Where Our Assessments Will Go in 2009

This is based upon the budget mailed by our association to unit owners on October 23, subsequently discussed, voted upon and approved at the November 2008 meeting. What I have done is to calculate monthly fees and percentages, using the information we, the unit owners, received in the mail. That information is provided each year to unit owners as part of the annual budget process, the financial statements and the approved budget.

I have my comments, and any replies to reader comments will be at the end of this post.

First, our monthly assessments have increase, but by an amount less than the COLA projections for 2009 by the Federal government. This is as predicted by our managers, who said they expected the rate of increases to abate as we build up the reserves for the forthcoming roofing and street projects.

The assessment is split into two components. One is to fund day to day operations. That includes energy, maintenance, the green spaces, the trees and snow removal, administrative expenses and fees, insurance and taxes, among other things. The second part of the assessment is for funding General Reserves, which are sometimes called "capital expenses" or "capital projects". These are larger, predictable and scheduled replacement items such as roof replacement, street paving, concrete work including curbs and so on.

The budget for my "B" unit for 2009 includes a monthly fee of $86.68 for funding the General Reserves, or "capital expenses". All other fees collected go to funding the day to day costs of operation.

There are, I have been told, 15 different assessment tables, which vary by size, location and view of the unit. So your assessments will probably not match mine. [The previous statement added December 5].

The following are based on the assessment fees for my "B" unit. I include dollar figures and percentages. For other "A", "B", "C" and "D" units, the percentages are the same, but the monthly fees will be different. [it is my understanding that units are in 15 different assessment groups] [comment added 12/12/08] To calculate for your unit, take your monthly assessment and multiply it by the percentage, to determine your actual monthly cost for each item. For example, if my monthly assessment was $299.30, then my share of the cost for utilities would be $299.30 x 6.10%/100 = $18.26 per month. (Note that because we are dealing with percentages, they have to be divided by 100 to do the arithmetic properly. In the example, 6.10% = 6.1/100 = .061. To calculate the amount for utilities in a $299.30 monthly assessment, after dividing the percentage by 100, the arithmetic is .061 x $299.30 = $18.26).

Major Budget Categories

These are the major assessment distribution categories for [my] "B" unit, according to the budget, with percentages:

Taxes = 0.51%

Utilities = 6.10%

Maintenance and Repair/Janitorial = 1.73%

Common Area Maintenance = 20.59%

Waterfall/Creek Maintenance = 0.17%

Building Maintenance = 28.98%

Administrative Expense/Insurance = 13.98%

General Reserves = 27.95%

Sub-Categories

The budget is further distributed into the following sub-categories, and the percentages and monthly dollar amounts for [my] "B" unit are:

Taxes

Taxes = 0.51%, $1.58

Utilities

Electric = 4.66%, $14.45

Water = 1.19%, $3.68

Pest Control = 0.25%, $0.79

Maintenance and Repair

Janitorial Contract = 1.73%, $5.36

Common Area Maintenance

Grounds Contract = 8.04%, $24.93

Grounds Maintenance = 4.23%, $13.13

Drainage Restoration = 0.85%, $2.63

Tree Maintenance = 2.96%, $9.19

Seal coating = 0.59%, $1.84

Snow Removal = 3.91%, $12.14

Waterfall/Creek Maintenance

Aerators/Lakes/Streams = 0.17%, $0.53

Building Maintenance

Maintenance Contract = 12.81%, $39.72

Panel/Trim Replacements = 1.86%, $5.58

Lighting = 0.76%, $2.36

Miscellaneous Repairs = 4.23%, $13.13

Painting = 7.20%, $22.33

Roof Repairs and Maintenance = 0.42%, $1.31

Administrative Expense/Insurance

Petty Cash = 0.03%, $0.08

Postage = 0.24%, $0.74

Printing and Duplicating = 0.34%, $1.05

Management Fees = 5.05%, $15.67

Legal Collections = 0.10%, $0.32

Accounting = 0.25%, $0.79

Miscellaneous Administration = 0.17%, $0.53

General Reserves

Paving = 7.79%, $15.76

Lake Restoration = 1.56%, $3.94

Carpet = 0.52%, $1.31

Roof = 12.46%, $47.28

Concrete = 3.11%, $10.51

Masonry = 1.96%, $7.88


My Comments, and Replies to Reader Comments:
General Comments

This is the lowest assessment increase since 1998, and it is less than the government projected COLA for 2009 (as based on the Social Security increase in benefits, which is 5.8% for 2009)! The assessment increase of 5% will raise the assessment of my "B" unit by $14.68 per month. The majority of the increase will go to fund the "General Reserves" and the projects listed above.

In 2009, the assessment fees include a 10% increase in the amount allocated to reserves. The budget for day to day costs is only about 1.42% higher for 2009 than the actual, projected costs for 2008. This would imply that the board and our professional managers are doing a good job of controlling costs. The board and our managers discussed the budget during a closed meeting in October. At that time, inflation was projected to be over 4% for 2009! I don't know what went on in that meeting, but this budget does lend credibility to our manager's statement during the November open meeting that "assessments are stabilizing and reaching equilibrium".

Our monthly assessment fees will be allocated as follows: 72.05% to cover day to day expenses and 27.95% for funding general reserves.

How Can I, a Unit Owner, Use This Information?

I originally did this exercise several years ago, and calculated the allocation of the budget as it applied to my personal assessment fee. This was for my own use, but I did send the results to our managers and I received a written reply from the board.

I did it because I wanted to know where the money was going. If you tell me that we spend $57,000 a year on something, I am somewhat overwhelmed by the large number. So I like to break the numbers down to something I can better relate to. This also lets me compare the association costs for certain items to my personal costs, such as utilities. It also makes the entire budget much more personal. I can see exactly how much I am paying for "printing and duplicating" each month, for example. Of course, I can't decide to spend or not to spend the money on a day to day basis; that has been decided by the board and this budget is pretty well fixed in stone, as they say.

However, it does give me a few things to think about. For example, in 2008 we had several water line breaks. I understand one of these cost about $17,000. There is no such item in the budget and so that money had to come from somewhere else in the budget. How much did that cost me last year? In looking at the budget, I can see an item for $15,000 and that costs me $3.94 a month. Using a little arithmetic, a water line break costs about $4.47 each month out of my pocket, or about $53.58 for the year.

Each of these items adds up. The board is discussing hiring consultants and engineers to do reserve studies and other consulting work. If that costs us $30,000 in 2009, I'll be paying $7.88 each month for that study. If we were to spend $60,000 on engineers and consultants, that would cost me $15.76 each month, or $189.12 next year for my share of the cost of the study. Is it worth it to me to divert that money from the General Reserves? Is it worth it to you? I would like to have some assurance by the board of the tangible benefits, examples of what they might be, and the actual costs before I am asked to fund things like that. Even though it is not budgeted, our management advised us in the "state of the association" letter that this is under discussion by the board. The board will decide because the board has the authority to do so and just about anything else they vote as a group as "necessary", even if it is not in the budget. This is essential to fund unexpected events or emergencies. Otherwise how to fund repairs due to water line breaks? However, that discretionary power can also be exercised by the board to change direction on long term projects. They can stop projects and create new projects at any time, and for any reason. So bear in mind that while this is the approved budget, the actual expenditures for 2009 will vary from it, and as we have no specific, agreed upon timetable for the projects in the General Reserves budget, those too may change.

If you have questions or concerns about assessment fees or where and how our General Reserves will be spent, I suggest you begin looking at proposals from the board from the perspective of "Is it included in the existing, approved budget?", How much will this cost me each month?", "Has the board adequately explained the tangible benefits?" and "Did the board present this for discussion?" The ROC won seats on the board with a promise of "improved communications". I think getting more advance information and the opportunity for more input into this process of spending money would be a part of such communications. However, I am convinced of the necessity of the plan for new roofs. What I do not know is 1) What is the timetable and specific schedule? and 2) Is our new board committed to replacement of the roofs? I don't think the new board has recommitted to the program and it is currently discussing "reserve studies" which can be construed as meaning the new board intends to alter the program.

I suggest that if you are a unit owner and you have any questions or concerns, then attend the monthly meetings, listen intently, and ask questions. I assure you, that is what I am doing. I also suggest you check this blog every week.

I realize that it is difficult or impossible to reduce the cost of some of the "built in" amenities at BLMH. These were designed and installed many years in the past. Another example of how decisions made today, will influence the distant future.

We do have to maintain the grounds and trees, and pay for electric lighting. But we can manage the planning of future expenditures. Each time our board "votes" on something, they are deciding on spending (or not spending) our assessment fees and they are voting to save or not to save for General Reserves. Today’s board will determine our future assessments. If our board does not adequately save then they will mortgage our future. However, that choice is ultimately determined by each of us, as unit owners. We exercise that choice when we vote, which determines who we place on the board, which in turn hires our management company. The decisions our board makes this year will determine the financial well-being of our association for many years in the future.

Thursday the 13th - Board Meeting and Congrats to the Board

[Note: My response to reader's comments is contained at the end of this post].

Last night (actually, earlier this evening) was the conclusion to the budget process for 2009 and the meeting of the board and unit owners. Owners from approximately 50 units attended the meeting, which is about 15%. After discussion, which was at times impassioned, the proposed budget was passed by the board, with one "nay" vote. This was not an easy decision. My congratulations to the board for listening to the unit owners, and for making a difficult but I believe, the appropriate choice. That choice approved a 5% increase in the assessments for this year.

There were arguments against and petitions made to either reduce the proposed increase or eliminate it entirely. Discussions also included possible methods of reducing costs. Some unit owners complained about the lack of "service" and collecting leaves, dirty entry windows, etc. That is the crux of the matter; reduce services to reduce costs and some unit owners complain. Other issues raised included reducing painting costs, changing from wood trim to more durable materials, pulling back funds spent on greens maintenance and trees. I think the board attempted to answer questions and address the issues with courtesy and in detail. The discussion of the budget and related matters prior to the vote took one hour and 2o minutes!

