Creativity in Running a Homeowner's Association

One of the great impediments for boards is a failure to realize and identify "change." Board members may actually take the position "This is how we have always done it" or "If it isn't broken don't fix it."

Unfortunately, putting our heads in the sand doesn't prepare us for the future, nor does it empower us in addressing change when is occurs. Which is why board may also say "How could this happen?" when things occur. Of course, there will always be unforeseen events. However, a lack of planning and preparation is the greater problem.

One easy task is to take a budget from 10 years ago and compare it to a current one. One can quickly identify some significant events. However, with the short term service of many boards, turnover and even a sometimes lack of willingness on the part of boards to do the work, some HOAs may have great difficulty completing even this simple exercise. Nevertheless, there is real value in doing so.

Several months ago I told the board at our HOA that it wasn't so many years ago that this association spent about $6,000 annually on water for the grounds, streams, etc. Recent budgets have reached nearly $60,000 annually. Identifying these types of changes provides the opportunity to apply creative solutions. However, boards may be content to deal with $25 monthly charges and other minutiae. Furthermore, if boards members take the position "Our fees are not high enough" for proper maintenance, there may be personal agendas present which interfere with identifying budget areas which could benefit from creative solutions.

Questions weren't raised by all of the board members when I pointed out the change in water bills in recent years. Doesn't that seem odd?  Furthermore, in 2010 there was an interest on the part of some in our HOA to investigate fraud. That was the position of some owners and even a few board members. When I question this, it was stated that this was the only reasonable explanation for rising costs in the HOA.  That too smacked of personal agendas at work.

Are there other areas in your HOA where improved scrutiny could result in significant savings? Firstly, one has to give up their preconceived notions and positions. For a board this should be easy because we are "fiduciaries." But in practice it isn't. Secondly, it requires some diligence in the form of research, getting off our duffs and really investigating the property, and then having unbiased discussion with management and maintenance. After all, they are the real experts. So we have to ask open ended questions of them without wasting their time.

Here are several areas discussed in recent years, or currently under discussion, as examples.

1. The utility rooms in our garages are electrically heated in winter. Would improved insulation be beneficial?
2. To determine the condition of the heaters in the utility rooms, maintenance personnel frequently inspect by opening the doors. This releases all of the heat in the rooms. Would temperature monitoring be a better way?
3. Recent changes in water metering charges has apparently resulted in annual meter costs to the HOA of more than $20,000. Perhaps there should be changes made?
4. Recent changes in water billing rates has resulted in water usage bills to the HOA in excess of $40,000 per year. Should a board consider methods to reduce water usage?

Of course, any changes will likely cost money and that means that "cost benefit analysis" is a necessity. Furthermore, this will add to the tasks of any board. Our boards for years preferred to avoid making conditional studies and even avoided the preparation of an independent reserve study for more than 30 years. Long term planning was avoided to "keep fees as low as possible" and owners colluded with this. Limited owner involvement or desire, and at time board unwillingness to be forthright and transparent will restrict opportunities. Add the "Don't fix it if it isn't broken" mentality which is really an attempt to avoid preventative maintenance, and one can see that in HOAs there may be no desire to be creative. It is truly easier to "slap paint on the pig" than to do almost anything else. And boards do take the easiest route, or the one which favors their personal agenda.

Boards do know what is required. "Follow the money" was a favorite expression of our longest serving board president. But that isn't as easy as it seems, and too often it is used as a baseball bat rather than a research tool. But then again, we all want to hit something, and some want to be "a home run hero."  In fact, there are no quick solutions to really difficult problems and a large, aging HOA is a difficult problem.  Nevertheless, the simplest solution may be the best one. To find a solution to a problem one must first identify that a problem does exist.

Currently, one of the major discussions is how to save ducklings on the property. That has taken precedent over the difficult discussions in several HOA meetings. We each have our priorities. Mine is doing what must be done to avoid those 5%, 7% and higher annual fee increases while dealing with serious problems and maintaining the property. However, I am of the opinion that now that fees increases have moderated for several years that some owners think that "this is the new normal." It isn't. It would be far, far easier for boards to charge 3% to 5% annual increases to owners, and some would prefer to do that. However it would not take long for our fees to rise to $500 monthly. One must ask how "affordable" our units would be should that occur. But we do avoid the difficult discussions. 

Owners and their personal agendas

Owners aren't forthright about their personal agendas, and in my experience neither are board members.

There have been times that this association was apparently run on special favors; that could be a source of some owner confusion. At times in the past I observed owners cornering the board and the board complied with their request. For owners, the reasons are sometimes financial. It is a means to transfer wealth from the coffers of the association to their own. Of course, that wealth was contributed by their neighbors, But I suppose for the greedy that is what neighbors are for.

A few years ago I sat in the audience during an association meeting. On cue I watched 30 or so owners pass slips of paper up to the board. These were the wish lists.

