Creating "Winners" and "Losers"?

Is it possible that our board, and of course, any board, in the course of performing their duties, can create winners and losers in the association?

I suggest that this can occur. It is the result of the selection and rejection of issues, budgeting and the expenditure of funds, and as a consequence of inconsistency. It would, of course, be a natural consequence of uneven or unequal treatment of unit owners.

On the matter of issues, our board majority has, for two years, had a focus on social issues. I base this in part on the amount of time spent during association meetings on topics selected by board members. Last year, for example, the better part of an entire meeting was spent on the issue of suspending rules enforcement pertaining to a semi-trailer parked on the property. Other issues included the creation of a neighbors club, a picnic which among the board there was strong sentiment that it must be held on association property. This year, there were subtle and not so subtle changes. Board members promoted social issues to include the creation of a "focus group" for rules changes, which has not yet reported to the owners. Rules and rules enforcement has been viewed as repressive or onerous by some of the board. There was a discussion of a "garden club", the subtle change in language from owner to "homeowner" by the board, and an attempt to change the rules to open association meetings to renters. There has been a concerted effort to blur the distinction of "owner" and emphasize "residents."

There are of course, larger issues which govern the overall direction of BLMH. Then there are the smaller ones, which occur in the course of day to day operation of the Association. On the matter of selecting the issues, our board sometimes refers to or cites the Community Associations Institute (CAI), to promote their positions. However, they don't give us the "top 10" list of reasons the CAI promotes themselves. I present that list here (actually, it's a top 9) as published by the CAI. I do this as an aid to understanding what some of the issues are and the selection process of our board:

1. Experiencing problems with turnover from the Developer.
2. Trouble collecting assessments and enforcing rules.
3. Apathetic residents and/or Board members.
4. Dangerously low (or no) reserve funds.
5. Drafting reasonable rules and regulations.
6. Dealing with hostile homeowners or board members.
7. Problems with the election process.
8. Questions about bidding for contractors or managers.
9. Conflicts of interest.

In the above, collecting fees and rules enforcement, apathetic owners, reserve funding are among CAI's top four issues which have relevance to this association. Then we have the drafting of reasonable rules, dealing with problem owners and the election process, bidding  and conflicts of interest. I assume "Conflicts of Interest" applies to board members.

A few of these issues are currently among the topics of the board. The ongoing issues with the "fairness" of Rules and Regulations is one. However, do you see any mention of "renters" or "renter attendance of association meetings?" No, you don't. Yet surprisingly, our board selected  "renter attendance at association meetings" as among the most urgent problems here at BLMH!  Of course, it is possible to say this is a response to number 3: "apathetic residents." However, wouldn't "apathetic owners" and another item "Problems in the election process" in our association, in which we have low voter turnout and owner participation, be more important to this association? Wouldn't it seem to be more important to enroll the 300 or so owners who live on the property in the process of ownership and management? The owners are the "majority" here and if effort is to be made, I would think a proportionate amount should be made to improve owner awareness and participation.

I do not consider the "neighbors club" as a board function. That's a function of unit owners independent of the board and the association. With a 5 or 10% unit owner participation rate in the "club" that would be much lower than the overall owner voting record. Yet the formation of this club was perhaps the number 1 issue here at BLMH last year!

In a volunteer organization, and our board is just such an organization, it is vital to prioritize tasks. Why is that? Because the volunteers who comprise our board have limited time to accomplish their tasks. Some are employed, some are not. None have unlimited time, talent and energy. Some are computer literate, and some are not. Being a board member is not a hobby! So when the board makes a conscious decision or choice of which issues to pursue, it also decides which issues do not warrant the expenditure of their limited time and other precious association resources. When I attend meetings and listen to the discussion of the board, I wonder "how did they go about selecting those issues?" and "How is it that these issues moved to the top of the list?" These are important questions to ask. It also alludes to personal agendas and conflicts of interest, another CAI top 9 issue.

Is an Attentive Board Important?
Should our board be concerned that owners come to association meetings and say "this board doesn't listen?" I would think it would be a red flag when a unit owner, who has professional credentials, has participated with the board and has provided a workshop to them, attends an association meeting and makes just such a statement.

So what's gone wrong? Where have we strayed from the path? It seems the board is focusing on their perceived issues and has forgotten about the heart and soul of BLMH. What am I talking about? I'm talking about the owners. True, in these extra-ordinarily difficult times, there is more than the usual concern and fear out there. That fear can mask or amplify concerns and issues. Are members of the board using that for personal reasons and to further a personal agenda? Or have they become caught up in the uncertainty and the problems in the country and the world at large? I cannot state motivation. I can state that in such times it is even more important than usual to maintain focus, monitor the financial trends and health of the association, and address the underlying concerns of the owners.

