con·ver·gence
kənˈvərjəns/
"The process or state of converging. To converge is to come together from different directions so as eventually to meet."
For this HOA the state of Lakecliffe Blvd was the result of the convergence of many dynamics within BLMH. Some can be traced to decisions made over decades. Some recent boards refused to make a decision and passed the problem to the current board. The failure of Lakecliffe didn't "just happen."
But the reader might be inclined to take the position that with the completion of the replacement of this section of this street "It's over." Ah, yes, let's just "move on."
Is it really over? Some infrastructure issues are being slowly addressed and yes, an additional eight roofs are scheduled to be completed by fall. However, other streets are showing the same danger signs as did north Lakecliffe in 2008-9. While it is true that the current board has taken the steps for a serious engineering analysis of the streets in 2014 and a reserve study update to incorporate the findings of the study, it will be entirely up to future boards to deal with this and collect and spend the money. Future boards will have to decide what to do, when to do it and by whom. There is no guarantee for a good outcome.
In the recent past, some boards were incapable of doing this. Lakecliffe is a consequence. There are other consequences, some remain unconcealed.
A question for future boards is this. Will the new streets be maintained, or not? With the completion of the roofing project will reserves be put aside each year earmarked for roofs and allowed to accumulate for 20 years? Or will the boards decide to pass the hat to future owners? It happened before and it can happen again.
Whatever future boards do, there will be consequences. So what converged to get us to this place in time? Here are a few factors to consider.
Conclusion - Provided here for those who want the executive summary
When things go wrong it's easy to look for simple answers. When an aircraft falls from the sky, the experts say that it is usually the consequence of mechanical failure and pilot or other human error. There is no one, single cause and human beings are usually involved as the decision makers that led to that aircraft failure.
So too with HOAs. When things go wrong some owners come to the then current board as the simple answer.
When serious infrastructure problems occur, it may be easy to point the finger at a construction company or builder, or a board, or a manager. I think its reasonable to say that these types of failures are the consequence of the complex interaction of people. People make decisions in a HOA, not one, but many and over a period of years. Those decisions determine fees and how and when they are spent. Those decisions require establishing priorities and allocating resources. Property managers and boards are not project managers, engineers or construction managers. Some management firms may include such individuals but that is not the skill set of the property manager. But memories are short, and when certain problems occur, then some owners will say "How did this happen?" Frequently it is the same people who promoted a certain course of action. Owners are an intrinsic part of the decision making process. Owners elect the boards and it is the owners who press to achieve certain results, including reducing fees.
In this post I've provided a scenario which presents Lakecliffe as a convergence of good intentions and some less than good decisions. Taken singly, each decision might seem reasonable and should not have resulted in failure. Each decision can be argued on it's own merits and has been, by numerous boards and a variety of board members. I suspect no one single decision made after construction resulted in the current condition of the street. Instead, a series of events, some of which began years before this street was installed all converged. Those events included finances commencing decades ago, the design and installation of the street, some long held beliefs about how to maintain a HOA, and beliefs about how to keep fees as low as possible. One factor was the conflicting demands and expectations of owners, and the attempts of various boards as elected representatives to satisfy the owners. Another is the capabilities of volunteer boards. Another is chronic staffing issues.
I am of the opinion all of the decision makers did so with good intentions. I suspect there was no overwhelming desire on the part of anyone for this street to fail. But fail it did. What do I mean by "fail?" I mean the early and premature expenditure of a lot of money to replace it. That's what I mean by "fail."
What were some of the contributing factors? Owners have pressed and complained about high fees for as long as I have been here; certainly since 2001. In 2008 the owners made it a point to put in place a board to correct that. Over decades a variety of boards made decisions to avoid spending money needlessly. The definition of "needlessly" varies from board member to board member. Each owner has a different definition of "essential" spending, but it is generally true that money spent for maintenance of "my" building, patio, walks, driveway, garage, lawn, etc. is money well spent. Design sometimes occurs in house, rather than by licensed professional engineers; there is a place for this, but the street should not one of them. Project management occurred in house. There is a place for this, but the street should not be one of them. Preventative maintenance did not occur, but spot patching and then larger patching did occur. Boards were slow to respond; this is inherent in the structure and makeup of volunteer boards, as well as the frequency of HOA meetings and a requirement that all such meetings be held openly. Replacement was delayed in an attempt to reduce expenditures and reduce owner fees. The street did not cooperate and failure accelerated. Boards were sidetracked by other issues, both social and substantive. In 2008-2012 Lakecliffe was not considered to be an emergency, and in 2008-2009 it was not even considered to be a problem worthy of discussion. In 2009-2010 it began as a nuisance. It was eventually elevated to the status of an inconvenience. By 2012 a realization of possible failure became a consensus, but catastrophic failure did not seem possible. We'd undergone a change in management and the board and most were baffled. After all, this street was supposed to be okay until 2021 or so.
The question to be asked is "What can a HOA do to avoid this type of situation?" Lakecliffe serves as a beacon. It provides an opportunity for change, and it can be used constructively to build a consensus that some change is really necessary. Not the political buzzword
Change, but rather a shift in perspective, the way problems are approached, the way tasks are prioritized, the character and composition of boards, the delegation of duties to property managers, the proper use of professionals, and the role of owners. Most of the owners in this HOA have regularly paid their fees. Some boards had members who did the same, showed up at meetings and merely cast votes as their primary duty. Some change really is necessary. There is absolutely no consensus that it should occur and no one is empowered to make it happen.
There are many other infrastructure and organizational issues. They simply aren't as visible or obvious as Lakecliffe. Boards are comprised of micromanagers with a different emphasis or focus for each board member. Programmed, cyclic replacement is frowned upon, with the painting program as the one unique and repetitive, guaranteed task at BLMH. Micromanagement supposedly reduces overall costs. It also delays replacement, prevents certain maintenance such as streets and driveways and garages and even sealcoating and carpet replacement. I suspect it supports a "squeaky wheel gets the grease" approach. There has been a slow transition, but it is an uphill battle. Without a programmed approach, new boards are likely to drop out entire tasks, and they do.