During the open session near the conclusion of the meeting, I congratulated the board for their consideration and for making this difficult decision.

In the very near future [December 1, 2008], I will add a summary of "where the money goes" for a monthly assessment, and the corresponding amounts. I have already prepared the spreadsheet for this, and I did so in advance of the meeting so that I had some idea of the impact of the budgetary process on my personal assessments. I have been doing this for several years. Here is a link to an earlier analysis, which was made from the annual budget and the financial reports provided to all of the unit owners for the annual meeting: How My Assessments In 2006 Were Spent or Allocated There are some current numbers for reserve allocation at the end of this post.

I have some comments and opinions to this meeting and to the general budgeting issues at the end of this post. In particular, I address the issue of funding reserves at our current rate and the impact this has on our monthly assessment fees.

One of the points raised repeatedly by several unit owners was the pain experienced by some of us as a consequence of the current recession. I think all of us are experiencing this. However, as I observed during the open session near the closure of the meeting:

1. Oil prices have recently decreased by a substantial amount. This provides immediate relief to all of us. This will offset the 5% increase and prices are expected to moderate until the middle of 2009. In our immediate neighborhood, 87 octane gasoline is readily available (as of November 13) for $2.23 to $2.29 a gallon. Link: Find Gas Prices by Entering Your Zip Code . Our gasoline prices are about the same as they were in October 2004. [On November 18 I added the chart below. This is for Midwest Gasoline Prices for the past 10 years. As you can see, prices have been "rolled back" to 2004. On November 18 I also added data from the S. Louis Fed at the end of this post. Oil futures are expected to remain low throughout 2009] .







2. Forthcoming 5.8% cost of living increase to those collecting social security benefits will also aid those who are living on these fixed incomes. Of course, we all are "living on fixed incomes" but those who are retired have been feeling inordinate pressure, and perhaps more angst with the current financial turmoil.

For the record, I do not like assessment increases. However, nor do I like special assessments, or the possibilities of a leaking roof. It is a fact that for the nearly 8 years I have been a unit owner, the board and professional managers have been increasing the assessment so as to increase the reserves so as to address some significant, looming maintenance issues. I know this because I have attended meetings, sent letters and interviewed the managers and the board on this matter several times. I did this first as a potential buyer and after purchase as a unit owner.

I do have the same concerns many of my fellow unit owner have. I understand the argument made during the meeting that as monthly assessments increase, our units become less affordable. Affordability can negatively impact the possibility of the sale of our units. However, these are general statements and at some point in the near future, I will do a study of the point of stability for our assessments. At present, we are successfully growing our reserves. We are on track to address the roof replacement and repairs. Once the reserves have reached an equilibrium point, and I think we may be there, the increases may only be required to offset inflationary pressures on the reserves and to accommodate increases in operating expense. This point was made repeatedly by the management company during the meeting. I agree with their analysis of the current situation.

I have a concern about the schedule for roof replacement. As I expressed to the board during the meeting, we will not accrue all of the necessary reserves until the year 2014. Actually, in January of 2014, we will be short $177,167 if we continue to fund at the present rate [the rate approved at the November meeting]. Our professional manager pointed out that we have reserves for other purposes that could be temporarily "borrowed" to complete the roofing at the currently projected schedule.

I presented spread sheets at the meeting, to substantiate my evaluation of the financial information. By 2014, some of the shingles could be 22 years old if they have not been replaced. That is far beyond the expected life for roofs of the type we have. In advance of the meeting I did discuss this with the Chairman of the Planning Commission for a nearby community, whom I am fortunate to know. He advised me that his city's engineers anticipate roofs of our type to have a life of 15 years. By that it is meant that we could expect to be "leak free" for that period of time. Unfortunately, I was unable to provide this information to the board and to the unit owners who were present. However, the discussion and presentation by the professional managers made it very clear that they are well aware of this time constraint and the urgency facing us.

In response to some of my questioning on the age of our roofs, the management company stated that the last roof was shingled in 1999. That is, the last building to have a second layer of shingles atop the old, was completed 10 years ago. If the roofs are replaced on an "as needed" basis, the last roof, which I assume would be the one last maintained in 1999, would be re-roofed in 2014. That is exactly 15 years from the date the second layer of shingles were laid on the roof.

I think the board needs to have an inspection made of the all of the roofs and publish a schedule for replacement, with the anticipated year of replacement for each building. This information should be made available to the unit owners. I expect that some studies have already been completed, as the board has made disparaging remarks about the condition of some of the roofs on some of the buildings. What is missing is a formal, published schedule. Unit owners who have experienced leaks, should be assured of when their roofs will be formally repaired and not just patched. This would promote certainty and alleviate concerns. Currently, people see annual assessment increases, with no tangible benefit. The publishing of a date, a true date, would be very encouraging to us all.

In these economic times, it is vitally important that people be provided with as much certainty as is possible. We cannot control the economy and there are also many aspects of our lives and circumstances that we cannot control. However, there are things that we can manage. Scheduling, budgets and projections are all tools that can promote certainty. With that comes stability, improved confidence and optimism. Link: People Will Be Strange

The suggestion was made during the meeting that committees be formed to assist the board members, who are all unpaid volunteers, in accomplishing their tasks. This is an excellent suggestion. I would hope that the board will quickly prepare guidelines for these committees, so that ad hoc groups, operating outside and beyond the board, do not further destabilize the situation and add concerns to those the unit owners are already experiencing.

The possibility of transferring assets to our city, so that we can avoid maintenance costs, which is to say, pass these costs on the city, was also raised from the floor. This has been previously discussed by previous boards and was diligently researched. At this time, some members of the board and the managers were not optimistic. There are the costs of meeting city codes and severe alteration to the complex in doing so. I also am pessimistic of the opportunity to do so. I recently listened to our Mayor discussing the budgeting issues facing our city. For example, tax receipts on gasoline formerly paid for all city street repairs. According to the Mayor, this year the city paid over $1 million from general revenues to cover street maintenance no longer covered by motor fuel tax receipts. The city is also projecting tax revenue decreases and increasing deficits. The "state of the city" meeting in January may shed more light on this, but the Mayor has stated that "City staff expects the next five years to be financially challenging". In that environment, I don't think the city will welcome us with "open arms" and the cost increases they will bear as a consequence. However, I suppose the board could propose and vote on a professional study to determine the feasibility and compliance issues we would face. We could then get bids from contractors to bring us up to the necessary standards. After knowing in detail the costs and types of alterations necessary, the board could then present this to the unit owners for our consideration. An initial study could be funded for $25,000 or so, which would only require a one-time special assessment of about $75 per unit owner. Or, the board can divert funds from the roofing project. I'm interested in knowing how the board would proceed with this one!

Good luck to all of us in the coming year, and to those of us who are struggling, I say "hang in there" and I strongly urge communication with the entire board about your personal situation. I have found letters to be the best method, followed up with telephone calls to articulate what I have written.

My Additional Comments and Observations:

Playing "Catch Up" with the Reserves, and dealing with rising costs:

First, this is not about pointing fingers or spreading blame or guilt. What follows are my observations and some arithmetic. We are all accountable for doing our own evaluations from time to time. I did my first BEFORE I purchased a unit about 8 years ago and our professional manager answered all of my questions, including my great concern about the state of the reserves. I purchased anyway, and all of us have made our own choices and decisions. If we don't do our own arithmetic from time to time, then we are not fully informed. In that case, we can only take what we get and then complain about it.

I'm putting these numbers out here so you are informed, and to provide a service to all of the unit owners. This is from my independent analysis of the information that is provided to us all. What I am doing does not relieve you of doing your own research. If you are angry, I can't do anything about that. However, you need to know that this problem began at least 15 years ago. It is my experience that the recent boards and professional management team have done everything possible to correct this problem, and to keep us informed.

Keep in mind that in 1999 we were paying about $1.15 a gallon for gasoline. I doubt if any of us were saving a $1 for each gallon of gas we put in the tank, so as to help pay for the fuel increases that have occurred since then. So too with our board. They cannot predict what inflation and the price of gas will be in 2015. If in 1999 they had raised our assessments $25 a month to help cover the effects on reserves as a consequence of someone's "predicted" $4.00 a gallon gasoline in 2007, I suspect unit owners would have been irate. And with good reason.

The board could not with certainty have predicted what has happened. What we do know is inflation does occur and it is historically between 3.5 and 4.1% per year over long periods of time. Or I should say it WAS. Because that is what economists do; they give us historical data and we apply that to the future. But who knows what the future will bring? We do know that the price of oil affects the cost of most materials, and even labor, as wages increase to keep pace as costs rise. That's why social security benefits are rising by 5.8% in 2009. We are all struggling with rapidly rising costs and the assessments required to raise reserves. Some of this is way beyond our control or that of the current and recent boards. If you are angry about volatile and rising gasoline and energy prices and the consequences on the economy and our association, that is something all of us are at the effect of. I suggest you direct your anger at the politicians who collectively have avoided a cohesive energy policy for the past 30 years!

Returning to the present situation, during the board meeting and during past budgetary meetings open to unit owners that I have been able to attend, I have been present to complaints about the increases in assessments. The board and our professional managers have done a very good job explaining how we found ourselves in the current predicament. For the nearly 8 years I have been here, the board has been accumulating reserves to make up for the fact that for many years there were either inadequate or NO contributions to reserves. Unit owners have overwhelmingly stated at the meetings I attend that they are opposed to "special assessments". That gives the managers, and our board, little choice.

To demonstrate the consequences of these choices, as of January 1, 2009 I will be paying a monthly assessment of approximately $47.28 to the roofing reserves. And so it is with paving, concrete and masonry reserves, to which in January 2009 I will be contributing $34.15 each month. These items combined are consuming $81.43 of my assessments each month!

