Response of Management to My Letter of February 14, 2007

From my archives. On February 14, 2007 I wrote a letter to management with separate copies mailed to each board member. That letter is the previous post. This is the mailed response by the Director of Management at our HOA management firm:

"March 12, 2007

Dear Mr. [My name]

On behalf of the Board of Directors and management, 1 would like to thank you for your correspondence pertaining lo the financial condition of the Briarcliffe Lakes Manor Homes Condominium Association. Since your correspondence arrived shortly after the February meeting of the Board of Directors, it was placed on the agenda of the March meeting. All of the members of the Board expressed their comments and certainly recognized the thoughtful approach that you have taken.

Your comments are and were echoed by the Board members. Sometimes it is a very close balance between structuring the assessment level while still providing the necessary funding to not only maintain the day-to-day operations of the Association; and, still be able to the fund the long-term needs of the Association for capital repairs. These decisions are always difficult. But you, like the Board of Directors, are concerned about maintaining the value of the properly. They would prefer paying a little more each month than being faced with the much more difficult financial task of paying for a special assessment.

Again, thank you for your thoughtful approach to your correspondence.

[Signed, The Director of Management, with copies to the manager and the board]"


Note:
In 2007 the board was clearly struggling with finances. I find this letter of response somewhat ironic. About 18 months later, when some owners arrived at HOA board meetings in 2008 and assailed the board and management, they said the board was not responsive, controlled communications and was unfair and uncaring.  The above letter is one of the reasons I challenged those owners and that 2008 replacement board.

Letter to Management and the Board, February 14, 2007

From my archives. Severn years ago, at the time this letter was written I had been an owner for 6 years. I had been monitoring finances since 2000, which was prior to purchase. About 18 months after this letter was written many of the board including the president were replaced. The problem seemed to be owners irritated by fee increases. Over the next two years the new board entrenched its position and attempted to replace management.

"Dear Mr. [manager with separate copy mailed to each board member]

Thanks to you for the work that is done. Thanks also to the board, as a former "volunteer" I understand what that means.

My spouse and I have had the opportunity to "digest" the info presented in the most recent annual meeting and also in subsequent "Manor Briefs". I have some observations to make. I also made a spread sheet and I thought I would share it. [Spreadsheet omitted for this post]

One of the items that is becoming a possible issue is the increases in the monthly assessments. The 2007 budget includes an assessment increase that is 6.0%. Now, that is larger than the CPl but I do understand the forthcoming electricity increases and the maintenance issues that the association faces. Frankly, it is my opinion that the people who lived here for the first 25 years got a bargain, as apparently there was minimal consideration to acquiring reserves for major repairs. Of course this also created a problem as the unit owners became used to the unusually low assessments. I can sympathize with the [owner] who wrote you before the annual meeting and was struggling with the increases and was attempting to find methods to move services from the association to the unit owners, and in so doing, reduce the monthly assessment.

[Paragraph removed for brevity and to preserve confidentiality].

When my spouse and I decided to purchase a unit in Briarcliffe Lakes in February 2001, we were concerned by the amount of the financial reserves. It seems our concerns were well founded, as roof repairs are on the horizon. I am hopeful the assessment increases will prove to be sufficient and special assessments will not be necessary. However, your statements and the statements of board members at the previous annual board meetings were not encouraging. I recall hearing a comment at a board meeting that a roof costs [dollar figure removed]. If so, that is greater than $1.6 million for the entire complex.

On reviewing the published budget, my spouse and I were wondering about the details as they apply to an individual unit owner; a $1 million dollar annual budget is a lot of money. So I made a spread sheet, copy attached. I applied the categories to my "Unit B" monthly assessment. As result I arrived at the following figures for the "Projected Year End 12/31/06":

Monthly assessment = $242.45, distributed as follows:
Monthly Utilities = $14.92
Monthly Maintenance and Repair = $10.56
Monthly Common area Maintenance = $51.42
Monthly Waterfall/Creek Maintenance = $0.63
Monthly Building Maintenance = $76.33
Monthly Administration Expense/Insurance = $42.17
Monthly General Reserves = $46.42

The spread sheet includes a column for annual assessment which is based on the data released in the December 2006 "Manor Briefs". To arrive at the distribution for the General Reserves I applied the unexpended funds on a percentage bases (pro rata) to the various reserve categories. This applies about $2,200 per building per year to the roofing reserves. At that rate, it would normally take 10 years to acquire the necessary funds. Of course, I don't know the amount accumulated to date in General Reserves for this program.

Sorry if this is getting a little long.

I also am aware of the issues concerning renters and parking. I think they are both sourced by changing demographics at Briarcliffe Lakes. My concerns are probably mainstream. As the population ages, there will be increased turnover. New owners seem to have more vehicles, typical of younger families, etc. In my building we have as many as three vehicles for a unit............ In 2001 there were 5 or 6 autos. If that is representative of a trend, then there are serious parking problems on the horizon.

I see a benefit in limiting renters in the complex. I also see problems if this does not come to pass. In my case, in the event of death of me and my spouse, the unit is willed to my sons. I have discussed this with them and I can foresee that in the event of my death, they would be more likely to choose to rent the unit rather than to sell. I wonder how many other, older unit owners (those over 60, like me) are in similar circumstances? This could have a profound impact on the makeup of Briarcliffe Lakes over the next 10 years.

Sincerely,

[My Name]"