Fireplace Safety at BLMH - Part II

Here's a brief video of a gas fireplace at BLMH. This provides some information about the construction of a natural gas burning fireplace, and it's limitations.



Comments, Corrections, Omissions, References

Note 1. This is Part 2 of a two part instructional post on natural gas burning fireplaces. 


Part I can be found here:
http://briarcliffelakes.blogspot.com/2010/11/fireplace-safety-at-blmh.html

Fireplace Safety at BLMH - Part I

Our fireplaces are prefabricated gas burning fireplaces. They were not designed for burning of anything except natural gas with the ceramic logs and inserts provided in them.

NOTHING should be burned in your fireplace at BLMH except the gas flames of the ceramic logs. Burning anything in a BLMH gas burning fireplace, such as wood, paper, sticks, trash or a "flame" log is extremely dangerous and hazardous. Such burning can result in injury and death, and destruction of the entire building by a disastrous fire.

The prefabricated gas fireplace in your unit is constructed of light gauge sheet metal. It is designed for the lower temperature of a natural gas fire. It has a metal firebox. It does not have a brick hearth or a smoke chamber in the chimney. Your entire fireplace, from hearth to chimney to stack on the roof, is constructed of light gauge sheet metal, which is lightly insulated for the heat of a natural gas fire. The mantles are decorative stone or brick, and not designed to contain the heat and flames of a wood burning fire.

Burning anything besides gas as intended can easily result in overheating the firebox and flue and allow flames to escape into the walls and ceiling, where it can rapidly spread and consume the building. Wood burning in a BLMH gas fireplace can also eject embers and flammable creosote into the flue and onto the roof.

The past year in Wheaton, I have been told there have been five fireplace or chimney fires. None have been at BLMH. Let's keep it that way! See Note 2 and Note 3.

Natural gas fireplaces normally emit water vapor and carbon dioxide gas; that's it! If the air-fuel mixture is incorrect, it is possible the incomplete combustion will result in carbon monoxide gas. This should travel harmlessly up the chimney. Wood-burning fireplaces, or ones which use a fuel other than natural gas, do emit all kinds of particulates, gases and embers. Smoke can be obnoxious.

Our rules prohibit "Noxious or offensive activities." Smoke flowing from a chimney and down to a neighbor's unit could be offensive. It is useful for owners to remember that four neighbors share an entrance, and there is minimal separation between units. Smoke can travel down the slope of roofs and into your neighbor's kitchen. It is not uncommon for owners to have kitchen windows open when baking or cooking in winter. On mild days, we use our balcony. (See section IV-J of our rules and regulations, which is in your Welcome Packet.)

Included in the post is a video of a true wood burning fireplace. It is included here for comparison to yours. The wood-burning fireplace has an extended stone hearth and mantle, to contain any hot embers and absorb the intense heat of a wood fire. Compare this to the fireplace in your unit and you will see that your fireplace is a "light duty" one designed for low temperature gas flame. Your fireplace cannot properly contain embers, it cannot properly protect the building and structure from the heat of a wood burning fire.

The wood-burning fireplace has a straight chimney. The video shows what it looks like from the inside of the hearth, looking up, Your chimney is metal and it bends and turns. Your fireplace and chimney is only designed to emit heat, water vapor and hot gases.

From time to time, a few owners would like to convert a gas burning fireplace to a wood burning one. To do so properly is very costly, and may not be accomplished safely in our buildings. It would require replacement of the prefabricated gas unit, installation of a new hearth, mantle, flue and chimney. The entire installation from mantle to chimney exit, must meet all codes for wood burning. A proper metal flue, for example, must be a high performance, high temperature one rated 650C or "HT" which means it is designed to operate of temperatures up to 1200F! The chimney exit, above the roof, may need to be elevated and supported, and equipped with a special top.

Proper installation requires a special high temperature flue and that requires modification of the wooden supports all the way up to the roof and through it, and possible modification of the roof, to accommodate the exit of the flue to the new chimney and cap.

Obviously, much of this work must occur in the space between the walls, and if you live on the first floor, that means passing that new high temperature chimney through the walls of the unit above you. There are also issues of weight on the structure of the building. Our buildings were never designed for the possible weight of wood burning fireplaces.

Storage of the wood fuel would also create a problem. Our rules have limitations of what can be placed on owner patios and balconies. An owner of a wood-burning fireplace may use an burning log substitute for wood, such as "duraflame" but who is to assure that is exactly what is being done? There is also no proper way to store the wood and dispose of the hot ashes of a wood fire.