It is my opinion that a variety of boards have accomplished quite a lot at BLMH since 2008. The pace has accelerated since then. However, it is also true that our infrastructure is aging and with that age there are additional problems becoming visible. Our reserve study does address the infrastructure issues, but cannot determine the lifespan of our water mains. However, there are some things that can be done to get a better grasp on that. The completion of the street analysis by a professional engineering firm will be important for updating the reserve study. The current status of driveways, garages and roof projects will also be incorporated. Future boards should have a much superior tool as a guide. However, it is up to the boards to decide to use that tool. Perhaps it is time to turn more of this over to professionals and fund a full time manager. Boards can be more involved in identifying problems, cost centers and fund sinkholes, figuring out supplemental sources of income, or social issues and keeping owners happy.
But a variety of owners are distrustful of the boards, managers and maintenance. Owners don't like the disruption caused by the infrastructure work. The pace has quickened and for several years it seems whole areas are a construction zone. This is a consequence of a promoted plan to delay such work for as long as possible, the acceleration of certain problems including aging roofs and dying trees, unforeseen events and Lakecliffe, and the game of "catch-up." There is a price to pay for delay and we today are paying it.
All owners really need to get a grip on financial reality. Our fees are not going back to $175 per month, unless future boards find other sources of income and return to a day when adequate reserve accumulation was for future owners to accomplish.
Is real change necessary? Possibly not. This HOA got to this point and various boards dealt with all kinds of issues. How will we pay for this street replacement? Simply delay other work. So why should we change? Consider the age of this complex, consider the fact that infrastructure is failing, be it streets or water mains or even the entrances, mail boxes and garage floors. Even the lakes pose a problem, but we are tied to Wheaton about that and our "tax and spend" neighbor COD. Nevertheless it does need to be addressed.
Consider the age of the board. Change is coming. It will be the decision of all of the owners if it is to be a transition or another series of costly disruptions. We all have decisions and choices to make. Make them well. If we do that and with a little luck and by the grace of God, our fees might actually improve and we might get better results.
Was it because of original design flaws?
BLMH has struggled for nearly 40 years dealing with and correcting design and construction flaws. These include roofs, patios, streets, garages, streams and ponds, and most recently owner fireplaces. Today the fireplaces have become the centerpiece and a primary concern for some owners. Some forget or prefer to be oblivious to the fact that the board owns units and we too have our personal fireplaces to deal with.
For some addresses the elevation of the buildings relative to the street is an issue. Some buildings were built so low that water could not flow properly to the streets. Any impediment, such as a thin layer of ice or snow, or even severe downpours caused a problem. This has required extreme diligence during any driveway or street repairs to assure that water flows from roofs to driveways to the street and then into the storm sewers. It has increased the cost of repairs, and the cost to maintain. Some driveways must be kept clear of all ice and snow.
BLMH was built in such a manner as to be expensive to maintain. Some boards fail to observe this, and some have chose remedial action over correction because it appeared to be the lowest cost approach. Or perhaps the approach with offered the lowest immediate cost was chosen. However, it is not practical to solve some of these problems. The best situation possible is achieve the longest possible life at the lowest annual cost over the life of the structure, road, etc.
Was it because of construction defects?
Lakecliffe was reconstructed in [2002-3]. At the time, project management was accomplished in-house by property management. I have never seen the construction drawings and so I cannot state if the curbs and street were installed in accordance with the plans. An inability to produce drawings when asked has led me to question if they existed; the lowest cost approach would be a specification to replace in kind. It seems a properly qualified, insured and bonded engineering firm was not retained to prepare plans and specifications.
What we have recently determined is the thickness of some sections of asphalt were abnormally thin. The slope or pitch of the street and the crown was less than recommended guidelines. The street was rolled to the arrangement of the curbs and several areas of these could not provide the needed slope. A layer of "petromat" was installed between two courses of asphalt, the topmost of which was sometimes too thin. All of these factors combined to create a street which failed prematurely.
Knowing what happened has resulted in a more costly project. It was initially thought (by me in 2009 and as an owner) that we could simply strip asphalt and put in a new course. As the disintegration of the street progressed, even with large patching of sections, it became apparent to me that simple asphalt replacement would be insufficient. BTW, in discussions with engineers, etc. I have
NEVER revealed my personal opinions. Doing so could have influenced the result of any study, analysis and so on. What I have done is set a desired outcome; specifically "What do we need to do to achieve a street that is capable of normal lifespan with nothing more than normal maintenance?"
The current project is considerably more elaborate than simply peeling and replacing the asphalt, and will cost more than my $100,000 estimate performed as an owner in 2010, provided to that board and promptly flushed.
Was it because of insufficient funding?
It's useful to look at the street from the perspective of a board in place in 1998-2001. Consider the state of HOA finances at the time, the absence of a formal reserve study, and the complaints of owners about "too high fees." So what would most of us do as an elected, volunteer board comprised of ordinary owners in those circumstances? Would we spend thousand of additional dollars for surveying, plans, specifications and project management? Would we hire an independent testing lab?
This HOA has struggled for most of its existence with a variety of funding issues. Early fees began far too low for a 40 acre complex with numerous start-up defects and issues. Those fees did not include any provision for adequate reserves. Paying for the daily bills and some major breakdowns was the major issue. Is it a wonder that today some owners prefer a lack of financial planning and preparation? Is it any wonder that boards were elected and put into place because they refuse to do such planning? Paying the bills each month via the checkbook is the minimum standard. It worked before, didn't it?
Here's an example. The first bona-fide, unbiased reserve study was conducted in 2011, 37 years after construction of this HOA began. [After construction of BLMH there were] several periods of see-saw fees which created financial issues and stress for boards and owners. One prevailing attitude and accepted operating principle which emerged was "If we don't spend it we don't have to collect it."
There appears to be a belief that "Our fees are too high." This was most recently stated to me by a board member while we were observing the Lakecliffe reconstruction. I found that to be ironic. We're ripping out a street 12 years after installation and which I identified as failing only 6 years after installation and our fees are too high? I wonder what contributed to that opinion? Of course, no one ever comes up with a viable solution for permanent fee reduction. The prevalent approach has been to reduce fees now and let future owners deal with the consequences.
