! Hidden Springs Board of Directors Meeting Minutes from Tuesday, June 7, 2016 Salado Civic Center 6:30 PM

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1 ! Hidden Springs Board of Directors Meeting Minutes from Tuesday, June 7, 2016 Salado Civic Center 6:30 PM Welcome Brent Rechtfertig Welcome to the Board meeting. The details of why we are doing what we are doing were sent in an so if any of you did not get an that explains that, go ahead and just send us an at and we ll gladly sent that to you. So, starting with board business, oh and meeting rules will be in effect, we have a revision 1.1 of meeting rules, these are up here if you want a copy. Starting off with board business we have an appointment of a new board member. Board Business 1. Motion was made to appoint Kathi Walrath to the Board and hold office in the position of President and serve until the forthcoming annual meeting. Motion was seconded. 2 voted for. None opposed. Motion passed. 2. Motion was made to place Don Peace in the position of 1VP and in the place of Earl Stearns whose term is set to end at the end of September Motion was seconded. 3 voted for. None opposed. Motion passed. 3. Motion was made to appoint officers, Lucas Loafman as Secretary and James Lee as Treasurer with both serving until the forthcoming annual meeting. Motion was seconded. 3 voted for. None opposed. Motion passed. Don Peace spoke requesting clarification and confirmation that Mrs. Walrath was indeed placed in the position of President. Brent Rechterfertig confirmed that yes, it was done. Kathi Walrath added that it was also in a spot that is set to expire at the end of September Property Owner Lawsuit Update: The next date we have is the trial in November. 5. Discuss Fall Elections & Texas Property Code : 4 out of 5 positions will be available. They will be classed as staggered terms as required by the bylaws. There is a Senate Bill, 1168 which is in effect since September 2015 which eliminates the need for a nominating committee because it says that Section now requires a Subdivision Association consisting of more than 100 lots that wants to use an absentee ballot for a Director election to solicit candidates for election to the Board of Directors and list all interested candidates on the absentee ballot. The new procedure requires an applicable Subdivision Association to provide notice to its property owners that solicits interested candidates for election to the Board of Directors and requires the Subdivision Association to list each person who expresses an interest on the absentee ballots used for such election. Additionally there is another piece in House Bill 1072 which also went into effect September 1, 2015 which states that if a board is presented with written, documented evidence from a database or other record maintained by a governmental law enforcement authority that a board member was convicted of a felony or crime involving moral turpitude not more than 20 years before the date the board is presented with the evidence, the board member is immediately ineligible to serve on the board of the property owners association, automatically considered removed from the board, and prohibited from future service on the board. That was a concern by some members so i just wanted to state that it is addressed in the state legislature.- Kathi 6. Community Picnic June 12 the park. Sunday from 2-5 in the community park. Bring a covered dish. We ll furnish the meat which be ham and will be professionally cooked by Best Quality Meats in Temple. We ll tie trash bags. Are there any questions?- James Lee. Brent Rechtfertig and Kathi Walrath interjected that it is a closed meeting. Kathi Walrath went on to state that there was an that went out regarding the picnic and that responses can be made on that . On that string, many stated what they will be bringing: Games in addition

2 to dishes. Bring something to sit on, bug spray and tent if you need something like that, so, it should be a good time. Member states that he has a question. We reminded him that it is a closed session but that he is welcome to send an for us to address. Secretary Report Brent Rechtfertig 1. Motion was made to Approve February 2016 meeting minutes posted to website. Motion was seconded. No discussion. 3 voted for. None opposed. Motion passed. 2. Filings at the courthouse none 3. Action Item list none at this time. With a new team member here, we ll be updating the action item list in the future. Treasurer Report Don Peace 1. Treasury report (expense report since last meeting) 2. Budget report (year-to-date expenses to budget) 3. Assessment Collection status *Mr. Peace has requested a deferment of the report until a time that an internal audit can be conducted and records can be gathered since he received records in an unorderly fashion.* Please also note that bills have been paid and are continuing to be paid. Motion was made to table the report until an audit can be conducted. Motion was seconded. No discussion. 3 voted for. None opposed. Motion passed. Compliance Report Brent 1. Lot 71. During the February 2016, the board decided that the owner was in compliance with his new RV location but we had a vote of 1-1-1, 1 for fines, 1 against fines and 1 abstaining from the vote on whether or not to access fines for the past violations. Since then, a variance request has been submitted to the ACC to not fine the owner and it was approved so that is a closed issue. 2. We received a complaint in March 2016 in the Creekview/ Mission area of suspicious activity regarding the possibility of a dead baby goat found in a ditch and possible violation of Section which has to do with animals. It was investigated and determined that no board action was necessary and the complaint was referred to animal control officers and the Sheriff s office for possible cruelty to animal type issues or even littering. Nothing further to report. Committee Reports 1. ACC Activities Phil Goodwill. Mr. Peace spoke. a. Lot 18. Fence approved. Completed. b. Lot 36. New Home construction. Estimated completion date of Dec c. Lot 8. New Home construction. Estimated completion date of Nov d. Lot 16. Auxiliary Bldg. Pending start and end date based on contractor. e. Lot 71. May 11, 2016 Letter sent from ACC reminding them of the March 31, 2016 completion date and requesting additional information. Response was that there is some material holdup for them to finish by the end of May. We are waiting on their contractor to give us the new estimated completion date. f. Lot 250,251 requested a change to the location for their approved auxiliary building. After additional information was received, the request was approved by the ACC. g. Several deposits into the ACC portion of the account for the $3000 deposit. We refunded 3 upon completion, with one of them being in the amount of $3000 less a stop check fee ($15) because the builder lost the first check given them and we had to issue a 2nd check. Address Public Comments Submitted Via At this time we will address comments suggested via .