This is a political way to run a HOA, and a populist way. With an elected board, should it be any other way? I think there is a better way, but owners and even board members have conspired otherwise. So that is how it has been at BLMH from time to time. There are a variety of reasons for boards to run a HOA this way. One is to be liked. Another is to get re-elected. One is to get persistent owners to go away, and another is to stretch budgets; things that can’t be given to all for financial reasons are given to the few who complain or are favored. Then they go away and the problem is swept under the rug. The other owners aren’t informed and remain clueless.

If boards wanted all owners to participate this way they would mail a “wish list” to each owner and ask them to compete it with the special requests and things they want, and then provide it. No boards have ever publicized their back door manipulations and so past owners were not aware of some of the machinations that have occurred. One would have to attend each and every meeting as I did for years and practice critical thinking skills to figure this out.

A few years ago an owner who was struggling financially wrote to the board and said that he/she would gladly give up some perks to stop the continuous fee increases. I always have wondered how that person would have felt had he/she attended the meeting in which owners demanded more flowers, or a better view or whatever.  This association doesn’t have funds to operate this way. It doesn’t now and as near as I can determine it never did. But owners continue to make demands and some boards do eagerly spend. I don’t.

Our budgets are really tight. Yes, we do have more than a $million in the bank. That seems like a lot, but by year's end it might be less than a $million. How much is that really? About $2,976 per owner. That is less than I spent to have my fireplace removed. It is far less than the typical remodelling project in one of our units. Even the appliances cost more than this.

So it is no surprise to me that owners will try to shake down the board from time to time.

Yet a few owners see that $1 million and lust for the gold. Okay, so why do I say that our reserves are barely adequate and why can’t this association flush that $1million on owner personal demands? To answer that question one needs to ask “What is the condition of the infrastructure today?” For several decades minimal work was done on the streams, etc. We have additional major street repairs on the horizon, the consequences of hundreds of dead and dying trees to deal with as well as ongoing water main issues. Average cost to remove, regrade and replant a single tree is possibly $1000 and we have lost several hundred trees. This year the association will spend nearly $200,000 dealing with this and related landscaping issues. There are also the issues with rainwater drainage on the property which is in part attributable to the design of the new roofs. And that is merely the tip of the iceberg. Our buildings are now approaching 40 years of age, with failing mailboxes and antique intercom and door systems. Our most senior board member once made the comment “You can slap paint on a pig and it is still a pig.” Perhaps that is why earlier boards emphasized painting the buildings. In fact, there is no funding in the budget to provide special favors, and there never was.

We Need to Live in the Present, But History is Important

While the board was discussing the budget for 2016, I made several remarks and one of the board members countered "But that was history!"

History is an interesting phenomenon. In fact, considering the age of this planet and the lifespans of human beings, what most of us do will generally have little impact upon the future. Therefore it is most important to live in the present, have as much impact as we can in the present, and avoid screwing the future. In a HOA that means making rules, maintenance, project and financial decisions that allow future owners to live unfettered from bad decisions, debt and the consequences of poor rules decisions.

Budgets are always difficult to prepare. It is unfortunate that boards are frequently so uninformed or unwilling to bone up on history. "History" can teach us important lessons and "history" can allow us to avoid serious financial pitfalls. The new board of 2008 was particularly uniformed about the history of this HOA and they fell into a financial trap set by previous boards. Today this HOA continues to pay for new roofs because of historical decisions made by the boards of 2001-2008. This HOA also experienced road failures about 15-25 years earlier than expected. But some boards don't want to know about history or use it.

I do use history as a guide because it is such a great teacher. It can guide us to avoid the pitfalls of the past and avoid the mistakes made by previous boards. Not everyone agrees with this approach and I suspect personal agendas do play a part in HOAs. Promoting a personal agenda and a legacy can really screw things up.

It is somewhat ironic that back in 2008-2010 when things looked really bad at BLMH that I was singled out for personal attacks because the word being promoted was "Elect Norm and he will raise your fees."

Nothing has been further from the truth. In fact, I've been the foremost champion in this HOA for fiscal responsibility, proper maintenance and the lowest possible and realistic fees.

I'm the one who championed the fee decrease for 2015 and it was based on solid research. In 2015 I again spent the many, many hours to come up with the basis for a budget for this HOA for 2016 with the two most junior members of the HOA who agreed to be on the "budget committee." Yet, I again find myself with them under personal attack. Why? Because we did the research which indicated that a 1.5% fee increase for 2016 would me more than adequate. Meanwhile, some board members argue for 3% to 5% annual increases. Based on what?

There is absolutely nothing in the three most recent reserve studies that indicates this is a requirement. Each of these studies have been imperfect, yet have been discussed and rebutted by boards thanks to the hundreds of hours I have put in to do this. That includes getting proposals for some of the issues raised in these studies. The advantage of physical surveys and obtaining proposals is they provide real substance to the issues of replacement costs, in real time.  This work was done with the participation of management which is the proper way to do this.

I've also done solid work on methods to alleviate possible concerns about some possible infrastructure issues 30 to 40 years hence. I've discussed this with management and presented it to the boards since 2013 not once, but annually.