Some owners have preferred boards which will defer spending while attacking other boards in a crude attempt to have funds diverted their way. This provides the best of both worlds. "My fees are lower but I get the benefit of higher fees were such benefits provided to each and every owner." Their rallying cry became "What do I get for my money?" Some boards apparently supported this with a "squeaky wheel gets the grease" approach. In other words, only if there is a forceful complaint will certain problems be dealt with. That approach does create a problem as the word goes out. Eventually, owners get the word via the club or whatever and so the playing of the game expands among the owners. However, most of the money spent in such appeasement was nickle and dime. It's certainly easier to pour a section of walkway than to plan for and deliver the replacement of streets, roofs, 336 patios and decks, 84 garages, 84 entrances, 800 trees or water mains.
Boards contributed by avoiding certain expenses, such as failing to hiring engineers for certain projects, failing to assure adequate supervision and failing to have a professional construction manager present for the street project. This would be expensive and of course, we got by without this in the past. But did we?
Was it because of a lack of reserves?
By 1999 the reserves were a shambles. In the first 37 years of existence, this HOA had never had a formal reserve study. In 1998-1999 a new management firm was brought in and boards were evidently made aware of the problem, as fees began to continuously rise each year as reserves grew. However, it didn't take long for owners to complain. This was a departure from the normal which was not communicated by the boards. The newsletters of that period don't give a hint of what is to come, or the long term financial goals of board and management. By 2001 owners were complaining "our fees were too high."
Was it because of a lack of planning or maintenance?
In 1999 this HOA began ramping up fees. Apparently the new management had a different perspective about reserves. Streets were replaced several years later and reserves began accruing again for the next street replacement planned to occur several decades in the future. No program was put into place to maintain the streets, beyond patching any hole that might appear, a collapsed basin, etc. Six years after completion, in 2008 the street was identified by an owner as failing. This did not fit the financial plan. By 2010 street patching began and the street was identified by an owner as requiring $100,000 within 5 years. That however, did not fit the financial plan. In 2010-2011 board discussions about performing street maintenance, including crack filling were tabled. A manager argued it wasn't necessary and the board was disinterested. Besides, such maintenance wasn't in the budget. By 2011 an unbiased reserves study was made. It too indicated a street replacement in 2021 or so, based solely on the installed date of the street, not the current condition.
Finally, a board did authorize funds for an analysis of the street. It confirmed what was already known, but difficult to believe. The street was gone.
Was it because of resistance to programmed maintenance cycles?
At BLMH most, but not all maintenance is accomplished as needed. There is no regular preventative maintenance program for any of the asphalt surfaces in the HOA. That includes streets and driveways. At present new driveways are being seal coated within two years of replacement. Beyond that there is no plan in place for future seal coating or crack filling.
One area of difference in which there is a regular cycle is the painting of the buildings. Interior halls and the exteriors as well as structures (lampposts, gazebo, etc.) have wood replaced and are painted on a regular basis. This was every 5 years, but recently a board agreed to change this to a 6 year cycle so that the same number of entrances and exteriors are done each year. This change will smooth annual expenditures.
However, just about everything else at BLMH is not maintained as a cycle. Hallway carpeting is to be regularly replaced according to the reserve study, but it is not. It would be very easy to do this in tandem with the painting cycle, but one year later. Same for sealcoating of driveways and certainly for street preventative maintenance.
Is there a financial advantage to avoiding cycles? Apparently there is a belief that delaying maintenance "as long as possible" will reduce annual costs. This was the argument used for delaying roofs. There is another advantage. Some things will never happen because there is no directive given to perform that work. Ultimately, some repairs will grind to a halt. I can provide a list of such repairs for anyone who will listen and I do bring this to the attention of boards each year.
Is there a disadvantage to avoiding cycles and using a buffet approach? That's an approach where maintenance issues are laid out on the table and a board picks and chooses? One glaring problem is simply this. Unless a board issues a directive each and every year, then some things will never occur because they may never be placed on the table or if it is a list, some items may never come up to the top of the queue. In other words, certain repairs will simply be "dropped out" because there is no instruction to perform them. In combination with board turnover, this means that some things simply never happen because they are forgotten. Other, more pressing issues will displace many attempts to move some items to the top of the list.
There will always be breakdowns or owner upsets. These can overcome boards. In recent years there has been the COD expansion and creation of a dumping ground on our east property line, flooding in South Wheaton, disruption caused by new roofs with gutters and downspouts, other drainage issues, an IDNR dam permit, owners fireplaces, delinquencies, foreclosures, board turnover, etc.
Boards seem reluctant to do programmed maintenance. Would regular maintenance of the streets contribute to a longer life?
Was it because of staffing problems?
BLMH has been professionally managed for about 15 years. Prior to that time it had a single manager, but financial systems were manual, etc. For approximately 15 years it has also had professional maintenance. Boards are chronically understaffed and there is currently one board member for 56 owners. At various times some board members have had no assigned duties or responsibilities, other than to attend meetings and to vote.
Other issues have diverted boards. These include dealing with delinquencies, bad debt, owner fireplaces, a flood in south Wheaton, IDNR issues with the lakes, board issues with Wheaton's control of the lakes, 15 or more water main failures, owner complaints about COD, other projects, drainage problems, roofing, garages, patios, streams and pumps, common area patios, etc. Let's not forget owner personal issues, which at times occupied 1/3 of entire HOA meetings. Then there are the "simple" day to day operations. Simply keeping this behemoth running and paying the bills are the areas in which a substantial amount of the HOA director and management resources go.
As BLMH approaches 40, infrastructure issues have taken center stage. The roofing reconstruction project ran into a serious problem because of a failure to handle water flow created by the installation of new gutters which diverted flows and flooded some units. In 2008 a new board either wasn't aware of this or ignored it. For whatever reason drainage improvements didn't occur for several years, creating a backlog of problems and some unit disruptions. Of course, owners demand these problems be dealt with "immediately if not sooner." One board in particular decided in 2008-2010 that what was really important was the replacement of management and the maintenance company. For good measure it was also decided to rewrite the rules.