An owner may decide to skirt the rules by storing fireplace wood in the closet on the owner's patio and out of view. Unfortunately, wood can harbor all kinds of destructive pests, from termites to carpenter ants to emerald ash borers. These critters can then spread to our wooden structures and can even be carried inside with the firewood, to destroy the building from both inside and out. Emerald ash borers can migrate to our dozens of ash trees, infesting them and resulting in their costly destruction. Your fees pay for removal of diseased and dying trees and stumps.

From time to time, owners sometimes approach the board for approval to convert their gas burning fireplace to wood. At BLMH we do not have an acceptable procedure to do this and there is no such approval at this time.

CAUTION and WARNING - This video is a wood burning fireplace. It is posted to point out the differences between a wood-burning and our light duty natural gas fireplaces. NEVER BURN WOOD OR OTHER MATERIALS IN YOUR FIREPLACE. INJURY OR DEATH MAY RESULT!





Comments, Corrections, Omissions, References

Comment
This post was prepared November 17, but was delayed while I edited a video of a typical gas burning fireplace at BLMH. Because of a serious fire in a nearby condominium association, I decided to post it early and without that video.

Note 1. Each home is required by Illinois Law to have at least one working Carbon Monoxide detector. The reasons for having one is a matter of safety, and is for the unit owner's protection.


Note 2. I'll be posting an edited video of a BLMH gas fireplace in a few days. The difference between it and a "wood-burning" fireplace will be readily apparent. 


Note 3. A fire occurred in the Knolls on November 23. It allegedly  began as a "chimney fire" but the fire department is officially stating, at this time that "cause is not determined." The building residents were removed and the building is posted as "unsafe" until repairs are completed. A fire can have devastating personal consequences. 
Here is a press release; the highlights are mine:

Wednesday, November 24, 2010

Fire Department Responds to Building Fire 11-23-10

WHEATON, Ill. – At approximately 8:15 p.m. on November 23, 2010, the Wheaton Fire Department was dispatched to a reported structure fire in the condominium building at 835 E. Farnham Lane. Upon arrival, fire crews identified a fire in the attic area of the building with some extension between floors and in the walls. The fire was brought under control within 30 minutes. Several condominium units were occupied at the time of the fire and all residents evacuated safely. The incident did not result in any injuries.

Investigators from the Wheaton Fire Department along with the DuPage Fire Investigation Task Force conducted a fire investigation. The cause of the fire is undetermined at this time and damage estimates have yet to be determined. The City of Wheaton Building Department was called to the scene and the building was posted unsafe for occupancy due to the damage. The Wheaton Fire Department was also assisted on the scene by the Wheaton Police Department and fire departments from Carol Stream, West Chicago, Lombard, Glen Ellyn, Hanover Park, Warrenville, Winfield, and Glenside Fire Protection District along with Ducomm Public Safety Communications. The building was turned back over to condominium association representatives after the fire.

### 

Task Agenda for a Board Member

It's been a very busy four weeks. In addition to my duties here at BLMH, and the financial background work for the association. I've been able to squeeze in a couple of business trips, over and above the normal 9-5 office work.

So, what have I been doing for our association, you might ask?

Well, there has been the need to get up to speed on financial and logistical matters. I also went through the board packet and made a list of work orders with comments for the board; went through the list of payments and receipts and found a $1,500 overpayment; found issues with the proposal(s) for the repair at 1731, which resulted in a significant re-work of one of the bids, which the board has now approved; got involved in some of the loose ends for the roofing project and discussed same with the Landscaping Director and the contractor who is to do the work; reviewed several contracts with the A&M Director who was my predecessor; prepared additional charts and graphs for the Association meeting of November 11, etc.

However, the main event has been completion of my first pass at my task agenda.

Here are the major categories. This will be a “work in progress” and will be revised and expanded on an ongoing and continuous basis.

As part of my collaborative efforts with the entire board, I emailed a similar list of major categories. As V.P. and A&M Director, some of the specific areas I am responsible for will require coordination. So there is overlap of responsibilities and in this list you will see areas of other board member responsibility. If I see something that may affect their area, it's my duty to advise them, and they should also advise me. So I asked each board member, and our manager at FUPM "If you see an area in which we can work together, let me know. If you see something that is missing, let me know".

I will be sending requests to the other board members via email, and I expect to receive some. In fact, I already have.


Task Agenda Categories:

1. Safety, Well-Being and Owner Satisfaction.
2. General Items including “What’s missing”.
3. “Beyond the Nine Dots” Solutions.
4. Financial Planning.
5. Architecture and Maintenance.
6. Landscaping and Trees.
7. Reserve Study and 5, 10 and 20 year plans.
8. Rules, Violations and Possible Rule Changes.
9. Articles for Newsletter.
10. Communications and Owner Awareness.
11. Promoting "community" and "life affirming" behaviors.
12. Meeting Notes and Resulting Agenda Items, by date.

