January 24, 2017

Hidden Lakes Development Partners, LP/Empire Continental Land LP

C/O Steve Sellers

3515 Tangley

Houston, TX 77005

ACMI Management Company

C/O Bert Williams, Owner

and

C/O Billy Paige, Hidden Lakes Community Association Manager

12603 Louetta Road, Suite 101

Cypress, TX 77429-5136

In light of the upcoming annual meeting of the Hidden Lakes Community Association, We, as a group of concerned Residents, would like to present you with a list of questions and requests.

We are sending this letter prior to the meeting so that you will have ample time to prepare a response to our concerns in time for the Homeowners at the meeting. We are writing these requests bearing in mind that the improvements to our community, maintaining fiscal responsibility, and efficient management is in the best interest of both the Developer and the Homeowners.

Quick-Look Summary

• Homeowners desire better communication with the Association and Developer
• Homeowners want restrictions violations enforced on unbuilt lots and Builders
• Homeowners desire a Property Management company that is more responsive
• Homeowners are seeking greater insight into budget and contracts along with investments that will save money for the Association in the long-term
• Homeowners are seeking changes to policies for basketball goals
• Homeowners are seeking some maintenance and amenities improvements
• A numbered list of specific actions which the Homeowners are requesting from the Association and Developer is included with this letter for ease of reference

General Discussion

At the annual meeting of 2016, there were numerous questions which were left answered with, “We’ll look into that.” To date, we have not received a further response to any of these issues. The only communication that the residents receive from the association at present is the annual meeting and restriction violation notifications. “We’ll look into that” is not an acceptable solution when there is no follow through.

Budgetary Concerns

We begin this letter by discussing budgetary concerns. First and foremost, the Homeowners should never be denied access or asked to accept a delay in reporting the budget data when the data is requested from the Property Management Company. When a Homeowner submits a request for the data, it should be provided, and the response should not be to wait for the annual meeting, as has happened this year. It is very difficult to conduct meaningful research on possibilities for addressing concerns with the budget when we only have an annual meeting and the budget isn’t provided until the meeting. Next, the budget should be provided with a much greater level of detail than was provided in 2016. Listing items such as “Landscape-Extras” with an $80,000/year forecast expense is unacceptable. This is our community and also our money that is being managed. Next, many of the budget items have values that seem out of line compared to similar neighborhoods, and point to possible mismanagement and insufficient planning. Primarily, the expenses for irrigation, the landscaping contract, and unnecessary services given the lack of use made of the clubhouse. Furthermore, when our dues are increased (this year there was a 10% increase) we should be told the divergence from previously provided budget data that necessitated the increase when we are told of the new dues, not simply provided with a bill with no explanation. All of this points to concerns with how the association is being managed. Finally, while one homeowner with extensive knowledge of the process for saving money for the Association through a sales-tax exemption has been in contact with the Developer and the Property Management Company to attempt to pursue this opportunity, the Property Management Company has been slow to respond and seemingly unaware of the opportunity and unwilling to make the effort to gain any understanding of the process. This is costing the Association money every year (particularly on things such as the landscaping contract which could have saved the Association almost $20,000 in sales tax alone).

Management Issues

Budgetary issues are not the only problems with the management of the Association. In general there is a serious dearth of communication with the Homeowners. Outside of restriction violations, there has been zero communication from the Association and the Developer to the Homeowners other than the annual meeting. Topics which the Developer and Property Management Company promised to investigate at the 2016 annual meeting had zero follow-through communication with the Homeowners. For example, to discuss a single restriction violation which the Homeowner believed was cited in error, multiple emails and voicemails left for the Property Manager over a two month period went unanswered. Homeowners should never have to pester the Property Manager to seek resolution. But the lack of communication also seems to be indicative of a general lack of interest provided to the neighborhood, as numerous problems that have cost the Association through wasteful use of water and electricity go unnoticed by the property manager. Examples include damaged sprinklers dumping water wastefully into beds and streets, ceiling fans left on at the pool for months after the pool closed for the winter season, sprinklers running year-round (even in periods where there is an excess of rain as was noted on the rainy day in January when the sprinklers turned on next to the pavilion by the pool as the residents met to discuss this letter). Finally, Architectural Committee review requests for simple things such as sheds and other changes should always be answered in a timely manner. Some Homeowners have indicated that they may need to resort to legal action to seek responses to requests. This is completely unnecessary, and could incur legal expenses which the association may be financially responsible to cover. In other words, the poor communication of the Property Management Company is introducing risk to the Association, and this is completely unacceptable. This delay is rather difficult to accept considering that the budget includes over $1,000 to cover “Architectural Control” expenses.