BLMH has the same number of board members as a HOA with 20 units. In fact, some much smaller HOAs have fully staffed boards. BLMH does not. Yet, in recent years we have had a webmaster, a communications director and at least one board member with no assigned duties.
BLMH is a complex PUD. It is considerably more difficult to manage than a couple of town homes. The board is a working board, not some group of political figureheads. Some recent board members have thought otherwise, as have some owners.
We do have a professional management company, but we don't pay for a dedicated, full time manager. Nor have we done so for about 16 years. Doing so would result in higher fees, and we can't do that, can we? We have a few amateurs on the board to do these tasks. "Any money we don't spend is money we don't have to collect" as fees. Penny wise and pound foolish is the expression that comes to mind.
So six people like me spend hundreds and thousands of man hours keeping this place running. What a way to run a business! Is it surprising that this HOA has maintenance issues? Frankly, we're doing damned well considering the impediments.
Was it because of board turnover?
Every new board has to come up to speed. Every new board member has to begin the arduous journey of comprehending just what is going on here. Most new board members are not prepared for the task at hand. Running a election campaign is easy. The problem in this HOA is that board members are working members. We're not simple figureheads who rubber stamp management's activities. We design and direct. Boards literally create the future. Our actions will determine the condition of this HOA 5 years hence, and the fees in 10-20 years. Could this have been a contributing factor to the failure of Lakceliffe? During the last HOA meeting, while discussing the costs of hiring a project manager to oversee the replacement of Lakecliffe, a board member objected and stated to the entire board and specifically to me "You could do this, couldn't you?"
With board turnover it's like the movie "Groundhog Day" and every year there is an election and then we may begin anew. Unlike the movie, the new board members don't have the benefit of prior knowledge. The election is a reset. It may provide the opportunity for mischief. As a board member I'm a fiduciary? What's a "fiduciary?"
A few years ago I prepared a document several pages in length to provide candidates and new board members an understanding of reality. Boards have been hesitant to use that document.
I'll publish it here in a few days; perhaps it will serve another HOA. I don't do these things because I need a hobby. This is serious business and a lot of owner money is at stake.
Was it because the board is overwhelmed with minutia?
Discussion of owner fireplaces has been going on during just about every HOA meeting since the fall of 2011. Owners bring a POD on the property and put it in a driveway with no protection under the steel rails; they don't even notify management. Satellite antennas get in the way of building exterior maintenance or magically appear. Asked to correct that the owner response might be "You can't tell me what to do and I'll sue you." "The stream is not running" "There are mosquitoes on the property" etc., etc., etc. Many owners demand hourly response and resolution.
Every project that becomes delayed joins a long list of "priority" tasks which increasingly absorb management and the board, as we strive to meet the needs of the 330, and to move this forward and retain perspective. Some owners could care less. Some apparently revel in creating disarray and diverting the board. for a very, very few the thinking seems to be "I paid my $300 and I will get my share." Some owners park habitually in "no parking" zones. Some owners bombard management and the board with phone calls or emails about their personal landscaping issues. Or mosquitoes or standing water or the street or a pothole or dust or COD or whatever.
From time to time some board members give up. Our HOA has had zombie board members; they are the walking dead. That is a problem because there really are some priority tasks, rules should be upheld and money needs to be spent to deal with issues, such as Lakecliffe. Progress needs to occur each and every month. If not, we fall behind and that creates additional problems and board stresses. Do we have unlimited maintenance resources and budgets? No we don't. So deferring maintenance piles on the hours and the costs. But the attitude seems to be "Some future board can deal with that."
WRONG!
Apparently, for anyone driving south from Salisbury, Thames, Gloucester, Dover or Plymouth the replacement of north Lakecliffe really isn't a big deal, is it? After all, "only" 56 units have been directly impacted. That's less than 17% of the units in this HOA. Anyone living in the impacted area would feel differently. I live in that area. But as one owner who lives on Thames said last year with respect to a problem on north Lakecliffe, "It's no big deal." Yeah, right. And on Monday when cars are parked in every single available space on the propery, some of the residents will view this as an imposition and an inconvenience. The "social group" said "We're all neighbors." The replacement of Lakecliffe is another opportunity for the residents in this HOA to "walk the talk." However, for some residents and owners, that's something for only the board to do.
Looking beyond the problems of the 17% impacted by the street replacement, the board is also dealing with the issues for the other 83% of the owners. When each of us is the center of our little universe of problems, we each demand immediate action. Some boards have operated that way. "Give the grease to the squeaky wheel and ignore everyone else." I don't operate that way. Each owner is an equal.
Was it because of board failure to plan and prepare?
Boards are staffed by owners. Some owners never studied this HOA prior to running for the board. Some owners don't understand the duties and responsibilities of a board member. Some don't know what a fiduciary is.
Some have never read the governing documents. Or perhaps they did at the closing 10, 20 or 30 years ago. Or perhaps they relied upon their attorney.
On joining the board, there are two choices facing an ill-prepared board member. Simply float, show up at meetings and vote. or do absolutely nothing. One good approach is to repeat the statements of others during HOA meetings. "So let me understand this, you are saying that ........."
Some can't read a balance sheet. Some don't understand the reserves. Some don't understand this HOA is a PUD. Some don't know what a PUD is. Some don't know what the difference is between operations, maintenance and capital spending. Some have difficulty with arithmetic.
Some choke when they see a bill from an attorney, engineer or whomever for greater than $100 per hour. Some go catatonic on seeing an invoice for $10,000.
Some have no available computer technology, or don't have easy access to email. Some have never built or used a spreadsheet. Some don't have a digital camera. Some don't have or use a cellphone. Some apparently can't balance a checkbook.
Owners, on achieving status as a board member will operate on the board as they do elsewhere in their lives. Some owners may struggle financially and they bring that with them. Some don't budget. Some have little or no savings. Some have no financial plan for next year. Some have no long term retirement plan. Some think that furnace will last "forever" and so should the streets, entrances, and so on. Some don't understand maintenance, or practice it at home. Preventative maintenance is a completely foreign concept. Some see rules enforcement as repression. For some, the most difficult thing they ever planned was that vacation on a cruise ship.
