Welcome to the New Board

Summary
This is to welcome the new board, indicate some of the changes and provide a glimpse into the lively discussion which occurred at the annual budget meeting. That meeting was attended by a few owners. I also provide additional information on the plans for improved cost accounting and why it should occur.

Mission Impossible?
Each owner expects repairs to be made to the building housing their unit, when a problem arises. Many owners expect immediate response when they face a problem. Each owner expects their driveway, entrance, or street to be plowed, or repaired immediately if not sooner. Each owner expects good streets, walks, lawns, wonderful landscaping, trimmed trees, working streams, mosquito abatement, working lighting everywhere, clean hallways with nice carpeting, serious exterior repairs with fresh paint every 6 years, a good driveway, a good garage and a good roof. Some expect to step off their patio into a green garden. The list of requirements is extensive. Yet, each owner also expects "fees as low as possible" with only small annual increases. Some expect someone else to pay these costs. The bad news? The only people who can pay for any maintenance and improvements in this HOA are the owners. We each expect the same treatment and conditions. That means, we each get to pay an equal amount because there is no one else to pay for these expectations. Each owner should also get the same treatment. In other words, there is no one else to pass the buck to.

This HOA isn't Illinois, which is $100 Billion in debt, and it isn't the U.S. Government, which can print money at it's discretion and bail out banks and stupid homeowners, etc. .

I'm sure the reader understands the difficulty each of us face when preparing our personal budgets. Multiply that by the long term planning required by 336 or 84 entrances in 44 buildings and you will get an idea of the magnitude of the problem facing the board and management. Here is the really bad news; a few of our owners are completely oblivious to the facts. They pretend they live in an apartment or a retirement community. The good news? They aren't a majority. The reality? As fewer than 50% of our owners vote in an annual election, it's very easy and very possible for a minority to gain control. That's what happened in 2008.

This is a large, complex, aging HOA which is a PUD. Some of the projects facing this association require 5 to 10 years to complete. Some are very complex. Each needs to be identified and then a plan developed to deal with these problems or projects. This implies a lot of planning. It also requires comprehensive budgeting. Many of us have difficulty planning our personal budgets. Image the difficulty facing our boards. With professional help our boards are required to develop plans for decades, determine the finances and savings required to accomplish those plans and then collect and save the funds so those plans can be realized.

It is also expected these plans will be accomplished with only small annual fee increases. Or none.

2015 will be an interesting year. Having a full board will certainly make a difference.

Welcome
It was that time of year and BLMH held the annual election. We had sufficient candidates and votes to completely fill the board. This is the first time in several years.

Welcome to the new board members and thanks to the old. Prior to the election the president made a brief statement at the annual meeting to thank everyone on the board.

Architecture & Maintenance Duty Changes
We will split the duties of the Architecture & Maintenance, and two of us will be preparing the newsletter. I'll continue to be active in all of these areas, but I will focus on long term issues, projects and cost accounting. This will be essential with continued street replacement on the horizon and other infrastructure issues or problems. Our HOA and its facilities are now well into "middle age." That's a time when additional infrastructure replacement becomes essential. It is time to identify these areas, their real costs, establish timetables that the board can agree upon and the plans to accomplish these tasks.

Finances, Budgeting, Project Planning and Cost Accounting
What was necessary at the budget meeting was to come to an agreement about what will be required for Operations & Maintenance (O&M) budget for 2015 while accommodating known reserve requirements for 10 years hence. Those reserve requirement will have a significant impact on the budget.

As I have written in previous posts I have a goal to stabilize association finances. Our reserve study is an important part and includes a 30 year projection. What is also necessary is a more detailed plan for the coming 10 years. The plan was touched upon at the annual meeting and outlined more thoroughly at the association budget meeting in October. Several owners attended and experienced a serious discussion and debate about reserves, the projects anticipated to occur in the next 10 years and the funding requirements for these projects. There are differences in opinion. To make this more difficult the update to the reserve study is not complete.

I was able to provide the board a projection of reserves balance on January 1, 2015 which was confirmed by management. I was also able to provide a detailed list of projects, timetables, costs and possible reserve balance on January 1, 2024 which is 10 years hence. It was beyond the scope of the meeting to determine the precise calendar for these projects. However, that was not a necessity for determining the annual budget for 2015.

The board also looked into the Operations & Maintenance budget for the coming year. Adjustments were made to several expense categories in anticipation of higher costs in 2015. Of course, projections are just that. However, the boards have had many of the tools necessary to make these projections a reality. Those tools include professional management, the previous year's budget and the projected, actual costs of that budget. The board also has the current reserve study, the costs to date for the replacement of the street and the roofs, and the current reserve balance.

What was necessary to complete this was to determine the percent remaining for roofs, probable costs for the remaining streets, and the list of projects recommended by the reserve study for the interval 2015-2024 and their projected costs. The final questions during the budget meeting to be answered by the board with management assistance included:

1. