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| Creating the Newsletter, being of service to the owners, and doing real work, even while trekking in a Class B RV "Remote working in 2014 with internet access via my JetPack - at my personal expense" |
I created this blog in November, 2008. That was more than 700 posts ago. I had every intention of becoming a board member and as usual I document my work and I wanted something that could educate and empower board members as well as be useful to owners.
In my mind, there is nothing worse than reinventing the wheel. Time is precious and limited, and we have very few years on the planet. There are deliverables and we have limited time to achieve results. Perhaps that's my business mindset, which is foreign to others, and to hobbyists.
It takes a lot of trial and error to hone a skillset. Applied to a Home Owners Association this means that some board members are learning on the job. While board members are learning, they are less than effective and owner money may be mis-spent. In other words, learning on the job is not a good way to run an association. I educated myself about the association for about two years before I achieved a board position. I realize that is unusual.
Keep in mind the board meetings have a duration of about 2 hours. There are at most 14 meetings each year. That's 28 hours of board time, most of it spent in open forums. If each board member spends one hour preparing for each meeting the total time expended by the entire board is 42 hours each, per year. About one man- or woman- or it- week of work per year for each member. Yet, the board is spending more than $46,000 per hour of meeting time.
That's a lot of money to spend if one is unprepared. In my board experience some members came to the meeting un-prepared and simply to vote as instructed by other board members. During my tenure I was aware that two or three others on the board were fully committed and involved. The remaining put in a few hours each week, if no other purpose than to read the management packet each month, and chat with friends who were fellow owners or members of the Neighbors Club, a PAC.
I probably topped the charts working on board matters at about 20 hours per week, or more. There was no chit-chat. This was business with real world consequences. I have 7 boxes of documents and stuff, and about 1TB on hard drives. That's expert knowledge that will be flushed. Some board members hope that it is shredded.
The outcome is as expected and that's why I upgraded the newsletter from 2010-2018. The board of 2019-2021 took down all of the old newsletters, and the information contained therein. Which is why I have pdf files available here. Recent association newsletters include tomes such as "The board is very busy". Really? Then why haven't the water mains been turned over to the city of Wheaton? Why hasn't the destruction of thousands of shrubs because of the Viburnum Leaf Beetle been addressed, after 4 years? Why haven't street repairs been made to Dover and Plymouth, as identified in 2018?
While boards are attempting to learn, our 43 year old association is aging and decaying. Things that are not addressed pile up and create a backlog. Maintenance costs increase and future owners are penalized via higher fees to deal with past board avoidance of dealing with issues, decaying infrastructure and mistakes or mis-steps. We have been here before. That was the state of affairs in 2008, when owners tossed out the board, and elected a new board.
Reserve collections in 2001 were about $57,000 and 8% of the budget. Annual Reserve collections peaked at $448,000 in 2014 at 34% of the budget. Reserve collections have been in the range 28% to 34% of the annual budget from 2009 to 2018. However, because any O&M surplus was turned over to reserves, the actual contribution to reserves may have been greater. In fact, the most recent audited financial report I was able to extract from the board has confirmed this. That report is dated, having been delayed by almost a year by the board, before management was directed by the board to honor my request and provide me with a copy. I had threatened to get an attorney.
When I was on the board the annual budgeting became more and more contentious among the board, particularly after a board member who had been passed over returned. There was a dogma instilled in the earlier boards. That dogma was about annual fees increases of at least 3%. That dogma was required because boards earlier than 2008 failed to accumulate sufficient funds in the Replacement Fund, also called Reserves. So it became religion among the BLMH board to increase fees each year. That was easier than doing the number crunching and implementing the budget controls that I promoted.
The actual fee increases were 7.3% annually from 2002 to 2008. However, during the period 2001 to 2007, before a new board was elected, the average annual contribution to reserves was a little more than $174,000 each year. That annual contribution to reserves was nearly doubled by subsequent boards. Yet, by 2015 a hold-over to the boards prior to 2008 insisted that was insufficient. There is an opinion among some board members that the association will never have enough money. I say the challenge is to construct reasonable budgets and use what we have in a responsible manner to properly maintained the association. I proved this is possible.