Was it because of the culture of BLMH?
Boards are created by the owners. A very few owners step forward to serve on the boards and some are elected to do so. The attitudes and beliefs of the owners determine the character and makeup of the boards. Every owner gets to vote. Only the motivated do so.
This HOA has some owners who have lived here for 20, 30 or more years. Many of them have never served on the board. Some remember the "good old days" when fees were much, much lower. Some owners got burned by purchasing at the height of the residential real estate market. Some discovered their newly purchased unit had a defective fireplace. Some hold that authority figure "the board" in utter contempt as the source of all things bad at BLMH. A few play a game called "Give me what I want and I'll go away for a few days."
It's taken an amazing amount of hard work by a small group of volunteers to get this HOA where it is today. Frankly, some boards obviously did an extraordinary job in the face of very difficult circumstances. I'm amazed by some aspects of this HOA, even today. From time to time I suspect board burnout has occurred. I say these things because I've studied this HOA in great detail.
Not all owners agree. Some have no idea of what it takes to run a HOA but they "know" that our fees are too high, they "know" that there is enough money, they "know" money is wasted, they "know" that the board is incompetent, some promote the idea that there must be fraud, and they "know" that a few handymen could keep this place going, and to paraphrase one owner "My cousin has a pickup truck and he would do a much better job of snow plowing at lower cost." They also "know" that any neighborhood realty firm could do a better job of professional management of this HOA.
Too many owners don't want to know the bad news, be it "foreclosures," "delinquencies," "budget issues," "rental percentages" or water main failures. Some want to avoid the bad news because they construe it to mean higher fees, which they dread. Others view this to be an apartment complex.
Some see rules enforcement including late fees as punishment or board repression. Some delinquent accounts have viewed the board as the enemy. Some view any board member who refuses to vote for lower fees as the enemy. A vocal few see BLMH as primarily a social organization and to this day a few think it should be a philanthropic organization in which they, of course, would be the beneficiaries. Others promote the HOA as "primarily a retirement community." Until recently many apparently didn't know or understand that this HOA is a Private Urban Development in which we own the water mains and the streets.
Some owners resent that their fees are spent elsewhere on the property. "It isn't fair that my fees be spent on that stream repair and bridge replacement on Thames."
Was it because of owner or board complacency?
Is it important for owners to vote and attend annual meetings? Should the owners study the candidates and then vote or is it better to sign the proxy ballots and say "Just fill in the votes for me, would you?" What's a minimum level for owner participation (casting their own votes) in the elections in a "healthy" HOA? Would you say it is 25%, or 33% or 40% or 50%? Would a higher percentage be better?
Some owners say "I paid my fees and I have done my fair share." Okay, and by that yardstick the only thing a board member need do is show up at about 8 meetings a year and vote. Don't read the management packet, don't prepare, don't do
anything. Simply pay your fees and come to the meeting and do your duty. In fact, in recent years that is exactly what some board members apparently did.
Owners may view living at BLMH as owning an apartment which should appreciate in value. Some view fees as something optional, because as we all "know" the money is wasted. Therefore any dollar I give to the board is going to be wasted, isn't it? [The money doesn't go to the board or to management, but some owners hold it that way. It's easier to play games when one can direct their anger at the board and management.]
"It doesn't matter who I vote for." A significant number of owners just don't bother to vote during the annual elections. After all, we have a manager and things just get done; it's magic.
The best candidate is one which promises to lower my fees; that's all that really matters.
Many owners seldom attend a HOA meeting and that includes the annual meeting.
Some owners have insisted that they don't read the newsletter. As for this blog, it would be used as toilet paper but for the fact it would cost money to print it.
Some owners don't have the slightest idea of what the board does, other than spending money and enforcing the rules. Apparently the board just approves the checks and collects fees. Some owners view the board as personal servants and the management as part of the concierge service. As one owner angrily complained to me "I'm a customer and I demand that you do [blah, blah, blah]. "
At BLMH with 336 owners, some apparently have the attitude "If I don't pay my fees this month, it's okay" after all, there are 335 others and we all know the HOA "has enough money." Anyone who looks at the bank statement know that. After all, what will this HOA do with that $1 million dollars besides waste it?
Was it because board members may believe "If we don't spend it we don't have to collect it?"
That is really not a good way to run a business. But it sounds wonderful. Combined with a lack of preparation for HOA meetings, all that the board member need do is show up and create delay or vote "No."
This is so easy to do, this ploy is the "swiss army knife" for the obfuscating board member. Don't like a project? Ask for more study, or more research, or more plans. If that fails, just delay it a month and perhaps somebody will forget or recent events will overshadow it. When the task is again brought before the board, delay it again, and again and again.
There exists an even better ploy. Don't allocate any money for the current task before the board. That forces the manager, or the board member or whomever into a place where it's all a matter of their opinion. They can make those plans, sketches or whatever, and then we can ignore them next month, or throw up another barrier.
To deal with management, simply discredit the manager. Then no one is the expert. Voila' The problem solved! We can avoid spending any money outside the regular Operations & Management budget, which was previously approved.
Was it because of "Wild goose chases" and "Snipe hunts?"
If all else fails, create diversions to keep board members busy. For example, "Norm, we think it would be best if you checked all of the clothes dryer vents on the property."
If that doesn't work the delaying tactic can then be employed. If these techniques are applied in tandem projects can be delayed and money saved, for years.
If all else fails, have a few owners come to the meeting and assail the board with their complaints. That is sure to derail the discussion and the spending.
If there is one thing most owners might agree on it is that Lakecliffe really needs to be fixed. That's not the way it was viewed a couple of years ago. Another benefit is it does give some of the chronic complainers something substantive and real to complain about. In this case, it has actually supported the board in taking positive action.
Was it because of the unrealistic expectations of owners?