If each unit owner contributes at this level of funding, the roofing reserve would accumulate in excess of $2,800,000 in 15 years! That is about 70% greater, or $1,160,000 more that is actually needed for roofs! So why are we today required to make this monthly contribution? It is because we don't have 15 years. We are "catching up" to the funding needs so that imminent roofing work which has already begun can be completed no later than 2014, and before we are all dealing with the breakdowns and expense of failed roofs. That's it, plain and simple. To put it bluntly, I am today putting $47.28 monthly into a roofing fund because 10 and 15 years ago there was $0 being put into this fund each month. So if there is no funding for 7 years, then the funding must be nearly doubled in the final 8 years to accumulate the necessary reserves. As a consequence, our current monthly roofing reserves payments are larger.

How much should the funding have been 15 years ago, back in 1998? If the average monthly assessment of the unit owners had been $25 greater than it was on January 1, 1998 and if that amount were put into reserves and, if each successive year the amount collected were adjusted upwards to compensate for inflation (let's assume by 3.5% per year), as of December 31, 2008 our reserves for roofing would have about $1,144,000! If we had been funding the roofing reserves commencing in 1998, our monthly assessment in January 2009 for roofing reserves would be about $36.50. Our actual payments, because we did not fund the reserves in 1998 will be about $47.29 each month into the roofing reserve fund. So our assessments are $47.25-$36.50 = $10.75 higher each month.

If we use that yard stick for concrete, paving and masonry reserves, which I am funding at the rate of $34.15 each month commencing January 1, 2009, these funds will accumulate in excess of $1.700,000 in 10 years.

If you are a long term owner at BLMH, you can take some consolation from the fact that the board, instead of funding the reserves for the roofing project, allowed you to keep that money all of these years. How much did you keep? I estimate that if the funding had begun 30 years ago, our assessments would have been $14 greater each month than they actually were in 1980 and would have increased at the rate of at least 3.5% each year to keep with inflation. At that rate, in 1990 we would have been paying $19.75 each month for the roofing replacement fund and in 2000 we would have been paying $27.86 each month for that fund. In 2009 our assessments for this fund would be $37.97 and we would have accumulated $1,692,000 in the roofing fund as of December 31, 2008.

Funding reserves is not an easy task and requires predictive skills and the ability to make adjustments each year. It is necessary to determine the point of replacement, and project the costs at that time. For example, let's assume that roofing must be done every 15 years to avoid leaks and damage to the units. So a second set of shingles can be put on each roof in 15 years. In another 15 years, the two sets of shingles are then stripped and repairs to the wood structure beneath the shingles, new membrane and totally new shingles are installed. If that approach is used, then we could say that we need to save enough to 1) Add new shingles in 15 years and 2) To completely re-roof in 30 years. If that is so, then the annual amounts we would be adding to the roofing reserves should be the amount necessary to shingle in 15 years PLUS the amount necessary to completely re-roof in 30 years. We also need to increase the amounts collected each year to compensate for inflation, as the cost of materials and labor do increase each year.

As for projecting the costs, let's assume that the new roofs will cost $1,650,000 in 2011. How much would such a project cost in 30 years? If inflation is 3.50% per year, and costs rose at the rate of inflation, then the cost of such a project would be $4,474,599 in the year 2040! If inflation were 4.0% per year, then the cost would be $5,145,775! The actual calculations need to include various factors. These may include, but not be limited to the differences, if any, between the interest accrued on the money saved in reserves and the rate of inflation, actual costs which may rise over time at rates greater or less than the basic rate of inflation and, adjustments for current inflation. So having a management company which is good at these types of calculations and keeps a "pulse" on true costs, is essential for projecting reserve requirements. These numbers may seem large, but keep in mind the cost of a unit in 1978 and what they are selling for today. Even automobiles prices have increased. As I recall, I purchased a new compact car in 1969 for the price, including tax, title and shipping of $1,800!

My final comment on reserves and the assessments for them is this. When we as unit owners are inclined to compare our funding requirements and assessments with those of neighboring associations, it is essential that we also determine what the nature of their reserves are and how they got that way. I can imagine a situation 20 years ago, at a time that we were not funding roofs, in which a unit owner in a neighboring association attended a board meeting and said “I don’t know why our monthly assessments are so high! The people over at BLMH, their assessments are nearly $50 a month less than ours!” Of course what that neighboring unit owner did not take into consideration, was that we were not funding some of our future maintenance needs, while their association was doing so!

The "Good News" about Funding of Reserves:

There is good news. This does substantiate our professional managers' assertion that these increases will stabilize the reserves. For if we are overfunding by 70%, then that implies that the $81.43 I am paying each month into those reserves is also about 70% greater than it would need to be if we had been consistently funding these reserve items for the past 15 years. So what does this mean? Once that we have accumulated the necessary funds, we can begin funding for the next repair cycle for the roofs at a rate consistent with a 15 year/30 year schedule. That schedule implies that the actual funds needed for roofing reserves, if consistently funded for the entire 15 years, would be $27.82 each month for each unit. This will have to be adjusted annually, but it won't be necessary to include an additional "catch up" amount for roofing, which currently is about $19.46 each month. See Note (2).

If I assume a similar percentage of overfunding for "catch up" for paving, concrete and masonry, then I am paying a "catch up" amount of about $14.05 each month. If my assumptions are correct, then I am paying total "catch up" amounts of $19.46 + $14.05 each month, which is currently $33.51 each month.

I am not suggesting that it will be possible to reduce our assessments in the future. What I am suggesting is that this implies that our fees are stabilizing. Increases should begin to taper off to an amount consistent with inflation. Long term inflation is typically in the range of 3.5 to 4.1% each year. Of course, there are no guarantees for the future. In fact, the inflation for the previous decade was below the normal. There are economists who are predicting we are now entering a decade of higher than normal inflation. We, the unit owners, and our board and the professional managers have no crystal ball.

However, it is my opinion that we have seen the worst and if we can bear up under the current situation, we may find some daylight in the very near future.

On The Subject of Reserve Studies:

During the meeting of November 13, the board and professional manager presented viewpoints about obtaining a reserve study. It was pointed out that this needs to be done with guidance and direction. The example was made that a consulting firm could tell us that we need to fund the reserves to replace the decorative lighting on the buildings. We don't need to spend money to have someone tell us that! It was also pointed out that a reserve study is a double edged sword. Yes, we will get confirmation that we are on track for major items, such as roof replacement. On the other hand, such a study might render opinions about things like underground piping and so on, that could put additional pressures on our already buckling unit owners. That is not prudent at this time.

I am of the opinion that now is not the time for a reserve study. However, I do see circumstances under which I would, as a unit owner, DEMAND that a study be done. For the present it is my opinion a study is not required because immediate, major items have already been identified and are being well funded. These are roofs and driveway paving. So why not continue on this course and as these are addressed and completed, then in 2012 or so, if we need additional outside confirmation or guidance along the lines of 1) What don't we know or what are we missing? and 2) What would be an appropriate funding level now (in 2012 or so), that will accommodate our needs for the next 30 years?

However, during the board meeting, one member of the board suggested that an assessment increase not occur in 2009. I want to state for the record that it is that type of approach that got us where we are today! The years we had 0% increases or assessment decreases are well documented, and I am of the opinion that some of the current members of the board were elected because of the frustration of some of the unit owners at the assessment increases since 2000. I urge all unit owners to keep the recent past in mind. We do not want to go through this again. We and the board must be rigorous in funding the needs of our community.

It is my opinion that the only circumstance that can justify a 0% assessment increase, or an increase that is below inflation is the determination that 1) All reserve items are well funded and on budget and 2) There are no "unknowns" out there. To determine if our board and managers are on track and are not being blindsided, a Reserve Study would be a very useful tool to determine this. So I think that a reserve study must be completed PRIOR to any reduction in assessment increases to a level below the current rate of inflation. If the board does otherwise I will vigorously oppose such an action.

My opinion for deferring a reserve study at this time is based on my observations at the meeting and the following: 1) We have already identified major items and are funding those, and this funding is for the immediate or very near future; 2) We are really tight on funds and I don't think unit owners will want to provide additional amounts via assessments to fund a study at this time; and 3) The economy is in turmoil and any reserves study would make assumptions about projected costs. At this time, such projections are more unreliable than is usual. We don't really know what the price of oil will be in 6 months or 1 year from today. That impacts the price of roofing, asphalt for driveways and vinyl plastic siding and trim, for example.

As of today, it is expected that the current recession, which extends beyond the U.S., will reach a bottom in mid- to late 2009 or early 2010. When the economies begin to pick up, we will have a much better idea of the cost of critical commodities such as oil, and the reliability of such projections will also improve.

The Impact of a Recession on Major Projects:

There is a "silver lining" to the. That sounds contradictory, but because of the recession we are in, prices have fallen or stabilized for many of the materials we need for these same projects. Hard times also mean that contractors may be more willing to negotiate. Combined, these factors mean that while prices may not decrease in the near term, nor should they increase. We do not know what will happen beyond the summer of 2009 but right now, and probably in the spring, it should be possible to get good bids and accomplish work with a potential savings on some of it. That means we may be able to do more roofs in 2009 that the board is projecting we can do. If so, we can do more of the oldest roofs next year. I am sure the board and management team will be watching this closely. Once that final bids are received for work to be completed in the summer of 2009, they will know what is possible. I am very optimistic!

Energy Initiatives and Our Forthcoming Projects:

I would prefer that we hold funds for the purpose of determining how this association can benefit from possible energy credits and so on, that the U.S. government will probably make available for the purpose of reducing this country's "energy footprint". Roofs are a significant energy component on buildings because of their exposure to sun light and insulating properties. So too, siding could be replaced with energy efficient improvements. If the government moves as rapidly in the direction and provides the funds that some economists are forecasting and calling for, this association could be in a wonderful position to reap some of the benefits and address some of the issues we are facing. It is too early to determine exactly what benefits are possible but this is something that really bears close monitoring and has the potential to impact our roofing project in a major way!