Would it be useful to get back to basics and consider that the first task to be done is to promote owner awareness? That is an important distinction. Promoting awareness would seem to be more important than responding to any and all complaints, or simply taking steps to remove the source of complaint, such as watering down the association rules, the collection of fees, etc. Our board majority is comprised of  individuals who apparently have a belief that "our fees are too high." There has certainly been a board response to such unit owner complaints and a resonance with those unit owners.

The board derives it authority from the owners. Are those who don't complain less so than those who do? Or I pose the question that are we to assume there are no problems if an owner doesn't complain? Further, if the board focuses on complaints, or the outcome of discussions with the few who attend the neighbors club, are they "missing the ball" and catering to special interests?

Certainly, because the owners provide the authority of the board, we, the owners are ultimately responsible.  We did elect this board! However, if the board has a specific method of listening to the owners, and creates filters, or ignores certain unit owners, does that create issues? Can that promote apathy and with it, it's adverse effects?

Instead of shutting people off, would it be better to get people engaged as owners? So how should the board treat "owners?" Our board has attempted free coffee and donuts.  They appear to be operating from non-publicized and therefore hidden lists of things to do or not to do in the association. They certainly have failed to create 5- and 10-year plans and have failed to engage owners in those plans.

It is known that apathy and inattention on the part of owners "can create neglect or the pursuit of self interest by the board, managers and committees." Surely our board is aware of this. There are those in this association who complained about such "self interest" and "special treatment" of some unit owners, whether it was real or not. That was a campaign slogan then. It was a perception, then, and so we cannot responsibly choose to ignore this as a possibility, now, because all boards are comprised of human beings, with all the strengths, and failings of human beings.

Are there Problems or Issues to be Concerned About?
Are there problems, issues and concerns at BLMH? What are they? I'm more than a little disappointed in board members who "choose" the issues and then create focus groups to address them. Let's be honest here. That's not representation. That's dictatorship disguised as a social club. Paying $300 per month for a social club is really expensive dues, nearly equal to my property taxes!

Keep the above CAI list handy, and better yet, ask our board majority why they persist in their direction, and why aren't they dealing with other problems? Who are they really representing here at BLMH?

It has been said that "if you don't have a plan, any road will take you where you are going." There is absolutely no doubt the BLMH will get to where it is going. Do you know precisely where that is? If you don't, why don't you? Have you been given a concise statement by the board of the association plan? I haven't! Do they tell us what we need to know as engaged owners, or perhaps are we simply being told that which they believe we should hear? What's missing? Does our board know precisely where they are taking the owners?

What I am talking about is the difference between BLMH as a creation of its owners, and a reaction of the board.

Our board may have a plan, but if they do, what is it? Could they possibly articulate what they are doing? Failure to do so simply feeds owner concerns about well-being and financial security.

For example, we are in the midst of two major programs here at BLMH. The driveway replacement and the roofing program which has been stated is to be completed within another 5 years or so. It would seem obvious that all roofs must be completed in a timely manner, so too with the driveways. It has been stated that the selection of the order of the roofs will be determined by review of the condition of the roofs, in any given year. Obviously it will also be determined by the amount of money available. Hopefully, sufficient money will be collected and saved in such a manner that all roofs will be completed in the identical manner and before any fail. Management has indicated an approximate range of completion dates, but the board has not agreed with them that I am aware. The board seems to be using 8 years from the start as the completion date. This may be an optimistic appraisal of the life of our roofs.

For example, do you know how many roofs will be completed in 2011, 2012, 2013, 2014 and 2015? There has been no published plan. And yet, simple arithmetic would indicate that, to complete the remaining association roofs in 6 years will require that about 7 be done each year. I appreciate that the board may not know exactly which group of roofs is to be completed in 2011. However, we do know the total number of roofs on the property and we can easily figure out how many must be completed per year. We also know the overall condition of the roofs and management's statements about the possible completion date, which reflects their best guess as to the current condition of the roofs. (Notes 2, 3).

What will this program cost this association? Perhaps a total in excess of $3.0 million. I can't be specific because our board seems to operate from month to month and has not "connected the dots" and provided a succinct statement. A lack of a board statement means that as an owner, I have to glean the numbers from published association documents and statements at the association meetings. The projects include drainage improvements requiring landscaping, the cost of which seem to be rolled into other aspects of the projects. By my best guess, the roofing project will cost at least $1.9 million. The driveways are  even more difficult to determine with the information at hand, because the project has been "stalled" for nearly two years. However, it would seem the cost will be at least $850,000 and possibly $1.1 million. Why the range? It's because of varying driveways sizes and the unknown condition of the sub-bases. Some driveways are twice the size of others and to use the cost on the smallest driveways creates a dangerous illusion. Using the highest number overstates the total cost.