• November 11, 2010 Association Meeting.

Well, gotta go to work!

Comments, Corrections, Omissions, References
Note 1. It's somewhat unclear how this will be received by the board. We're all "nice and cordial." Will my efforts be construed as "stepping out of bounds" or interfering with someone's area, or, heavens, as "too much change?" or "too radical?" It will take time to see exactly where we are headed. We currently have a declared vacancy on the board. Our A&M Director resigned and another director did not attend the most recent Association Meeting. At that meeting, a former, very experienced  board member offered their services to the board. They were rejected last year. Will they be again? We need people with financial, bona fide "get your hands dirty and do the work" management skills, planning and logistics, and serious architectural or engineering skills. Who will the board select to fill these vacancies?  That will tell me a lot about where we are really going, and if it is possible to achieve the goals we are setting for ourselves. It will also tell you. 


Note 2. Of course, you might be inclined to say the my call for "experience" on this board, is a personal perspective. I'm assembling a list of some serious problems and near misses for the board. These occurred in the last 12 months. They will substantiate my position. 


Note 3. It's very easy for slips to occur in payments and billing. This business spends a $million each year on literally thousands of work orders, subcontract items, etc. It's important for the board to thoroughly peruse the list of payments, etc. to catch mis-coding errors, etc. That's all it takes; one small accounting error and someone can be overpaid or underpaid. Or a work order that should be paid by an owner, is paid by the association. I discussed this with our FUPM manager and he encourages board members to do this. In a partnership and collaboration, we each support one another in these tasks.

I intend to do so. Our president has been tracking expenses for the entire year, so as not to exceed the budget. If we overspend on Operations and Maintenance, we have no where to draw from for making up that difference, but to stop maintenance in one area to cover the overage, or charge a special assessment, or get "creative" in our accounting. I am absolutely opposed to special assessments, and I won't support questionable practices.

With a very, very tight O&M budget for 2011, it will require even more vigilance and forward planning. But that's why we signed on to be board members, and that's why we are here, isn't it?

Note 4. I'm preparing several expanded and revised charts, for inclusion in newsletter. It can be time consuming, but I've been preparing such documents about BLMH since 2001, and on a regular basis, since 2004.  In the past, some of this information was posted here, or provided to others at BLMH. This information was the basis of my statements made during the association meeting "Owner Forum" for the past few years. Now it will be possibly made available to the larger group here at BLMH. 

Result of November 11, 2010 Association Meeting - Part I

The long awaited association meeting occurred Thursday night. Here is a brief summary, which is part one of a two part post. These are not necessarily in the order of the actual events of the meeting:

1. The new board member (me) and the positions assigned during the budget workshop were affirmed and voted. All board members who were present affirmed the CAI code of conduct. Two board members were not present; our Treasurer and our Director who has no specific assignments.

2. The budget for 2011 was approved unanimously. This included a 6% reserve funding increase and a 1% Operating and Maintenance budget increase. The total increase is 7%.

3. Our Architectural Director resigned. He explained this is due to a change in work assignment, which will require extensive travel. As a result he will miss too many meetings. He read a brief statement, and handed me several folders, so that I may carry on the work. Note: He and I had collaborated for the period since his election and we had discussed improving documentation system and methods. As part of that, he had begun a spread sheet of all major improvements at each address in BLMH. At my request, he had emailed me a copy of the original. I promised to maintain and expand this.

4. I was asked to assume the position of Architectural Director, and I accepted, and this was passed by the board. Note: This means that for the present, I am both Vice President of the association and the Architectural Director. (Note 1).

5. The repair to the building at 1731, which requires the installation of pressure piers, will finally proceed. We had obtained two bids, but I noticed that there was a serious problem and it seemed a bidder may have had incomplete information. I discussed this with the Architectural Director and then with management. Finally, after a re-bid, we were able to approve a bidder and this work will now proceed. The owner of one of the units in that building asked if this would correct an issue with the out-of-square brick surrounding the window frame (he wants to replace that window). With Management's approval, I read aloud a statement included in the proposal of the successful bidder. (Note 2).