We've shifted from a reactive approach to water main problems to a preventative maintenance position. We have replaced our "minefield" Lakecliffe Blvd with a solid, properly engineered and installed road. We are way, way ahead of the curve at this point, I've personally reinvigorated the maintenance of this HOA and we are doing a damn better job than the boards of 1990-2008 did.

Yet I again find myself under personal attack, and this time it is from within the board. Some old dogs cannot and will not learn new tricks, I guess, except undermining ones.

It is ironic. I'm the one who puts in the hundreds of hours in this HOA to do the work which ultimately defends the owners. I have no personal agenda, I do solid research and yet I am the one attacked.  It reminds me of that old expression "No good deed goes unpunished."

Fortunately, I don't have to live here. I can sell or rent my unit at any time. In other words, I don't have to spend all of that time dealing with this bullshit. I do really have better things to do and I can provide my services where they will really make a difference. I have learned the lessons of history. Too bad some have a personal agenda and will throw others, including this entire HOA "under the bus" in order to achieve it. But some will never learn from history.

I have warned owners about the pitfalls of not paying attention and participating in their HOA.

Board Operation, Some Examples and Fiduciary Duties, revisited - Part I

I'm going to provide a few quotes and links to illuminate the subject of "fiduciary duty" as it applies to an HOA with some insights into these duties as they have been and are being applied in this HOA. Because of the length and richness of this subject, I’ll provide this in three parts. Part I will serve as introduction, Part II will include references and review of “fiduciary duty” in the words of "experts" and certified "professionals", and in Part III I’ll look at some of the practical application of  "fiduciary duties" as currently and previously applied in this association and I'll draw some conclusions and perhaps make a few recommendations. 

First, some background information. If you came here for entertainment, you came to the wrong place. I don't think this subject will be particularly entertaining, but I suppose it could be. I should also state that one of the forces that drive us is the desire to remain in the dark, and unenlightened. That way, we can continue on our merry way and do untold mischief, and feel good about ourselves at the same time. Yes, it is true that "ignorance is bliss" and if you crave that, you have also come to the wrong place. 

Our board is comprised of many newly elected, or inexperienced members. That is to say, some have no prior experience on the board of an HOA, or any board, for that matter.  Some have no “professional” or business experience. So it would be presumptuous on my part, and arrogant on theirs, to assume that they know their true duties. Most of us, and that includes myself, operate more as technicians than as leaders. That's a natural way for most of us to be. We all have immediate tasks and responsibilities to perform, and we can and do become readily absorbed in the day to day minutia. However, to do any task well requires some critical thinking skills and the willingness and ability to keep "the big picture" in perspective, and to prepare for the part. That preparation can take years; some of us prefer to think like the Nike ad, which purports that all it takes is a nice expression such as "Just Do It" and we are ready for the task at hand. Reality has a way of deviating from 30 second sound bites. If you have read about Chesley B. "Sully" Sullenberger, the pilot who landed a disabled aircraft in the Hudson River in January 2009, you quickly discover that he was unusually trained. That training, some on his own initiative, allowed him to accomplish what some people think was a "miracle".

For the members of the Board of Managers of an HOA in Illinois, part of the training is an understanding of the Illinois Condominium Property Act, another is a comprehensive  understanding of the Bylaws of the HOA and the Rules and Regulations. Another and perhaps most important is an understanding of their “fiduciary duties”. Finally, each member of the board  must possess sufficient education to exercise common sense, make sound business decisions, and perform their specific duties and assignments.  If we are to assume that an HOA is first and foremost a business, which it in fact is, then some rudimentary arithmetic and accounting skills are required. How else to review, approve and execute budgets? And so on.

It is the responsibility of candidates for the board to determine their suitability and  to either possess or rapidly acquire the fundamental skills necessary to function as members of the board of managers. They all vote on all matters, and they begin voting at the first association meeting. So it would be common sense that the members each possess these fundamental skills. Of course, if they don’t then they must rely upon “professionals” who are experienced in these matters, or they must rely upon other board members. In either case, the quality of the board is impaired. In the first situation, a board can become over-reliant upon the judgment of a single manager or professional. In the second case, the board may become the expression of one or several “powerful” board members. In both cases, the results can be less than satisfactory. For example, at one time, this association relied upon a manager who provided guidance on budgeting and reserves which was, to understate it, less than adequate.  We have the historical data to substantiate this. 

The opposite extreme is also possible. In such a situation the board decides that it is far too reliant upon the “professionals” and is eminently and inherently qualified to make more or most of the decisions.  At our HOA, the term “larceny” is sometimes used by some unit owners to describe past boards and management. There is no proof of any of this; it's simply innuendo and character assassination. I do have to wonder how people can think and say that the past situations were so terrible, and then in the next breath promote a position founded on the belief that our current board is so eminently capable, qualified, trustworthy and honest that such a situation “could never occur here”. This type of flip-flopping is not rational and certainly doesn't adhere to any definition of  "common sense" that I am familiar with. Any manager is somewhat familiar with the “Peter Principle” and if people are seriously considering this route, I suggest all unit owners read Tom Peter’s management book “Thriving on Chaos” (sorry for the pun, Mr. Peters). I do have a copy of this excellent book in my library.  But again, the fiduciary duties of a board would prohibit certain aggressive actions. 