Boards and owners sometimes think that things should happen immediately. Some owners see a big check balance at the HOA and they say "What do we get for our money?" In other words, in the event of an owner personal issue the money is there so the board should spend it. There are mosquitoes on the property, there is a broken slab of sidewalk, there is standing water over there, I want new grass, etc. etc. etc. These are trivial amounts. True, they do add up, but who tracks these? No one. Get it into the work order system and get the board to approve it and voila' it's a done deal. Management is empowered to spend a small amount and the savvy and the selfish know that. It's all about playing the game to one's personal advantage, and some owners do just that.
If management were not so empowered, it would be impossible to deal with a lot of the simpler maintenance tasks in fewer than 45 days. Why? Because every task would have to go before the board. With a board meeting approximately every 30-60 days, that would determine how rapidly a HOA could respond. More complex tasks do in fact, require a minimum of 45 days because there can be no board authorization to proceed. Emergencies, such as water main breaks are an exception.
For larger projects, the boards just don't say "Hey, Mr. Manager, get a specification and have that street replaced next month." Well, some might. We don't need drawings and specifications, or we can't afford them. So just hire a contractor. Now, that might be okay for some projects where the contractor has specialized knowledge and proven skill. So how can we tell the difference? When should we spend the money for additional expertise and when should we not? Is it prudent to go for bids? What's the complexity of the work? Why be concerned; if or when it goes wrong, a future board will have to deal with it. But we are a nation of gamblers, so we know we'll win.
Let's be real, shall we. There is no "all knowing and all seeing board." Each member is an elected volunteer and each is merely doing what every other owner should be doing if they were in that seat. The Illinois Condominium Act implies we are each fully qualified.
Was it because of a lack of courage and vision?
Making difficult decisions requires courage. The courage to take on a challenge and in the face of adversity to take the necessary steps.
HOA boards are comprised of fiduciaries. Fiduciaries act for all of us, not for some of us. Fiduciaries accept the challenge and take the steps to acquire the necessary education many of us won't or don't. Fiduciaries take on the challenge of dealing with a myriad of problems most of us won't or don't.
It takes courage to make difficult decisions. It takes courage to identify unpopular challenges and take them on. It takes courage to look ahead 20 years and operate for all owners, both present and future.
Some board members cannot do this. Some won't do this. Some see themselves as the consequences of a popularity contest and have the well being of the entourage as the desired goal. It is really difficult to make decisions that are unpopular for that group.
Each and every day, and with every decision, board members are required to have courage. Courage and vision.
Was the problem with Lakecliffe the consequence of a failure of courage and vision?
Was it because of board reluctance to spend money?
Boards are reluctant to spend money. Some actually freeze at the thought of spending $10,000. Others are aware that every single dollar in those bank accounts have been allocated. Therefor, shifting $100,000 as a consequence of anything other than a dire emergency is not something taken lightly; that sum represents $300 or more from the pockets of each dues paying owner. These decisions are darned difficult.
Each and every board member is concerned by the answer to the question "What will be the consequences of an unplanned major project?" However, running the numbers is sometimes a foreign concept for board members. Some will freeze with the thought "What if we make a mistake?"
So boards may prefer to delay until the last possible moment, or until the timetable and even beyond. Sounds like a valid strategy, doesn't it? Wait until just before that street collapses, or that roof leaks or that tree falls. Then get into action and spend the money. This will keep the reserves as high as possible for as long as possible and it will reduce fees? However, this so stresses management because there are a lot of other things to do including water main breaks, for example, or a foreclosure. Legal meetings and true breakdowns will take precedent. It will stress maintenance and the maintenance budget. We don't have an unlimited army of workers here, do we? It stresses boards because BLMH is like the Titanic and changing direction quickly is at best difficult and at times, impossible. Is it any wonder a HOA may skirt from from iceberg to iceberg?
Boards, being part-time volunteers aren't available 24/7 (Although some owners expect that). "What do we get for our money?"
When a consensus is finally, arduously reached to move forward, what really happens? Boards are required to discuss such money spending matters during open meetings. That means a unique major project can't be approved and accomplished in a week, or a month or even a year. . For example, the first roof replacement was in 2002. The second didn't occur for 6 years, but the board already had plans, specifications and a bidder list. Yet drainage improvements didn't occur and some units were flooded in 2008-2009. Such problems increase the costs for the HOA and a few board members understand this.
Was it because of an inability to distinguish between small problems and larger ones?
Knee jerk "call a plumber" action simply doesn't work on major capital projects. Those projects occur sequentially and each step is discussed during many HOA meetings. Each step may require one or more months simply to agree and approve each step. What is the true condition of the street, how serious is the damage and do we need an engineering analysis? Who is to perform that? What will it cost and should we spend that money? Who is to do the specifications and drawings (in house or not)? Should we hire an engineer? Should we get bids? Which engineering firms? What is the cost and is it worth it? Only after selection and award of engineering contract can the work on drawings and specifications begin. Once the first draft is received who will review them and when? After management and board discussion, back to the engineer. The engineer is requested to make changes. Then back to the board and management. Who is going to perform construction management? Go for bids and then approve which portions of that management. Select the paving contract and go for bids. Review bids and get engineering opinion. Board approval of bids. Coordinate actual construction dates with contractor's schedule and HOA schedules. Adjust schedules to avoid unnecessary delays and conflicts. Decide what to communicate to owners and when and by whom.
The patio and bridge at the Thames waterfall is an example. The board of 2008-9 discussed this problem but could not move on it. In 2010 the bridge, which required repairs to restore to safe condition was closed for several months. This got the attention of owners and dramatized the problem. It was finally worthy of serious board discussion. There were two immediate courses of action possible; temporary repairs or replacement. The board chose the band-aid, but it was finally possible to have a serious discussion during HOA meetings about moving forward with replacement. Even with that board agreement, it has taken four years to replace a walk, a bridge and repair a stream at Thames. The replacement patio has not yet been approved, but over a period of three years multiple sketches and concepts have been submitted and the area was marked by me because of board concerns about the dimensions of the patio. It could very well take another four years to complete this. Of course, delaying indefinitely means that money will never be spent. "If we don't spend it we don't have to collect it."
Many owners don't understand this and some really don't care. After all, "My personal problems should be the paramount problems in the HOA because I'm an owner and I paid my fees." (The other owners really don't know who is delinquent, and the board can't reveal this and I won't).