Restrictions and Enforcement Issues

Architectural Control relates to the next topic, restriction enforcement and desired changes. First and foremost, the lack of enforcement on Builder-Owned lots. The jungles growing next to Homeowners lots are not only unsightly, but have also created safety issues with wildlife contact with residents. It is particularly insulting to receive a restriction violation for a yard in need of trimming when the lot next-door has greater than three feet tall wild vegetation. Additionally, the Builders are not properly cleaning up trash, and in many cases using the empty lots to dispose of trash, such as the pile of bricks on Bonham Pines Lane in Section 2. And in a very disturbing example of not paying attention, the Property Management Company has cited Homeowners for vehicles parked in lots, when the vehicles are Builders’ trucks left in un-built lots next to lots with houses. If the Builders were held to the same standard as the homeowners, this wouldn’t have happened. This will lead to another topic discussed later in this letter, regarding Builder treatment of existing Homeowners; however, there is one other topic for restrictions changes that the residents would like addressed. Basketball goals were asked for repeatedly at the 2016 annual meeting, and Developer stated that it would be looked into. The restrictions currently say that the owners can ask for permission; however, it has been the policy of the Architectural Committee to deny every single request. The Property Management Company stated that they enforce this rule because of complaints from residents. However, the Homeowners currently have a petition circulating to request a change of rules (complete with suggested replacement rules derived from examples in surrounding communities), and this petition has had over one-hundred people sign in favor of allowing basketball goals and only two opposed. This is a neighborhood with houses sized for families with children in the house, and given the singular playground provided by the Association, the Architectural Committee should begin to approve basketball goals.

Builder Treatment of Homeowners

While it is clearly understood that the Association is not directly responsible for the treatment which the Builders provide to the existing Homeowners, it would be very beneficial in the interest of showing a relationship that the Association serves the Homeowners if the Association would at least provide a route for communicating with the Builders. The Homeowners have dealt with the following treatment:

• Nails left in the road, with some Homeowners collecting dozens of nails in less than a week period, and unfilled promises from Builders to have street-sweepers come through “next week”
• Water stolen from hose hook-ups, and in many times simply left running, driving up Homeowner water bills
• Deliveries arriving at construction sites and work beginning prior to the city-allotted 7am earliest start time
• Parking and driving in Homeowner lots causing ruts which are left unrepaired
• Breaking down fences to access easements, without warning Homeowners, causing loose animals and other security problems
• Blocked driveways and roadways, causing Homeowners to miss work, putting people at risk should a medical emergency occur, and preventing trash from being picked up by the City.

If the Association, through the Property Manager, would serve as a middleman for communication, then there would be more authority requesting better behavior from the Builders. Furthermore, if the Association would enforce the lot restrictions for lawn maintenance, trash clean-up, and other rules, this would set a tone for the Builders that would lead to more considerate practices in general that would likely prevent most of the other complaints.

Maintenance and Amenities Requests

No letter to the Association would be complete without homeowner requests for amenities and maintenance. As such, there are a list of items that the Homeowners humbly request the Association consider providing for in the budget or addressing immediately. With respect to maintenance of the property, the Homeowners would like the Association to address the erosion of land along the lakes. Many Homeowners have had challenges resulting from this, and have been given the run-around in trying to have it addressed. Next, the green spaces through multiple sections, example section 3 phase 2 at both end of Tawakoni Canyon Lane, or those in Section 2, have had zero improvement provided and are never maintained. At a minimum, the wild grass which often goes untrimmed should be replaced with sod since the lots are full of ruts caused by construction. Additionally, some of these green spaces have not had sidewalks completed to connect the neighborhood properly. The entrances to Section 1 and Section 2 are not lit, and this has created a few concerns, namely, safety when these are used for bus-stops, an inconsistency in the appearance of the entire neighborhood, and a sense of unfair sharing of dues to fund the lights and fountains in other sections by residents in Section 1 and Section 2. Landscaping in general could stand much improvement, and it’s possible this is more a result of mismanagement of the landscaping contract than a result of lacking design or intended degree of completion. It has been noted that after the Homeowners discussed this list of requests, the Property Management Company was made aware of the lack of attention the landscapers have provided to our neighborhood, and crews were out cleaning up some of the common grounds. However, it is not yet complete, nor anywhere near the level maintained in neighboring Communities, nor is it in line with the high rate which the neighborhood is paying for landscaping services. Additionally, there exists a large number of dead trees on common ground throughout the neighborhood. With respect to the lakes and fountains, it has been pointed out that the fountains are not synchronized for lighting and operation. Additionally, there have been some safety/security concerns discussed regarding the pool and splash pad. In particular, the splash pad is primarily used by young children, and is very close to a small pond which presents a risk for children. A fence around the splash pad could solve the safety issue, and also address the concerns regarding non-resident use of this expensive resource. Furthermore, there is concern with respect to relying upon the lifeguards at the pool to be gate security as well. Neighboring communities such as Mar Bella have implemented access cards that open the gates, and this was done without incurring a substantial cost. Finally, electricity is already run to the pavilion by the pool, and it would be nice if lights were installed, along with a secured means to control the lights. The residents have discovered this is a convenient location to meet; however, the lack of lights limits the time available to residents.