6. During the "Homeowners Forum" owners were given an opportunity to speak. Statements included:

• A former board member volunteered her services to fill our board vacancy. This former member also  volunteered last year, but was passed over. She has extensive experience and could certainly do any position if asked. Our board president thanked this owner for the offer. There was no other statement by any board member.
• A unit owner, who is also a former board member (treasurer), addressed the board and requested that we seriously consider the candidacy of this person. 
• A unit owner stated that he understood the necessity of the 7% fee increase, but felt that it was "punitive." He asked that the board attempt to smooth these fee increases and keep them consistent. This to avoid owner distress and undue hardship. He stated the opinion that it should be a priority to avoid these types of financial see-saws. 
• Several owners expressed the difficulties of the current economy. I expressed that I understood the issues with the two consecutive COLA freezes for those on Social Security, and the many unemployed and underemployed. Note: I did not state this at the meeting, but my business experienced a 50% decrease in revenue in 2007-2008 and I am personally aware of these difficulties. I recently sent a written statement to the board which included this information. Of course it is personal in nature, but I sometimes think there are those in this association who think we really don't "get it." Be assured, I do. 
• A unit owner stated that she found "the bench" to be a nice place to sit, when she takes her strolls through our property. (See Item 6) 
• An owner expressed dismay about the costs of the roofs, and the timing of the replacement of some. I repeated what a former Architectural Director stated and pointed to him in the audience as I did so. "If we replace a roof a year earlier than necessary, there is a financial consequence. However, if we replace a roof a year later, there is possible discomfort and inconvenience to an owner, as well as costs of repairs, which can be excessive." I expressed the statement made to me by management of the selection process. I also stated the average age of our roofs, and the need for some diligence in the program. The average age for remaining roofs will be 17 years, but some may be replaced in as little as 10 years as one was this year, and others may wait longer. Note: I have posted an explanation in this blog and some details. (Note 5).
• The minor fire that occurred in an electric space heater in the water closet of the garage at 1731 was discussed briefly by a couple attending. They made several independent statements during the forum. They were not involved or live in the building, but they stated their concern about "being safe" at BLMH. They asked about inspection methods and also expressed a concern that there is no fire detector in the garages. They acknowledged that they are aware of the smoke detectors in the hallways. They reiterated their concerns about safety. I advised the owners that I have begun research into a possible, lower energy and potentially safer replacement for these heaters. It is too early to state if this is reasonable. Note: I did not ask them if they have replaced all of the 30 year old utility or bathroom vent fans in their unit. This has been an ongoing discussion because of two recent fires. (Note 6).
• An owner asked for the final cost of the water main break at Gloucester. Management provided that information as requested to all present.  Management also passed a piece of the remains of the pipe to owners for their inspection and made a statement about the condition of the main, and status of the project. All repairs, including patch to the driveway, are now complete. 
• An owner inquired into sealcoating for the new driveways. Management stated that this is not to be done for a year. Early application of seal coating will damage the asphalt.  Note: Our budget includes funding for sealcoating in 2011. 
• An owner asked if this board was developing a long range financial plan of 10 years duration. She also wanted assurances that our financial plan includes provisions for accruing reserves in a timely way for ongoing projects (for example, are we accruing reserves for the most recent roofs). She was assured that we are developing a long range plan, and that the financial program does include building reserves for current AND future projects. I stated that the initial work on this was the basis of the charts and data that had been provided to all owners as part of the release of the proposed budget. I advised her that I had prepared additional charts for presentation at this meeting. Management and I advised the group that there is more work to be done in 2011. Note: At the conclusion of the meeting, the owner asked me for more specific information and I again assured her that the board was intent on working on this and it is my personal commitment to develop a 10 year (and longer) plan.
• Owners expressed their opinions about real estate sales in the association and in general. An owner stated that there were professional opinions that in 2013 things would be improving.

6. The "bench" which was installed in the common areas by a unit owner, in violation of the rules, was discussed. The couple that did this was present during the meeting. I stated my concerns, including the cost of maintaining and issues with owner annexation of common property. I acknowledged that there are many "nice and desirable" things that could occur in the common areas, including benches, lawn furniture, vegetable or flower gardens, a children's play area or areas and even a dog run. I expressed my concern about how best to proceed. Management stated that the board can, by decree, do whatever it wishes. The issue of rules violation was sidestepped and this was passed to the Landscaping Director, who was not present, to resolve. He will be asked to determine type and location of benches. (Note 4).

7. There was a discussion of aerators in the lakes. Currently there are none. An owner has requested that they be re-installed. (Note 4).


8. Management was asked the status of the experiment with a different wattage outdoor light bulb for the sconces on the exterior of the building. Management reported that the experiment was a success, and that exterior bulbs would be changed on an "as needed" basis. Note: Credit for this goes to our former LD. I was skeptical of this and expressed reservation about the possible reduction in lighting levels. However, management stated that the reduction was "slight." I recently discussed the next step and if lighting levels need to be increased, this could be accomplished with clear lenses. Cost to be determined.

9. At the conclusion of the meeting, I made a slide presentation which expanded upon the financial data and project funding. Some of this has been presented in the blog, in earlier posts. This presentation was optional and was made to several owners who stayed for this briefing after the main portion of the meeting.  Here is one of the charts presented, which shows how a typical owner's fees are spent on Operating and Maintenance item at BLMH. It does not indicate the reserves. This chart is a typical one, so don't use it to determine your exact fee. Our fees are based on percentage of ownership, and there is a variation between units. As usual, if you click on this chart, it will enlarge.

