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Seventh Mountain Resort, Located near Bend, Oregon
 Settles Legal Battle with Condo Owners
By Andrew Moore, The Bulletin, Bend, Ore.McClatchy-Tribune Regional News

Oct. 7, 2008 - The legal tussle between some condo owners and management at Seventh Mountain Resort regarding costly building repairs and control of the resort's owners' association has been resolved with approval Saturday of a settlement agreement.

The agreement dismisses one lawsuit filed last November by several condo owners over a roughly $18 million assessment to replace roofing, siding and make other exterior modifications to the resort's residential buildings. The agreement also dismisses a suit filed in January by the association of unit owners that sought to invalidate a recall vote against the association's board of directors. In that vote, a new board was elected that rescinded the assessment.

Those party to the settlement agreement, including INNspired LLC, the resort's management company, the association of unit owners, its board and several owner groups, have agreed to instead honor a new assessment based on a $9.9 million construction bid approved by the association's board in August, as well as recognize the legitimacy of the original association board.

The new assessment also will include an amount to be set aside for the resort's reserve fund, which should be no less than 70 percent of $2.13 million, the amount recommended by the resort's annual reserve study.

The Oregon Condominium Act requires condo units to conduct a reserve study each year.

In addition, $6.2 million that INNspired previously sought from unit owners for past renovations to the resort's common areas will be submitted to binding arbitration, with the resulting amount to be tacked onto the new assessment.

Per a 2003 contract between INNspired and the association, INNspired agreed to renovate the resort's common areas with its own money in exchange for a credit against future assessments. According to the contract, INNspired would receive a maximum credit of a little more than 35 percent for its past work when applied to any new assessments levied before Dec. 31, 2007. The percentage dropped to roughly 11 percent after that date.

Dr. Peter Bours, a member of the association's board who had protested the original assessment, was pleased with the outcome.

"Anytime you have settlement, there's compromise. But I think we got a lot of what we were after and I'm feeling optimistic about our future," Bours said.

Bours said the old board is "clearly in charge" and expects the total assessment amount to be less than the $18 million originally sought.

Owners won't know the total assessment amount until the arbitration is completed within a month or two, Bours said.

All parties involved agree the roughly 35-year-old resort needs to be renovated. In addition to new roofing and siding, new insulation will be installed as well as energy-efficient windows, Bours said. Renovation work already has begun, he added.

The agreement also changes some bylaws, including a new provision that calls for a 75 percent supermajority among owners to approve monthly dues increases in excess of 25 percent, sales and leases of fee simple land owned by the association and capital improvements exceeding $8,000 in any one year.

The document also introduces a dispute-resolution process.

The settlement agreement was approved by 96 percent of the resort's roughly 230 unit owners in a vote Saturday at an owners' association meeting, according to Bruce Cahn, a Portland-based attorney with Ball Janik LLP who is representing a group of unit owners who sued over the special assessment levied on owners last year.

As a result of the vote, Cahn said he will dismiss his clients' lawsuit in Deschutes County Circuit Court this week.

"There's been lots of discussion of this project because people are excited what this might ultimately mean to the inn," Cahn said.

"Individual unit owners will feel a burden, but by the end of the day it will be a better place collectively and it will be (more fair) getting us there."

Tamara MacLeod, the attorney representing the association's board, said her clients are happy with the agreement.

"It's a very forward-looking document," MacLeod said.

INNspired officials could not be reached for comment Monday.


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