There was actually a serious effort underfoot to replace Lakecliffe in 2013 with a board consensus that it really, really needed to be done. But the HOA was unable to get all the necessary pieces into place for that to occur during 2013. (Hire the engineer, get approved specifications, approved drawings, go for bids, contract award, determine who is to do project management, etc.). There were discussions about how late in the year to possibly do repave. Of course, putting in roads is dictated by the operation of the asphalt plants. If the board screws up, well, as that one owner said about his/her current inconvenience "The board should pay for this." Instead the street was patched yet again.
It seems we have sufficient funds when it comes to owner inconvenience, but not enough to move forward on projects. That's the double standard with some owners. Any HOA board that operates in accordance with the whims and wishes of these people will fail, as will the HOA.
Boards are merely owners wearing a different hat. North Lakecliffe was identified as failing in 2008. Boards for a variety of reasons were slow to respond. Being told in January 2010 that we will have to spend $100,000 on this was not something a board wanted to hear.
By the time there was a board in place and a consensus on that board that Lakecliffe was failing and action was required, it was already too late. Then it became merely another item on a list of items requiring "immediate action."
Was the attempt to run this HOA as a social club a cause?
Social clubs might view collecting fees as a secondary objective. In fact, in some clubs "If you can't pay your fees, that's okay." Social clubs are based upon acquiring members and providing activities. For example, garage sales, picnics and outings. And finding people willing to do the work to organize and publish these activities in a club newsletter. If an attempt were made to run a HOA as a social club and if paying homeowner fees became "optional" what would be the consequence? If the emphasis of a board was on social activities instead of running the business, would that delay unscheduled capital projects? If such a board also took the perspective "If we don't spend it we don't have to collect it" as part of an approach to reduce fees, would that delay unscheduled capital projects?
Would such an approach result in a reluctance to enforce the rules, and would that increase the delinquencies?
If a board allows budget shortfalls to accrue and increase as a consequence of a failure to collect fees, will that impact capital projects?
Was it because of the attitude about HOA fees and finances?
Some owners don't want to know about any financial problem that may result in higher fees. Other owners don't understand the nature of infrastructure failures or the costs of dealing with them. "Just get a handyman and lower my fees."
"I'm paying $189 per month in fees and that certainly should never increase. After all, we have enough money. I know this because "so and so" told me." "The board really needs to get spending under control; my fees should not be going up and up and up!" [Quotes from 2001]
"If BLMH was well run, there would be no need for fees to go up, ever!"
"I'm selling my unit. I expect to be reimbursed for my share of the funds in the HOA bank account."
"We have enough money", "We have more than enough money", "We really have too much money!"
"I love the 800 trees, but the board spends too much on tree maintenance each year." I really love that comment by an owner. Yes, but that maintenance money includes the removal of dead and dying trees, which now requires $thousands per year. [In 2009 I asked a board member about our tree reserves; I was concerned about the rising cost of dealing with dead, dying and diseased trees. I was told "trees last a long time." At the time we had no reserves for this, apparently didn't need them and never would.]
Was it because of board failure to communicate?
Owners weren't informed of the potential problem with Lakecliffe in 2010. Nor were they advised of the financial implications. Why is that? As a consequence, any new board member was completely unawares of the seriousness of this problem.
Communication by boards is one of those really difficult chores. Some boards see it as optional and to be done after everything else. Besides, there really isn't anything new going on, is there? But we do get new owners each year, so how are they to know what's going on? For a new owner it's a brave new world. Some board members see communications as a waste of time. Some are concerned about saying or writing anything that could be held to be a "promise." Some are simply unwilling to make a commitment to the owners.
Some boards avoid bad news or may have difficulty determining what is really going on in a HOA. What is the direction, what are the initiatives, what are the problems that determine the finances, and so on. Every new board is a reset in HOA direction. Every new board needs time to "get up to speed." So what to write about? If all else fails we can write about architecture in England, or have a page on the resident of the month, or whatever.
To add to the issue, some owners don't want to be treated as shareholders. However, it's my opinion that it is the duty and responsibility of the board to publish communications that reflect that. Boards are required to publish budgets and annual financial reports. After doing so, boards can do whatever they like about communications.
It can be really difficult to assemble communications because one has to understand what's really going on. "Every owner gets the annual financial statement and a budget. So why read it to them?" Here's a thought. Why not tell them why we are saving and what we intend to do with that money and when? Tell owners how well or how poorly we are doing to meet these budget goals? "That won't work because some people will say we made a promise and we can't do that."
Okay, so in the absence of communication we'll let owners simply make up anything they want about what the board is doing. "They will do that anyway." Sure, and some will read between the lines or misconstrue what is written. But many won't. While the 80% may be complacent, they aren't the 20%. "People don't read the newsletter." That's not my problem.
A real question is and remains "What is to be communicated?" Another is, "What's really important?"
Boards cannot divulge certain aspects of HOA operations. Who is delinquent, for example. Or who is foreclosing, or who is breaking the rules. But we can provide statistics, can't we?
Is BLMH too large to succeed?
This remains unanswered. Boards remain understaffed.
But let's look at the flip side. In recent years any owner who may have avoided paying their fees for months obviously decided this HOA was "too big to fail." Any board unable to reign in delinquencies must have decided likewise. However, such financial problems create other pressures and distress. With owner financial distress, "bad debt" and delinquencies, how should a board respond? Delaying capital expenditures is one way. Delay spending money. Avoid street preventative maintenance. Did this contribute to the condition of Lakecliffe?
Conclusion
When things go wrong it's easy to look for simple answers. When an aircraft falls from the sky, the experts say that it is usually the consequence of mechanical failure and pilot or other human error. There is no one, single cause and human beings are usually involved as the decision makers that led to that aircraft failure.
So too with HOAs. When things go wrong some owners come to the then current board as the simple answer.