We'll keep waiting and eventually the truth will emerge. Until then, as an owner, I can simply watch the dollars flow from the checkbook. However, I can use some arithmetic. If an equal number of roofs and driveways are completed each year, it will require at least $375,000 each and every year for a period of 8 years, to complete all of the roofs and driveways in a manner similar to those completed and planned for completion, to date. If the projects must be completed in 6 years due to the condition of the roofs and driveways, it will require $500,000 per year. Do we have sufficient funds to do that? Ask your board!

I have questioned this plan and I have cited the professional managers statements about it to the board. For it's part, the board has been very closed mouthed and has "hedged its bets" by hiring an outside firm to provide a "reserve study." However, the board majority also voted in a 0% fee increase. They apparently believe we will collect the necessary funds at the current fee rate.

So while the plan continues, some owners fret and worry. I have been told point blank by a current board member who is not the treasurer that "there are sufficient reserves" to do this project. I have asked that the entire association be presented with a clear statement to substantiate that position. That has not yet occurred.


Are our Fees Too High?
The board majority appears to believe this, has sided with the vocal group that says "our fees are too high" and passed a 0% fee increase last year. This too, seems to substantiate the board position that this association has, at the current rate of collection, sufficient monies to do the roofs and driveways.

I don't know if our fees are too high, are just right, or are too low. However, the numbers aren’t encouraging. Management has recommended a 7% fee increase for the sole purpose of adding to reserves. Certainly the "reserve study" should provide some clarity. However, it will not necessarily provide certainty. If that were so, the expert opinions of our managers should have been sufficient. What happens if the opinions revealed in the "reserve study" differ with those of the professional managers? My guess is the board will choose that which allows the lower fees. I would suggest that critical numbers for roofs, driveways, streets, and other infrastructure be reviewed to assure accuracy and alignment with "reality."

If the board was uncertain, why was there no "austerity program" announced and implemented last year or this year?

If our fees are not equal to the task, are there to be "winners" or "losers?" Last year I was concerned when the board decided to hold fees constant. Why? Because 1) Owners can better absorb small annual increases. 2) Money uncollected can only be collected in the future by larger fee increases. 3) The board had not yet gotten a larger reserve study. 4) The advice of the professional managers in their informal "reserve study" indicated there were concerns and issues. 5) The driveway program was probably going to cost more than anticipated. 6) The board had stated a commitment and had begun to address some of the drainage issues on the property. 7) Considering the above and the large amount of uncertainty, to err for a year in the direction of slightly higher fees would seem the better choice than to underfund these projects and risk a larger fee increase in 2011. 8) I don't like to gamble and won't knowingly do so.

So how is this relevant to the topic of this post? This is an example of how board action can create or promote winners here at BLMH. What am I talking about? Perhaps not all roofs will be completed in a timely manner or using the same methods and techniques. How would you characterize that inequality? Does it matter? Well, previous boards articulated and acted to preserve the integrity and similarity of all of the buildings here at BLMH. Some unit owners objected. But is there a method to this? Consider that differences may result in some buildings being perceived as "better" or "worse" than others. Varying amounts of insulation will lower the energy costs to some unit owners. Sales of units could become competitive within the association if the board approves and uses different methods and techniques.

Can Inconsistent Fees Create "Winners" or "Losers"
Not all owner are in equal circumstance. Some are retirees who are experiencing pension payout reductions. Some are working but are experiencing reduced hours and reduced payrolls because of the recession. Some were given a 5% raise this year. These differences are irrelevant as "owners" because as owners, we are all equals. We all pay the same fees as based on percentage ownership. The same is true also for our votes, which are equal. So those circumstances should have no bearing on the day to day operation of the association. However, we all have a limited capacity to bear the fees that are levied, and to support each other in carrying out our duties as "owners."

So when fees increase, are there "winners" and "losers?" Well if you are financially strapped, I am certain you feel as if you are a "loser". But let's consider how this works if we take another perspective.

Let's assume that the board holds fees down for a period of years. If you are vigorously attempting to sell your unit and you do, you will achieve some savings in fees because you sold your unit while fees were held down. If you purchased your unit while fees were low, you may have some savings but those will vanish if fees increase and more importantly, if they increase to make up for past deficits. That's a point of CAI number 4: "Dangerously low reserve funds."

