for money borrowed or debts incurred.”

The Current CC&R’s: 5.2.3. (Page 10) “Borrow Money. To borrow money and with the approval by vote or written assent of a majority of the voting power of the Association, mortgage, pledge, deed in trust, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred.”

Obvious and significant differences in the Current and Proposed versions include:

1. Instead of requiring a “vote or written assent of a majority of the voting power of the Association” all the real and/or personal property of the Association could be “mortgaged” – “by the affirmative vote of a majority of the Class A members present in person or by proxy at a duly called meeting of the Class A Members,”— Do you see a chance for real mischief here?  You could wake up and find an “oil Shiek” holding a mortgage on all the clubs assets the morning after any Board meeting. OK, so that may be a slight overstatement, or is it?

2.  When you compare the wording of the two versions of the CC&’R’s you must take into consideration that the present version is limited by Article VII of our current Bylaws. This Article requires: A. A current financial review of the financial management as part of each board meeting (changed in new CC&R’s to annually);  B. Requires the formulation of a comprehensive budget (operating and capital expenses) during the 4^th quarter of each year and that the budget be adopted “at the first board meeting in January.” C. Requires “strict adherence thereto” in referring to the adopted budget. D. Sets forth “A basic philosophy of operating within budget guidelines should be considered in all financial decisions, avoiding unnecessary debt” and E. Unnecessary debt being placed upon the membership of the Club or Association is to be avoided.

It is the announced intent of the Board to repeal and change those Bylaws without guaranteeing a vote of the membership, nor informing you of how they intend to change them. They have refused to guarantee in writing that there will be an actual vote of the membership, rather, when they “fixed” this problem (Resolutions of 11/11/09) they retained the language that would allow them to adopt new bylaws without involving the members.  They did this in spite of our request to guarantee the members the right to vote on any proposed changes by way of a written, dated, signed ballot.

Ask yourself:  Does this Board of Trustees and all future Boards deserve the level of trust we are being asked to endow them with?

DAILY MESSAGES: I would like to personally thank Earl Seeley & Charlie Riddle for their due diligence on this matter.  If we don”t act now, this could be a nightmare. I will set the account up with $500.00 of money that I plan to pay/s/ B.J. Wright:.   An account has been set up so those who would like to help with the legal and mailing costs can contribute.  Unfortunately we all pay what the Board wishes to spend, and when they need to be challenged, as they do in this case, we have to pay again.  We are asking that concerned members send what they wish to help with legal and mailing expenses.  The account is a legal trust account administered by:    A-Plus Tax andAccounting,     P.O. Box 308, American Fork Ut 84003: Make checks payable to SAVE SMR.

COMMENT 2/1/10: A meeting of concerned members of SMR will be held on Wednesday February 3rd at 6 p.m.   Due to the number of people who have indicated they will be attending, the meeting site has been changed from the Club-House to a larger room at the Mt. Pleasant City Offices at 115 West Main Street, Mt. Pleasant. The purpose will be to review the documents, changes being made and what they mean. We will also be seeking member input as to what we do next.

Check here tomorrow (2/2/10) in the pm for a thorough review of what is to be changed in our founding documents.

Don't You Just Love This Place

Let me begin by asking you 2 questions:  First; Would you like to own your property in Fee Simple (have a real deed), instead as “holding an undivided interest in one or more of 14 separate parcels of real property together with the exclusive right to use and occupy – - -“?  Second; Would you like to have access to a ‘resort wide’ water system?  I suspect that, if you did not know the cost of the water system, or it was insignificant the answer to both of these questions would be a resounding YES.  That is not what you are going to get if the deeding process as now being pursued is completed.

As things now stand the above questions, if they reflected the true situation, would read:  First; Would you like to own your property in Fee Simple (have a real deed), if such change would lead to a sizeable increase in your property tax (over $1,000 /year), and result in no more building permits being issued until there is a connection to a state approved water system for each lot?  Second: Would you like to have access to a ‘resort wide’ water system if it would increase your property taxes by $1,000 + per year, and mean a $23+ “water bill” per month, whether you were connected to the system or not? My answer to these questions would be NO.

On December 4, 2009 I mailed a request to the SMR Board of Trustees requesting: First: Copies of all documents on which item #3 on page 2 of your recent letter to the members is based (their assertion that we would continue as we are after the deeding process).  As of December 2, approximately 9:00 a.m., I was told by Mr. Lee Holmstead, the Sanpete County Zoning Administrator that he could not comment on whether or not an agreement existed between SMR and Sanpete County, because the County Attorney was researching the history of this matter to see if anything that would constitute such an agreement existed (directly conflicts recent communication from Mr. McCandless to the members).