The Economy:

For information on my view and economic outlook, go to this link. You may return to this blog by using your browser "back" or "return" button. Link: Nov. 11 Outlook on the Economy

Additional Supporting Information:

Oil and Natural Gas Futures, as per the St. Louis Fed on November 14, 2008. These indicate continuing low prices through 2009. For the original data, go to http://research.stlouisfed.org/publications/usfd/20081114/usfd.pdf

Oil Futures, per the Federal Reserve:

Natural Gas Futures, per the Federal Reserve:

Notes and response to Reader's Comments:

(1) Replaced and updated price chart for gasoline on Nov. 18.

(2) Revised Nov 21, per comment.

(3) Comment: "I don't understand how the board got us to this". My response: It wasn't simply "the board". It was the boards, as there have been different members over the past 30 years. It was also the "unit owners" that is, us, you and me, who got us here. Our professional managers identified the problem and then worked with the boards, since about 2000 to correct this problem. That is why we today, have the reserves and the replacement program. I have a further comment on this. We the "unit owners" elected some new board members this year including a new president, because a majority of us exercised our rights and elected members of a group which represented "change". It is my opinion that members of that group had an agenda to lower our assessments. Unfortunately, what we did was to "shoot the messenger" and replace some of the people who identified the problem and worked with our professional managers for over 8 years to correct it. It is ironic that some future board will take the credit, when our assessments level off and the roofs are replaced. All I can say is, some of these problems take years to occur. So too, it can take years to correct these problems. As I explained in my comments, we had two roofing programs here at BLMH even if we weren't completely funding them. As unit owners, I am convinced most of us were oblivious to them. The first roofing program is to add a second layer of shingles in 15 years and the second is to remove, repair and reshingle in 30 years. So this problem began 30 years ago.

(4) Further response and Nov. 24 response to "who was minding the store": As to how we got here, it took a while and I suspect the board, over the years, succumbed to pressure from unit owners. From time to time, there has been grumbling about assessments. There will ALWAYS be grumbling about assessments! Our professional management was changed in 1998 or so and since then, there had been more assessment discipline which includes long term planning and the funding to accomplish those needs. I surmise that prior to 1998 the professional management and boards had a different emphasis, which seems to have been characterized by “keeping assessments as low as possible”. How else to explain a program that for 14 years consistently had assessment increases below the annual “cost of living” increases published by the U.S. government? Each year of that period, the average assessment was about 1.5% below the annual social security increases, for example!

During the recent 13 years and with the new management we have been on average above the “cost of living”. As I have stated elsewhere, this was to “catch up”, so as to adequately fund the reserves, and meet day to day operating costs. So we have changed from assessment increases that were consistently below the rises in the “cost of living” to assessment increases that have been on the average above the “cost of living”.

However, for 2008, our assessment increase will be 0.8% below the published U.S. government SS “cost of living” increase.

These differences may seem small, but they add up and have big effects on the reserves.

Let me demonstrate. Let’s assume the monthly assessment was $100 in 1983. Since 1984, the various boards and managers have given us a variety of assessment increases. Sometimes less than 0%, sometimes 0% and an increase as high as 12.0% (in 1989). This resulted in total monies collected from assessment fees from 1984 through 2008 of $16,761,887.

If the board had instead voted assessment increases that were consistently the same as the U.S. government COLA figures of the Social Security administration, the total monies collected from assessment fees from 1984 through 2008 would have been $17,482,301.The peak assessment increase would have been 7.4% in 1982 and would have been below 4% for all but four years!

The big difference between the two methods is this; our assessment fees in 2008 would have been about $225.04 each month and the association would have collected more money! As I said, these small differences do add up. I’ll publish the spread sheet at some time in the near future, so you can see the exact number, year by year.

So to answer the question,” who was minding the store?” I have to answer, “Who was arguing for assessment decreases back in 1982, 1983, 1985, 1986, 1988, 10991 and 1992”? So now perhaps you see why I am concerned about a repeat of the past.

Monday the 13th

Well, the "new" board meeting was to have been held today, October 13. This was a closed session designed for budgeting purposes.

There has been a long pause of silence since the elections.

Is there anybody out there??

The Future and Where to Go from Here?

The board elections have been completed, the vote tallies are in, and we have three new members on the board. Congratulations to them. To the other members of the board and to the members who have lost in this election, I say "THANK YOU" for all that you have done to get this association to where it is today.

I began this blog as an exercise. The original purpose was to post my personal "adventures" and observations as a BLMH Condo Unit owner. During the campaign of the ROC, I became aware that the communications system in place at BLMH was inadequate from the perspective of countering falsehoods, rumors, or erroneous statements; all of the things that some campaigns generate. I decided that my blog would become a dissenting voice to the ROC so as to provide a measure of balance and fairness to the campaigning juggernaut.

The ROC campaigners ran on a slate which included improved communications. Now that the election is over I expect that they will keep that promise and provide an official BLMH website, open to all residents and which supports a true dialog between residents and the board. So my blog could revert to what is was before, a reflection of my observations in the pastoral and sometimes sleepy community that BLMH appears to be, or, I can use it to be of service to that community.

At this moment, I am inclined to become a more visible and vocal part of the residents of this community, somewhat like a watchdog. While I do want to be of service and make a contribution, this is not simply altruism on my part. As I have stated previously we the owners of BLMH are bound as a group who share shelter and a significant investment. I have a personal vision of where this association should be in 5, 10 and 30 years. I have the past promises of the board on how the reserve contributions I make will be spent. My personal financial contribution to that endeavor is about $30 each month to a fund for the declared purpose of replacing our roofs and another $16 each month to a fund for replacement and repair of paving, concrete, masonry, carpeting, and lake restoration. (This based on the actual budget for the year 2006). I want to see this association grow in a manner consistent with my vision, protect my investment and see those programs to fruition.

What about you?

Let me know where you want this blog to go. You can email me at:

letmethinkaboutthisblog@gmail.com

How to Use this Blog

Instruction on navigating and using this blog

This blog is arranged chronologically, that is, each new or current entry I make is at the top. Entries are called “Posts”. Previous or older “Posts” are arranged beneath the current one.

So as you scroll down this blog you will see “Posts” arranged from the most current to the older, and eventually you will get to the oldest post.

How to Make a Comment
At the bottom of each “Post” there is an opportunity to make a comment and read the comments left by others. All you have to do is click on the pencil symbol to open the window for entering your comment. Or, click on the word COMMENTS, at the bottom of the post and which looks like this:

Each comment is public. So be courteous. If you choose to leave personal information, such as your name or phone number, you should be aware that it can be viewed by anyone. So I suggest you DO NOT do that. You can use a nick name or if you want, something like “Thames Resident”.

To leave a comment, once that you have clicked on the pencil symbol or the word COMMENTS, you will be taken to a window where other comments are listed, and which includes a pane called "Leave your comment". Once you are there:

1. Type your comment in the box, and then in the CHOOSE AN IDENTITY section click on the circle (bullet) to the left of "Name/URL".
2. Then type the name you want to use. In the example below, I chose the name "Tree Lover on Thames". If you consistently use the same name, I'll get to know you. However, anyone else can use your name, so you could be impersonated. The advantage of the blog comments is you can leave a message for others to see, you can see what other people are saying, or what the same guy has said 200 times! HOWEVER, THE ONLY WAY TO GET A MESSAGE TO ME SECURELY IS VIA EMAIL!
3. Finally, click on the box "Publish Your Comment" to send your comment on its way!
   

How to Email me
If you want to reach me directly, you can do so via email. The email address I use for my blogs is:

letmethinkaboutthisblog@gmail.com

How to Get to Older Posts
As you scroll through the posts, you will eventually get to a point where this message appears:

Older Post

All you have to do is click on "Older Posts", and you will be taken to the next group of older posts, which otherwise are not visible. After you read the next group of posts, you will again see “Older Post” at the bottom of the page. Clicking on it will get you to the next group. You can repeat this over and over, until you finally get to the oldest, or last post.

How to Get to Older Posts Arranged by Topic
There is a much faster way to get to older posts. That method uses the labels of the post. At the base of each post, you will see the following:

“Posted By” refers to the person who wrote the post. That’s me, and my nickname was “What the Heck”, but I have since, simply changed this to display my email address, which is "LetMeThinkAboutThisBlog@gmail.com".

Beneath that are “Labels”. These are topics and if you click on any topic, for example, “Condominium Board”, it will take you to the blog posts that have that label and contain text about those topics.

Another Way to Get to Labels (otherwise known as TOPICS)
Another way to get to the topics is from the right of the screen. As you scroll down, you will see a list of labels which looks somewhat like this:
What you are looking at is a list of all the Topics and Labels. The numbers in parenthesis, for example (3) is the quantity of posts which refer to that label. If you click on any of these labels, you will be taken to posts that have these labels.

How to Get Back to the Top of the Blog

There is a quick way to return to the topmost entry, which is the most current, for the blog. If you have been navigating through the blog for a while, you may see this word:

Home

All you have to do is use your mouse to “Click” on the word “Home” and you will be returned to “Home”.

There are over a million blogs out there so you can have some fun looking for blogs, and seeing what other people are writing and posting.

HAPPY BLOGGING!

My Observations at the Board Elections

We were given the opportunity to meet the candidates for the Board. This included the three candidates of the ROC.

I learned that one of the ROC candidates has a dog, and a fellow candidate also has a dog. Two of the ROC candidates first met while walking their dogs. I also learned that this candidate had an issue of the speed bumps that were proposed for the BLMH. The speed bumps were never implemented.

This candidate acknowledged responsibility for posting the notices to all of the unit bulletin boards last year regarding fighting the alleged decision to ban pets at BLMH and the forthcoming assessment increase. I believe the candidate made a statement from the podium to justify the posting, which is in violation of "the rules and regulations" by describing a conversation with a fellow candidate who had cautioned this candidate about the rule violation. The candidate's response was something to the effect "that rule was stupid and so I posted the notices anyway." This candidate has made prior statements about being a long term, 22 year resident at BLMH. That means that this candidate is one who was present most of the years 1982 to 1998 and benefited from the very low and nearly ruinous assessments. So I can understand why this candidate would be upset about assessment increases and become a leader in a coalition to overthrow the board.