Of course, a board could take the approach that they are first and foremost "administrators", hire professional threesomes in all categories, and then sit back and allow or direct, depending upon the skills of the board, the professionals to argue each position and present for each situation. The board would then simply select the two that, in the opinion of the board, are most satisfactory and vote on that. Using this approach could be prohibitively expensive and would run afoul of "fiduciary duty" issues. After all, could anyone really state that such an approach was a good and prudent use of association fees?

The members of our board are mandated and required to put the association first, at all times. Upon becoming members of the board of directors of BLMH, they gave up certain personal rights as a unit owner, because they must now act in the interests of all the owners of the association. They are prohibited from creating or supporting groups or sub-groups in an HOA. For example, as a unit owner, one can ignore the rules and assume this is primarily a social club and press for block parties, garage sales, street fairs and socials and coffees. However, a member of the board of managers, who also may have similar beliefs and agree with a specific group, is required to put their personal wants, needs and desires aside. They must view this solely with the perspective of an impartial member of the board of managers. That perspective should include a consideration of  the impact on all unit owners, which may include but is not limited to the cost of insurance for these public parties, the consequences of accident and possible litigation, direct and indirect costs, the problems of traffic and parking and possible hazards with visiting people driving our, to them, unfamiliar streets, and finally the consequences and desirability of the imposition of these events upon all unit owners. (Note: We don't have a sidewalk along our streets so most unit owners and their pets walk in these main streets, which because this is a PUD, are narrower than the usual, and cannot readily accommodate pedestrian traffic and two-way vehicular traffic).  A member of the board must weigh the possible benefits to all unit owners, as well as all costs both direct and indirect, as for example "wear and tear" on association property, and any and all possible liabilities. The personal position of the board member is of no relevance. Members of the board must  actually transcend the issues and view everything from the perspective of their fiduciary duty on one hand and the Illinois Condominium Act, the Bylaws and Rule and Regulations of the Association on the other.

What's best for the association is not necessarily the result of formal or informal polls. As an example, what if the majority of this association, as the result of a poll, decided they wanted no reserves and that all monies paid should be returned? This is an extreme example, but I think some of our board would be inclined to say "return the money" because that's what they believe the "majority of us" want! That’s one of the dangers inherent in an HOA in which a member or members of the Board of Managers are unfamiliar with their true “duties and responsibilities”.  If any member of the board assumes they have a broad political or  “social mandate” and their duties encompass ambiguous “change” and their specific tasks are the administration of  the Landscaping contractor, Maintenance contractor or even simply preparation of our Newsletter, then they are operating out of a personal perspective, not a fiduciary one.

To look at this a little closer, it is perfectly appropriate for me, as a unit owner, to express my "outrage" over what I perceive as "injustice" or infringement upon my personal “rights” or the rights of others, and I can threaten, cajole, or solicit agreement to change the rules which don't work for me. And in so doing I can ignore all or most of  my neighbors. However, as a member of the board, I must publicly and privately uphold the current rules and regulations and see that they are applied fairly and impartially to all unit owners. The board may openly discuss the issues inherent in the current Rule and Regulations, but is bound to uphold those rules fairly, impartially for all unit owners, no matter what their personal situation, relationship to the member(s) of the board or even their proximity as neighbors.  There is a method for altering the rules and regulations, but again that method not only encompasses open discussion but it also requires the members of the board of managers to view this from the perspective of their “fiduciary duties”, which includes the rights and privileges of all unit owners.

To overstate this, I can also, as a unit owner, operate from the perspective that I want to be as popular as possible. I can schmooze and "ooh and ahh" and express "oh, you poor dears" to my heart's content. However, as a member of the board of managers I must remain somewhat aloof and avoid entanglements and promises. I can only promise that I will always be objective, will do my best to use sound business judgment and common sense to guide this association in such a way that divisiveness is reduced, that the property (common elements) is well maintained, and that I will evaluate budgets encompassing both current and future needs when preparing and voting for assessments, fees, promoting capital projects and the funding of current operations and maintenance. 

It is unfortunate but in the real world, not all of us operate from integrity and it is also true that individuals seek seats on boards for personal esteem, personal reward and to promote personal agendas. If you doubt me, then you are truly naive. I recommend that you spend about $100 and talk to a good lawyer who specializes in condominiums and HOA law in Illinois. I can recommend one.

As individuals and unit owners, we may perceive our duties and obligations as the member of a board of managers of an HOA in a certain way, and there are many possible interpretations, but only one is of any significance, and that is the legal interpretation as it applies to our HOA. Winning a seat on the board of managers is nothing more than an opportunity to be a steward. Some say it is to work for the good of the association. But what truly is the "good of the association"? That is an area of mischief. Only by becoming intimately familiar with the concept and realities of one's "fiduciary duties" and by using that as a beacon to guide a board member's actions, is it possible for the board members of an HOA to navigate through the problems which face them.  If the board member is capable of exercising common sense and good business judgment, it is then a possibility that the board member will successfully complete his or her tasks, but will most likely not be universally popular.  