This reached a peak confrontation in the annual budget meeting held in October 2015. That board member demanded that there be annual fee increase of at least 3% and 5% was preferable. That demand was made in the face of facts, which indicated otherwise. Yet. to do approve a lower fee increase was heresy. Some board members were manipulated by cries of "There will be special assessments". LOL; a special assessment of 2010 was averted. There are better ways and I prevailed. That led to even greater animosity and undermining. Yet. the 1.5% fee increase prevailed with a 4-2 vote. Ultimately, the obstructionist did succeed and three board members who voted for that lower fee increase did leave the board as of September 2018. The new board immediately voted for a fee increase, in the face of a large budget surplus. Of course, any surplus is turned over to the Replacement fund. I have concluded that some board members can never extract sufficient money from the owners.
I say that the boards prior to 2008 underfunded reserves. There had been no formal study by an impartial company from 1978-2010. The Replacement Fund totaled about $295,000 December 2001, according to the information provided to me when I was attempting to purchase a unit. That was the Balance Sheet information I was provided at the time..
Inflation has been one justification for annual fee increases, but not all association costs increase per the CPI-U. Operations and Maintenance budgets increased by 4.5% annually for the period 2003-2008. Yet, collections for reserves increased by 23.9% annually for the period 2002-2008. The board was playing catch-up and preparing for a major roofing replacement. You didn't see the numbers in the newsletters of that period. Nor did owners get numbers in the Candidates Forms. The actual fee increases were 7.3% annually from 2002 to 2008. By delaying maintenance the reserves grew to about $709,000 by December 31, 2007. However there was that large and expensive roofing project to do, driveways, dealing with the failing street Lakecliffe and so on. More than $3 million. Owners were oblivious and were unawares, thanks to the lack of information provided by the earlier board.
After that board was replaced in October 2008, things changed dramatically. The new board of September, 2008 struggled, but to use an expression of an earlier president: "They were thrown under the bus". I joined the board in September 2010. Some owners did their best to keep me off the board because "Norm will raise your fees."
Well, that was baloney. Thanks to my efforts the fee increases from 2010 to 2018 moderated and were about 1.5 % each year with tighter O&M budget controls, stabilized reserve collections, improved and more extensive maintenance, and the addition of a contra account (delinquencies and foreclosures). With great effort delinquencies were reduced and became manageable.
The most recent board, under the old leadership since September, 2018 has struggled. Hamstrung by the past on the board, and by their own limitations.
Handicapping future boards
When board members who have "kicked the can down the road" leave, they kneecap the boards that replace them. This is a method used to prevent replacement of a board because "You can't operate without me."
Owners may revolt and elect a new board, as occurred in 2008. The president, Sheryl Bailey and her board members were deposed. The board of 2008-2010 floundered, in part because of a total lack of support by the previous board.
This happened to me when, as a new board member in September 2010, owners gave me grief for the mistakes of previous boards. I also had to determine how to deal with the huge maintenance backlog, fund the roofing project, replace a prematurely failed street, failing streams, etc. and do so without penalizing owners with the unrelenting fee increases promoted by earlier boards. Yes, catching up is expensive and is financially painful for owners.
I did stop the hemorrhaging and fees moderated, as I told owners who attended the annual meeting of 2010. It was difficult to achieve, and yet, the amounts allocated to reserves did increase substantially.
In 2008 the new board allocated $300,000 to reserves. That's about three times the allocation in 2001, when I purchased.
