It's now 11:11 a.m. GMT on Dec. 21, 2012

Well, the Mayan calendar has officially ended.

Perhaps we should be selling "I survived the Mayan calendar" tee shirts?

Were the Mayan's Wrong?
No, the Mayan's were not wrong. Their calendar ended exactly at the date and time it was supposed to. Similarly, our Gregorian calendar for 2012 will end precisely at midnight on December 31, 2012.

So what went wrong?  Nothing. The problem was the human beings who made a faulty interpretation. They said that at the end of the Mayan Calendar that the world would end. What actually occurred was the current cycle ended.

Cycles have specific beginning and endings. So the cycle ended. Other cycles in our lives include the phases of the moon, the seasons and so on. The end of a cycle is not the end of the world. It is an event that marks the beginning of the next cycle.

Will the world end? Of course the world will end. We simply do not know precisely when.

Will the future be better or worse? Yes, it will be both. There will be better times and there will be difficult times.

My Point? We don't have a new Mayan Calendar because no Mayan has created one. Saying the world ends when a piece of paper ends a date trails is about the same as saying the world will end when I burn my checkbook.

My Suggestion?
Deal with the things we can and should deal with. Watch less TV and spend less time on the internet. Take care of our personal business, develop ourselves and get critical thinking skills. Don't expect someone else to make things happen.  Plan for our death and celebrate our life.

Realty Check

I noticed that according to Zillow my unit is worth only about 1% more than I paid for it 10 years ago. So I guess I lost money? After all if one can't make about 3% per year then one is losing money. That's the traditional wisdom, isn't it?

Well, I did the numbers, and I actually saved $38,315.99 in the last 10 years by purchasing instead of renting. Oh, and I did get to remodel the way I wanted, and I didn't have to deal with a landlord.

What's more, I put $10,000 into a new kitchen upgrade, and I have installed hardwood floors throughout the living spaces, including entry, dining, living, kitchen and hallway.

My numbers included the cost of the kitchen upgrade, electricity, natural gas, sewer, water, property tax and condominium fees. It also took into account the interest I might have made at 4% per year if I had invested any difference between renting and purchasing. Of course, 4% is fiction. We'd all love to have a savings account which yields 4%.

So all I can say is, from my experience at BLMH, owning is better than renting.

But, there are a range of opinions in the popular media. Some suggest that owning one's home is not good, while others say it's the best thing since sliced bread. Or we can simply rent at the lowest possible cost and  "invest" what's left following "Mad Money Cramer's" suggestions. He is the guy, as I recall, who went on the Today Show and told people to "sell everything." This advice was given after the Panic of 2008 and after the stock market had already plummeted. In other words, those who followed this self proclaimed guru's advice lost their retirement funds. My advice? Live within your means, save for your retirement, invest prudently and ignore the politicians, the talking heads and all of those wonderful commercials advocating why you just gotta have all of that stuff. While you're at it, ignore those credit card ads about "the wonders of just swiping."

Notes:

1. I've been asked if this post is realistic. That's a reasonable question to ask.  It reflects my personal financial experience over a period of about 10 years. Certainly, my experience may not reflect any one else's. It depends upon the specific numbers, and more on that in the next note. The "buy versus rent" question is one that just about everyone who has purchased a home, condo or townhouse has considered. Some say it's the "universal question" of personal finance. 
2. In my case, i used nearby rental prices for comparisons. When we looked into buying, we did look at a range of rentals in the area for the purpose of arriving at a rental cost for comparison purposes. Here at BLMH some of the units are available for rent, and there are listings on Zillow and elsewhere. It's not too difficult to find out what a realistic monthly rental would cost. However, as we all know, there is a range of differences in these units and nearby rentals. I could have used the minimum but that wouldn't be realistic. For example, in 2000 it was possible to rent a single bedroom apartment nearby for $700 a month. Not a fair comparison to a three bedroom, two bath condo with attached garage. 
3. The numbers are accurate in my case. I've kept pretty good records for major purchases, repairs and upgrades, and I do use Quicken. But my numbers aren't impeccable. However, I don't think I've mis-allocated more than 10%, and if I did, that's about $30 a month.
4. I know, using Zillow prices may overstate a possible selling price. However, this post is about the amount spent to rent as compared to the amount spent to purchase. It does not consider the current selling price. Why not? I'm not interested in selling today. If I take a "loss" or "gain" at the time of a sale, it will be determined by the selling price. I don't know what that price will be in 5, 10 or more years. However, if I did rent and invest any difference instead of purchasing, I'd have to speculate about how any money invested would appreciate, wouldn't I? My crystal ball doesn't tell me that, either.
5. What would or could one expect today? I'd say one has to do their homework. There are aids and my favorite site is the New York Times "buy versus rent" calculator. It has an "advanced settings button which allows a lot of customization. Clicking will open a link;New Window> Buy versus Rent NYT Calculator
6. Some of the things that will determine your personal result if you do consider purchasing will include:

• The purchase price. 
• The amount of the down payment.
• The mortgage interest rate.
• The cost of closing, points, etc. 
• The cost of a real estate attorney.
• The cost of an independent inspector. 
• The length of the mortgage.
• The cost of mortgage insurance.
• The condition of the home or condo. That includes furnace, appliances, carpeting, plumbing, sinks and water valves and drains, etc. as this will determine how much is spent on repairs or replacement of these items in the near future. Eventually, everything breaks and an owner must be prepared to replace these items.
• If a home. The exterior condition and the condition of the grounds, fencing, driveway, walks, etc. 
• The price for any improvements made after purchase.
• The cost to rent comparable living space.
• The cost of utilities (natural gas, electric, water and sewer).
• Other utilities which are to be considered for budgeting include telephone or cellphone, internet access and cable or satellite TV. However, when comparing renting to buying, these are usually the same in either case. So they do influence one's budget, but they probably will cost the same if one rents or purchases. But not always! Some condos include internet and cable TV with their monthly fees. It's something worth checking. Caution: At any time in the future, a condo association or HOA may shift from including such amenities as part of the monthly fees to having owners purchase these directly. 
• The cost of fees if a condominium or HOA.
• The cost of any special assessments if a condominium or HOA. 
• The cost of real estate taxes. 
• The cost of homeowners or condominium insurance.
• If a home or townhome, the cost of any "tools" necessary for maintenance. This include hose and sprinkler, lawnmower, snowplow, snow shovel, fertilizer spreader, brooms, rakes, and annual supplies (grass seed, fertilizer) and other misc. Or you can pay someone else to do these normal chores, but that needs to be considered if one is comparing purchase to rental. 
• If a home or townhome, the cost of exterior maintenance. Doors, trim, wood siding must be painted or stained about every 5 years or so. 
• The cost of interior decorating. That includes paint, carpeting, etc. 
• The thoroughness with which you pursue this and your personal financial situation. If you use Quicken, have a good budget, can plan and prepare financially, have low credit card and student loan debt and live within your means, then you probably are on the right track and do understand your personal finances. If you don't do these things then purchasing might be more financial responsibility than you can deal with.  

Realty, er, Reality Check

It's been a couple of years since my last posting on real estate and prices. I haven't really seen the need because there have been so many experts and opinions. However, I'll put forth my two cents.  I called my post, on August 1, 2010 a "Reality Check." I noticed a writer at the Chicago Tribune recently used the same title for their update on the Real Estate market.

The real estate market is determined by many factors. These include availability and pricing of homes and condos, availability and terms for mortgages, interest rates, employment, the economy, and many others.

All Real Estate is Local
CoreLogic, a real estate data firm, announced that for the 12 months ending October 31, home real estate prices in the U.S. was up 6%. That's good news, but they say all real estate is local. 45 states experienced real estate price increases. But not Illinois. Why is that? Here in the State of Illinois we are losing population, the state government has a history of political malfeasance, and nearby Chicago seems to be reverting to a "Dodge City" on the lake. Oh, and let's not forget that the state is broke, and is not considered a prime location for corporate business centers. Among other things, high uncertainty about taxes is a problem.

According to CoreLogic, Chicago can claim another first. It is the riskiest city in the country for mortgage fraud, and that is the second year of distinction for the city. Mortgage fraud is, in simple terms, where the buyer lies about their financial situation, so as to get a mortgage. Nationally, about $13 billion in mortgages originated in 2012 did involve mortgage fraud. According to CoreLogic's fraud risk report "It includes risk indices across multiple fraud types including employment, identity, income, occupancy, property and undisclosed debt."