Actions by a board to put the board first is not putting the association first; power in a democracy does not give one the power to do whatever one pleases. It does provide the opportunity and that can be coupled with private agendas; ergo the need for the Illinois Condominium Property Act, for observers, and for point of law. Of course, what does one do in an association when members of the board have the unflagging opinion or belief that their position always conforms and aligns with the "right" position? That is, of course, in accordance with their personal beliefs, standards, judgments and evaluations.  It may also be aligned with those of a group of unit owners which is forever promoting and reinforcing these unshakable beliefs, to the benefit of course, of that particular group. In such a situation the board member occupies the center of the universe, and we the unit owners, in particular the "silent majority" of us are, I suppose, simply dust and detritus orbiting around them!

When posing some of these questions, I have been told that a good paper trail is always a handy thing to have, and there are any number of organizations that provide "independent and objective evaluations of fiduciary compliance".

  In part II, I’ll take a closer look at what exactly are the “fiduciary duties” that guide our board and how they guide and enable a member to do “the right thing”, no matter what their personal viewpoint may be. 

Towing Incident and Response of a Member of the Board of Managers

During the April meeting of the Association, our Communications Director, who is a member of our Board of Managers, read a statement which she had prepared, signed and presented copies. I am publishing that statement below. I delayed this posting because I wanted to see what outcome, if any, would occur over the following month and at the May meeting. The reading of the statement and noisy followers of the Communications Director disrupted the April meeting in what I would describe as an attempt to coerce the entire Board of Managers. Refer to my blog “Update – Board Meeting of April 9, 2009’.

The position taken by one of our board of managers was very disturbing to me. Our board is a representative body with a legal mandate to represent all unit owners, equally. A member of our Board of Managers should not take a position for one unit owner, that would not be taken for any and all unit owners. The members of our Board of Managers are not empowered to determine who is deserving or not deserving in our Association. Ergo my ongoing concern. It would appear that those of us who would be less deserving in the opinion of the Communications Director would be held to the rules. There are parking rules and the boulevard leading to our complex is posted with a 5,000 lb. GVW restriction. A tractor of the type described has a GVW in excess of 30,000 pounds; it cannot be legally driven to our complex.

Here is the statement made by our Communications Director at the April meeting. I suggest that all unit owners read this and consider the implications. I have altered this only to remove the identity of persons named in the statement. For that purpose underlines indicate where names, addresses and other identification have been removed:

Proposal to the BLMH Board of Directors
April 9, 2009
RE: __Towing Incident

BACKGROUND
The occupant resides at _____with her son, _____. Her sister-in-law _______owns the unit.

The occupant of the unit is disabled ______ and requires around-the-clock attention from live-in caregivers. Her separated spouse does visit the occupant two or three times each month. His visits are typically 2-3 hours long.

Her separated spouse is a long-haul trucker for a company ___, which has a drop garage in ___. Since the unit occupant’s confinement two years ago, he has been dropping the trailer at the garage and driving the tractor to our community to visit the occupant, as he does not own a personal vehicle. Prior to his first visit to Briarcliffe with the tractor, he called the local police department to find out if there were any parking restrictions. The police told him that overnight parking is prohibited and, of course, anyplace where signs are posted restricting certain vehicles. He is very conscientious about observing parking restriction signs and, seeing none in Briarcliffe, he’s been parking the trailer on the street within in our association boundaries.

TOWING INCIDENT
One Saturday in mid-March, after visiting his former spouse, he walked out of the _____ building at around 2 p.m. and discovered that his tractor was gone. Thinking that it might have been stolen, he called the ___ police, who knew nothing about it but suggested that he call the towing company that was listed on the posted sign. He called and was told that his tractor was there and he could have it back after paying $700 by credit card or $600 by cash.

____ drove him to the bank and he paid $600 to get his tractor out of the tow yard. He has not visited his former spouse since the incident. He has no way of getting to our community, unless he takes a cab from the garage in _____, and quite frankly, he cannot afford it.

I do not know who called the towing company. I do not know why the towing company was called. I do know that what was done to him was unjust and, because it happened on our property, we should try to make things right. As part of a community, and especially in these tough times, we should be kind instead of mean to our neighbors.

PROPOSAL
I propose that the association reimburse him $600 to cover the expenses he incurred from the act against him by our community. Whether it was performed by one person or a group of people, this action reflects negatively upon all of us. Not only have we caused a significant financial drain on him, but we have deprived his former spouse of his visits.

I also propose that the association allows him to park his tractor on our streets so he can resume his visits to his former spouse. And, I hope that when we see that tractor, we welcome the thought that an invalid neighbor is sharing a few hours with a friend.

Signed by our Communications Director

Update - Board Meeting of April 9, 2009

These are my notes pertaining to the board meeting on April 9.