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| Dealing with a maintenance backlog while moderating fees |
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| Reserve projections October 2015 The chart is a possibility. It is possible because from 2010-2018 the board decided to complete the roofing project with urgency, replace pump pits for the streams, complete stream repairs delayed for a decade, replace water mains beneath Lakecliffe, install a properly engineered street. It replaced failing bridges and common element decks and driveways, garage floors and additional street repairs. In total 500 feet of water main, accompanying valves and fire hydrants were replaced, rather than applying band-aids. As a consequence the Reserve Balance was capped. But, as fiduciaries, boards are charged with maintaining the property and controlling fees. Oh, and property values have increased by about 30% |
In 2009 I was not a board member, yet I did the financial analysis, prepared and published this chart. I used my rudimentary financial analysis of the association. It was made easier because at one time owners were provided annually with the balance sheet, etc. Getting this information out of the current board is very difficult with delays, excuses and stonewalling.
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| How boards prior to 2008 tossed the owners under the bus and knee-capped future boards |
I did succeed as a board member and I knew it would take a number of years to do this. It took 8 years and a lot of work and timely action is of the essence. I left the association in far, far better condition than I found it, both financially and in terms of condition of infrastructure. I left it in less capable hands, but then, owners get the board that they elect.
I had no intention to become a boat anchor or impediment. I accomplished my primary goals and moved on, I have published what I did in the association newsletter, and in this blog. I left completing several streets and turning over the water mains to the city, in the hands of the board of 2019.
Alternately, if we pretend we have forever as a board member, we can spin our wheels and re-invent the wheel. We can put pap into the Candidates Form and get re-elected. I chose a different path. I worked with a purpose, achieved the goals I had set, and then turned over the reigns to a new board, some of whom insist they are extraordinarily capable.
In 2008 I gave this advice to a newly elected board member who took on the role of Maintenance Director: "You need to hit the ground, running". Winter is the time to plan, and spring, summer and fall are the time to execute those plans. Some board members see winter as a period of low activity and an opportunity to do nothing. For some who literally do nothing, it is merely business as usual. That is a huge mistake and a disservice to owners.
I say, use the winter months to develop the plans for the next three seasons of good weather. It is an opportunity for intense planning and preparation.
After formulating the annual budget in October, winter is an opportunity for the board to delve further and determine how to make that budget a reality. The budget is merely a framework and it will take oversight and many individual actions to make the "Actual" as of December 31 meet the "Projected" in October of the previous year. Some boards will cheat; for example, deferring billing for maintenance hours into the next year. Shame on them!
Winter is an opportunity to review the earlier surveys and plan the surveys to be conducted in the next year, and plan all of the maintenance tasks and reserve fund expenditures for the new year. Some board members view winter as a vacation. I also say that it is best to build upon what others did and learned, unless we want to repeat past mistakes. I have determined that by the time most board members have figured this out, in a typical two year commitment as a board member, they will actually be departing at about the time the lightbulb comes on and they reach some level of effectiveness. It is a downward spiral. Three years after I left the board we are still waiting for the board to turn over the water mains to the city of Wheaton.
I categorically reject what doesn't work or is ineffective. Why? Because in a HOA it is the fees of owners that the board is spending, and the owners are the shareholders. Inaction about turning the water mains over to the city means that owners will pay for maintenance of mains that the city should be financially responsible for. My experience is, some board members will spend the fees and argue for higher fees to cover maintenance costs for the water mains. That attitude is why fees increased at BLMH by more than 5% each year, year after year. The board seems committed to repeat the mistakes of the past. Why? One need look no further than the composition of the board of 2019-2021, and their lack of accomplishment 2019 to 2021. Dover and Plymouth have yet to be repaved, yet that was planned to occur in 2019.
I was unusual because of my life's experience prior to joining the board, and because of my education about the association. I fully realized the meaning of being a fiduciary and I was very familiar with the Illinois Condominium Act. Upon being elected, I was able to hit the ground, running, because I was fully prepared and motivated. Not typical for most new board members who think they have the time to learn, or can coast, or rely upon others while they figure it out. Relying upon the wisdom of others may provide insights, but it is also the best way to repeat past mistakes, or fall under the personal agenda of others.