None of this is good for attracting new buyers in the area or the state. However, there are pockets of improvement, and DuPage County is one of them.

Dupage County and Zip 60189
Here's a recent interest index from the Tulia.com real estate site:

Foreclosures
CoreLogic also maintains a datebase of home in the national foreclosure inventory. These are distressed mortgages and homes that are sometime sold at "firesale" prices.  They depress the prices, and add to the negative perception of real estate. The good news is the so called inventory of foreclosed homes is decreasing slowly. The bad news? It would take 31 years to properly liquidate all of these homes at the current rate. That obviously will not happen!

According to CoreLogic "Approximately 1.3 million homes, or 3.2 percent of all homes with a mortgage, were in the national foreclosure inventory as of October 2012 compared to 1.5 million, or 3.6 percent, in October 2011. Month-over-month, the national foreclosure inventory was down 1.3 percent from September 2012 to October 2012. The foreclosure inventory is the share of all mortgaged homes in any stage of the foreclosure process."

The Bigger Picture
The Wall Street Journal on November 15 had an article about the Federal Reserve's position. Chairman Benanke gave a speech on November 13. "The housing market, despite nascent signs of revival, is still plagued by tight credit, underwater borrowers and overdue loans, Federal Reserve Chairman Ben Bernanke said in a speech Thursday that expressed a great deal of caution about the progress of the U.S. economic recovery."

There are other problems. The Mortgage Bankers Association has stated that 4.1% of mortgage loans on one-to-four-unit homes were in the foreclosure process at the end of the day September 30th. That's about 1.9 million homes! This is about 46% more homes than are currently in the "national foreclosure inventory."

It's reasonable to assume that most of those homes will be on the market, and will be competing for buyers looking for a new home and existing homes for sale.

Foreclosures have decreased from 4.4% over the past year, and this is supposedly the lowest level since early 2008.

Meanwhile, the FHA has announced that as of September 738,991 single family loans which are insured by the Federal Housing Administration are 90 or more days past due or in foreclosure. That's an increase of 100,000 from one year ago. Obviously, things are not getting better! The problem is so severe that the FHA will probably go to Congress to get cash from the taxpayers to bail out these insured mortgages. Yes, that's right. You and I are paying taxes so that the FHA can be given money to hand over to banks in the event these FHA borrowers foreclose. Most taxpayers are probably unawares that they are on the hook for bad mortgages insured by the government. But we are.

How much money are we talking about? Oh, about 9.6% of the $1.08 trillion guaranteed mortgages, which is about 104 Billion Dollars. How much is that? It's about what the Federal Government spends each year for all transportation in the U.S. It isn't nearly as much as is spent on education. I suppose we should be grateful that the politicians haven't pulled the plug on schools to assure that everyone who wants a home, or who thinks they are entitled to be a homeowner, does in fact get a home.

The Realtor's (r) View
The Wall Street Journal also recently quoted the National Association of Realtors Chief Economist Lawrence Yun, who presented at the NAR national conference in Orlando, Florida. Mr. Yun "foresees U.S. home prices rising by 15% over the next three years.." However, the WSJ also noted that "Mr. Yun is widely known for his optimistic forecasts, given his employer, the nation’s largest housing cheerleader."

Mr. Yun is apparently concerned about a housing shortage, and is also concerned about home affordability. In other words, supply and demand issues. "Supply remains relatively scarce because builders are not producing as many homes as in past years. Mr. Yun predicts that construction will ramp up to 1.3 million units by 2014, but that still would be below the historic average of 1.5 million." Mr. Yun added that “Builders need to add more,” Mr. Yun said at the group’s annual conference. “We need to moderate the price growth.”

The problem here is all of those foreclosures. I guess that the NAR is writing these millions of homes off as unsaleable by the Realtors. What other reason is there to ignore them in the statistics?

Of course, some of those foreclosed homes do make it to market, and they are depressing the prices of existing home sales. It's almost as if there are two different housing markets out there. The "new" home market and the "used" home market. However, they may be interconnected, as both markets are vying for the money of the potential home buyer. Also, with current depressed prices, a used home can be much cheaper than a new one.

Some think there is a housing boom coming. A statistic that is used is new housing starts. Prior to the housing crisis, there were about 700,000 more homes built each year than were needed. Current statistics indicate that today the opposite has occurred and at present about 500,000 fewer homes are being built each year than are necessary. This statistic is most often used by those who talk about a coming housing shortage, or a housing boom on the horizon.

"Too Good To Be True" Mortgage Advertising
At present, mortgage rates and refinancing rates are very low. This has contributed to home sales. There are some wonderful mortgage rates being promoted, but some of it is deceiving.  It seems some of these advertisements are too good to be true.

Apparently, some of the brokers or lenders have advertisements that purport that they are a part of the U.S. government. These firms, which have absolutely no affiliation to the government have added “Government Loan Department” to their company’s return address, or official appearing seals and logos.

The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission have announced a crackdown on mortgage ads. Those to whom warning letters have been sent include lenders, home builders, advertisers and mortgage brokers. They have been instructed to clean up their advertising.

Mortgage Fraud
One picture is worth a thousand words, is the old saying. Here's a photo of a "home" that received a loan in excess of $100,000. It had no floor to speak of, and was basically a wooden structure sitting on the ground. Was fraud involved? We had a unit here that sold for less, and obviously provides much higher value than the building in this photo. What more can I say?

Rising Rents
Renting is the usual alternative to buying. Or living with a relative. Renters include those driven there by the foreclosure of their property. But rents are rising. In 2008 the national rental-vacancy rate peaked at 8%, the highest level in nearly a decade. By 2010 the national vacancy rate had dropped to 6.2%, as reported by Reis Inc., a real-estate data company. The vacancy rate is expected to continue to drop to 5.5% by December 31, 2012. This is bad news for tenants, because landlords are raising rents and lowering incentives. According to Zillow.com, Chicago rents rose 9.1% in 2011. Zillow currently shows 67 homes, condos and apartments are for rent in Wheaton.

"Moreover, rising rents increase demand as buying becomes more attractive than renting because of low purchase prices and higher rents." Zillow Chief Economist Dr. Stan Humphries at ChicagoNow.com.

Indebtedness and Buyer Finances
The level of indebtedness in the U.S. remains high. Consumers are reducing the level of revolving, or credit card debt. In fact the change has been remarkable. Here is a chart from the St. Louis Federal Reserve:

The Fed also has the following chart, and as can be seen, debt is not all that rosy. Here is the actual debt level. As can be seen, it's still near historically high levels and has doubled since 2000:

Student Debt 
There is another worrisome trend. Student debt has been rising and is now about 5 times greater than it was in 2000. According to the St. Louis Federal Reserve, it topped $1 Trillion this summer, exceeding other types of consumer debt. This is significant because it would be expected that the next wave of buyers will be the young who have graduated college, entered the work force, decided to marry and have children and then want to have a place to raise that family.

Here's a chart widely circulated by the "Occupy" group to support their position of the dire straits of college graduates. The political platform was "debt forgiveness." This chart is grossly inaccurate and overstates the amount of student loan debt. It has been conjectured that the following diagram uses the ratio of the diameters instead of the ratio of the areas. I think this is an important error, because it's a simple math error, and a failure to understand simple arithmetic concepts is a good way to get into serious debt. .

Here is the proper chart, which was printed on Mother Jones. it accurately shows the change in student debt since 2000.

The Obama administration, as part of the 2008 press for education incentives, has promoted student debt. A cynic would say that this was intended to keep people off of the employment rolls, and thereby lower the unemployment numbers.

Whatever the reason, we now find student debt has exceeded revolving credit debt. So more and more graduates are entering an anemic jobs market with substantial credit card and loan debt. These people will have great difficulty achieving home ownership. A student loan of $50,000 represents a $5,000 annual payment plus interest for 10 years. In other words, about $450 a month. The average college debt is 27,000 and here in Illinois, 64% graduate with some debt. The unemployment rate for college graduates was reported as 8.8% in 2011. According to a CNN Money article dated October 18, 2012 "Of the 1,057 colleges in the study, average debt per graduate ranged from $3,000 to $55,250. At 114 colleges, graduates had average debt above $35,000, while 64 colleges said that more than 90% of seniors graduate with debt."