I'm not certain precisely where to begin. I drafted a letter to the management and the board regarding the shenanigans at the meeting. It was originally 6 pages in length and required editing prior to mailing. The following is based on that letter.

1. Our “Communications Director” read a statement in support of a personal agenda and advocating the use of association money to fund that agenda. That action was a catalyst and fed dissentious elements in the gallery. Comment: I conclude this little drama was staged, at which point the constructive elements of the meeting ended. Frankly, I cannot understand why that board member did what she did. Why is a board member taking up these unit owner causes and disrupting the meeting? No matter how “noble” or well intentioned, I must ask, is it appropriate for a board member to do what she did? It is my opinion that her action was an undermining one. It was a major disruption of the meeting. It was inconsistent with the stated goals and strengths of the ROC board members; most notably “conflict resolution”! The word “antithetical” comes to mind. What is going on here? Fomenting conflict or supporting fractious groups at BLMH is at the very least divisive and not appropriate for a board member. What this board member did is not for the good of the association. Or, to put it another way, promoting causes or promoting a private agenda is not consistent with the code required of a board member. Each of the board members signed an agreement to abstain from this type of activity.

This is not the first time this individual has staged this type of event. Last year, as a unit owner, she prepared and posted a document in each foyer, in advance of a board meeting exhorting unit owners to attend the meeting and thereby prevent a ruling on the banning of pets at BLMH. There was no such ruling.

2. Certain aspects of the meeting were, as one attendee stated to the board “terrible” or words to that effect. There were unit owners shouting down the manager, board members and each other! This led to repeated shouting between two groups of unit owners! The board was unable to manage the meeting. I realize this is difficult particularly when things occur such as the personal statement read by our “Communications Director”. Comment: The “Leadership by Example” must come from the board. The unit owners should not be manipulated by members of the board and vice-versa. Our board has a lot of work to do and theatrics and disruptions cannot and should not be tolerated.

3. A vendor (contractor) attended the meeting. That is one of the results of advertizing the meeting on the web, I suppose. Comment: Instructions should be posted on the website and the blog, advising who is permitted to attend the meetings. Announcing meetings is fine, but they may be interpreted as an invitation by readers who are not unit owners.

4. During the meeting I observed unit owners complaining about snow removal “bobcats” parked on one of the courts and then in the next few minutes the “Communications Director” swung the meeting to support the parking of a tractor of a semi-trailer on the property. Comment: What is going on here? I must say, this was incredulous, and if not duplicitous, then inconsistent. Bobcats are an eyesore, but tractors are OK? What are we devolving to, mob rule led by our “Communications Director”?

Why is a tractor parked on the property apparently OK to our Communications Director in defiance of the rules and regulations? Why is that same board member championing causes which are totally against the rules? I have a little story about this; I once had a pickup truck and some of my neighbors were unhappy. I resolved this by parking the pickup off site for a period of time and ultimately capitulated and sold it. I guess my “circumstances” would be construed as being without merit. Besides, I was simply keeping the rules and operating as one would, in a ”community”. But talk about “community” is apparently easy and without meaningful action. A board member can champion personal causes to spend association money, but can’t seriously discuss deferring the painting of the exterior of certain units for a year at a savings of about $15,000.

Regarding the tractor (which is the motorized portion of a “semi-trailer”), why did the vehicle owner not attempt to park the vehicle on the boulevard outside BLMH? Alternately, why not in the driveway of the building and with a notice in the window stating visitor with unit owner's name, address and cell phone? Why this board member statement about the personal feelings and concerns, which is essentially a private matter, and a subjective one at that? Why didn’t the board member who seems to have great concern about this, not handle it simply with a request for a collection from “concerned” unit owners, instead of attempting to manipulate the board and spend association money for her “cause”?

5. I asked a question about budgeting, which was lost during the meeting. That’s what happens when personal agendas reign and disrupt. We have some significant expenditures, including driveway repairs. During the meeting, our Treasurer and Architectural Director, and our professional manager stated that we have eight or more driveways which, under the criteria (81%) qualify for immediate repairs. It was also stated that to maintain reserves at a certain threshold, not all of these repairs can commence OR other expenditures must be curtailed. Our Treasurer has pointed out several areas where this might be possible (reference: my March 19 blog). Most notable was delaying painting of the exterior of certain buildings for a year (or more?). I asked if this has been further explored, and the Treasurer stated “no”.

This was lost because of discussions about personal causes, bobcats, demands for "service", etc.

Comment: If there is an assertion that driveway repairs are not now possible due to finances, I ask the board to consider just how long it will then take to make repairs. Consider that driveways will continue to deteriorate and at an accelerating rate, which is not unusual as bituminous concrete (asphalt) ages and loses its binding agents to the bacteria in the soil. I fear that the board may be creating another catch-up game here. The result will be disrepaired driveways pushed off until next year, joining the group which does not survive the winter of 2009-2010, and so on. That is a game with nature that our association cannot win.

Consider the uproar from the unit owners who have terrible driveways and have to wait a year or longer. That will certainly feed the negative elements at BLMH and will foment another shouting match later this or next year.