Conclusion

In conclusion, most of the issues addressed in this letter would be non-issues that could easily be resolved with improved communication and management. Attached to this letter is a numbered list of items which the Homeowners would like to be specifically addressed at the annual meeting.

Actions Requested By Homeowners

1) Create a Homeowner Advisory Board to the Association until the Association is turned over to Homeowner control. This Advisory Board should meet with the Association’s control Board monthly (or at a schedule set by the Advisory Board), and preferably the Homeowners would like to designate the Representatives to the Board, not have them selected by the Property Management Company or Developer.

Rationale – The annual meeting is insufficient for providing clear and complete two-way communication with the Homeowners. The Property Management Company has been incapable of identifying needs of the neighborhood in a timely manner, and this will also improve that situation. Furthermore, the residents will then have greater insight into the budget and be able to provide recommendations regarding means to control expenses.

2) Reconsider the Property Management Company which is being utilized for Hidden Lakes.

Rationale – The Property Management Company that is not located near the neighborhood has shown a disinterest in the neighborhood. Communication has been poor, and actions taken by the Property Management Company have subjected the Association to financial risk. The lack of knowledge of Property Management concepts such as the sales-tax exemption demonstrated by the company has caused a loss of faith in their ability to serve in the best interests of the neighborhood, and lead to concern about the quality of contracts which have been signed for landscaping services, etc.

3) File for sales-tax exemption

Rationale –Saving money is in the best interest of all Members of the Association, and the only negative consequence (requiring that the neighborhood offer use of amenities to non-residents who are willing to pay annual association fees) is considered a non-concern by the Homeowners

4) Provide greater detail in the annual budget, and communicate the budget prior to notifying the residents of increases in annual dues.

Rationale – It would foster greater trust that our money is being properly managed and enable easier acceptance of increases if the budget is properly communicated and residents believe the neighborhood is being efficiently managed

5) Review the contract for landscaping services

Rationale – Landscaping costs seem unnecessarily high relative to similar neighborhoods, and quality of service provided seems unnecessarily poor.

6) Implement smart controllers and sensors for the irrigation of common ground to save money

Rationale – The water budget is very high, and the residents have consistently noted untended leaks and sprinklers running through long rain storms. This is a small investment to save large amounts of money long-term

7) Enforce Property Maintenance restrictions on the Builders

Rationale – The Builders are not maintaining lots and it’s not only unsightly it’s unsafe. Additionally, enforcement of these rules may lead to more neighborly behavior in general from the Builders, preventing such problems as flat tires due to uncleaned roads and stolen water.

8) Allow Basketball Goals with ARC Guidelines (work with Homeowners on new guidelines)

Rationale – This is a neighborhood targeting families, and this is a chance to provide additional positive outdoor activities for kids at zero cost to the Association.

9) Address land erosion around the lakes

Rationale – Delaying attention to this by pointing to the City, MUD, or other agency as responsible for repairs/improvements only increases the cost and risk.

10) Correct the scheduling of sprinklers and fountains

Rationale – Money is being wasted utilizing these resources at inappropriate times.

11) Provide a response to the request for additional amenities/improvements (plans for any improvements and schedule)

a) Unfinished Green Spaces (Examples: Both ends of Tawakoni Canyon, and no sidewalk/sod at the space at the end of Silver Dawn connecting to the pool)

b) Lights for entrances at Sections 1 and 2

c) Controlled access for the pool

d) Fencing and controlled access to splash pad

e) Lighting at the pavilion next to the pool

We look forward to the Annual Meeting and discussing the above mentioned items.

Sincerely,

Hidden Lakes Community Association, Inc. Members & Homeowners.