It is not surprising that we now hear of people carrying student loan debt all the way to retirement age. Nor is it surprising that we hear some calling for "debt forgiveness." After all, it's an easy moral step from thinking "I'll just borrow the money and deal with the consequences later" to reaching the point where "Someone else should pay; why should I be held accountable for my debts?"

What is truly unfortunate about student debt is that it is not inevitable, or there are methods to reduce the levels of borrowing. It is also true that the purpose of higher education is to prepare one for the work force, and that upon completion of education, one can expect that it will be necessary to work 40 hours a week for 40 or more years. The money earned will be used to pay off debts, pay for one's food and shelter, provide retirement savings, and if there is anything left, then one can party and buy the bling or something better than a slightly used car.

So how are the graduates or others with student loans doing as responsible citizens?  At the end of September payments on 11% of student-loan balances were 90 or more days in arrears. These people will have difficulty getting a home mortgage unless they clean up their credit, or unless the Congress begins pushing another program of "homes for everyone, even those who can't afford one."

Conclusion
Real estate is improving slowly. Some think that prices will generally improve each year, but will take 5 to 10 years to get back to the good old days.

There are also those who say this country has a financial awareness disaster. I agree there is a personal financial disaster. However, I don't think it is about awareness. It's difficult for me to accept that someone who goes to a four year college and gets a degree is not able to figure this out and live a financially responsible life. Ditto for anyone with a 2 year Associates Degree. Supposedly 56% of adults in this country have some higher education.

I am of the opinion that what we face is a "responsibility" disaster, where people of all ages refuse to take responsibility for their actions. It's much easier to use age or circumstance as an excuse, and pass the buck and the problems on to someone else. Like cheating in taxes "everyone does it" is the motto.

Notes:

1. I've expanded the section on student debt. 
2. I was asked about bad loans held by banks. A lot has already been written off. How much? Bank of America has charged off over $25 Billion each year for four years; a total of $105 billion for bad loans. Most of these were supposedly made to subprime borrowers. Countrywide Financial was the company that financed 20% of all mortgages in the U.S. in 2006. In 2008 BofA purchased Countrywide for $4.1 billion. Now that is what we call a spectacularly bad purchase!

College of DuPage as Viewed from BLMH - Part 3

This is the latest in a series on COD construction, from the perspective of an owner and board member at Briarcliffe Lakes Manor Homes.

Several members of the BLMH board have twice recently met with Dr. Breuder to discuss the issues and present our concerns. The response of the college is a mutually beneficial arrangement of the property along the eastern boundary of BLMH. I was one of the attendees, as was our treasurer and the welcome director. We also attended the earlier County Zoning Board of Appeals meetings.

The plan of the college will permit them to use more of the property that was once simply green space. In removing this buffer, a berm and plantings will provide alternative shielding for our association.

Some information has been distributed via newsletters to our owners. Much more has been provided during association meetings and a detailed discussion with several artists renderings was provided and explained during the annual meeting of September 27. As most owners did not attend, most owners were not aware of the details of these meetings. Too bad. With attendance at these meetings comes understanding, information and knowledge.

The September 17th Meeting
On September 17 a meeting was held in Dr. Breuder's office for a frank discussion of the details of the current plans of the college along our eastern property line. During that discussion Dr. Breuder provided several architect's artistic renderings, and a drawing of the latest version of Pond 9. However, as the necessary permits had not yet been received for the pond, it is not possible to provide final information to our owners. Our management, attorney, and a representative of our maintenance company also attended. I prepared a follow-up letter to Dr. Breuder, for issuance via our attorney.

The following is a rendition of the tree lined berm that is being built along the eastern property line of our association. It will extend from the north lake (Lake #3) in a southerly direction along our property line. It will be sodded and irrigated, and will be topped with conifers. There will also be some deciduous trees. It was stated that the work on the BLMH side of the berm will be completed in 2012. It was also stated that the toe of the berm will be 20 feet from our property line. The berm will be 6 feet tall. The purpose is to shield our property from the pond and other COD construction. The tall object is the existing WDCB, FM 90.9 radio tower.

Clicking will open a New Window> COD Artistic Rendition

October 2 Meeting at the College
We were provided with an invitation to a meeting at the college for neighbors. I RSVP'd and attended, as did our treasurer and welcoming director. We were provided with additional information about the plans of the college, and with an update.

Dr. Breuder stated that the planting of the connifers on the berm would occur in 2013. This is a delay, and some might be disappointed. However, I remain optimistic that this work by the college will be ultimately beneficial to our owners, and will deal with the issue of replacing the green space with another type of boundary.

Additional Information and Video 
The owners who attended the annual meeting were also provided a view of a large scale artistic rendering of the new CMC building which will be built about 300 feet east of our property line. This rendering was provided by the college.

According to the college, the CMC building will replace a 40 year old maintenance building. Details of the construction were explained to the owners who attended the annual meeting.

I've taken a recent video of the construction of the berm. However, work is proceeding quite rapidly and since the video was made the college has planted deciduous trees. At this point in time, I may wait a week or so and see if the turf in installed. Then I'll post an updated video.

Of course, our owners can view this at any time, so posting here is for those who can't easily get access, or those owners who won't take a walk along our eastern paths.

Annual Meeting 2012 - Part I

The association annual meeting was held on September 27, 2012. As is required personal notices and invitations were mailed to all owners. We also posted notices in the lobbies a few days prior, as a reminder.

This meeting provides the owners with the opportunity to hear the "state of the association" in the boards' own words. This year the meeting spanned about 2-1/2 hours and included summaries provided by each board member, as well as extensive information on finances, projects, fireplaces, details pertaining to COD construction on our eastern property line, and the future. There were no free donuts and no koffee klatch (it's never "free" because fees would pay for these things.)

I'll provide some observations of the meeting in this and the next few posts.

Topics for the meeting included:

• Introduction of the board and our manager
• President's Comments
• Treasurer's Comments
• Welcoming Director's Comments
• Rules & Regulation Director's Comments
• Landscaping Director's Comments
• Architecture and Maintenance Director's Comments

Other special topics included:

• Fireplaces Moratorium and Status Update
• College of DuPage Construction Update

Low Turnout Disappointment
This year, the meeting was lightly attended. I do want to publicly thank every owner who attended. As a board member I appreciate your interest in your association and your willingness to set aside an evening to spend with your board and management.

The low turnout was not surprising, but a low turnout is always disappointing. The majority of owners did not attend.

Why was turnout so low? Perhaps the lack of freebies? I'm not sure what was on TV that night, and that's always a factor. I've noticed that attendance seems to be better when there are "significant personal issues" for owners. For example, in 2008, with the mushroom cloud of the financial meltdown hanging over our heads, a national presidential candidate running on the platform of "change" and a group here at the association promising the same, we had higher turnout and more interest.

This year, even with a problem with our COD neighbor, the continuing fireplace moratorium, and so on, there was not a lot of interest. Is this possibly a consequence of other, better forms of ongoing communications, specifically our expanded and more detailed newsletter? Or is it simply apathy? I don't know.

Two Upset Owners
Before the meeting even began, I had two individuals "in my face" to complain about a lack of seal coating on their driveway this year. It was not a discussion. It was a demand, as in "What are you going to do about this NOW?"

Note: This year we seal coated all driveways that has been replaced in 2010. The selection process for those driveways was made by an earlier, wiser board which included one individual who was sometimes described by other board members as the "sage" of the board! The purpose of this seal coating is to preserve and protect. It is not about beautification. At this point in time 2/3 of all driveways have been repaired including crack filling and seal coating (this began in 2011), or have been replaced and seal coated. The project will continue next year and additional driveways will be repaired or replaced in 2013. This has been communicated via the newsletter and described in depth during association meetings. Of course, most owners don't bother to attend these meetings.

Was this particular exchange of any significance? I think it was. My initial response to our dear, irate owners who were in my face at the meeting was "I suggest you talk to the board that made that decision." One of that former board was seated a few feet away and I made it a point of responding at a volume so that person and anyone else within earshot could hear the conversation. Then the method for selection this year was questioned. My response "Do you read the newsletters?" When this also failed to get me to make the concession that was demanded, one owner made the remark describing the association as a "Project." That was the last straw.

I'll have a post devoted to this particular exchange, owner demands and hostile, belligerent behavior.