9. The meeting was attended by about 14 unit owners. There were several couples present, as were the spouses of board members. I did not double-count couples.

10. I personally want to thank those who attended and made statements and asked questions. It's my opinion that the owners were very considerate of their neighbors, fully engaged in the financial issues, and were cordial and attentive. That certainly made the evening somewhat easier for me.


Comments, Corrections, Omissions, References

Note 1. I have been working on a "task agenda" as Vice President, which I intend to submit to the board for comments. Due to this appointment, that agenda will be re-evaluated and modified prior to submission,

Note 2. This building foundation is one of two on the property that have, in recent years, begun to separate and settle. One was repaired several years ago. This building was languishing and there were now large, prominent stress cracks, visible on the outside of the building and inside the units(s). I made it a priority on being elected to proceed as soon as possible to guide management to correct this. I may provide some general information about the repair and the issue in a future post. In particular, if it cannot be in the newsletter due to space restraints, etc. I want to state here that it is my opinion that our association must vigorously and rapidly perform this type of maintenance. This is not only for the comfort and security of the owners, but to assure potential buyers that the property will be maintained.

Note 3. The "bench" and related conversation became somewhat disruptive this week, as board members discussed, via email, the pros and cons. However, there are one or two board members who seem completely committed to this. "Benches are good" is the current position, and details such as the cost to install, the cost to maintain and the fact that we may have "benches forever" seem to be of little consequence. As they say "where there is a will there is a way" and for benches, there is definitely a will. The timing of all of this was poor, because of last minute issues with the 1731 building repair, and of course, ongoing and time consuming financial matters. The bottom line for me is that I am opposed to owner annexation of the common elements. See Note 4 for a perspective on this.

Note 4. Here is another perspective, on modifying common elements, and a possible consequence. This  from the HOA Leader Newsletter -Tip of the Week November 12, 2010: I have sent this to the the other members of the board, for their information and guidance. This is an email publication of HOALeader.com. They also provide a subscription service. There is more information at the conclusion of this note.

"Is your HOA considering eliminating a common element to avoid the cost of maintenance or repair? If so,  consider this week's tip your fair warning: You probably can't do that without your owners' say-so.

A reader asks an interesting question: "We have a small play structure for children. It is now time to do maintenance on it, make modifications, install a new one, or remove it entirely. I understand that since it is an amenity, we probably have to have a vote from all homeowners, especially if we deem the maintenance to be cost prohibitive. Our governing documents also state that if an expenditure is more than 5 percent of our operating budget for the year, all homeowners need to vote to approve it. The
question: Since the play structure is 20 years old and doesn't meet the new, required safety codes, could it be taken down or modified without all homeowners voting?"

"The reader asks a good question," says Kyle Hooper, an associate at Atkinson, Diner, Stone, Mankuta & Ploucha PA in Ft. Lauderdale, Fla., who represents about 40 community associations. "This is something we deal with frequently here in Florida--maintenance and repair, replacement versus additions, and alterations and improvements. Your governing documents control what the board can and can't do, and that's the first place to look. Generally there will be different sections in the governing documents covering these issues.

"An association has a duty to maintain, repair, and replace existing common elements, which would of course include a playground or play structure because it was there and approved through the process and should have been maintained," explains Hooper. "To simply remove it, I think, would be in violation of the maintain, repair, or replace rule. You can't summarily remove a swimming pool if it's 20 years old and doesn't meet safety codes. The board's obligation would be to maintain, repair, or replace the pool with a similar kind and quality that meets code standards.

"Otherwise, you're in essence taking away an amenity that has been furnished to unit owners by saying it doesn't meet code,"  continues Hooper. "That's not good enough.""

Comment: So, once we put benches in, it may be difficult or impossible to get them removed. Something to think about?

Note: HOALeader.com provides a free email newsletter, from which this is excerpted. They also provide a subscription service. There is more information go to

HOALeader.com - Practical Information for Homeowners Association Leadership


Note 5. For further information about the age of our roofs and details of our project, see "My Primary concerns" in this post:

BLMH - Making a Good Decision

Note 6. I attempted to be on my best behavior.  I did my best to be supportive to the owners, my fellow board members and represent the association in an appropriate manner. My spouse, who attended, congratulated me for being very controlled during the entire proceeding. To support me, she had brought a large sign to display from the audience, as a reminder to me. Here it is. The message was "Don't Get Hooked."