Critical thinking skills are the best tools for a board member. Ask questions, use the internet to delve deeper and study the association finances, reserve studies, and the monthly packets. For a board member, the association is an open book and there are no restrictions of information. Ask "Why is it this way?"
Boards may become rubber-stamping machines because of a lack of time, a lack of capability, and over-reliance upon others. I say, ask questions and ask for explanations. I've seen board members ridiculed by other members and even by management for asking questions. That's one indicator of a dysfunctional board. Dysfunctional leaders only want the board to toe the line and vote as instructed. Management does as it is told because bullies on the board will say "I can fire management" and management does know this; the bullies make certain of that. I say that isn't good for the owners.
Keep in mind that management is a contractor and they have absolutely no fiduciary duties. That falls entirely upon the board, which makes all decisions. Many owners don't realize that and some boards will use management and the HOA attorney as a shield or and excuse. I've seen it all.
During my tenure I had a reason for everything I did, and I could explain why and also was capable of discussing alternatives, and explain the pros and cons. There are trade-offs inherent in every decision.
Some rigid board members have no vision and cannot comprehend alternatives. I can't count the number of times I was told "We didn't do it that way." I have no interest in style with regards to running a HOA. I prefer substance over style, reality over perception. In the age of wokism that is not appreciated until it becomes essential to achieve real results. I was considered a problem until it was necessary to design and implement effective solutions. Only then could some board members listen to me. Others were oblivious. For one it was "knives out".
I handed the board of 2019 a means and a foundation to turn over the water mains to the City of Wheaton on a plate. They have failed to do so.
In my limited experience, at most four board members at a time are effective and the others may think their duty is to read or skim the 90 page monthly information packet provided by management and then vote or direct. Some will operate as rubber stamps and vote as instructed by other board members.
Some board members will actively undermine new board members, and their voting block will fall in line. I'm speaking from my 8 years of board experience at BLMH. A HOA is not a place for politics, but it is, what it is.
I'm familiar with cabals and fiefdoms and kingdoms. I am not going to spout about my life's achievements and experience. But I will say that, as the leader of an organization that dealt with multi-national corporations and foreign entities, I was appointed by the Saudis to a special position. That occurred as an acknowledgement of my extraordinary achievement in dealing with a technological and political problem.
I know all of the games that people play and I work around them. Most HOA board members operate in a very, very small arena. Some don't understand their role as fiduciaries and think they were elected to take care of the association, which is their first commitment and supersedes the owners.
When I purchased (closing February 2002) I considered it to be essential that I get an in-depth education about the association, and I did so and prepared, In 2006 I focused upon the coming financial disaster. It was apparent to me that our association was financially at risk. Reserves (the replacement fund) seemed adequate until one added up the cost of the backlog of maintenance and an expensive roofing project, a failing main street and so on. Add financially strapped owners and one has a toxic combination.
History has proven me to be accurate in my assessments. I am usually ahead of the curve. Critical thinking skills, an ability to listen, awareness, financial acumen and a willingness to put aside preconceived notions is a valuable aid. For fiduciaries it is a necessity. It is owner money that the board is spending and their mistakes or bad steps will use all of the fees of the owners; once depleted additional fees and even special assessments will be extracted. Board members who are running personal agendas will fail the owners. Some board members will eventually move on, after kicking the can forward, and leave it for others to clean up their messes. That's what occurred in 2008 although owners said "enough" and ejected that board. That created an opportunity for my entrance.
In an association with low owner awareness and involvement, it will happen again. Meanwhile the hanger-on's will always look for someone else to blame, so as to avoid responsibility and be re-elected. Read the candidate's forms and learn. What isn't being said?
