October 18, 2016

Today's Blog post deals with the Board Meeting and assessment vote on October 25, 2016, as well as my thoughts on our professional management.

Before we get into the assessment issues, I finally have found the apparent, primary reason for the Board approval of the repair contract with ThunderBay (TB) for Roof C.  As you know, the repair proposal with TB was approved rather than the full roof contract with Martin.  I reread the minutes from the July  Board Meeting, when the contract was approved and there it was.  The $1,200 yearly saving in the maintenance contract that was approved was contingent  upon approving the TB proposal for repair of the roof of Building C.

I understand that this deal was negotiated by Kimberly.  She actually traded a yearly $1,200 savings on the maintenance contract for a repair contract for Building C that cost $10,000 more than the competitor! Of course, we now have only one roofer.  And a roof that will likely need replacement in ten years!

The President's Letter to Owners.

Since I started work on the Blog, Janet has sent the owners a letter in which she tries to support the assessment and projects.  My impressions of that letter follow.

Roof Contracts.  The roof contracts contained in the Assessment Breakdown are all bills that should be paid out of the Roof Reserves.  The first vendor listed, TB, is our roofing company.

The Maintenance and Cleaning Agreements that Janet mentioned in her letter (with excellent detail - something that Kimberly should be doing when introducing contracts) are contracts of which I very much approve.  However, to put this in General Operating is way off base.  We have plenty of money in the Roof Reserves and the roof reserve is the account which should be used to pay for that $8,200, instead of putting that on the backs of the owners in the form of an assessment..

The Association had $36,697.99 on 9/30/2016, in the Roofing Reserve, according to our September Financial Report.  With $2,083 budgeted monthly, that means that  $8,432 will be added to the Roofing Reserve for  a total of $45,029.99 on January 31, 2017, the end of the fiscal year.   Pay for these contracts utilizing the appropriate account and the General Operating Fund need not be reimbursed.

Janet didn't address the two bills from the Breakdown that lists two payments to our roofing contractor, TB, for scupper repairs totaling $1,431.    Again, there is a Common Roof  Reserve for payment of those items.  No need to reimburse the General Fund (meaning assess our owners) when roofing reserves should be used to pay for those items!

The TB Clubhouse Roof Contract.  While it is true that there was overage in the mansard installation because of termite ridden boards, the immediate problem we faced was the nonpayment of assessments from 212 and 214.  However, in November 2015, Wells Fargo paid not only the assessment but the maintenance for Unit 212.  Unit 214 recently sent in a check for over $6,200 that covers the assessment and maintenance for that Unit.  The books should show that all Units have paid their portion of the assessment - a total of $73,000.

Here is the data:

TB roof contract = $6,614     Aluma mansard contract:  $66,000     Assessment:  $73,000

TB Billing:         $6,614   +     $546.50 extras             =               Total:       $7,160.50
Aluma billing:  $66,000   +  $2,244.00 extra boards   =               Total:     $68,244.00

Total billed for both projects:  $75,404.50   Assessment:  $73,000      Overage:  $2,404.50

The $2,404.50 is the money that should come out of the General Operating Fund, not $4,228.

It is likely that the Breakdown figure was determined prior to the receipt of the money from 214.  The balance should be changed to reflect the assessment payment by 214.

The TB data is from the TB invoice of December 12, 2015.  The Aluma data can be found in the January 2016 financial report.

One interesting tidbit:  Resource shows assessment income of $73,541 on January 31, 2016.   This is reported before the assessment money received from Unit 214 could be counted.  The real income here should be less than $73,000. Perhaps part of this is interest, maybe somebody overpaid (unlikely) or this is just a Resource bookkeeping error.   At any rate, Resource should take another look at this, as it may make a difference in the Balance Due, as listed in the Breakdown.

PRS and Bravo.  The work done on 105, 110 and  113 that Janet listed was absolutely necessary.  The Association was responsible for making repairs in Unit 113 that could have avoided this mess. You recall the Laub contract that was signed 2014.  That contract cost us $5,200 to make the water intrusion issues in 113 and 204 go away.  It didn't.  As a result, the buildup of mold in Unit 113 was intolerable.  Because the Association should have addressed the issue in 2014 and took action to prevent further damage, the Association is, therefore, responsible, in my mind anyway, for rehabbing that unit.