Announcing a New Service

One of the limitations in publishing this blog has been the nature of a public blog. While most of what I publish is general in nature and specific in content to Condominium Associations in general, there has been information which I am unwilling to post on a public web site. For some time, I have had the desire to publish more specific information, which is sometimes unsuitable for the public at large. For example, what benefit is there for this association if I publish certain financial information? Almost anything can be construed in various ways. I intend to support the owners and other involved parties at BLMH. Ownership has both privileges and responsibleness.

I was requested to provide information that was more specific to BLMH. In response to that request, I began a service which provides, via email, expanded information and data that I think should only be provided to owners or other interested parties in BLMH.

I have completed a trial of this expanded service, and I am now willing to provide it to all owners of BLMH and to certain other interested parties.

This service is free, includes information that could be valuable to owners of BLMH, and because of the nature of the information, is unsuitable for general publication. This information is not necessarily detrimental to BLMH, nor is it extremely positive. It is, for lack of a better word, realistic and personal in nature. Ownership in BLMH has its privileges. We are a unique community, and I intend to keep it that way.

If you would like information that is expanded beyond that provided on this blog, and much more detailed, then this is what you should do:

1. Send an email to this secure and private email address:    redded96499@mypacks.net
2. In that email provide the following: 1) your name, 2) your street address, and 3) your email address. If you are not an owner of BLMH, then 4) provide a statement of why you should receive this more detailed and privileged information. 
3. I will send you a letter via U.S. mail, using the address you provide to me, with a request and instructions that you send a specific email to me. The purpose of this is to verify that you are who you say you are. 
4. Upon receipt of your reply with the proper message, you will be enrolled, and I will send you an email notifying you of your enrollment. You will then be given instructions on how to "unenroll" should you decide that this service is of no value to you. 
5. Once enrolled, you will receive emails that include enhancements to that published here. Such enhancements may include supplemental documents and charts. 
6. Sit back, read this blog and then, with the information and specific insights I send you, expand your knowledge of condominium living at BLMH, and enrich your life here. 
7. There is no cost to this service. I provide it as a "public service" to the interested owners of BLMH and other interested, and qualified, individuals.

That's all there is to do! I am providing this as a free service. Your email address and identity will be confidential and no one will be aware of your enrollment here but me. I do not broadcast messages. Each email will be completely personal and confidential and your email address or any personal information will never be made available to others, sold or used in any commercial way. Be assured, this is entirely legal. I will not reveal confidential information about the board, the workings of the board at BLMH, or privileged information about specific owners. What you will receive are specific insights which are expanded beyond those in this blog. This will all be derived from public sources, such as our financials, and will include my personal perspective and insights.

I look forward to your enrollment and partnership at BLMH!

Budgeting Part V - Making a "Good Decision" and Avoid Being Wrong

By now, everyone should have had the opportunity to read the letter of the proposed budget for 2011. I am sure the thought of a 7% fee increase is causing some concern. Passage of such a measure will impact owner finances in 2011.

I need your help.

I have been asked by owners where I stand in this matter. First, let me say this is not a "personal" recommendation on my part. It was arrived at by the entire board, during two long "budget workshops" held last month. However, I realize that you want my personal position in this matter. I have been told by non-board members that this is being discussed with owners by other members of the board.

One impatient person who I assume is an owner, sent me an anonymous message and said "What percentage do you think the monthly assessment should go up?"

I am hesitant to state a number for one reason and only one reason. During the workshop, there was a certain amount of compromise on the part of board members. I too compromised. There will be consequences to the association because of this budget, or the budget that is voted and passed.

What I personally want to achieve is the ability to  make a good decision. That's a decision that allows this association to properly function in 2011 and avoid the consequences of a bad decision. I don't want a repeat of 2010. Nor do I want a fee that places an unnecessary burden on unit owners. Whatever decision I ultimately make and whatever percentage this board votes and passes, this association will have to live with. Future boards will have to deal with the consequences of any funding shortfalls, just as this board is dealing with the financial consequences of decisions made last year and 20 years ago.

Making a good decision today, is more difficult because of the uncertainty in the economy, the consequences of foreclosures on the association, the financial stress experienced by some unit owners, and the ambitious and necessary roofing and driveway programs. It is all the more difficult because of the projections for the next 10 years, and our reserve study.

Last year, the board made what turned out to be a bad decision regarding fees. I think that occurred because the board, after receiving information, decided to use some of it and discard some. Ultimately, that information was used that was consistent with their personal beliefs. They authorized a reserve study, assuming to would prove we were well or fully funded. It didn't. I concluded in 2008 and again last year, that some members of the board are somewhat confused.  I see nothing that has caused me to change that opinion. Making a popular decision is not necessarily a good decision. The opposite is also true; an unpopular decision is not necessarily a bad one. However, while I am not alone in this thinking, I most certainly am outnumbered on this board. So it is entirely possible this board will again make a popular decision.