Finances, Architecture and Maintenance (A&M), and Rules & Regulations (R&R)
I'm going to skip ahead of the meeting to the presentation I made to the attendees. I had prepared a detailed, 13-page report for the meeting. This included sufficient information were it necessary to provide details to owners. However, my formal presentation was a verbal summary. Anyone who reads the newsletters and association meetings did not get any surprises. However, I did elaborate on a few things. The report I delivered was very brief but did include these areas:

1. Financial support of A&M.
2. Progress in major projects - 2 year summary.
3. Progress in other maintenance areas - 2 year summary.
4. The near future - What should be expected. 
5. Cost increases for Owners and the Association - Water Rates.
6. Observations on Rules and Regulations violations.

Finances as the Foundation for Architecture and Maintenance
I very briefly discussed finances from the perspective of "What do we get for our money." Our budget has two components. 1) Operation and Maintenance, and 2) Reserves for capital projects.

I expressed to the owners who were present that I see some "daylight." In other words, I am cautiously optimistic. This optimism has nothing to do with the economy, or how I or anyone else "feels." It's all about the numbers and the current completion levels.  I also expressed to the owners who were present the dangers of "falling behind" in finances or maintenance. Once we fall behind it becomes difficult to catch up. After two or more years, it may become impossible. Why? Who has the financial resources to pay extra each month to make up for that funding shortfall? I'm one of the owners who is on the board who is absolutely opposed to "special assessments." These are to be a last resort, and are to be avoided. I'm going to elaborate on the presentation and provide some background information in this post.

What's the Meaning of a Word - "Difficult"
When describing finances, or a financial situation, or to describe an architectural or maintenance issue, we will sometimes use the word "difficult." That is a really rich word and it has a deep, significant meaning behind it. During meetings, owners seldom get a 5 minute dissertation on a problem by the board. So certain words are used such as "difficult" to embody the complexity, cost and issues. I'm going to elaborate here on the meaning of the statement "difficult" as it pertains to some aspects of finances in the association.

Finances are a long term proposition. It requires collecting a fee of about $50 a month from each owner and saving that amount for at least a decade to pay for roofs. Ten years ago, this association was collecting less than $200 each month from most owners, and had no reserves of consequence for roofs. The reserves were not sufficient to replace streets, roofs, driveways, water mains, exterior and interior painting, garage floors, patios and decks, shoreline maintenance, tree care and landscaping improvements. Those monthly fees also had to pay for electricity and street lighting, association water, stream maintenance, landscaping and mowing, snow removal, and for any and all other repairs, including temporary roof repairs, doors, etc. .

In 1999 with new management to provide guidance the board began ramping up fees to pay for ongoing Operations & Maintenance, and save for identified projects including roofs.  There is another way, and that is to simply make special assessments each time a roof is done, or a driveway, or a water main blows, etc. Of course, owners don't like that either. Some owners have promoted the idea that the association should take on a mortgage or loans when necessary. I've published the higher costs for owners if the association chooses that financial path. Banks do charge interest to provide us the use of that money, and fees from owners will be required to repay any loan principal and interest.

Borrowing and going into debt seems oh, such a comfortable way to deal with today's problems. Or at least it was for a decade. That "lost decade" was the one in which people racked up $tens of thousands in credit card debt and used their home equity like a piggy bank. Then in 2008 the music stopped. This is precisely why so many "homeowners" in the U.S. found themselves in a very "difficult" situation as serfs on property owned by the banks.  It seems it wasn't "free money."

Maintenance Update; "Save and Spend"
Our last major roofing project, which added a second layer of shingles on top of the first, occurred during 1991-2000. Roofs can be expected to last about 18 years. Our new roofs may last longer because they include ice and water shield, improved attic ventilation, etc. The present age of the second layer of shingles on our existing roofs is in the range of 12-21 years. Overall age of our existing roofs is 35-36 years.

Selection and replacement is not based on age. It's based on condition, and we had a roof fail at about 11 years, while we do have several over 20 years of age. The goal is to avoid damage to the building, owners contents, moisture and mold damage, and so on. Leak reports, exterior and interior (attic) inspections, etc. are all guides for determining possible remaining life, and dealing with problems. I've been tabulating problems for several years so I can track leaks and problems. While it is the goal to replace, this association continues to do roof repairs where necessary. This project will continue for another five years or so until all roofs are replaced.

Our driveways had not been seal coated for years. Some were being patched. We did have some garages with problem floors, we did have some driveways with problems, some concrete patios and last year a complete wooden deck was replaced, and so on. As downspouts are being moved off of driveways, drainage improvements are made to carry water away from the new downspout discharge. After doing the roof, serious driveway repairs or replacement usually occur. We've had a few gutters relocated prior to roofs, if the condition of driveway warranted replacement. Water standing on driveways is a serious problem.

Many of these maintenance items are predictable. We can determine with relative ease how long these things will last, and we can budget for their repair and replacement. That's actually the easy part. The difficult thing is collecting fees and amassing the reserves to maintain this association.

In a society which generally does not believe in saving, getting owners to contribute extra money for fees so we can save for these required (by statute) repairs is not easy. Board members are owners. So we bring our baggage and personal beliefs with us. I imagine it's been difficult for some board members to consider saving for the association if they themselves don't practice personal savings. For anyone living out of a checkbook and with little personal savings, seeing an association with a significant sum set aside as "reserves" can be considered wasteful. Some of these people will become board members in associations and when they do, they'll attempt to run the association in the same manner as their personal lives.

Once the association savings begins to grow, some owners will covet that money. After all "I could use that for a new furnace, or a new car" Yes, but where will the money come from for that replacement roof? "Oh, that's someone else's problem," or "I don't think I need a new roof this year." Sure, and when the roof leaks and damages the owner's contents, the association will be required to replace to primed drywall. So not only will your fees be used to replace a roof, additional money will be required to replace ceilings, walls and possibly even electrical "owned" by the owner of those units. In other words, the money required to do repairs and replace roofs is greater than that required to simply replace roofs.

We're a Nation of Gamblers
So while saving may be relatively straightforward, more difficult is getting a board into place that will do these things, rather than run a "popularity contest." Collecting money does not make one popular in an association. Saving money for the future does not make one popular with owners who want to flip or bail. I think the reader gets my drift.

When we read about HOAs which are financially struggling, or are dealing with special assessments, I can understand how that happened. It's a difficult and fine line to determine how much to collect from owners. Too little and special assessments are guaranteed. Too little and the association will fall behind, then have to catch up by raising fees higher than might be expected. This may financially stress the owners.  Most would agree that small and steady fee increases are easier to deal with.

Once an association falls behind there are really difficult choices to be made. None are easy or good. Raise fees in large steps to catch up, have special assessments, or delay maintenance and repairs are available choices. In extreme situations, all of these may be used simultaneously. In such a situation the board faces the difficult decision of balancing fee increases and assessments with delayed projects. While this occurs, the association may struggle to keep up with repairs. In extreme situations, it may not be able to pay monthly bills. Board members should not have to be the only ones who make these difficult choices. Nor should they be the target of unhappy owners. But sometimes they are. After things fall apart, in my experience there will be endless owners who will say "How could this happen?"

Financial planning is a long term requirement, and a long term commitment.  Yes, sometimes things can occur that create a step change in the finances of the association. Most situations occur gradually. Occasionally an association may fall behind in finances and then, at the most inopportune time, will encounter something financially unexpected. Murphy's Law is well understood and "The worst possible situations will occur at the most inopportune time." Even if sudden problems don't occur, an association may bleed to death, while the board and owners argue about how to deal with the situation, or the owners are unawares or unwilling to face the future. After all, some will say, "I don't plan on being here in five years." Back in the "good old days" of house flipping, it was easy to walk away and leave others to hold the bag. No longer.

It was pointed out during the annual meeting that all board members are owners, and pay fees. We are in exactly the same situation all owners find themselves to be. We all deal with the financial consequences of fee increases or breakdowns. But the board is a group of "fiduciaries" who are supposed to be stewards for this association. In 2012, as in 2008, that's much easier said than done. Unlike 2008, the problem today isn't the board. It's a few of the owners.