Among the Bravo items that Janet did not address but was listed in the Breakdown, was the  $3,200 payment to Bravo for that paint job on the exterior of 113/213, part of the ill-conceived "Paint Buildings Project".  Now, whether it was a correct solution or not, the fact is that this contract was a paint job - even though some would describe it as water intrusion prevention.  We have a reserve for paint (August balance = $10,944), and this is where the money to pay this item should come from.

Update:  Bravo was actually paid $3,950 from the Paint Reserve for painting on Bldg. D.  Why then are we being asked to reimburse the General Fund via an assessment, for an item that was correctly paid from the Reserve Fund?

Dumala Paving:  Last time I checked, we had a paving reserve account.  This is a road repair contract.  It seems very appropriate that this paving expenditure should be paid out of the paving reserve account.  The balance as of August 2016 = $10,970.   More than enough money to pay this bill.  This has nothing to do with the General Operating Fund.

The other items  described in the Breakdown were Common Maintenance issues.

Drainage.  In her letter, Janet talks in generalities when addressing the drainage issue.  There is nothing in her letter that gives us a reason to approve $20,000 for drainage.  Is there a contract proposal?  How did they come up with the $20,000 figure?  What kind of work is involved?  Her letter does not adequately address the drainage issue sufficient for me to vote yes for this project.  And further, those snowbirds that got her letter must also be unimpressed.  If this is the only thing that the drainage project has going for it, then I say, forget about it!

Rear Stairwell Repairs.  I'm just a little confused about terminology Janet used in her Letter to the Owners.  She starts talking about stairwells, then stairs then steps.   So when I substituted steps for stairs, then I was able to follow what she was saying - I think.  It appears that there are 26 steps that are in need of repair or replacement.  So with 12 rear stairwells, we have an average of a little over 2 steps per stairwell.  Now what a contractor sees and what is seen through other eyes may be two different things.  I didn't, frankly, go around to all the stairwells and check them out. Owner Richard Lindner did and he has a very different view of the amount of the cost of the repairs.  I tend to agree that the repair/replacement costs are higher than warranted.

Janet ended her letter with a plea that "we need to start working together to find solutions to today's issues".   The grand ideas that Janet has developed have been entirely hers (plus her contractors and Kimberly).   Who is it that they consulted for opinions on the Building Paint, Stairwell Repair and Drainage issues?  There have been no open discussions on any of these projects.  No group meetings.  No newsletter.  No requests for comments.   You have to wonder how firmly Janet believes in "working together to find solutions" when her actions are so distant from her words. Unless I missed something, her Letter to the Owners, was the first of any substance regarding either the drainage or stairwell repair issues. These are issues that she has identified that are, supposedly, of critical importance to the Circle.  Our owners also have the best interests of the community and when it comes to maintenance projects in the Circle, we'd like the chance to prove it!

Board Meeting.

Update:  The agenda has been posted and they will be accepting our ballots at the door as we enter.  That strongly implies that there will be no additional information provided to help you determine how to vote.  It is take it or leave it!  I'm going to leave it.

Aside from the Janet letter, all we know about the Board Meeting, is in regard to the assessment - the agenda has yet to be posted.  The meeting  is a Special Board Meeting called because an assessment is being considered.   The assessment is for $105,000, a lot of money.  I have some thoughts on the assessment.

Per the Breakdown that was provided in the packets sent out by Resource,  the assessment is designed to reimburse the General Fund for expenditures made to several vendors.  These bills were selected from Resources Unbudgeted Maintenance account, continuing the farce of having two distinct maintenance accounts.  Repaying the General Fund is just a rather obvious method of putting the onus on the owners to pay for some billings instead of the reserve funds.