A multi-faceted financial solution may exist, but the board is distracted by personal causes and agendas which dominate the meetings. A financial solution could include the temporary lowering the threshold for our reserves and delaying painting. But that would require an inspection and discussion. As I understand it, our reserves are growing by about $27,000 per month. If so, then they will increase in the 5-month period April 1 to August 31 by about $137,000. Is that included in our cash-flow projections?

I appreciate that these are difficult choices, and in many respects the current and recent boards are attempting to make up for lost time and lost revenue. Believe me, as a “B” unit owner, I will gladly pay for a new window if that is what it takes to free up funds. On the other hand, I will not pay for a window so that the board can take the association money thusly saved and flush it on the private causes championed by a board member.

I am also disturbed that our “Communications Director” apparently has little or no interest in these matters, but would prefer to discuss block parties, garage sales and personal causes. I do understand that this may be consistent with her focus on her interpretation of “community”. However, that is not within the duties and scope of a board member of a million dollar business. Perhaps I am naïve but I don’t think that block parties can overcome the pressures on unit owners of increasing assessments, increasing numbers of vacancies, increasing rentals, increasing absentee owners and so on. However, I would like to hear a statement by our “Communications Director” about how her proposed events will satisfy her constituents, some of whom are committed to an increased level of “service”.

6. I was heartened to hear our professional manager address a unit owner and state that the assessment increases are due to underfunded reserves as the result of previous board action. That is the first time I have been present at a board meeting and heard a direct statement on the matter. In all previous discussions that I have been present to, there has never been a direct statement of this type.

Comment: There are unit owners attending meetings and pressing that more funds be spent on “services”. It seems there are different positions about funding repairs and funding services. Since 2001 our assessments have increased about 50%. This has been for two reasons; to fund reserves and to pay ongoing operating expenses. At the present rate, our assessments could increase another 50% in less than 8-1/2 years. I do not expect that. However, I do not know what the future inflation rate will be, nor do I know what the “reserve studies” will reveal. However, I do know our association faces an aging infrastructure and with it increasing repairs. Too bad the boards in 1983 to 1999 made the decisions they did. But “it is what it is”.

I know that the term “perfect storm” has been much overused after the publishing of the book and the movie. I apologize for using it here. We are in the midst of just such an event. A serious economic decline, new unit owners who purchased at the height of the boom and possibly at inflated prices with "resetting" mortgages, rising assessments and aging infrastructure requiring increased expenditures and one or more new board member with private agendas and causes!

We have many older unit owners who are very used to the lower assessments. The data on BLMH reveals an incredibly low 2.36% average annual increase from 1983 though 1995. That is what unit owners came to expect. However, since 1999 what they have gotten is an average 6.96 percent annual increase. When I purchased in 2001 after conducting my own studies and interviews of management and unit owners, I fully expected that there would be “trouble in River City”! Nor did I believe the ROC candidates when they replied to my letter, in writing, that “assessments were not an issue”. If that was true, then the new board members are as oblivious, ineffective, or subject to unit owner pressures as the boards we had in the period 1983 to 1999.

I always find it humorous when someone talks about how "low" the assessments are “somewhere else”. They were incredibly low here for years and look at what that got us! I guess some unit owners want to go back to those “good old days” and hang future owners. Talk about “community” is so easy, but action is what counts!

There is a purpose in my stating this here. It is simply this: I think some really straight talk about finances, budgeting, and forecasting is preferable to the alternatives. Again I say “kudos” to our professional manager. To that end a reserve study may be helpful, no matter the consequences. I have been opposed to such a study and it is simply because I fear the possibly bad news and diverting funds to the study. But overall, I don’t think this board has a choice. We need some really straight talk. We are now definitely in a crisis, aggravated by certain new board members.

I suggest that the board and my fellow unit owners consider the implications of the financial demographics at BLMH. There is no formal census, but I think I can state that we have some unit owners who purchased in the period 2000-2007 and are struggling with the unanticipated (on their part) increases in assessments and balloon payments on mortgages, or mortgage rate resets. Consider our aging demographics. (Our census form does provide age info on unit owners, so that can be determined). The social security administration awarded a 5.8% benefit increase for 2009. However, with core 2009 inflation below 2.0%, it is to be assumed that the increase for 2010 will be far lower. I am advocating as per my recent letters and blog, that the board consider the SS benefit increases when discussing and evaluating assessment increases. If inflation remains low and if we can maintain reserves at a certain threshold, then perhaps future assessment increases will moderate as our management has predicted. However, we do need new roofs, the driveways are deteriorating and so on, all of which need to be paid for. But funding personal causes is not a problem!

I would hope that the entire board and community realizes that the problems here at BMH are due in large measure to our low assessments for an extended period of time. That drew in owners who expected such assessments would remain low “forever”. It built false and unsustainable expectations among the existing unit owners. It undermined our finances and it underfunded our reserves. It is the reason that the board today is struggling to agree upon expenditures and to do such simple tasks as replace driveways in serious need of repair. It is also why we have unit owners complaining about a “lack of service”. And we apparently have board members willing to seize upon this and use it for personal advantage.