I was given the opportunity to ask one question of the candidates for the ROC. I had four pages of questions and it was difficult to choose. I also knew this was pointless. Proxy ballots had already been cast and with few unit owners in the room to hear any of this, what I or anyone on the floor or the podium said would have no influence on the election results. So much for a commitment to "open communications".

However, I used that one opportunity to direct one question to the candidate who was a 22 year resident and apparently the leader of the coalition. I asked about the statement that the ROC had made in their mailing several weeks ago about “the majority of us”. I asked if, at the time of the mailing “did the ROC have a majority”. I was not given a direct answer. Instead I was told that the ROC had members in 45 buildings. I pressed again “Did the ROC have a majority of UNIT OWNERS", and I gave the number of units that would be. I was finally given a partially straight answer, and that answer was to the effect "no". At that point, I knew that I and the other unit owners had been deceived. In my case, multiple times. So I pressed again “Then you deceived me in the mailing and in your letter of response!” I was not given an answer. I see this as an integrity issue. In a written letter to the ROC on September 11, I asked "I construe from your statements that you represent a majority.... 169 units....you have made certain statements and should be willing and able to back them up. If you don't I must conclude that some of the statements the ROC has made are false, and designed to deliberately mislead". I reiterated this several times in my letter. The written response "we make no exaggerated or false statements."

It is unfortunate that this election was based on deception. How many people voted for the ROC thinking they were voting for or with the “majority”? Was this a fraudulent election?

Whatever the election results, I have to say at this point, that this is not a good beginning. As I said in my comments written prior to the election “Honesty and the ability to manage are my greatest concerns about any of the board candidates.” This group has not been honest. In response to my questions they have repeatedly said "this was not about assessments" but in fact, this group was formed immediately after the budget meeting last year when, according to the leading candidate "angry people met in the street after the meeting". At the podium the candidate claimed responsibility for organizing the unit owners to attend and protest at the budget meeting. The material sent to all of us by the ROC stated in their FAQ that "none of the ROC candidates have had conflicts or disagreements with the current board." Literally that may be true; for the budget meeting, this candidate stirred up the owners who were then set upon the board. I guess that would be called a covert conflict on their part.

The ROC candidates do not at this point have my trust. If their candidates do win this election, they will have one year to get tangible results. I don’t mean improved color brochures or better xerographic copies. They will be evaluated first, on their ability to perform the "Powers and Duties of the Board of Directors, which each candidate signed. Second, in this case, they will also be evaluated on how they performed the duties and promises on the "ROC Slate of Objectives".

During the meeting, the current board president did not actually manage the meeting, but sat quietly while other board members fielded questions or dealt will issues from the floor. This was very unusual; it is my opinion the president was in resignation. For this reason the meeting was more unruly and less organized than most I have attended.

I will post the election results after they are made available.

My Comments Prior to the Board Election

Here is my perspective about the candidates and the core issues which influence my vote.

Since purchasing 6-1/2 years ago at BLMH our property values have consistently increased. I attribute that in part to the city we live in but also to the fact that the board has a program in place to preserve or enhance the value of our condominiums. To put it another way, the value of our units is in large measure due to the excellent condition of the BLMH complex and it's current financial health. At present, our financial reserves are growing, the complex is well maintained and the board has plans in place to handle some of the major maintenance issues, such as the repair of the roofs. This complex is 30 years old and there will be increasing challenges ahead as the BLMH infrastructure ages and continues to deteriorate. It is our board that will be charged with making the difficult choices we face ahead. It is our choice as unit owners to invest in BLMH or not. Either way, there will be consequences. I would hope that this association will continue to be well maintained so that my property values are protected and we will continue to have the wonderful grounds and views from our windows and balconies. However, these are privileges which are not guaranteed. They are purchased with the funds I put in my assessment envelope each month. The decision of how to use those funds will rest with the board we elect tonight.

For this election, there are two groups, comprised of members of the existing board and a new group called the “Residents of Change”. The ROC is represented by three candidates.

I have two sources of information for making my selection and voting. I have my observations of the actions of the current board, the budgets, the monthly newsletters and I have a campaign letter mailed to me by the ROC. In response to that campaign material I wrote a four page letter to each of the ROC candidates on September 11. The ROC response included comments to my letter, an email, a “FAQ” and an “ROC Survey”.

I conclude that this election is about resources, communications and possibly misplaced anger. This association has finite personnel on the board, volunteers and limited funds to address the concerns of the unit owners. How these resources are allocated determines the quality of life here at BLMH. As I have stated elsewhere (in my blog) and in my letter to the ROC, I see the unit owners as a diverse group. I also view “change” as not always a good thing. The unhappiness about increasing assessments is an expression about unwelcome change.

Each board member has what I call an “open ended” agreement. They have to do whatever is necessary to satisfy the “Powers and Duties” of their position and they have limited time each day to do that. So if there is anger or outrage on the part of some unit owners, perhaps it is because we have failed to support the board in fulfilling their duties. If there are complaints about “being heard”, then a larger question is what can we as unit owners do to assure that our board members are available to be heard? The issue is not about making other people wrong but about seeking solutions. The board is in the hot seat of providing the time and making the critical decisions. I am but a unit owner, mostly an observer, sitting in the audience and expecting it will all turn out to my personal satisfaction.

The ROC Candidates, in their material, make statements from which I conclude that they feel they would do a better management job than the current board. The only way to know is to elect them and find out. There are risks in doing so.

It is very easy for things to get out of hand, and simple decisions made with good intentions by our board can have consequences for many years. The assessment decisions made in the period 1982 to 1998 have today affected each and every unit owner living at BLMH. During that period, a decision was made to hold the increases in assessments to a low value, an average of 2.59% per year. During that period unit owners were apparently happy, even though the association was going broke. However, when my spouse and I conducted informal interviews of residents while making our decision to purchase, there were complaints about the increases to assessments in 1999 and 2000!

In my letter to the ROC candidates I asked a lot of questions about their positions regarding assessments and budgeting. Why? Because I don’t want a repeat of the decisions made in 1984 to 1998 and which culminated in the financial condition of this association. There is every indication that the board was the “voice” of the unit owners in that period and as such, some poor financial decisions were made. The ultimate result was last year’s meeting in which to quote the ROC candidates “outraged residents demanded a reduction in the proposed 8% increase”. I wonder if there were any outraged members attending meetings in 1984 after a 10% assessment increase? The following year, the assessment increase was 0%.

Unfortunately, the ROC candidates have not revealed to my satisfaction how they will provide better management of the BLMH. On the issue of rising monthly assessments which resulted in a stormy association meeting last year, the ROC has stated in a written response to my letter of September 11 that “Interestingly, you are only the second person to ask about the rising assessments! We've been surprised that that topic is not first on everyone's mind, but it seems that the other issues surrounding the board have taken precedence”. The ROC candidates stated in the response to my letter that “Our election is not about expenses and assessments” and in that same e-mailing to me, the ROC candidates also stated that the ROC was formed at “last year’s budget meeting when outraged residents demanded a reduction of the proposed 8% increase” [to assessments].

The ROC candidates also have stated in their communications to me that “being heard… is really what the residents care about now”. In that same response to my letter, they further stated that “The current system allows no communication. Again, see our [enclosed] FAQ”.

The ROC candidates say that communications is not possible, and people aren’t being heard. But they also say in their published material that we, the residents were heard and as a result the proposed 2008 assessment increase of 8% was reduced to 5.5%!

I am a bit confused by these and other conflicting statements made by the ROC candidates. It may well be that the ROC is a good idea, but their candidates aren’t up to the task of board management.

As a resident, I have successfully communicated with the current and previous BLMH boards. By “successfully” I mean that I received responses that included letters, memos and telephone calls. I have attended several monthly meetings and all but one annual election. Sometimes what I was writing to the board or the management company was acted upon in the way I wanted and sometimes it was not. However, whether or not the board and our management company do what I want as I express my complaints or requests is not a measure of successful communication. That is about outcome or results, which is a different matter entirely.

After receiving the response to my letter to the ROC candidates and reading it several times, I debated about meeting with them but I decided against it. It is my position that they need to generate this, and not simply echo back my letters to me. For example, I noticed that the printed material they issue is not dated and I suspect that the “FAQ” and “Survey” were generated by the ROC candidates from my letter of September 11.

I must admit that some of what the ROC candidates have stated in their letter and publications did concern me, and the tone seemed undermining. There are five items in particular. There is the statement about “a majority of us” in their first mailing to me, but their unwillingness to even give me the number of units in that alleged majority, their slate to champion what they think are “forward thinking ideas” and possibly repress what they construe as backward thinking ideas, their agenda of fear; i.e. the current board is to be feared and will “retaliate” on unit owners, their statements that “there is no communications with the board”, and their opaque agenda regarding the projects they would fund from our assessments.

After reading their response and their materials, I find the ROC candidates to be an enigma. There is no doubt they want to place themselves on the board. Their primary agenda seems to be “trust us” and we’ll do a better job than the other candidates and the current board.

Things at BLMH are not perfect. I know communications could be better. So the choice is to vote for a group professing change and who thinks they can do a better job and hope it all turns out, or vote for the existing board. Either way, I now have the knowledge that there are some unit owners who are very unhappy and will continue to press their agenda, whatever that is. As an individual who has made a living successfully “managing change” I know it isn’t easy and I also know as a successful businessman that some of the choices facing this board are “mutually exclusive”.

As for the ROC, I am most disappointed that they have chosen to use the fallout and consequences of responsible decisions made by this board as a springboard for their candidacy. Most notably the “outrage” of unit owners over the assessment increases. In their material to me, the ROC candidates have not promised that they can or will reduce assessments or expenses. Merely that they will “keep our assessments as low as possible”. Which implies that it is the belief of the ROC candidates that the current board is not. The ROC candidates unwillingness to make promises about the management of BLMH that affects the bottom line, that is, my assessments, leads me to conclude that they know the board is hamstrung by decisions made nearly 25 years ago or they are oblivious. Either possibility is chilling.