If you are in the area and will be attending the meeting, you are likely to get some more assessment details presented to you to help make up your mind.  Snowbirds won't be privy to the information that will be presented at the meeting.  The Janet letter is not very helpful.  Snowbirds are apparently being asked to vote for this assessment on blind trust.  With the track record of this Board, it would be folly to trust them to do the right thing with your money - just my opinion!

We do have some budget issues that are going to put us in the red, come the end of the fiscal year.   Reimbursing the General Operating fund is just window dressing for an assessment to balance the budget.  No matter how you frame the issue, we're deep in the red and the management needs to do something about it.   Owners understand budget issues - just give us the facts!

My suggestion:  Back up! Slow down!  Redo this assessment by dumping the projects; they are not a problem that is a dire need.  Remove those bills that can be paid by reserve funds.  A vote by the Board is all that is necessary to okay an assessment to balance the budget.  Take care of the immediate need -  balance the budget.  Vote on the projects at the Annual Meeting in February.   That would give management time to justify the need for the two projects that they are pushing.  And will also give the owners some time to, perhaps, be convinced that these projects are necessary!

My vote is No on this particular assessment.  Obviously there are some issues that we as an Association face.  The budget likely does need a cash infusion.  And some expenditures may be required to fix the drainage and stairwell issues.  But this assessment was presented with far too many holes and with too little supporting information.  I believe the appropriate phrase in this instance is:  Come correct or don't come at all!

Resource.

It was noted in the May 3, 2016, Board Meeting, that the contract that we had with Resource was renewed.  The contract expired on May 1, 2016, with one year of experience under their belt.  The management fee was $750 per month with an escalating clause that allows a 5% increase.  As I understand it, the new monthly rate is $787.50.  That is a premium rate for property managers in this area.  There was no discussion regarding the renewal and, if there were contrary opinion, there was no opportunity to express them.  My initial opinion was that Resource should be given another year, so this is not a big thing for me.  However, time has a way of changing things.

The question before us is:  are we getting premium service from our property manager and our management company?  Are they living up to their obligations?  To me, the answer is no.

Resource has a lot of capability.  Support specialist abound.  But what they've done for our community is just routine stuff -  nothing special - any management company could do what Resource does and probably cost us less.  In your mind is there something that Resource has done that stands out?  They're there; they collect their management fees each month; they issue financial reports as required and tend to some of the small state mandated issues that are applicable to 55+ condo communities.  Sometimes they even answer phone calls.  And, yes, they do well in processing assessment notices.  In other words, they do a similar job that other management companies do for a lot less.  No premium service here!.

I've given examples here and in previous Blog posts in reference to the bookkeeping Resource does. Remember the billing for the Clubhouse cleaning company that ended up in Common Maintenance? The payments made to TB that were paid from Common Maintenance rather than the Roof Reserves?  And the way they handle the flood insurance so that we get a false impression  of the negative/positive balance at the end of each month.  Their bookkeeping is no better or worse than other management companies - but it isn't premium.

But the test of a management company is in the manager.  We have Kimberly.  Kimberly started slowly and worked her way in slowly.  Now that she is established, she has become more important in the grand scheme of things.  Now she is the de facto President, running the Board Meetings when our President is not on site.

Notably, and unfortunately, she has become an enabler for Janet!  When the paint job on the exterior of Building D to waterproof Units 113 and 213 was being considered, I'm hearing that Kimberly is the one that said, yes!  You can sign a contract, have the work done and label it as an emergency - even though it obviously was not.

Of course, Kimberly made the decision to save us money with the maintenance contract with TB, trading the $1,200 maintenance saving for a roof repair contract that cost $10,000 more.  This I have discussed at length, ad nauseam.   This action alone should cost her the management position at Aspen.

How often have you seen Kimberly walking around the yard to check out the things that need to be done?

It is my opinion that Kimberly is not really working for the Association as much as she is working for Janet.  She is not doing the job for which we are paying Resource:  protecting the interests of the Circle.  We should do an evaluation of her work and of Resource  when a new Board is elected in February.  It seems like a new property management company may be called for.  At the very least, a new property manager should be requested.

Just my opinion,
Andy Johnson