He did restate: that in the absence of such an agreement he would enforce the Sanpete County Zoning statute, i.e. there would be no building permits issued without a water connection following the recording of the plat.  This is consistent with what we were told by Mr. Holmstead on at least 3 previous occasions; what we were told by the Sanpete County Attorney on the previous Monday (Nov. 23), and with what Mr. Joe Hanks said, after he and Max Henri had met with the county attorney.  Also, on November 23 we were informed by the county attorney that the proper place for such questions was to the County Zoning Administrator.  Finely, today (1/21/10) representatives of SMR (Mr. Hanks and Mr. Henri) are meeting with the zoning administrator.

As of today (1/21/10), I have received no response (Statute requires a response within 5 business days) from the Board to this reasonable request. Representations made in the above referenced letter from Mr. McCandless about existing agreements, apparently led to the County Attorney instructing the county administrator to give no opinions concerning these matters to anyone until he has finished his research and issued an opinion. These 2 items can reasonably lead to the conclusion that such an agreement does not exist (no one can find it, the Board nor their Attorney can furnish it).  I suspect, with good reason, that there will be no forthcoming opinion until these matters are settled (i.e. an actual agreement negotiated and reduced to writing) and voted on by the membership of this organization. Something that should have been done long ago.

In my information request of December 4, 2009, I also requested that: “Second: I am also requesting that: concerning item 8 of the resolutions; that the Board of Trustees, assure the membership, in writing, that the deeding process will not proceed without re-instatement of the By Laws of this organization and that any changes in our By Laws will be made, only after a true vote of the membership (required), through a signed and dated ballot process.” Do you wonder why they will not agree to this?

Through a recent ‘partial mailing survey of club members’ we found that most members were not aware that signing the consent form and escrow agreement was agreement to: 1. Repeal the By Laws of this organization, 2. Allow the “Board or the class A Members” —to adopt new Bylaws. 3. Making extensive and highly significant changes to the CC&R’s, in spite of the Board’s and Attorneys statements that: “With respect to specific changes in the CC&R’s, comparison of the proposed CC&R’s with the current documents demonstrates that the few changes are minimal and necessary.” (Quoted from letter of 11/20, page 2 item 5).

Would you agree that repeal of the By Laws and allowing the Board or the class A members to adopt new Bylaws are “minimal and necessary”?  It speaks volumes about the Boards attitude and intentions when their “fix” to this problem reads —“the Board of Trustees hereby adopts and reincorporates the existing bylaws which shall govern until such time as new Bylaws are adopted by the Members or the Board of Trustees.”  (From: Resolution 2009-1 item 8)  See: By Laws: Their Role in Defining and Protecting Members Rights; posted 11/18 at www.savesmr.com for more information.

Compare just one of the several “minimal and necessary” changes in the proposed CC&R’s with the current CC&R’s:

Proposed  CC&R’’s:  5.2.3. ( page 9) “Borrow Money. To borrow money and, upon the approval by the affirmative vote of a majority of the Class A members present in person or by proxy at a duly called meeting of the Class A Members, to mortgage, pledge, deed in trust, or hypothecate any or all of the Association’s real or personal property as security for money borrowed or debts incurred.”

The Current CC&R’s: 5.2.3. (Page 10) “Borrow Money. To borrow money and with the approval by vote or written assent of a majority of the voting power of the Association, mortgage, pledge, deed in trust, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred.”

Obvious and significant differences in the Current and Proposed versions include:

1. Instead of requiring a “vote or written assent of a majority of the voting power of the Association” all the real and/or personal property of the Association could be “mortgaged” – “by the affirmative vote of a majority of the Class A members present in person or by proxy at a duly called meeting of the Class A Members,”— Do you see a chance for real mischief here?  You could wake up and find an “oil Shiek” holding a mortgage on all the clubs assets the morning after any Board meeting. OK, so that may be a slight overstatement, or is it?

The precedent in this organization has, until recently, been that a paper ballot was mailed to each member for a yes or no vote on important matters (arguably required), as was the case with the original ballot as to whether or not to attempt to obtain deeds (12+ years ago) and when it was proposed to the membership that we  ‘settle’ the lawsuit over the golf course.  Recently when the ownership of our water rights (value $1.7+million) was transferred to SMSSD (a division of Sanpete County) the vote consisted of a notice in the newsletter stating that if you objected, do it in writing to the Board.  Mr. Henri told me, with an obvious high degree of satisfaction, that there “was only one dissenting vote”.  Were you aware that a vote had occurred?  Do you think that this change is “minimal and necessary”, or do you think it shifts too much power to the Board, and opens the door to the real possibility of significant mischief?