When serious infrastructure problems occur, it may be easy to point the finger at a construction company or builder, or a board, or a manager. I think its reasonable to say that these types of failures are the consequence of the complex interaction of people. People make decisions in a HOA, not one, but many and over a period of years. Those decisions determine fees and how and when they are spent. Those decisions require establishing priorities and allocating resources. Property managers and boards are not project managers, engineers or construction managers. Some management firms may include such individuals but that is not the skill set of the property manager. But memories are short, and when certain problems occur, then some owners will say "How did this happen?" Frequently it is the same people who promoted a certain course of action. Owners are an intrinsic part of the decision making process. Owners elect the boards and it is the owners who press to achieve certain results, including reducing fees.
In this post I've provided a scenario which presents Lakecliffe as a convergence of good intentions and some less than good decisions. Taken singly, each decision might seem reasonable and should not have resulted in failure. Each decision can be argued on it's own merits and has been, by numerous boards and a variety of board members. I suspect no one single decision made after construction resulted in the current condition of the street. Instead, a series of events, some of which began years before this street was installed all converged. Those events included finances commencing decades ago, the design and installation of the street, some long held beliefs about how to maintain a HOA, and beliefs about how to keep fees as low as possible. One factor was the conflicting demands and expectations of owners, and the attempts of various boards as elected representatives to satisfy the owners. Another is the capabilities of volunteer boards. Another is chronic staffing issues.
I am of the opinion all of the decision makers did so with good intentions. I suspect there was no overwhelming desire on the part of anyone for this street to fail. But fail it did. What do I mean by "fail?" I mean the early and premature expenditure of a lot of money to replace it. That's what I mean by "fail."
What were some of the contributing factors? Owners have pressed and complained about high fees for as long as I have been here; certainly since 2001. In 2008 the owners made it a point to put in place a board to correct that. Over decades a variety of boards made decisions to avoid spending money needlessly. The definition of "needlessly" varies from board member to board member. Each owner has a different definition of "essential" spending, but it is generally true that money spent for maintenance of "my" building, patio, walks, driveway, garage, lawn, etc. is money well spent. Design sometimes occurs in house, rather than by licensed professional engineers; there is a place for this, but the street should not one of them. Project management occurred in house. There is a place for this, but the street should not be one of them. Preventative maintenance did not occur, but spot patching and then larger patching did occur. Boards were slow to respond; this is inherent in the structure and makeup of volunteer boards, as well as the frequency of HOA meetings and a requirement that all such meetings be held openly. Replacement was delayed in an attempt to reduce expenditures and reduce owner fees. The street did not cooperate and failure accelerated. Boards were sidetracked by other issues, both social and substantive. In 2008-2012 Lakecliffe was not considered to be an emergency, and in 2008-2009 it was not even considered to be a problem worthy of discussion. In 2009-2010 it began as a nuisance. It was eventually elevated to the status of an inconvenience. By 2012 a realization of possible failure became a consensus, but catastrophic failure did not seem possible. We'd undergone a change in management and the board and most were baffled. After all, this street was supposed to be okay until 2021 or so.
The question to be asked is "What can a HOA do to avoid this type of situation?" Lakecliffe serves as a beacon. It provides an opportunity for change, and it can be used constructively to build a consensus that some change is really necessary. Not the political buzzword
Change, but rather a shift in perspective, the way problems are approached, the way tasks are prioritized, the character and composition of boards, the delegation of duties to property managers, the proper use of professionals, and the role of owners. Most of the owners in this HOA have regularly paid their fees. Some boards had members who did the same, showed up at meetings and merely cast votes as their primary duty. Some change really is necessary. There is absolutely no consensus that it should occur and no one is empowered to make it happen.
There are many other infrastructure and organizational issues. They simply aren't as visible or obvious as Lakecliffe. Boards are comprised of micromanagers with a different emphasis or focus for each board member. Programmed, cyclic replacement is frowned upon, with the painting program as the one unique and repetitive, guaranteed task at BLMH. Micromanagement supposedly reduces overall costs. It also delays replacement, prevents certain maintenance such as streets and driveways and garages and even sealcoating and carpet replacement. I suspect it supports a "squeaky wheel gets the grease" approach. There has been a slow transition, but it is an uphill battle. Without a programmed approach, new boards are likely to drop out entire tasks, and they do.
It is my opinion that a variety of boards have accomplished quite a lot at BLMH since 2008. The pace has accelerated since then. However, it is also true that our infrastructure is aging and with that age there are additional problems becoming visible. Our reserve study does address the infrastructure issues, but cannot determine the lifespan of our water mains. However, there are some things that can be done to get a better grasp on that. The completion of the street analysis by a professional engineering firm will be important for updating the reserve study. The current status of driveways, garages and roof projects will also be incorporated. Future boards should have a much superior tool as a guide. However, it is up to the boards to decide to use that tool. Perhaps it is time to turn more of this over to professionals and fund a full time manager. Boards can be more involved in identifying problems, cost centers and fund sinkholes, figuring out supplemental sources of income, or social issues and keeping owners happy.
But a variety of owners are distrustful of the boards, managers and maintenance. Owners don't like the disruption caused by the infrastructure work. The pace has quickened and for several years it seems whole areas are a construction zone. This is a consequence of a promoted plan to delay such work for as long as possible, the acceleration of certain problems including aging roofs and dying trees, unforeseen events and Lakecliffe, and the game of "catch-up." There is a price to pay for delay and we today are paying it.
All owners really need to get a grip on financial reality. Our fees are not going back to $175 per month, unless future boards find other sources of income and return to a day when adequate reserve accumulation was for future owners to accomplish.
Is real change necessary? Possibly not. This HOA got to this point and various boards dealt with all kinds of issues. How will we pay for this street replacement? Simply delay other work. So why should we change? Consider the age of this complex, consider the fact that infrastructure is failing, be it streets or water mains or even the entrances, mail boxes and garage floors. Even the lakes pose a problem, but we are tied to Wheaton about that and our "tax and spend" neighbor COD. Nevertheless it does need to be addressed.
Consider the age of the board. Change is coming. It will be the decision of all of the owners if it is to be a transition or another series of costly disruptions. We all have decisions and choices to make. Make them well. If we do that and with a little luck and by the grace of God, our fees might actually improve and we might get better results.