A bad decision is one which will result in a need for a special assessment, or will allow maintenance to fall behind to a degree that future owners cannot again "stand the pain" of making up these financial shortfalls, when it is necessary to raise fees. As I have stated repeatedly to my fellow owners last year: "If we can't raise fees this year, what makes us believe it will be easier next year?" What would make me believe that we'll be in better financial condition in 2012 than 2011? There's nothing to indicate that owners will receive a windfall of money from anywhere. Serious financial shortfalls can result in probable ruin to this association. Last year I suggested to anyone who would listen, and published here that owners should "Save that 2% in a cookie jar, because you will need it next year." If you did, you will not experience the full financial impact of whatever fee increase we do have in 2011. I wish last year's board had vigorously promoted that idea to all owners, but they didn't.

I think it's also very short sighted for an owner to assume that it is to their advantage to hold fees down for a year, two or three and then sell their unit, passing on the financial obligation to the "new" owners. This economy and real estate market isn't going to allow that.

At this point, I'm not certain, because of our financial situation and last year's decision, that anything I do will resolve this problem to anyone's satisfaction. We are, as they say, "in a pickle." I have already stated that I will not be the scapegoat for this year's decision. Some owners will say "How could this happen?" Even when everything is done properly, things can go wrong. Our proposed budget does not provide much financial leeway if anything does go wrong.

Before I continue, I want you to look at this chart of our fees and the possible one for 2011:

Here is what is significant in the chart. In 1981-1982 there was a severe recession in this country, with extreme unemployment exceeding 10%. Unemployment began rising in 1980 and did not fall below 7% and stay there, until November of 1986.  Another recession resulted in high unemployment from 1991 through 1993. These periods were similar to today's high unemployment due to the recent recession.

In the chart above, you will see the response of the boards at BLMH under the stress and pressure of owners, during those economic times. They lowered fee increases, but when there was insufficient cash to pay the bills, voted in large increases. Then they reverted to the popular low (3%) or 0% fee increase, again fell behind and ultimately spent every dollar collected, with little saving for replacement of roofs, etc. in the "far distant future" of 2005.

Those earlier boards, particularly from 1982 to 1998, continued on their merry way with generally popular decisions and average annual fee increases below 2.59%!

By the year 1999 our boards, based on the published numbers, found they had almost no reserves, because of the earlier decisions to keep fee increases low. Boards thereafter had no choice but to raise fees sufficiently to make up for the fees not collected or saved. Owners didn't like the change from less than 2.6% average increases to about 6% annual increases. There was talk of "repressive measures," and that board was replaced, ultimately resulting in the current board.

The board in 1999 with the advice of new management, made the difficult but unpopular decision to raise fees. They didn't do it because they wanted to. They did it because they had to. To be honest, we were on a path to very large special assessments. Until that time, most owners were satisfied with the fees at BLMH, I am told! In 2000 fees jumped and when I purchased here in 2001/2002, I was told by several owners that they were very unhappy with the "high fees." Sounds familiar, doesn't it.

Today each owner at BLMH is paying a much higher monthly fee because those boards made popular decisions and kept fees unhealthily low. Here are the average fees for several periods. They demonstrate what I am saying:

• From 1982 through 1998 average = 2.59% annual fee increase.
• From 1999 to 2010 average = 6.61% annual fee increase (includes 0% in 2010).
• From 1982 to 2011 = 4.30% annual fee increase (includes proposed 7% in 2011).

There are consequences for the financial decisions of our boards. The history of the association shows that our boards have never been able to raise rates sufficient to make up for the fees that were never collected, when they were lower than the average 4.30%. It's because most boards find it difficult to collect money. The difference is staggering. If our boards had maintained a 4.30% fee increase each year, 1982 to 2011, we would now have a monthly assessment that is about $100 LESS than what it currently is.

However, our fees are where they are because we have been attempting to collect and save enough money in about 6-8 years to do our roofs, and other improvements. We should have been saving for 15 years.

Coincidentally, last year, the board, in similar economic times and under similar pressure from owners, made the decision of a 0% fee increase. That was the popular thing to do. The treasurer objected. I suspect that if this thinking continues, we'll simply stop funding roofs when we finish this project, to "keep fees low" and pass that financial problem and pain on to future unit owners.

So, what decision should I make? Why did the board decide on a 7% proposed increase? It's because, to their dismay, some costs such as energy and water, did increase last year. It's because they deferred paying for some of the landscaping completed in 2010 to 2011. It's because the reserve study, which they apparently expected would show we were excessively funded, did not show that. It's because of the failure of the water main on Gloucester; at the time of the workshops we did not know the full cost, but we did have rough budget numbers from past failures and the price of a driveway. It's because of the age of our roofs and driveways.  It's also because of the 0% fee increase last year.