2.  When you compare the wording of the two versions of the CC&’R’s you must take into consideration that the present version is limited by Article VII of our current Bylaws. This Article requires: A. A current financial review of the financial management as part of each board meeting (changed in new CC&R’s to annually);  B. Requires the formulation of a comprehensive budget (operating and capital expenses) during the 4^th quarter of each year and that the budget be adopted “at the first board meeting in January.” C. Requires “strict adherence thereto” in referring to the adopted budget. D. Sets forth “A basic philosophy of operating within budget guidelines should be considered in all financial decisions, avoiding unnecessary debt” and E. Unnecessary debt being placed upon the membership of the Club or Association is to be avoided.

It is the announced intent of the Board to repeal and change those Bylaws without guaranteeing a vote of the membership, nor informing you of how they intend to change them. They have refused to guarantee in writing that there will be an actual vote of the membership, rather, when they “fixed” this problem (Resolutions of 11/11/09) they retained the language that would allow them to adopt new bylaws without involving the members.  They did this in spite of our request to guarantee the members the right to vote on any proposed changes by way of a written, dated, signed ballot.

Ask yourself:  Does this Board of Trustees and all future Boards deserve the level of trust we are being asked to endow them with?  As time and space permit, we will analyze some of the other changes in the proposed CC&R’s.

Worth Saving

It has now  been 28 business days since I hand delivered a request for information (see “THINGS YOU SHOULD NOTE: Really It’s Important! below”).  I have had no response.  Since the Board of Trustees canceled the December meeting, apparently that letter did not reach the Board’s hands until the evening of their appreciation dinner (Jan. 8th? Was not invited so am not sure of date) even though their attorney discussed it with my attorney before the end of the year.  I would really like a response, wouldn’t you (read the request below and decide for yourself , if you and I,  as members do not deserve a response to these reasonable requests.)

Some things communicated by way of the last letter to you from Mr. McCandles and the Board are in direct conflict with what we have been told by the Sanpete County Zoning Administrator and County Attorney.  Request #1 is for documentation that supports those representations.  Remember, an un-written agreement is not enforceable as you all know and the Board and their Attorney should know.

On January 21, 2010 we will check with the County Zoning Administrator, The escrow company, and hopefully will have received a response from the board.  At that time we will write to each interest holder to inform you of the facts, and present to you for your signature a petition to the Skyline Mountain Board of Trustees asking them to undo some things that, in our opinion need to be undone, and do some things that will correct the present situation and prevent similar ones from occurring in the future.  We will also provide an avenue for those of you who have already signed the “consent form” to obtain an affidavit which you may sign and have notarized to withdraw that consent if the board insists on moving forward without correcting the severe problems in the process.

We will also provide a space for your comments.  We found 2 very important things from our first attempt to correspond with you.  They were that a 6 year old mailing list and a surprising number of sales resulted in us reaching less than 50% of you, but we tried after being denied a current mailing list.  We have corrected that so all of you should be reached with a mailing to occur during the week of January 25th.  It is extremely important that we hear back from you by way of the returned petition (addressed stamped envelope will be provided), and your comments(for owners of multiple lots please note all lots, you deserve a vote for each, no proxies will be accepted).  We seek to obtain enough petitions to constitute a majority of the voting power of the association, realizing that will be difficult, but it will greatly simplify the process and save you and us a lot of time, money, and experience with “For Sale” signs.

If we do not hear from a majority of the voting power of the association we will have to either let things happen, or use the affidavits and other legal means to prevent the deeding process from going forward.  We would rather have the Board of Trustees recognize the problems, correct them and then begin again at the point in the process where the situation dictates.  Hundreds of Thousands of dollars have been spent over the last 12 years and should not be wasted by a failure to recognize the important deficiencies in the current attempt and the appropriate actions to correct them.  No body wants to have the membership in a position of choosing between no more building permits, or an increase of well over $1,000 per year in their property taxes and a further increase in their monthly water bill.  Please respond appropriately, as you see fit through the petition.  Sincerely Earl J. Seeley/on behalf of many of your concerned neighbors.

On December 4, 2009 I mailed a request to the Board of Trustees of SMR, requesting several items as noted in the post below.  I also instructed my attorney to request the same things from SMR’s attorney which he did.  To this point in time I have not heard anything from the Board of Trustees, even though they are required by statute to respond within 5 business days.  Mr. McCandles was contacted and admitted to my attorney that he was assuming that we would continue as a dry sub-division after the plat is filed.  It should be simple for the Board to contact the Sanpete County Zoning Administrator and request the documents that they claim exist. They have not, and can not, because there is no agreement.  I am still getting reports that Mr. Henri is assuring interest holders of SMR that these problems have been fixed.  He knows better, and frankly I am disappointed that he and the Board will not recognize this fact and seek such an agreement.  It appears that misrepresentations of extremely important matters are knowingly taking place, and no real efforts are being made to correct the situation.