Savings for a Decade
This association has been collecting fees and saving money for a decade while ramping up the roofing and driveway projects. In 2007 we did not have nearly enough. But owners were a bit fed up with rising fees, and swelling coffers. A problem in an HOA is this. Back in the "good old days" prior to 2008, some owners didn't want to contribute their fees for reserves. I guess the idea was to sell before the bill arrived for that new roof, driveway, etc. For a short time we had a board that was willing to tell people what they wanted to hear, and that was "We have enough money."

The financial meltdown and real estate implosion put an end to that scheme, but it did take a while for the reality to sink in. People could no longer flip out. People couldn't sell their unit for what they believed it was worth. Some were trapped here, and some were angry. Most settled down once the reality sunk in, and things shifted slightly. 1) Some owners got serious about finances and maintenance, and 2) Some owners decided to lash out at the board prior to 2008, or anyone who talked about fee increases. After all, "They did this to us."

Ah yes, some politicians tell us that we live in the age of victims, where the rich did it to the rest of us! I'm a firm believer that there is no place for politics in an HOA. It would be oh, so much easier if we could get owners to stick to the numbers!

In 2007 management was publicly speaking about additional reserve requirements. So it seemed there wasn't enough money to do the really important projects including roofs. So what can an individual owner do? One can sell, but if that isn't possible, as occurred in 2008, there remain a number of options and one of the more effective ones is to get a board in place that can be manipulated and is compliant. In other words, one that will "take care of the squeaky wheels." No one really expected this terrible economy to last very long. Even President Obama said he'd get the job done in three years. So all that was necessary was to "kick the can down the road" for five years or so, real estate prices would be back and then owners could bail and leave the new purchasers holding the bag. Sounds elegantly simple, doesn't it?

Well, it wasn't simple, and I didn't buy it. Not the politics, the quick fix or the "squeaky wheels." I was one of those who expected it would require at least 5 years, and could take 7-10 years for the economy to recover. Real estate prices will eventually turn up. But how long will it take for them to return to the stellar prices of 2007? I won't be holding my breath. With this comprehension I shifted my plans accordingly. It was very apparent that parties, daffodils and mulch were not going to handle the problems facing this association.  As a former board member who had been "run off on a rail" in 2008 was fond of saying, "You can paint a pig, but it remains a pig." In other words, paint is not a substitute for a new roof, driveway and street repairs.

By 2010, I and a few very concerned and financially savvy owners prepared a "wake up call" of a financial letter, which we sent to all 336 owners via U.S. Mail at our personal expense. I may publish a few excerpts here as a reminder of the facts.

So here we are, five years after the onset of that terrible recession, and the association is making great progress, and there has not been a special assessment. For each owner this means that when they do make that decision to sell, there will be no lien on their property, and no assessment balance to pay off.

Are Things All That Good?
Well, let's see. The economy continues to struggle with really high unemployment, real estate continues in disfavor and prices are low, people everywhere are generally disgruntled and there is a national election about a month away. The international scene is a mess. I think that there might be "bad news" or "negative news" overload for a few of us!

So how are things in this association? Well, the fees saved as reserves have been ramped up are being used to fund the roofing and other projects. About 2/3 of our driveways have been repaired and seal coated, or replaced and seal coated. About 1/2 of the roofs have been replaced, and the accompanying front drainage improvements will be completed before winter. Lakecliffe has been repaired, two pump pits have been replaced, there is a plan to complete the repairs to the stream in the vicinity of waterfall #2 with a new patio with walks to replace stairs and an old bridge in that area.   The longest duration project is the roofs which could take another 5 years to complete. The board will conduct a budget workshop in October to review all of this and develop the budget for 2013.

Are People Happy? 
Who knows? As a board member, I'm not here to make your life work, or anyone else's, for that matter. When I purchased, I don't recall reading in the Bylaws about how we should all "be happy and completely satisfied." I've got my hands full dealing with my own problems. My spare time is completely absorbed being of service to this association.

"How are people doing?" That's possibly a more relevant question. We do have some statistics which can guide us as board members. Each month I prepare an updated spreadsheet of delinquencies since January 2008, with information provided by our treasurer. This is distributed to the board. Our treasurer provided owners at the annual meeting with a good summary.

We have delinquent owners and some disgruntled owners, we have experienced foreclosures, we have had modest sales.  I suspect some owners remain here simply because they cannot sell their units for the price they would like. Prices are substantially below the peak of 2006. It's a great time for recent buyers.

Asking owners "how are you?" can be construed to be a request for complaints. "I live on fixed income," etc. Because not one of us in this association is authorized to print  money, we each live on "fixed income." What varies is the source of that income. For many it is from work. For some it is from pensions, annuities and social security. With thanks to the politicians who were complicit in creating this mess via their easy money for homes schemes, and to the Federal Reserve which regulates the currency, savers are being punished. That includes this association which gets little interest on its money. Thank you, Congress, Mr. Greenspan and Mr. Bernanke!

BLMH Architecture and Maintenance News Update #1

This is the second of two posts. If you are interested in the first, then I suggest you read this short post first:

Clicking will open a New Window> Earlier Post

This Post
Information on the status of architecture and maintenances is provided several ways in our association. In our newsletter there is an article about architecture and maintenance. Our association issues these about every other month. I also provide the board with a printed update with further information and details at each association meeting. These reports may have ten pages, spreadsheets, photos, etc. I summarize them during the meetings and owners who are in attendance also have the opportunity to hear this summary.

I've realized that there are limitations to the newsletter. Owners may only get updates every 8 weeks. Of course, there is also a limitation to how much owners and residents want to read in that newsletter. While owners can attend association meetings and get monthly updates, about 95% do not attend regular meetings. After a year of hemming and hawing, I've decided to provide an online update.

This particular post will bring the reader current for this year. This post won't include everything. I have only a limited amount of time to spend doing this, I am working for a living, and I do have other things to do with my life. Anything published on the web is also available to just about everyone on the planet, and I'm not interested in hanging my dirty laundry out to dry.

This post is a legitimate attempt to improve communications, and a good benefit of the internet is that this is available to those who are interested in reading it and at no cost to the association. This blog and being a member of the board are not a popularity contest.

The next two items are part of a Preamble and the "meat and potatoes" begins with the item "Roofs 2012." If you prefer you can skip ahead.

Finances and Reserves
You, dear reader, may wonder why this is the first item in this post, or here at all. It's because finances are paramount in a HOA. Do you want the lights on, the streets plowed in winter, the grass mowed in summer, or your driveway or roof replaced? Do you want, or expect, maintenance to continue? Well, that only happens if the association has the necessary funding and reserves to get the job done. In other words, if fees are adequate and collected.

Owners do want their association to be maintained and ours is no exception. Our management gets calls and emails every day for problems ranging from "Paint that unsightly fire hydrant" to "I have a roof leak." So everything you are about to read has occurred ONLY because this association has had a funding level for a number of years and has accumulated the funds to achieve it. It takes a long, long time to save enough money for 42 large roofs!

This may be counter intuitive to some who prefer to "keep fees as low as possible." I have no issue with the general philosophy; in fact I embrace it. But I do have a problem if "as low as possible" means inadequate reserves, special assessments and avoiding maintenance. Of course, there is a "back door escape" and that means "simply do maintenance for the squeaky wheels."  Neither this approach, or kicking the buck down the road to be paid by future owners, is appropriate or acceptable to me as a fiduciary. All owners are equals, if you arrived yesterday or 20 years ago, you should all be treated identically.

But sometimes boards and owners don't operate in their best interests in an HOA; sometimes they are their own worst enemy. That's where being familiar with the duties and responsibilities of a fiduciary is essential.

I prepared an assessment on association reserves and the near term projects for the board. A summary was provided for our July-August association newsletter; it includes significant and recognized projects 2012-2018. Our newsletters are available on the web, and hard copy is issued to all owners and residents. So I'm not going to repeat that information in this post.

However, you can find recent newsletters at this link:

Clicking will open a New Window> BLMH Newsletters;

What's the Weather Got to Do About Maintenance?
One more issue is the weather. The weather is the enemy to the infrastructure of this association. Wind, sun, freezing water, snow, salt to remove ice and so on contribute to the wear and tear on our roofs, driveways, paint, and even the trees and shrubs. Even painting and wood replacement is an ongoing matter because of the weather.