There is the problem of “outraged” unit owners and how they treat our volunteers. I must have missed most of the confrontational meetings. I wonder how our board has been treated by “outraged” unit owners or those who harbor “bad blood” as the ROC calls it? Would these “outraged” unit owners been less “outraged” after last years budget meeting if the assessment increase had not been reduced? Is this about “being heard” as the ROC candidates say, or is it really about getting our way?

Honesty and the ability to manage are my greatest concerns about any of the board candidates. Hindsight is wonderful and forward thinking may be desirable but what we really need is foresight.

Quoting Gandhi in the ROC literature was a nice touch but for the business of managing and running a condo association with a million dollar annual budget, I think the following is more appropriate:

“Those who cannot remember the past are condemned to repeat it.” George Santayana.
“A goal without a plan is just a wish”. Antoine de Saint-Exupery.

Assessment History

This is our Association Assessment History. The percentage information is from the "Welcome Packet" which is given to each unit owner. An updated sheet is available on request, or it is possible to use the budget information given to each unit owner each year to update that contained in the original welcome packet. Either way, the information is readily available.

To construct the chart, I used the percentage increase each year, and with a spread sheet, I plugged a starting amount into the spread sheet which, with all of the annual increases, yielded the current amount of my assessment. There may be rounding errors, but they should be trivial. I also calculated the "average" of all of the increases.

I have included some observations later in this post.

This is the table of values which was used to construct the chart above:

1978 = 35.00%
1979 = 22.00%
1980 = 26.00%
1981 = 25.00%
1982 = -12.00%
1983 = 0.00%
1984 = 10.00%
1985 = 0.00%
1986 = 0.00%
1987 = 5.00%
1988 = 0.00%
1989 = 12.00%
1990 = 5.00%
1991 = 0.00%
1992 = 0.00%
1993 = 6.00%
1994 = 3.00%
1995 = 4.00%
1996 = 5.00%
1997 = 3.00%
1998 = 3.00%
1999 = 11.00%
2000 = 11.00%
2001 = 9.00%
2002 = 6.00%
2003 = 7.90%
2004 = 6.50%
2005 = 5.80%
2006 = 5.40%
2007 = 6.00%
2008 = 5.50%

Here are a few of my observations from the above data.

The monthly assessment "starting amount" in my chart was $50.00 per month in 1978. By 1984 it had risen to $93.00.

While constructing the chart, I noticed the large assessment increases in the period 1978 to 1981. This was followed by a negative assessment, and then an assessment of 0% in 1983. If these "start up" years are removed from the table and from the calculation of "average", the assessment increases from the period 1984 to 2008 were 5.2% per year.

You will note in the table and chart that after four years of large increases, 1978 to 1982, the assessment was actually a negative 12% in 1982 and then 0% in 1983. In fact, there were 7 years in which the assessment was either 0% or a negative number, which was an assessment decrease to the unit owners.

As I noted on the chart, the average of all assessment increases is 7.29%. However, a consistent increase of about 6.10% each year would have yielded the same monthly assessment in 2008.

I have a few opinions about all of this.

As the writer of this blog, I have the opportunity to include my opinions.

One could ask, why would a lower annual percentage of 6.1% yield the same results as the actual, higher "average" assessments that unit owners have been paying? Higher increases are required to make up for years with 0% or negative assessment increases. Of course, actual costs do not always rise by consistent amounts each year. Economists say we passed through a decade of lower than usual inflation. Inflation has jumped the past few years and the average may be above normal for a few years. But we and they have no crystal ball.

In the table you will see large assessments in the early years. It is my understanding that this is not a unique situation. The builders sometimes provide an initial reserve amount. I have been told that in the case of BLMH there was NO initial reserve, so the "start up" was, as they say, a bit rough, and assessments were increased in jumps to cover the actual operating expenses, breakdowns, and post construction problems. After a few years the finances reached an equilibrium where assessments were at least equal to the costs of running and maintaining the association. At that point, if reserves are adequate, it might be possible for the increases of assessments to be reduced. That is what apparently occured at BLMH. However, I personally think it is a mistake to lower assessment increases to 0%. Why would I say that? Because costs are always increasing. It's due to that phenomenon called "inflation", or the erosion of purchasing power. Economists say long term inflation is normally about 4%. So it would be reasonable to expect operating expenses to increase by that amount at an absolute minimum. That's why I think assessments need to increase at an amount sufficient to offset inflation, or about 4% per year.

That is only part of the story. The cost of replacement must also be included in our assessment fees. Things do wear out, so in addition to utilities and maintenance items (painting, lawn care, snow plowing, etc.) we also need an amount in each assessment to cover replacement of things that wear out. These “things” are the common elements like roofs, street paving, curbs, electrical and plumbing infrastructure, patios, etc. Finally, other unforeseen events my also come into play. Large insurance increases, law suits, fire, broken water mains, etc. can all result in larger than anticipated expenses. Paying these will come from the reserves, which must then be replenished, and may require a larger than normal increase in the annual assessments. Or a special assessment.

I would therefore expect a unit owner’s monthly assessment fee to include dollar amounts to cover operating expenses, maintenance, reserves for replacement plus an additional amount to cover inflation.

If an association does not have adequate reserves, and it is my opinion that at one time this association did not, the monthly assessments must include not only money for expenses and replenishment of reserves plus inflation, it must also include an amount to build up the reserve that did not exist in the first place.

That is what the board has been doing. As I noted in an earlier post, when I purchased a condo here in 2001/2002, the association had reserves equal to about $300 per unit. That was in my opinion far, far too small an amount and it was also the opinion of an independent accountant who reviewed the financials at my request.

If an association does not maintain adequate reserves, then once we dig a financial hole, which financial planners sometimes refer to as "mortgaging our future" it can be difficult to dig our way out, because we not only must pay for ongoing operating expenses and repairs from funds currently assessed, but we must also pay a “hidden” special assessment each month to build up the reserves.

As I see it, that is what I have been doing for the past 6 years. If you look at the chart you will notice that it began sloping upwards in 1999. That coincides roughly with increases for the purpose of building up reserves. As I noted in an earlier post about where my monthly assessment went, about 19% last year was directed toward building up “reserves”. This is no different than a special assessment each month for a building fund for replacement of that roof overhead that is wearing out each and every day.

Perhaps it would be more correct to call it that on the bill for each month’s assessment instead of burying it the overall fee. In which case I am paying a $46.42 special assessment for roof, paving, lake restoration and concrete. Of course, that doesn’t change matters as my total bill is still the same!

Finally, there is the psychological damage when associations issue special assessments. I have read other blogs where unit owners rant about special assessments. In one case, a $2000 paving fee at another condo resulted in some harsh language about the management company. Owners are always concerned about their property values. When I inspected BLMH prior to purchase, I reviewed the assessment history. Frequent or large “special assessments” would have been construed as a negative.

If I were to attempt to sell my unit, I assume other perspective buyers would also do their “due diligence” and special assessments would not be helpful.

Here at BLMH our unit values have increased pretty consistently. I attribute that in part to the community we live in but also to the fact that the board has a program in place to preserve or enhance the value of our condominiums. To put it another way, the value of our units is in large measure due to the excellent condition of the BLMH complex and it's financial health. At present, our financial reserves are growing, the complex is well maintained and the board has plans in place to handle some of the major maintenance issues, such as the repair of the roofs.

Finally, is it possible for assessments to decrease? I don’t know. If we have sufficient reserves to do all of the repairs identified and if costs do not continue to spiral upward, then I would think the board would review the fees for reserves and see if they are excessive. As a former home owner, I know that roof repairs are required about each 15 years. However, this complex is 30 years old and other things, such as those that are buried underground, may also require reserves. The city we live in is spending $1 million more each year on street repairs than it did just a few years ago. At one time those repairs were covered by taxes collected from motor vehicles. Now, that $1 million difference is being paid from general revenue. According to the Mayor, this is a difficult thing to do.

It is our board that will be charged with making the difficult choices we face ahead. We too will feel the pressure of these cost increases. It will be our choice as unit owners to invest in BLMH or not. Either way, there will be consequences. I would hope that this association and it’s complex will continue to be well maintained so that my property values are protected and I will continue to have the wonderful views from our windows and balconies like that photo at the top of this blog. However, these are privileges and are not guaranteed. They are purchased with the funds I put in my assessment envelope each month.

The Cost of Our Utilities Over a Period of 5 Years

Here's a link to a blog I posted recently which gives some idea of our utility costs.

http://letmethinkaboutthis.blogspot.com/2008/09/cost-of-our-utilities-over-period-of-5.html

Residents of Change Summary of Documents

Here are the various links to the posts regarding the "Residents Of Change". These are for all posts prior to September 22, 2008. I've assembled them here to save you the trouble of hunting through this blog to find them.

The ROC Email response in response to my Email dated September 12, 2008:
http://briarcliffelakes.blogspot.com/2008/09/roc-email-response.html

My Letter of September 11 to the ROC Candidates:
http://briarcliffelakes.blogspot.com/2008/09/open-letter-to-roc-candidates.html

The ROC Letter in Response to My Letter:
http://briarcliffelakes.blogspot.com/2008/09/roc-letter-in-reponse-to-my-letter.html

The ROC Survey Document:
http://briarcliffelakes.blogspot.com/search?updated-max=2008-09-15T06%3A55%3A00-07%3A00&max-results=7

Methods for Association to Reduce Costs

One of the ongoing issues for unit owners is the relentless nature of annual assessment increases. These are necesary to combat the ever increasing costs of energy, for example. In this year alone, electricity is supposed to increase 6-1/2%.

The association has high efficiency lighting, but there should be some other great ideas out there. If you have any suggestions, let me know.

Here are a few "energy and utility" cost saving methods that might be appropriate for consideraton. Of course, there are other areas of operation in which savings might be achieved.

Solar Power Roof Fans.
Variable Speed AC Drive (VS) for stream pumps.
Ban on use of association water for cleaning automobiles, etc.
Energy Credits applied to Roof Projects and improved insulation? Note (1).

I am certain there are other areas that we could address, such as ongoing maintenance items.