I was different. I was the real deal. I had specific goals, prepared for several years, was elected and implemented the goals published to owners via the candidates form. No smoke screen or buzz words. Over an eight year period. I left guidance for the board members that followed me and then moved on. I had goals and no desire to be a boat anchor. One really should be able to reflect upon when to leave and then do so, after preparing for others to follow. That's a pre-requisite to personal growth and achievement. That is what is best for a HOA. "Nature abhors a vacuum" is an expression. I did what I could to prepare the HOA leadership for those who would follow. However, some people do the opposite; they entrench themselves and will drive capable people away. Really capable individuals do what they can, create a future path and then move on to greater challenges. That's a goal of personal development, isn't it?
My candidates form, 2016, which was submitted to the owners:
"QUALIFICATIONS: Purchased (closed) my unit in February 2002. Served on the board November 2010 to present. Proven track record. Current president of the BLMH board and also served as Architecture & Maintenance director. I have expert knowledge of this association, and of business operations as founder, president and systems engineer for several high tech industrial automation firms from 1978 to present. Expanded these businesses during severe recessions and never laid off or docked the wages of a single employee. Received extensive communications, leadership and human potential training and trained the trainers. As a volunteer I am the recipient of the BSA District Award of Merit “for rendering service of an outstanding nature at the district level; this is the highest award at the district level” and I successfully completed Wood Badge. Currently I am also a published and paid free lance writer (on retainer) on matters of personal finance, retirement planning and investment. I am an entrepreneurial case study in a published book on personal financial planning. I am an advocate of continuous learning and personal improvement.
Since 2010 I advocated responsible, appropriate and necessary fees which have allowed the work achieved to date and maintained reserves, currently above $1 million. I voted for the recent, lower fee increases using extensive fact based financial analysis of the current, changing situation while acknowledging 30 year future projections with condition analysis. This includes frequent condition surveys. I converted problems into opportunities, spearheaded or reactivated numerous programs and worked with or on the teams that got the job done, despite some great difficulties. I practiced proactive leadership to deal with the fireplace issue and liaised with the city on this matter. I realigned priorities and openly encourage others to join the board and committees. I prepared the “newsletter” for about 5 years, which expanded with responsible, concise articles on association finance, procedures, priorities, planning, maintenance and projects. Projects completed included the replacement of Lakecliffe with a street engineered for 30+ years of service. Other projects included the proactive replacement of about 300 feet of water mains, stream repairs, excess soil removal with sod installation, substantial rain water handling improvements throughout the property and as part of the roofing project and others specifically designed to handle standing water, remediate muddy areas and so on. The roofing project will be completed in 2016; about 70% of the roofs were completed in 6 years. Replaced numerous garage floors, decks, patios, driveways, portions of walks, bridges, etc. Documented and published the extensive issues with surrounding COD and Wheaton storm water systems.
POLICIES/OBJECTIVES: I am in favor of reasonable and appropriate fees using realistic and fact based knowledge of the condition of the infrastructure of the entire association, while acknowledging the value of our units and the financial impact of fees on our owners. I advocate creative solutions to keep fees as low as possible today and in the future. Expand the owner participation recognizing that these are volunteer positions and we all have other things to do, and I encourage all including younger people to join the board and committees and strengthen our community. We each do make a difference. I want to expand the possibilities for this association. I advocate the expanded use of technology in our association and improved communications. I want to maintain the grounds and streams, establish priorities, improve our planning, preparation, project management and cost accounting. Continue frequent reserve study updates recognizing the extensive work that has been done. Maintain continuity of maintenance and replacement programs and avoid suspending or stopping them; it is so very important to maintain momentum because incompletions will accrue and will become costly breakdowns for future owners to deal with next year and beyond. I want to strengthen our liaison with all professionals including with management and our contractors. Use engineering professionals to solve long term issues and realign priorities. Improve our liaison with the city, recognizing that we are at least 1.25%of the city population.
TIME CONFLICTS (working/retired, etc.): I am 70 years of age and I currently work part time and I do have other commitments. I also travel extensively, yet I met or exceeded all objectives and requirements for a board member 2010 to date. "
Yep, compare that to the other candidate's forms provided to the owners.