If we could put a bubble over this association, then all we'd have to deal with is the normal aging of pipes, dust, etc. And we could have an environmentally controlled atmosphere. Of course, we would have to pay for the enormous energy to maintain that "bubble environment" and purge vehicles exhausts. But the question then becomes "Who would want to live in a cocoon?" But we don't live in a bubble.

So our maintenance is a constant battle to correct the damage wrought by the elements, and to do it during those periods of "weather permitting." In this climate, outdoor maintenance can only occur about 8 months of the year. At other times it's too wet or too cold (frozen). In the middle of summer, it's also not practical or possible to do certain things. Landscaping improvements related to drainage improvements, new swales, etc. are just about impossible in the midst of summer.

This year, summer meant 100F and drought. Not a good time to be in attics, or on roofs, or doing planting. Planting grass mat and sod under these conditions is truly difficult. However, a lot of maintenance can continue; for example, street repairs, concrete work, setting new benches, drainage piping, stream maintenance and architectural cast stone walls.

You did see some new grass, but you also saw sprinklers to keep the new plantings alive. In an association with 15 acres of turf, paying the water bills to keep recent planting green and alive is not a good use of the fees paid by owners. So the association faces a trade-off. Delay plantings and deal with owner upset or concerrns, or plant and spend fees on watering? As with most trade-offs, some plantings will be done and watered, while most are deferred to cooler weather.

We also want to achieve the best quality work at a reasonable price. That means good specifications, good contractors and good materials. It also means doing the work under optimum conditions so we get the best work out of our maintenance people and various contractors.

"Best Quality" does not mean most expensive. "Best" means adequate and long lasting or permanent, if such a thing is possible.

This means that a lot of the work begins in spring when it becomes sufficiently dry and continues into summer. Then there may be a decrease or pause, and finally a flurry of activity beginning when temperatures fall off their peak, late Augusr or about September 1, to take advantage of moderated temperatures, dry outdoor weather, and so on. In other words, optimal maintenance conditions.

This is merely another logistical complexity, which compounds the coordination required to do roofs, driveways, driveway repairs, concrete work, entrances, walks, sealcoating, drainage improvements and finish landscaping. Not to mention the requirements dictated by our other, specialized projects.

Roofs 2012
The roofer is on the property and work is proceeding. If we include the 6 roofs being done this year, we'll have arrived at the point at which about half the roofs are complete, and the overall association project is on schedule. The ultimate goal is to replace all roofs before they exceed their lifetime, at which point leaks and other problems shift from being a concern to becoming a reality.

It's a balancing act. Replace too soon and money is spent sooner than is necessary. Replace too late, and the owner's are inconvenienced and have to deal with leaks, and the association pays for interim and extra repairs to roofs and drywall.

Roofing project includes additional gutters. That re-directs and concentrates water, and so some drainage improvements are also required to avoid water getting into garages and units. On the other hand, we don't want to make the simple, but expensive decision to regrade everything!

Inspection and surveys of the attics for problem roofs occurred early this year, to avoid roofing delays and to keep workers out of attics, which can reach 120F and higher. That was a good decision because we avoided a summer of extreme temperatures.

Why are inspections necessary? We need interior inspection of roofs to further assess the condition. We look closely at roofs that have had leaks or appear to have a problem. We're also attempting to avoid delays to the project, which includes the addition of insulation and new ducting and vents from the bathroom fans through the roofs. It also includes expanded soffit vents and new ventilation at the peaks.  We're removing all "mushroom" or powered ventilators.

We have experienced delays to this work in previous years, and our roofer is under weather related deadlines. We do want good roofs and we want proper adhesion of the shingles so we avoid "blow off" in the winter.

One note of caution to owners. Our roofer needs access to the driveways of the building while this work is being done. A dumpster is stored temporarily on each driveway to contain old plywood, felt, shingles and so on. Space is also required for vehicles which unload flatbed trucks and hoist the new shingles, etc. onto the roof.

Notices are posted about the work at each building, but we really do need those driveways to be maintained clear of all vehicles. If there is a vehicle on the driveway, and the resident cannot be reached, the association will tow any vehicle that isn't removed to a safe location on the street.

Driveway Projects, Overall, 2012
This is the third year of a project which has the purpose of repairing or replacing problem driveways so that all are in "good" or better condition. All driveways are surveyed each year since 2011 and we're on track to achieving this goal, with 2/3 now meeting or exceeding our goals. This work includes drainage improvements, and the addition of narrow walks.

New Driveways, 2012
A number of driveways throughout the property are being replaced this year. This is the third year in a sequence beginning in 2010.

This year, new driveways and roofs will again include entrance repairs and narrow walks, to provide a "hard edge" for the asphalt, an area for water to flow to the street, and to improve snow removal. Of course, this also provides a place for unit owners to walk and to exit the automobiles when parked in front of the "A" unit garages.

Our snow removal pushes snow off of the driveways, but the plows are to avoid damage to lawns. A narrow walk the length of the driveways provides additional space to push snow while leaving the driveways and entrances clear.

In 2009 the board decided these narrow walks were undesireable, so not all entrances will have them.

Before beginning the work, notices are posted as soon as practical, but this is one of those outdoor maintenance projects that are susceptible to weather delays, and so schedules are somewhat unpredictable.

This work was planned to occur after summer peak heat and with sufficient time for curing before winter sets in.

The work for 2012 should be completed in another week or so.

Sealcoating of Driveways, 2012
Additional driveways will be sealcoated in the next few weeks. These are the driveways that were replaced in 2010. It's our goal to sealcoat two winters after new asphalt has been laid. This is part of an overall goal to maintain all driveways in "good" condition in this association.

Streams and Waterfalls, 2012
As of 2012, two pump pits have been replaced. These were of galvanized steel and as can be expected, after 30+ years the metal had eroded and was allowing soil, clay, rock and groundwater to enter the pump pits. These are expensive pumps and it is really beneficial to protect them and maintain the pits.

When the pumps fail, the streams stop. Need I say more?

Park Benches
Two of our benches, overlooking the lakes, have been replaced with composite material benches. No metal or concrete. As part of this work, new stone bases were included, and a new shallow retaining wall was installed. These benches should require no maintenance.

Retaining Walls
All timber retaining walls have been replaced with cast stone. The new walls are insect and rot free. This is considered a long term, maintenance free solution. They can be seen at ponds, etc. An additional wall was installed to prevent an elevated concrete patio from sliding. This was to avoid replacement (again)!

Drainage Improvements
Each roof was originally constructed with a rainwater discharge in the middle of the driveway. This contributes to icing and asphalt deterioration. Getting the water off of the driveways has been determined to be a practical method to extend the life of the asphalt, minimize the intrusion of water into the garages, and to minimize driveway icing in the winter. To address this, as roofs are being replaced the downspouts are being moved off of the driveways and onto the lawns.

However, we have lovely, landscaped grounds which include shallow berms. Unfortunately, those berms sometimes direct rain and melting snow against the buildings and the entrances.

As part of the work on driveways and roofs, drainage improvements are being made to move water away from the front of the buildings, entrances and driveways.

This does temporarily cause unsightly front landscaping. Last year, as a "catch up" the association did improvements at over 20 entrances. But we are now on schedule.

This year, clay and excess soil is being accumulated for use elsewhere on the property.

Additional Drainage Improvements
Improved driveways has sometimes resulted in no where for runoff to go. So in 2011 a problem behind Thames was solved with new stormwater collection, basins and underground piping.

New roofs have additional gutters. This concentrates runoff and can pose a problem for the maintenance. Additional stone, and underground piping is being installed "as needed" to deal with this.

Stone will reduce splash and mud flung against buildings. This will improve overall appearance, reduce the need for high pressure washing of brick and promote drainage. However, adding stone also requires the addition of landscaping or mulch "buffers" to prevent or minimize the possibility of our mowing crews picking up stone.  "There is no end" to the problems! But with good coordination between maintenance and landscaping, we can and will get the job done.

Waterfall #2
Our association has three waterfalls and streams. These include shaded patios. At waterfall #2 the patio, which was concrete, was slowly deteriorating and sinking. In 2012, the association began a two year project to replace that patio, and a wooden bridge.

A portion of the stream has been replaced, and the area is being prepared for a new patio or deck. Clay and soil from drainage improvements is being used to fill this area. This avoids paying to haul clay and soil off of our property, and also avoids paying to bring in additional fill for the void created at the new waterfall patio.