Notes and Comments:
(1) This is added after the presidential election. President-elect Obama has stated that he wants to promote energy initiatives. It's too early to determine what will occur, but there may be incentives applicable to our roofing project.

Projects Status

When we purchased our condo, we concocted a list of projects. With the exception of the kitchen, these were all considered to be "optional" and discretionary spending. However, building this list has kept me on task, and my spouse and I review it from time to time.

There was an inital "surge" of projects which we deemed absolutely necessary. We have budgeted funds and tackled the projects as soon as possible.

Since that time we have been saving on a monthly basis to handle these projects, as well as to build up an "emergency fund" or reserve. This is similar to what the association is doing to build up reserves for the roof and other large projects.

We have performed other maintenance, such as carpet cleaning, fixing the sliding door and screen on the patio, replacing the faucets in the sinks in both bathrooms, but these were relatively small projects that did not require work on or in walls, etc.

Here's a summary of the projects on the list and their status:

1. Repair leaky valve in hot water heater and repair damage = completed 2001.
2. Upgrade the kitchen = completed 2002.
3. Install new handles on Dining Room Cabinetry = completed 2002.
4. New wallpaper in closets, baths = completed 2002.
5. Upgrade certain doors = completed 2002.
6. Paint living room, hall, dining area = completed 2002.
7. Remove loose tiles in bathrooms, repair showers = completed 2002.
8. Upgrade spare bedroom to Library with bookcases = completed 2002.
9. New kitchen waste disposal = completed 2003.
10. Glider and Dining Furniture for patio = 2002m completed 2003.
11. New Bedroom furniture, paint and decor = completed 2004.
12. New sofa, chairs and area rug for Living Room = completed 2005.
13. Replace HVAC Compressor = Breakdown, completed 2005.
14. Art and decor for the living room = completed 2006.
15. New hot water heater, new floor in utilit room = completed 2005.
16. Newwasher and dryer = completed 2007.
17. Replace shower valves and faucet, guest bath = completed 2008.
18. Replace shower valves and faucet, main bath = partial, purchased parts 2008.
19. Upgrade in-ceiling insulation - not begun.
20. Upgrade main bath fixtures and cabinets - not begun.
21. Upgrade furnace and HVAC - not begun.

More Water Problems!

We have also had water in the garage. We share this with other unit owners and we each have a seperate overhead door. Last fall, I noticed that the asphalt had disintegrated at the base of the downspout. I took a couple of photos, including this one, and forwarded them with a letter to the management office. They responded with a "cold patch" of concrete.

That had a side effect. If the driveway is not kept clear, and for example, ice and/or slush collects at the downspout, it can prevent water from flowing downhill and we can have water in the garage. I have reported this to the management office. The same situation occurs if we get very heavy rain and wind from the proper direction. Water is then blown against the overhead door and flows under it. Sort of a miniature "storm surge".

Here are a couple of photos of this event. The water normally stands within about 4 inches of the garage floor. If the wind is from the proper direction, then the water is pushed against the doors and into the garage:

Rain, Rain "Go Away"

Interestingly, most of the "breakdowns" involving our unit have involved water. Fortunately, problems have been few and far between, and the management company and board are usually responsive. A roof leak incident was probably the "perfect storm". Oops!

From my experience, one of the things I do not like about being a unit owner, is the need for coordination and cooperation between management, contractors and neighbors and the lack of power in that process. As a home owner, I was accustomed to making decisions in which I had purchase authority. As a unit owner, I have no such authority or power with contractors or my neighbors. As a result, some simple problems can, and do become much larger ones.

I have kept copies of the letters I use to resolve these and other issues at the unit. I also have a "diary" and a task agenda. The "diary" keeps track of names, dates, conversations and so on. It's simply a day planner with notes. These get rotated out each year. The task agenda is used to establish priorities. I prefer to use letters as follow-up for conversations because they document what is going on. A letter is also a means of controlling what I say; conversations are less rigorous and it's easy to make verbal promises and agreements and then promptly forget about them. Then there are those dreaded "senior moments" that people keep warning me about. Letters are a form of documenting who promised what to whom, etc. I am also very careful that what I write is accurate. Of course, in the end you could say it is all my opinion. I prefer to view these as my "assertions". There is evidence to back up what I say. However, I do agree that this is from my point of view.

I have found that conversations can be very, very sloppy. That said, here's a couple of "water incidents".

A Leaky Water Heater

In April of 2002, our hot water heater's valve developed a minor problem and a drip. Not all of the water went down the drain in the utility room, which was only about a foot away. Unfortunately, a flaw in the floor caused some of the water to find it's way into the unit below, rather than into the drain per se. Our neighbor alerted us to the problem, which after inspecting their utility room, I was able to confirm. This was not easily resolved. I "capped" the hot water valve to stop the water "drip". I also called the general maintenance company recommended by our association and asked them to contact my neighbor to gain access to their unit and to provide me with an estimate of repairs. I'm reasonably "handy" but for liability reasons, I decided not to do the work in my neighbor's unit.

It took a while to figure out how the water was getting into the unit below. It was a very small trickle which did make it to the drain in the floor. After a few inspections from below, it was determined that water was running along the outside of the drain pipe. I stripped the tile from the floor above and determined that the cementatious underlayment had a crack. Water apparently found this path and ran along the outside of the drain pipe and into my neighbors unit. The contractor confirmed this from below.

I decided to cut the lip of the drain pipe, which was extended slightly above the level of the floor, patch the crack and the seam along the outside of the drain pipe where it passes through the floor, using epoxy cement. I then replaced the tile. I also extended the tile into the drain, so that water hitting the floor would be guided into it. However, to do this "right" would require replacement of the entire floor of 12 x 12 tiles with a single sheet of plastic vinyl. To do so would require a new hot water heater. The repairs to my neighbors ceiling were completed and they confirmed that the repairs were "satisfactory". Accordingly on May 16, 2002 we issued our check #1056 to the contractor, in the amount of $700. This was an expensive repair, in part because it took multiple visits by the contractor who stood on a ladder below with his head in my neighbor's ceiling and with me above pouring water from a bucket onto the floor. We eventually determined exactly what was happening and how the leak was getting into the unit below. I was then able to make repairs above, and that had to be completed before the contractor could replace the ceiling.

We decided to postpone replacement of the hot water heater until such time as I could also do the repair to the floor and install the vinyl waterproof floor. This was finally done in January 2007. At that time I replaced the floor with a single sheet of vinyl, put an aluminum pan under the new hot water heater, and sealed the entire edge with a vinyl cove base and generous amounts of silicone sealant. The vinyl floor was installed so that it extends over the edge of the drain. Any leaks in that room should not reach the unit below.

A Leaky Roof

In 2004, we developed a leak on the roof. It was traced to a missing cap on the chimney. However, the repairs took some time and my neighbor was very unhappy with me. It took quite a number of telephone calls, coordination with a contractor, and ultimately a letter to the management office. There was more than enough frustration to pass around and for a time we were not on speaking terms with one of our neighbors. This is the letter that finally got the problem resolved. I have deleted names, etc. but otherwise, this is the exact letter, spelling and grammatical errors included. On re-reading this, I was struck by a similarity to the premise of that movie "groundhog day":

July 21, 2004

To: Director of Management

Dear Sir:

This is to advise you in writing, of the UNSATISFACTORY and UNRESOLVED status of a problem at BLMH. What should have been a relatively minor problem, speedily repaired, has been anything but. I suppose I should be thankful this was not a major problem. However, this has gone beyond a simple nuisance and my neighbor below is a problem, as [he] would like to believe that any water entering [his] unit from above is my problem, my responsibility and can be controlled by me and that any resulting damage is my financial responsibility.

This was reported over 30 days ago to [the management company] (on June 16) but as of today has not been resolved. There is ongoing and spreading water damage to two units and a significant amount of water is collected in [my unit] each and every time it rains, with continuing and spreading damage to the utility room ceiling of the unit below. On June 21 and again on July 15, we were told by [the contractor] that this was a chimney cap problem. The parts were supposedly ordered after the June 21 inspection but in a second inspection on July 15 my spouse was told that the required parts had not been ordered. This morning I spoke with [so and so at the contractor] and he said that the proper cap is not immediately available and that he would attempt to make temporary repairs. However, I don’t know if this will be successful and prevent water entering the building.

I appreciate [the contractor's] efforts; I don’t know precisely why it has taken this long to solve this problem. My work requires extensive travel and so my spouse has been attempting to coordinate this to the best of her ability, with minimal success. As a consequence I have altered my business to permit me to be in the area for the next week or so. My neighbor below has requested that I pay for repairs to [his] utility room.

The bottom line is this. 35 days for minor repairs is excessive. It is my understanding the roof, chimney and caps, and flashing are the responsibility of [the association], not the unit owners. However, I am absolutely capable of orchestrating the necessary repairs and therefore, if this is not resolved by 5:00 pm on July 28, then on the morning of July 29 I will at my own expense hire the necessary contractors and make any and all necessary repairs to the roofing and/or chimney and related structures at [my address].

If I do have to bring in a contractor I will backcharge [the association] for the work. If, after issuing a backcharge I am not reimbursed within 30 days I will then deduct the amounts from my assessments until I am fully reimbursed. Further, and to avoid any confusion in this matter, I am a responsible owner not a renter and I do understand the difference and I believe I am acting accordingly.

To give you the complete story, the problem involves one or more roofing and/or chimney water leaks above [my unit] at [my address]. This has resulted in damage to both [my unit] and to the unit below it. However, I understand the damage to the unit below [my unit] is more extensive and includes bubbling of the utility room ceiling. Photos of [my unit] are enclosed and includes both the utility room and the adjacent bathroom ceilings in [my unit]. I do not have photos of the unit below, which is owned and/or occupied by [my neighbor].

Chronologically, this event began on Wednesday, June 16, 2004. As I stated, my work requires significant travel on my part and I was away that week. In fact, in one recent month I was on the road 29-1/2 days. This makes my involvement difficult and puts an additional burden on my spouse. However, I have altered my business for the next week or so, even though I should be at several clients out of state, so that this problem is fully and completely resolved. I digress.