When I purchased here, I was one of the those who did so after a decade of low fees at BLMH. Shortly after purchasing, fees ramped up and continued to ramp up. So today I pay about 50% more than I did about 9 years ago. Anyone who sold the year I purchased was able to pocket about 10 years of lower than necessary fees. I and anyone else who purchased at that time, took the difference out of our pockets over the next 9 years and handed it to the association, where a portion has been saved for "reserves" for new roofs, driveways, etc. I paid higher fees to accomplish this and to build up reserves that were "dangerously low." So I suppose you could say I was a "loser".

Can this happen again? If the board is currently collecting sufficient fees to cover all anticipated projects in a necessary and timely manner and is building a contingency fund, it should not. I think the primary purpose of the reserve study would be to show that we have identified all of those projects. I say that because we already supposedly have a list of projects, their time lines and a professional management company to guide us. Our board currently has, and has had, the facts. So should we be uneasy? I am, because our board has not put this into a succinct, clear, concise statement and has instead avoided doing so.

They have also undermined confidence by their occasional lack of support for management.

Competition Among Owners in the Association
An owner has the right to provide upgrades to his or her unit, for personal benefit and this may differentiate their unit and stimulate the sale of the unit when the time comes. For example, that $10,000 kitchen upgrade may make a difference when selling the unit. This is the unit owner's choice because it's the unit owner's personal funds.

However, if the association spends unit owner fees and creates differences, then what? At the time I do finally sell my unit, I would not want to compete against another building in the association on which $50,000 or so of association money was spent for treatments my building did not get. Would you?

To avoid even the perception that there will be some who "lose" here at BLMH, it would seem that the board should be doing everything in it's power to promote owner engagement in projects and of course, in many others. That would include frank discussions of the finances necessary to achieve them.

The board has chosen to taken a somewhat paternal approach which seems to request that we "don't worry" and "be happy."

This sugary syrup is being spooned to a population which has heard this before, from "big government" to "big corporations" to local politicians. Somehow reality did not coincide with the cheerful appraisals and we now find ourselves in the worst recession in anyone's memory, with terrible unemployment, a State which is considered a bigger credit risk than Portugal, etc. In this environment, even if we aren't worried, people now sometimes look for something hidden in the shadows and over-react. Our board certainly should realize this.


Does Fee Collection or Rules Changes Create "Winners"? 
Another example. Number 2 on the CAI list includes "trouble collecting assessments." Are our receivables, which is to say "uncollected owner fees" increasing or decreasing? What were they in 2007, 2008, 2009 and at the current trend, where will they most likely be on December 31, 2010? That data would certainly indicate if board action is improving the collection or not.

I don't think there are any winners when unit owners fall behind in payment of their fees. However, the losers include all unit owners because the financial plans assume these "receivables" will, in fact, be collected. That rosy assumption is one of the reasons these past due fees are considered to be "receivable." However, what if they are not or cannot be collected? The association building programs assume the reserves will be there. If they aren't, who will lose? The other unit owners who will be required to step up and add a little more each month as a "fee increase." Or perhaps those who are left "holding the bag" when there is a call for a "special assessment" or the board decides to encumber unit owners with a mortgage.

Number 2 also includes "rules enforcement." Our current board seems to be on a direction to water down the rules to keep everyone happy. I have criticized sloppy, haphazard and unequal enforcement many times. The former Rules and Regulations Director was characterized as being "uncaring" when she refused to deviate from the rules and procedures. There was discussion about rules enforcement as actually being "punishment."

Rules enforcement is an attempt to seek compliance.

Our rules are not onerous or overbearing. Violators are given a letter and sufficient time to comply before any attempt is made to levy a fine. But that was insufficient. Who "wins" in the current arrangement? Those who break the rules and that includes chronic and repeat offenders. When trash is left outside a unit, and the owner isn't cited but this is picked up by our professional maintenance crews, who pays? In these situations, "Who loses?" Those who attempt to keep the rules and the social contract that includes.

Keeping the rules may include some cost to the owner. For example, purchasing a bicycle rack to get it out of the walkway, or purchasing more costly "brown" windows than the cheaper "white" ones. Those who comply may spend some of their money as involved and committed owners.

Who is really being punished here, if anyone?

Continuing, I and others on my cul-de-sac assist each other in picking up trash in the street, discarded newspapers, etc. We also share the burden of cleaning the halls. As I have previously written, it's possible that all in our cul-de-sac do not do so. Would rules enforcement encourage such participation? Would such participation be indicative of a step in the direction of involved owners? Possibly. But our board, through word and deed, actively discourages this.