The new area will be designed this winter, and after the board arrives at a decision, a new bridge and patio will be installed next year. This will open up the view of the waterfall, replace a worn bridge, replace several stairways with sloped walking surfaces, and connect the various walking paths in the area, while providing new landscaping.

This will the final central patio upgrade required for the association.

Concrete Patios, 2012
The 134 concrete patios in this association were surveyed this summer. As a consequence, four were replaced. All of the concrete patios are now rated "good" or better.

As part of the survey, a list of problems, mostly minor, were identified with patio closet doors, lintels and so on. Management was provided with a spread sheet and a request was made to issue work orders for further inspection by maintenance, and repairs.

Garages, 2012
All garage interiors were surveyed in 2011, and as a consequence, the floors at 6 addresses were replaced. In 2012 an additional repair was made at one garage. At this time, all garage floors are rated "good" or better.

Garages were surveyed as soon as possible in 2011 for two reasons. 1) Replacing garage floors means cutting out portions of driveways, which requires repair. 2) Because it is my overall commitment to avoid spending association monies needlessly, it was essential that garage floors be surveyed before continuing driveway replacement.

Logistics, as I am fond of saying, is one of those impediments to the "just do it" or "shoot from the hip" approach used by so many of us, and that seems to include some association boards.

North Lakecliffe Repairs, 2012
Repairs to this section of the street, and to a failing storm sewer have just about been completed. The only remaining thing to do is one final asphalt patch, and landscaping.

Mulch and Stone
Our association has used mulch as a landscaping aid for many years. However, this has sometimes contributed to maintenance issues. Mulch deposited against or near buildings will degrade and compost to form soil. Over decades, in some areas, this soil had risen to above the level of some foundations. Mulch and composted mulch will flow with water and settles at the "low points" which may be in storm sewers, driveways, walks, against the buildings and so on.

The board has directed that mulch no longer be used in the immediate vicinity of buildings. The board is also beginning a longer term program to add stone around and against buildings. This will minimize splash against the brick and maintain a better overall appearance, while avoiding a means for water to rise above foundation levels.

Wooden Patio Inserts, 2012
This year was the final year of a multi-year project to replace all wooden patio inserts.

Limestone  Window Sills
Our buildings have brick window sills on the first floor. Several years ago, the association began replacing these with limestone to combat leaks. In 2009, the board suspended such replacement.

I do advocate such replacement with stone. The brick is porous, and leaks are expensive to repair and a disruption to owners. After discussion, and with the recommendation of the reserve study, the board has agreed to restart this program in 2013.

Of course, that will be up to next year's board.

Street Sweeper/Cleaning, 2012
This year, on Friday May 18, the association had the streets of the association cleaned.

Miscellaneous Maintenance
Replacement lighting poles, curb repairs, testing of fire hydrants, replacement of hydrants that fail the test, door closers, stuck doors, lighting repairs, underground water supply piping repairs, miscellaneous concrete and stream repairs, etc. etc. As our current treasurer will say "If you walk on it, under it or over it; the association owns it and maintains it."

Newsletters
An expended "Architecture and Maintenance" section is included in each newsletter, space permitting. This is to provide additional information to all owners and residents about maintenance issues, projects, and their status.

Coordination of Maintenance with Landscaping. 
Our association is 35 years old. We have about 800 trees, and a professional arborist to assist us in maintaining these assets. Some of our trees are ornamental, and all are at a good age. Our trees are considered to be an asset, and are well maintained.

It is very difficult to remove a tree, which I think most of our owners who have been on the property for a period of years consider to be "good friends."

However, as our property has matured, some of our densely planted trees have grown into one another, some have been damaged in storms, willows have hollowed out, and so on. Dealing with these problems frequently requires coordination between landscaping and maintenance.

I take the approach that while it is preferred to maintain all of our trees, there is a point at which "life support" or problems exceed the benefits. With West Nile virus becoming a problem, standing water needs to be addressed. Mud doesn't add to resale values or appearance. So this year, one area was "thinned" to provide more sunlight, remove some decidedly gnarly and bent trees, and to provide a sunlit area for grass to grow.

I personally have great difficulty removing a tree. On the other hand, if it is bent, hacked and looks awful, I do have to ask "Is it really providing a benefit, will that help to sell the property, or is it costing more to keep it alive than to replace?"

College of DuPage
Anyone familiar with this blog understands some of the issues this association has faced with our neighbor, the College of DuPage. You also are aware of my personal opinion in this matter.

This is not an architecture and maintenance issue. However, our owners pay fees to maintain our property and it is reasonable that our neighbor match our level of care and appearance.

On September 17, several members of the board including myself, management and our attorney did meet with Dr. Breuder, the president of the college. The purpose of the meeting was to discuss the situation on our eastern property line with the college. .

A report will be issued to the owners who attend the annual meeting of this association.

Notes:

1. I've finally found the time to put out a few posts. It's been a busy spring and summer. Contracts are moving ahead and I find I have some time available. I do have a series of posts prepared, but sometimes they aren't relevant to current events, or I consider them incomplete. How many do I have in "draft form?" About 65. 

Personal Philosphy and Comment

Overall Comment and Philosophy
For anyone who is new to this blog, here's a bit of a preamble. if you already know who I am, or are familiar with this website, then you can skip on to the "meat" in the next post.

I'm an owner for 10 years, and for 2 years a member of the board of directors of this association. I take my duties as a fiduciary very seriously. I do my best to be a good owner, a good neighbor and a good steward. I can't honor an open-ended agreement because my duty is to be of service, and I do have other commitments in my life. I am not a servant.

To honor this specific commitment, I do my assigned tasks and some others. It's about achieving a realistic possibility for this association. Our board is short handed, and we have no owner assistance, beyond paying fees and keeping the rules. I do my tasks to the best of my ability. As an owner and resident, I pay my fees on time. I do my best to keep the rules and regulations.

I consider this property to be unique. It is truly the hidden jewel of Wheaton, Illinois with 40 acres, 15 acres of turf, about 800 trees, hundreds of yards of walking paths, three streams and waterfalls. We are immediately adjacent to a lovely park, and to what may be one of the finest community colleges in the country.

I have a long term mind set and I am a planner. I have the perspective that if this association, or any association, allows finances or maintenance to fall behind, it is probably impossible to catch up. I have the perspective that it is better to do it "right" the first time than to allow the situation to get out of control and become a "money pit." I also have a real abhorrence to "damage control."

As a small business owner, which supports industries involved in construction, believe me, I know more about the problems in this economy than most. I've lived and experienced most of those problems including my invoices that were not paid or for which payment was delayed. Escalating insurance costs, rising energy costs, increased taxes and governmental obstructionism, etc.

Enough about that, and on to the main event!

Possible Water Rates by 2015

I was asked about the significance of the water rate increases contemplated by the City of Wheaton and the DuPage Water Commission.

If they do occur, expect three years of increases, just about doubling the cost of water for residents by 2015. In other words, I should probably begin planning a personal budget to deal with such an increase. If the city and county proceed, it will require I budget an additional $428.90 a year for water by 2015. Please note that most of the increase is by the DuPage Water Commission. This was detailed in the City of Wheaton press release, which is the previous post.

Here's a real world example, based on a recent water bill, and with the percentage increases from the Press Release, which is contained in the previous post:

• Monthly water bill in 2012 = $38.50
• Monthly water bill in 2013 after 30% increase =  $50.05
• Monthly water bill in 2014 after 25% increase = $62.56
• Monthly water bill in 2015 after 20% increase = $75.08.

So there you have it. Within three years, my water bill will possibly be about $37 each month higher than it is today. 

Is there anything we can do about this? Use less water is one thing to think about. Of course, we can petition the City Council and our local politicians, but that raises the question "where is this money to come from?" After all, a significant part of our water bill goes to the City of Chicago, and that fiscally teetering drunk to our east is in about as bad a financial shape as the State of Illinois is, overall. So we can expect to pay higher water rates as the City of Chicago increases the fees collected per gallon. However, these water rate increases are "to allow revenues to catch up with water system operating and maintenance expenses and to fund the full cost of operating and maintaining the water system."

Sorry to be the bearer of bad news. And yes, this will raise the cost of water for our association. So watering shrubs, trees and keeping our streams running will cost about twice as much in 2015 as it did in 2012, unless some "miracle" occurs. 