On June 16, my spouse, reported to me that [my neighbor] knocked on our door at about 10:00pm to report water leakage in [his] utility room. My spouse investigated our utility room and found evidence of water leaking from above. She called me long distance about this. At 10:30pm [my spouse] called the night Operator at [your office] and reported the problem and requested assistance. [My neighbor] also promised [my spouse] that [he] would call [the management company], but we are unaware that [he] in fact, has ever done so, and according to [your contractor] they have no current work orders from [my neighbor].

On Thursday June 17, we had not received any response from [your office] so on Friday June 18 [my spouse] called [your office] during normal business hours and was told “there will be someone soon”.

On Monday June 21 [so and so] of [your contractor] arrived and investigated. [My spouse] advised him of the problem and after an inspection he advised [my spouse] that the leakage is occurring in the ductwork leading from the roof (this ductwork is compartmentalized, with inner and outer ducts, and according to [the contractor] there was water moving between the inner and outer). While he was in our unit I spoke with him via long distance telephone and he informed me of his findings and advised me that a chimney cap was missing. However, he declined to enter the attic and confined his inspection to the exterior of the roof and the utility room and bathroom. He advised [my spouse] that this would be corrected quickly, but that a chimney cover would be placed on order and so repairs could not be done immediately.

Upon return from my business trip, I made an inspection of my own. I entered the attic and looked for evidence or water leakage. Beneath the ductwork leading from the roof I installed an aluminum pan under a seam at a 90 degree elbow, in the area above the bathroom ceiling which is stained as indicated in the photo. At the time the duct was dry, but there was evidence of water (water marks) in that area of the duct. Also, it is possible that more than one section of ductwork is affected. However, the major leak is in the duct which goes through the utility room of [my unit] and to the unit below, and which I understand is causing bubbling and damage to the utility room ceiling in [my neighbor's] unit. I inspected that duct in my utility room in [my unit], but the water appears to be running vertically within the duct and is beyond my control. I also inspected the appliances in my utility room, including the HVAC unit, water heater, humidifier, washing machine and water and drain piping. The underside of the water heater and the entire floor was bone dry. There was absolutely no evidence of any internal leakage in the utility room. The nylon tubes which convey condensation from the HVAC exchanger to the drain and from the furnace humidifier were properly inserted into the floor drain. The humidifier tube was internally dry; the HVAC tube and had typical “scum” inside of the tube, but was freely conveying condensate into the drain.

I do understand there are several possible sources of water. These include and are not limited to:
1. Water from appliances and HVAC situated inside the utility room.
2. Faulty plumbing or drain piping within the utility room.
3. Roof leaks.
4. Faulty floor drain including cracked piping above the ceiling of the unit below.

Now, when the unit was purchased about 2 years ago, we discovered a faulty hot water heater drain valve. At that time we also discovered a crack in the cementatious floor of the utility room, and a defective drain which had a lip about 1/8” above the floor level. These all combined to channel water into the ceiling of the utility room below. A work order was issued to [your contractor] for which I paid $700. Work done at that time included removing floor tiles and sealing the cracks in the cementatious floor of the utility room, cutting the 1/8” lip off of the drain and sealing around the drain and floor opening with vinyl cement patch, installing a cap on the hot water heater drain to prevent any leakage, and repairing the drywall of the ceiling of the unit below. Since that time, there have been no further problems, until now.

To continue with the chronology, during and following rainstorms the week of July 5 we did collect water dripping from the ceiling above the utility room in [my unit]. Depending upon the severity and duration of the rain, each storm has resulted in about ½” to 1” of water accumulating in a utility pail I installed under the stained area of the ceiling. On July 5 [my neighbor] complained to [my spouse] about water dripping from the ceiling of the utility room in the unit [he] occupies.

[My spouse] again explained to [my neighbor] the cause of the problem and the status, and again and repeatedly suggested that [my neighbor] contact [the management company] directly for assistance in dealing with this problem.

On July 8 [my spouse] called [the management company] to determine the status of the chimney repair. She was advised that [the contractor] needs to be contacted by [us] directly as [the management company] was unaware of the status. [My spouse] left a voice message with [the contractor] and telephone tag ensued with [the contractor].

On July 13 a second appointment was scheduled with [the contractor] to occur July 15.

On the night of July 13, [my neighbor] again complained to [my spouse] of water dripping from [his] utility room ceiling. [He] insisted it must be an internal problem and convinced [my spouse] to have another contractor look into the problem.

On July 14 a contractor, “Mr. xxx” the handy man from [some company], arrived at our door.

According to [my spouse], Mr. xxx inspected the utility room and bathroom, and blows on the nylon tube existing the HVAC unit. He tells [my spouse] that he might have fixed the problem! From our unit, [my spouse] telecons [our neighbor] at [his] work as requested to give [him] a report and Mr. xxx gets on the phone and tells [my neighbor] that “he has solved the problem – it was the air conditioner”. At that point [my spouse] interrupts, but [my neighbor] refuses to discuss this with [my spouse].

I think [my spouse's] allowing Mr. xxx into the unit was a lapse of judgment, Mr. xxx apparently ignored the stains on the ceilings and would not check the attic. While he was there he offered to fix other miscellaneous problems and for whatever reason, [my spouse] assented. He look into a leaking flap valve within the bathroom toilet (ignoring the stains on the ceiling) and also tightened some of the handles on the bathroom water valves. Of course, all of this does absolutely nothing to resolve the problem of the leak(s) from above. It’s just a lot of cosmetic touches. For his service, Mr. xxx presented a bill, for which my spouse signed a check!! [My spouse] was quite upset that Mr. xxx told her that the AC might be the problem but then told our neighbor that it was the problem and he has fixed it!!

I have telephoned [the handyman company] and talked to Mr. xxx regarding [his] involvement. On July 20, 2004, I discussed my issues with Mr. xxx. I advised him that I completely disagree with his statement made to [my neighbor] that the HVAC in my unit is the cause of the water damage. I told him that I believe his statement was both incorrect and misleading. He attempted to say he did not place the blame on my air conditioner. I believe he did a disservice and in my telephone call I told him so. I told him I will not allow him or his firm into my unit in the future and have so instructed my spouse. His response was to hang up on me.

To support my position, during two inspections related to this problem, [your contractor] has not found any evidence of water damage from my air conditioner, or for that matter, from any of the other appliances in the utility room. Of course, it is always a possibility for an air conditioner to leak but in this particular case, it is not doing so. It is also possible that the piping from the floor drain is cracked and this is an additional source. However, Mr. xxx didn’t check this! YOU CAN CONSIDER THIS LETTER A FORMAL COMPLAINT AGAINST [MR. "XXX" THE HANDYMAN].

When this problem began I inspected the air conditioning system, the water heater, and the washing machine, etc. All were and are bone dry. The floor, top of the HVAC unit and interior of the bottom of the furnace were and are all bone dry, with absolutely no evidence of any water leakage, condensation, etc. etc. I want to point out that the HVAC system is not the original unit and is in EXCELLENT condition. Two years ago it was thoroughly inspected by a professional and some minor repairs were made at that time.

Returning to the chronology, on July 15 [your contractor] arrived and re-inspected [my unit]. Prior to his arrival, [my spouse] telephoned [my neighbor] and advised [him] that [the contractor] is available to inspect [the] unit but [was] declined. He performed the same check that [his predecessor] did a month ago. He checked the interior of the [my unit] and the water stains in the ceiling of both the bathroom and the utility room. He went further however, and entered the attic from [above my unit] and he advised [my spouse] that there are moderate water stains on the ductwork leading from the roof. Prior to mounting the roof he stated to [my spouse] that he suspected a chimney cover may be missing. After inspecting the roof he confirmed that a chimney cover was missing. He advised that [his company] needs to acquire one and install it. This is the same thing we were told nearly a month earlier!!! Obviously, [my spouse] was not happy to hear that it had not yet been ordered. [My spouse] discussed the issue of the air conditioner and he stated that that is possible, but that the evidence of water from above and the extent of damage described to the unit below, is more substantial than that possible by an air conditioner problem, for which there was no evidence, and was consistent with the leak from the roof, above.

[The contractor] also advised [my spouse] that he is in charge of work orders and that he never received work orders from or regarding this problem and [my neighbor's] unit. So I must conclude that [my neighbor] has never called [the management company] to report the problem in [his] unit.

At present and to the best of our ([my spouse] and my) ability we have been collecting water dripping from above in a bucket. However, any water running inside the duct or walls and entering the unit below is beyond our control. It is my opinion that “Mr. xxx the handyman” performed a disservice and should not have been paid by [my spouse]. However, I was not there to prevent this from happening.

I must conclude that [my neighbor] will not assist us in resolving this problem by contacting [the contractor] and [the management company]. So be it. However, I will not accept financial responsibility for damage done by roof and or chimney leaks to my neighbor’s unit, nor should I. I am sending a letter to [my neighbor] to advise [him] to deal with [the management company] directly. I will not be the scapegoat for roof or chimney cap problems and 35 days to fix this problem is excessive. [My neighbor] can knock on your door!

As of July 20, I left a message at [the contractor]. On the morning of July 21 [the contractor]returned my call. He advised that he has no cap but that if necessary he will have one made. I advised him that my neighbor is holding me responsible for the problem and had become a problem. He told me that I am not responsible for roof leaks and that if the drain pipe were cracked it could be a source of leakage in the unit below. However, he is not aware that it is cracked. I also advised him that the prediction is for severe storms today (60%). He advised me that he will attempt something today, even if it is temporary and agreed to call me on my cell phone if he does make repairs.

If it rains, without repairs I am certain we will collect additional water and that [my neighbor] will also be knocking on our door to complain about leakage which [he] insists is from our Unit.

Please advise me of what further action I am to take. However, if this is not resolved by July 29, rest assured that I will unilaterally take action to resolve this and fix the roof, chimney or whatever is necessary to stop this problem.

Sincerely,