I'm a professional problem solver and so I don't linger. Why? Because in this world, there is no end to the problems to be solved. By lingering one atrophies and reinforces that bubble they live in, which eventually becomes a prison. Those trapped in the prison of their own making become bitter and even nastier. When this happens to a board member, they may choose to punish the owners.
I have passed on what I know and have learned to boards, management and to owners. I did that in many reports to boards and two of the current board were present for all of this. I did it in monthly meetings, and the newsletters. These were designed to inform owners, and educate future boards.
Much of what I provided has been flushed, but that is the nature of HOAs with popularly elected boards, or entrenched board members who are most interested in maintaining a legacy, or a perception of one among owners. That disease can permeate even two year board members. Power can corrupt. I did publish here although I did use filters on what I published. I am aware this is a publicly viewed blog, and I constrained what I published.
In 2008 the association did not have a website. I knew that boards would screen anything provided to them for that inevitable website. Some of what I could provide would be rejected. I also knew that future boards would have the ability to delete my work if it was published on an "official" association website. I created this blog and I did offer to turn it over to the association. I was declined by the board. So I was free to continue on my own. I appreciate that lack of foresight by the board.
While on the board I provided reports to the board each month. Some were 12 pages or more in length, and then there were supporting emails, spreadsheets and so on. I'll be publishing more of my archives here. I've got 7 boxes and the time will come when they are shredded. Until that time, I'll post. However, I am not a fiduciary and so I have no overwhelming reason to do so. As a fiduciary I was supposed to operate to a much higher standard, and I did.
About turning over my blog to the board and allowing it to be controlled by others, my concerns were realized when in September 2021 I couldn't access the official BLMH.org website. I inquired of this with management and the email response was:
"This google website has been deleted due to the site no longer being able to be edited because of it being outdated. The Board made the to decision to delete it because owners can now sign up for the portal. We are working on uploading approved docs/policies. If an owner emails us regarding a docs we know has not been uploaded yet – we will assist the owner. No owner at this time has requested they need something they can’t find."
I did advise management that the rules posted were incomplete. Hmm, did any current board member do that? Have they managed the managers in this? Who on the board actually promoted taking down the website?
When the BLMH.org website was taken down, all of the newsletters prior to 2019 and all the information contained therein became unavailable. The board of 2018-2020 had been deleting newsletters from 2010-2015.
So, my forward thinking has preserved the information which I have presented here in more than 700 published posts. I recently posted links to my cloud storage for the newsletters for the period September 2008 to September 2018. That is the only published source for this information as of 9/25/2021. Of course, if directed by the board management can download the newsletters from my cloud and post them at the new association portal.
My blog has only had about 106,000 views. Not all that much, really. But, considering the hidden nature which has been ignored by boards, that is really very good. Much better than having 5 owners who aren't on the board or candidates attend the 2021 annual meeting. As a comparison, at that rate, 5 per month, my blog would have only realized 240 views over the same 10 year period.
Views peaked on December 31, 2015 with 2,702 on that day. The views per day fell off after I left the board as of October, 2018. However, I also posted less frequently thereafter.
How large is this blog? More than 700 posts, more than 1,500,000 words and a thousand images. If printed the backup would be about 2,000 pages in length. A board member once commented it was too much to read. LOL. Imagine the hours I have spent writing it! As I prepare to purge my files, I'll be posting more information.
Other Online Publishing
I do have several other blogs and one of those I began in 2013. It is of an entirely different theme and has 326 published posts and only about 350,000 words, with 115,034 views.
I have three YouTube channels. I began and administer three narrowly focused Fakebook groups; one has 923 members.
I am also a creative finance writer and my work is published online and available to paid subscribers. I was told that 38,000 have the opportunity to read what I write.
Several years ago I did create a Fakebook group for Briarcliffe Lakes Manor Homes:
(C) 2021 Norman Retzke