My considerations now include this. I want to avoid making a bad decision and a mistake. Will the economy continue to sputter along? That seems to be the consensus of the "experts," with slow growth and high unemployment. Will inflation come back? Probably not yet, but as we have seen in 2010, there can be price spikes or other unforeseen events that will financially impact this association. Will ComEd get that proposed transmission fee increase? Will the price of roofs and driveways increase in 2011? Will any of our contracts go up or down in price in 2011? Can we reduce expenditures, or will irate owners attend meetings and complain about a lack of services "what do we get for all this money we pay," etc. and finally, will the board cave in to these owners. So as to be "popular?"

My primary concerns are:

1. How to avoid a special assessment or assessments, which will put owners under far more financial stress than they are at present?

2. Can we achieve a fee that will allow the association to meet it's current financial commitments? In doing so, we can then maintain the property for the owners, and promote both current living and possible sales.

3. Can we get sufficient time to complete the planning process of the reserve study? We will need a lot of time in 2011 to do that. Then we will have further information and can make a reasonable budget decision for 2012.

4. At the rate of funding proposed in the budget, most owners will have roofs that are an average of 17 years old when they are finally replaced. Can we hang on that long? According to a 2006 letter by management, our roofs can be expected to last 12 years. With the increased funding of the roofing reserves, at the fastest pace planned in making the proposed 2011 budget, and replacing the oldest roofs first, this will be the age of the remaining roofs as they are replaced at BLMH:

• 2 roofs 16 years old
• 14 roofs 17 years old
• 17 roofs 18 years old
• 4 roofs 19 years old
• 1 roof 20 years old

5. If anything goes wrong, how will we deal with it?  

Conclusion
If you, the reader, have any ideas, let me know. I suggest that we get someone on the board, if the opportunity presents itself, with some real financial acumen. A CPA would be ideal. I have spent about 60 hours doing the "number crunching" and that doesn't include the data from management and the time they spent in preparing it. There is a lot more to do in 2011.

However, before we again go down that path and plan on firing our maintenance company, I want you to consider that such a move will not solve the problem in 2011. I will be looking at various expenses here at BLMH in 2011 and thereafter. However, for the moment, I need to work with the hand I have been dealt. That means, improved planning and preparation on the part of the board. However, I am but one board member of seven. If we can't even manage the rules, then how are we to deal with real problems and a crisis, which I do consider this financial situation to be? Your board needs your support. This is your property we are attempting to maintain. These are your property values we are attempting to keep. We are required by statute, the Illinois Condominium Act, to do so.

Comments, Corrections, Omissions, References
Note 1. On that roofing letter in 2006. The letter was requested of management by our former Architectural Director. He was replaced when some current board members refused to support or endorse him. I got a copy of the letter after asking management and former board members for information on the age of our roofs. I asked that because I was very concerned by our budget, the roofing schedule, and the condition of our roofs. I am sure our other board members also had access to that information. 


Note 2. As I stated in the title, I want to avoid being wrong. However, if I make a mistake, I'll admit it. At present, if I vote for a fee increase that is too high, I'll possibly stress some owners. If I vote for a fee increase that is too low, I'll lead to future financial problems. With spending for capital improvements at the projected levels and the age of our infrastructure, any mistake now will have serious consequences. Consider that last year was, perhaps a minor one. But we don't have the luxury of time to allow us to increase fees 1% per year. If we had 5 or 10 years, we could "ease in" fee increases. However, I have no confidence in the vocal minority of this association to allow that, either. The history of this association has shown that sufficient number of owners are far too willing to attempt to avoid financial responsibility and push the pain on to other, future owners. We've done it before and we'll do it again. 


Note 3. We'll see how the association meeting goes. I suggest that owners attend and be constructive to this process. Telling the board to cut expenses will not work this week. However, i am in favor of eliminating some contract work in 2011 as contracts come up, even should that mean passing the work on to owners. 


References:
Here are some earlier posts on finances and reserves for this association:


Association Finances and Reserves

My personal response to 0% fee increase

A Compendium of Rules

Here's a list of posts I've made which include or refer to rules and regulations at BLMH. This is in response to an anonymous commentl, which asked "Norm, what happened to the original blog about Rule violations? -- October 29, 2010 5:11 PM.

I haven't removed or deleted any of the posts on rule and regulations. Here is a list of links:

When is a bench more than a bench?

Is this sign difficult to understand?

Benefits of owning a PUD

Dialog on a Rule Violation

It's not in my job description

Benches and other ideashtml

Am I in violation?