So who loses? Most owners don't sweep the snow from the walk I have been informed. Most don't pick up the trash. Will such behavior promote ownership and desirability here at BLMH? Will it promote sales? Does a lack of support of such positive behaviors possibly promote negligence on the part of owners?

Why did the board promote a neighbors club and avoided a spring cleaning or fall cleaning drive? Why the emphasis on "party" instead of co-operative building of a neighborhood?  I understand the desire for parties. But what about being and acting as owners? This is neither a "Club Med", nor a retirement village, or a rental community.

Owners and Other Residents
Our board has argued in favor of and attempted to pass a rule change in which renters could attend association meetings. Who are the "winners" among the unit owners, should this occur? Those unit owners who own property and rent. How is that? Renters will attend meetings, and in other ways gain access to the board. Our board appears all too eager to spend their time and our money in dealing with social issues rather than running the business. In doing so, they could relieve the landlord, which is to say, the unit owner who rents his property, from dealing with and being fully and completely responsible as unit owners and as a landlord. A previous board member, who does in fact, rent a unit here, argued that specific point with this board. However, the board persists. Why is that?

Who loses? Any unit owner who resides in the building with the renter. Why? Because I am unaware of any renter at BLMH who shovels snow in winter, vacuums or cleans the hallways, distributes salt, picks up the papers or in other ways participates in "ownership" here at BLMH. So these duties and responsibilities pass to the remaining unit owners in each building.

I never hear the board promoting more “ownership” at BLMH.

"Lighten Up", they seem to be saying, so here goes!




Comments, Corrections, Omissions, References, Miscellaneous News
Note 1. What I am presenting here is gleaned from various issues that come before our board during association meetings. I listen to the board, our professional manager and the owners who attend. I also listen to individual board members, the members of committees and focus groups. I observe the actions of board members at informal events such as the "neighbors club." I also read all of the published material on our association that comes my way.

Note 2. I have revised the numbers per the most recent information available September 9, 2010. There is a great deal of uncertainty about the cost of the driveways because no one knows the exact condition of the sub-bases and there are variables in the contract. It is most likely the driveways will cost more than expected and this was demonstrated by the costs discussed during the September 10 association meeting. 14 driveways are in construction (7 begun in 2009 and 7 additional selected in 2010). We won't know the actual costs until these drives are completed. We can then project a more accurate cost of the remaining 70 driveways, using the actual cost per square foot of the 14 completed driveways.

Note 3. There are wide variations in asphalt shingle roofs. According to experts, asphalt shingle roofs have varying life expectancy, depending on several factors including the weight (quality) of the shingles, the slope of the roof, the exposure to the sun, the shingle color, the weather and general climate. Our roofs have two layers of shingles. The first was applied at the time of construction. The second was added on top of the first when that first layer reached the end of it's life span. My building is, according to my bank, approaching 34 years of age. Each layer of shingles on my roof most probably had a life expectancy of 15 to 20 years; doubled would yield a total life span of 30 to 40 years. This is apparently what our board is using.

Darker shingles such as ours wear faster, because they absorb more ultraviolet light. As shingles "wear" they lose their granules. You can see granules at the discharge of the downspouts after rain falls. This is normal. However, as these granules leave the roof, it becomes more and more exposed to ultraviolet light and the rate of aging increases. As the granules are worn off, the shingles will dry out and become brittle. They will then crack, buckle, and curl.

If you see curling of shingles, that is an indicator of a wearing roof. I have photos of a worn roof on this blog. It was on Harrow Court and it received a new roof last year. It is best to look at the roof in morning or evening, when the light casts longer shadows. The condition of the roof and in particular curls or lifting shingles, are more visible.

The shingles on our roofs are reaching the end of their life span. That's why some of our roofs are being replaced now.

How long can shingles last? Using modern standards, the most common type of shingles used today weigh 210 pounds per square and is called a "210" shingle. It has an average life expectancy of 12 to 15 years. There are heavier asphalt shingles available including 225’s (225 pounds per square) 235’s and 320’s. Modern fiberglass reinforcement mat shingles such as 225’s and 235’s have an average life expectancy of 15 to 20 years. The heavier 320’s have a life expectancy in excess of 25 years.

Here are a couple of photos taken of a roof that was replaced last year. This is prior to the replacement. You can see the curling of the shingles. This roof also had a section in which the shingles had blown off!

Note 4. I really do like it here, and I am looking forward to the completion of the driveway this year, and I am also looking forward to that day in a few years, when my building will get a really neat architectural roof like the one at Harrow and Lakecliffe. We will each get one, won't we?