I'm sure we'll have owners coming to association meetings or sending emails to the board and complaining "You should do something about this!"

Yes, as an owner in your association, if there is something to be done about this, I suggest YOU should be the one to do it! Oh, and by the way dear reader, this applies to any and all residents; who also use water. So, if this is a possible issue for the reader, I'd suggest meeting with the City Council. The City Council will continue discussing this, and attending these meetings as well as "Coffee with Council" is a wonderful way for owners to participate. The next "Coffee with Council" will be on Saturday, September 8 at 10:00am in the Gamon Room at Wheaton City Hall, 303 W. Wesley. According to the city "City Council members conduct Coffee with Council sessions at 10 a.m. Residents are invited to attend these informal sessions to discuss any item of interest with the Council."

Notes:

1. I'd suggest that owners be thankful that they aren't paying Chicago for water and sewer. 
2. Chicago Mayor Rahm Emanuel, sometimes called the "Rahmfather" was quoted in the Chicago Tribune as saying "Nearly half the cost of the water and the street repair will be (borne) by the suburban people who rely on the system....Chicago residents themselves won't be bearing that cost." In other words, you, dear reader, as a suburban uses of Chicago water, will be paying an unfair share and that will include Chicago street repairs. If you don't like it, contact the Mayor's Office in Chicago. I'm sure they'll tell you where to go. 
3. Here's a link to the original Chicago Tribune article: 

Chicago Tribune October 15, 2011

Chicago also gouges its citizens for water. How would you like to live in Chicago in a small bungalow and pay $339.43 for one month's water and sewer? That bungalow is about the size of one of our units. Compare that bill to your combined water and sewer bill. Here's a link to an older article in the Chicago Sun Times about how Chicago, by avoiding the use of water meters, has skewered many of its residents with unusually high water and sewer bills. There is no date on the article, but as it refers to Mayor Daley, it's obviously old.

Sun Times Chicago Water Rates

Water Rates to Increase

The City of Wheaton has completed a study to analyze the water rates. Our association uses water in several ways. Each entrance has 5 water meters. One each for metering the use of each resident. Those meters are billed to the owner of the unit. The fifth meter is for water to the outside spigots. These are used for maintenance purposes, as well as by owners who assist the association by watering our shrubs and trees under drought conditions. A few owners use the water that is billed to the association, and their neighbors for personal purposes, usually cleaning their automobiles.

Here is a press release from the City of Wheaton pertaining to the problems faced by the City because of the shortfall from water meter fee collections and the actual cost of water.

The cost of water is one of the items that your association board takes into consideration during its annual budgeting session.

It is probable that water rates will increase. What remains to be determined is what specific rate the City Council, and the DuPage Water Commission, will ultimately adapt.

PRESS RELEASE

Tuesday, August 28, 2012

Watch Council Discussion of Proposed Change to Wheaton’s Water Rate

WHEATON, Ill. – Last night, Wheaton’s City Council listened to a presentation summarizing the results of a study analyzing the City’s current water rate structure and the costs associated with providing water service to Wheaton customers. According to the study, the City’s current water rates will not produce adequate revenues to cover the costs of operating and maintaining the water system starting in Fiscal Year 2013.

Municipal & Financial Services Group, the firm that performed the study, made the following recommendations based on their findings:

• The City should increase revenues from water rates over the next three years to allow revenues to catch up with water system operating and maintenance expenses and to fund the full cost of operating and maintaining the water system. These increases should be in conjunction with the DuPage Water Commission increases for a total revenue increase of:
  • 30% on Jan. 1, 2013 (20% DuPage Water Commission increase + 10% City increase)
  • 25% on Jan. 1, 2014, (18% DuPage Water Commission increase + 7% City increase) and
  • 20% on Jan. 1, 2015 (17% DuPage Water Commission increase + 3% City increase)
   
• The City should adopt an alternative water rate structure that will increase the revenue stability within the Water Fund by collecting more revenue from the fixed portion of the water bill, eventually collecting 25% of revenues through the fixed charge by Fiscal Year 2015. The fixed charge should be based on meter size.
• The City should strive to maintain a minimum unrestricted net asset balance within the Water Fund equal to 30% of the operating expenses.

A video of the presentation and Council discussion is available on the City’s website. The Water Rate Study Report document and the Water Rate Study City Council Briefing (which is the Powerpoint presentation displayed at the meeting) are also available on the City’s website. Look for more information in the future as the Council continues its discussion of Wheaton’s water rate. 

Mortgage Relief Project Outreach Event

The City of Wheaton has issued this press release dated August 6, 2012:

 Mortgage Relief Project Outreach Event Aug. 25

The Mortgage Relief Project will host an outreach event from 9 a.m. to 1 p.m. Saturday, Aug. 25 to help connect residents with programs to help them lower their mortgages, avoid foreclosure and keep their homes. Hosted at the DuPage County Government Center Auditorium, 421 N. County Farm Road, Wheaton, the event is presented through the Illinois Foreclosure Prevention Network, a State of Illinois entity. The event will include free housing counseling, information on identifying mortgage fraud and more.

To register or for more information, visit www.keepyourhomeillinois.org or call 800-532-8785. The local event will be hosted by State Senator Thomas Johnson, State Representative Mike Fortner, State Representative Darlene Senger and DuPage County Board Chairman Daniel Cronin.
 

West Nile Virus Update

Updated August 11 with City of Wheaton Press Release

Here is the current map of the mosquito traps in DuPage County. Apparently 89 have tested positive for West Nile Virus carrying mosquitoes.

Clicking will open a  New Window> West Nile Mosquito Traps

Clicking on the symbols over Lake Michigan on the map will reveal the meaning of the Green, Yellow and Red.

PRESS RELEASE - City of Wheaton

Thursday, August 09, 2012

West Nile Virus Activity Prompts Mosquito Spraying

WHEATON, Ill. – In response to the increased West Nile virus activity in DuPage and the surrounding counties, the Wheaton Mosquito Abatement District has scheduled a mosquito spraying for Monday evening, Aug. 13, 2012. West Nile virus is a potentially serious illness that can be transmitted by mosquitoes. The treatment will cover the entire district and is intended to reduce the numbers of mosquitoes that are known to transmit West Nile virus to people.   

There have been six reports of West Nile disease in residents living in Cook County. Additionally, the DuPage County Health Department’s testing of adult mosquitoes indicates a high incidence of West Nile virus infection in the adult mosquito population.   

The District is continuing to inspect and treat known mosquito breeding sites throughout the area to help limit the development of new mosquitoes. The district needs your continued help to prevent new mosquitoes by disposing of any standing water you find on your property. The culex mosquito that transmits West Nile virus easily breeds in small amounts of water that collect in containers around residential property.    

Don’t forget to “fight the bite.” If possible, avoid outdoor activity when mosquitoes are present and active. Dawn and dusk are the periods of the day when mosquitoes are most apt to bite. If you are out when mosquitoes are present, wear protective clothing such as light-colored, long-sleeved shirt and pants. You should use insect repellants to discourage mosquitoes from landing and biting. The Centers for Disease Control and Prevention provides current information on mosquito repellants. 

Clarke Mosquito Control has been contracted to provide all district mosquito control services this year. Call their hotline at 800-942-2555 if you have questions or problems. 

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A Personal Perspective 
This year, I haven't received any calls from residents complaining about mosquitoes, venting their concerns about this possible problem in our association or threatening me and the association by stating the intention to call the city and the county and report the association for a lack of due diligence in this matter.

Before we celebrate, it has nothing to do with the number of reported incidences in the County, or what this association is doing. This year, I suspended the use of the cellphone "donation" I had made to the association. So I no longer receive those calls, or respond to calls on that cellphone.. Those complaint calls were a major reason for the disconnect. I think most people would agree with my decision, if they were in my shoes. It's usually easy to spend someone else's money, isn't it?

Notes:

1. I regret the disconnect. but  I am not on this planet to be a sounding board or a target for those with an axe to grind. If anyone has any complaints about this, I suggest they contact their friends or come to an association meeting and I'll be glad to give them an earful. I preferred to have that phone available because I was of the opinion it could improve communications. But I concluded it wasn't serving the population of this association. It instead was providing a channel for complaints. Yes, those who called me from time to time with legitimate issues were also cut off. I regret that. However, there are consequences for the actions of the few. I spent about $350 from my pocket to provide that service.