3 First, there was an inquiry about purchasing the lot up front that is now for sale. Though this may be a really good idea, we do not believe that this matter is proper for the present board to consider unless overwhelming community sentiment is shown. It probably should be considered by the elected Board this fall if the property is still available. Is there a formal or informal documented agreement, signed by both Brent and Don concerning the decisions outlined in your May Update, and, will that agreement be made available for review, if requested? There was not. Between February 9, 2016 and February 18, 2016, while the Board was still comprised of three members that made a quorum (Brent, Don and Joe Sloan), what efforts, if any, were made to seat Don Peace to a position on the Board? If there were none, then why? None, as we thought we had more time. With respect to the history of the Board, when appointments were made in the past (all appointments prior to February 9, 2016), were the vacancies on the Board filled in the order in which they occurred or in the order in which they became vacant? We couldn t say. Does past precedent set by the Board dictate that Don Peace has to be seated in the position on the Board that is up for election in the Fall of 2017? Again, we couldn t say, as we re not aware of having two vacancies at a time with differing terms. And the bylaws are silent. Regardless, Don wants to be seated in an expiring seat to give him the option to run again or not. This would be a great issue to handle with appropriate bylaw revisions by the newly elected Board this fall. Along the same lines, there was a concern about the limited appointment path and elections and would that set precedent for the future. As stated above, it is hoped that the new Board will look at revising the Bylaws such that the rules are clear in these cases. They are, unfortunately, not clear or completely nonexistent presently in addressing this highly unusual set of circumstances. Amended bylaw 5.1 says there should be 5 Board Members, but it also says that they should be elected. Thus, we are striving to comply with the elected requirement. There is no temporal mandate for the 5 member Board. We have had many periods where we operated with less than 5 for certain periods of time. There were two concerns about our present course of action not complying with the staggered term requirement of 5.2 and four seats being up for election. There are still five seats with staggered terms. Two of those, which happen to both expire in 2017, will not be filled until the election this fall. Those seats will immediately be up for election the following year and all will be on track again. Who (specifically) sought the advice of our legal counsel; who (specifically) met with our legal counsel for a recommended course of action; and who (specifically) was the legal counsel that was contacted? Was the legal counsel made aware that our Board of two members at the time did not make up a quorum and that without a quorum, elections could not occur? Both Don and Brent were on a conference call with Mike Russell and Tad Allen from Harrell, Stoebner & Russell, P.C. and received a letter outlining his opinion. He was aware of the two person board situation. "though he stated that the covenants were not clear and

4 consistent on what to do without a quorum, ( precisely his question was regarding the definition of quorum and our bylaws, it was not clear whether or not it related to a five member board or a two member board. It s just very vague.(no, it s not- from a member in the room) Yes, it is. And his primary suggestion was to start elections immediately Is it appropriate for Mediator Lucas Loafman to serve as the Secretary for the Board? We see no reason why not. The secretary position is integral to the election process and as he has stated, he has no desire to run for an elected position in the Fall. Will Lucas Loafman be appointed to the Board on June 7, 2016, and would Lucas Loafman be a voting or non-voting member for the Board? He is an officer only not a board member, thus no vote. His term as secretary ends after the elections and with the election of new officers by the 5 member board. Was there any other mediator that tried "to understand what was going on and see that the needs of the community were being met" and, if so, was that mediator offered the opportunity to voluntarily serve on the Board if he/she agreed to withdraw his/her candidacy for a Board position? If not, why not? Not that we re aware of. Lucas volunteered as an officer only in late May. We did not ask him, but agreed it would be helpful since the Secretary is integral to the election process. Was anyone else contacted and informed that they could volunteer to serve on the Board as long as they would "not be running for a Board seat, thus no potential conflict of interest." If not, why not and if so, please provide a list of the names of the individuals contacted. Not that we re aware of. We didn t feel a need to. Mrs. Walrath has volunteered to be the President. Unlike Lucas Loafman, Mrs. Walrath is running for a Board seat. Does a potential conflict of interest exist? No, as she will be up for election this fall if she chooses to run again. The office of President has little to do with the election process. Mr. Lee has volunteered to be the Treasurer and he, like Mrs. Walrath is running for a seat on the Board. Does a potential conflict of interest exist? We don t see any. His term as Treasurer will expire with the elections. He is free to run for a Board position and it s the community s choice to elect him. We are thankful for his willingness to use his expertise to benefit the neighborhood. Unlike Mrs. Walrath, Mr. Lee will not be a voting board member. Why? Correct. This is to keep and odd number (no ties) and allows for four seats to be elected this fall. There were also concerns about our nominating committee provisions and the intersection with While does not preclude the existence of a nominating committee, Bylaw 6.1 is clearly no longer in compliance with state law clearly allows any person to submit their name for consideration and our bylaw 6.1 clearly states that names come from the nominating committee. At this time, we feel it s best to defer to the statutory process and the new Board can consider any bylaw amendment. We would welcome the assistance of interested parties in preparing the ballots and such this fall though in lieu of a nominating committee. Why will there not be an open forum tonight?

5 In consideration of what has happened over the last few months and the very strong opinions that we have seen, we felt it was in the best interests of the community to not provide an open forum in an effort to maintain civility and continue to chart a path forward for the community. As stated in the previous , we welcome all questions and will answer them as has been done this evening. Meeting Adjournment. Motion was made to adjourn the meeting. Motion was seconded. No discussion. 3 in favor. None opposed. The meeting was adjourned at 6:55 p.m.