Recent history of boards here at BLMH has shown that those who do make the hard choices will be fired. I am of the opinion that is due in part to the avoidance of straight talk by the boards. There was bad news, and perhaps everyone hoped it would get better, that assessment increases could be curtailed. Well, our aging infrastructure, the economy and the housing bubble conspired against that hope. What we need in new unit owners, are owners that are fully informed of the future here at BLMH, to the capacity of board and management. There may be fewer sales, but we will not be contributing to future problems.

There are about 10 million home and condominium owners in the U.S. that are “underwater” and in dwellings they cannot afford, according to data by the housing industry and the U.S. government. Some of those are here at BLMH. We have experienced foreclosures as evidence. There is, to my knowledge, nothing we can do about that. We can emote, we can be concerned, but what definitive, corrective action is possible?

7. At the meeting I again listened to a unit owner declare that “I’m a unit owner” as compared to something else. Comment: I see this as an opening for a serious conversation about the duties and responsibilities of a unit owner. There seems to be a lot of conversation centered on the “rights and privileges”, and the expectations for “service”. Well, with those “rights and privileges” also come “duties and responsibilities” and the need to “be of service” to our community.

Perhaps it is time for a dialogue regarding the duties and responsibilities of a unit owner. It may no longer be appropriate for the majority of us unit owners to be sitting idly by. For example, it may take one unit owner per building to take responsibility for the condition of the halls, another the garage interior and yet another the grounds in the immediate vicinity of each building. The fourth unit owner per building could actively support our landscape director. To get involvement may require the stipulation by the board of who is to do what. Absentee owners may be required to have a surrogate owner perform their duties. If that is not workable, this opens the path to an additional assessment fee to offset their inability to perform their duties. However, leadership in this and all other endeavors at BLMH will come only from the board, which is being driven in the direction of private causes and block parties.

8. I am disturbed by unit owners who have complaints about our management or the board, when statements are made about alleged insults, etc. Why would this disturb me? It isn’t the statement. We all have opinions. It is the reaction of some of the board and the grand stand. This frequently becomes the basis of “proof” that someone is incompetent or unjust. Why should I ever believe a unit owner just because they said something was so? Ditto for any of us. But some members of the board seem to relish this and I have seen a board member state that this must be proof as “there were complaints”. For example: A unit owner who is trying to sell their unit (or so they stated at the meeting) is unhappy that bobcats are parked on their cul-de-sac, snow accumulation and so on. This is inhibiting their opportunity to sell, or so they stated. Then they say the management company is rude and unresponsive to their requests to remove the bobcats. Should I believe this? If so, why? But apparently the word of a disgruntled unit owner who is attempting to exit BLMH should always be trusted over that of the management company!

To be frank, if I were attempting to sell, I might do the same to move my unit. But why should my position be believed? I certainly would have a reason to distort the facts, and as a unit owner, I might not agree with management's unwillingness to move the bobcats so I can improve the appearance of "my" cul-de-sac and facilitate a sale. I have been known to lose my temper in such situations. If I were desperate or intent upon a specific outcome, I might be inclined to get argumentative, or to stretch the truth. That's the way it is with human beings.

9. During the meeting a gentleman in the homeowner’s section stood up and addressed the board. He stated that he was in the business of maintenance and implied his business serviced associations such as ours. He then went on to talk about his business and how he would love to get the contract here at BLMH. Did anyone get his name and phone number? Was he a vendor attending the meeting or a unit owner? Was he a plant or was he invited by someone on the board?

He went on to dangle a few “plums” at the board. He actually backed off from some of his more powerful statements, as he continued to talk. I was concerned when he stated that his revenues are down about 35% this year. This could be construed to be due to price decreases, but the gentleman did not state that. More likely, his revenue falloff is attributable to several causes, including a loss of business. Why is his business down by that amount? Is it due to poor workmanship and quality or poor business skills? Just the kind of people we need attending unit owner meetings: hungry vendors of dubious ability looking for a choice plum of a contract.

I am not encouraged by a business owner who comes into a board meeting, addresses the board, states he wants their business and then tells me his business is down 35%. He is certainly looking for business to fill that void. But the larger question is why was he here and at whose invitation?

10. I sat quietly at the meeting for the most part. Thank God I had some gum to chew on. But believe me, it was difficult. Sitting quietly can be construed to mean that I support one position or another. However, discretion won out and I simply refused to join the fracas. I will continue to attend meetings, but if this is the way it is going to be, I may bring a camera and I will need a lot of chewing gum.

Let me say in closing that I do appreciate the efforts of our management and the board. Let me also say that my concerns have increased in the past 6 months and that this is not related to the economy but is strictly the result of observing the new board in action. I have discussed certain aspects of this letter with other unit owners who are not on the board and who have never been on the board. They share my concerns, which are due entirely to the current board situation; the character, integrity and makeup of the new board, and the apparent direction that certain members of the board seem to want to take BLMH. What will happen when the board is comprised entirely of members all supporting personal causes and private agendas?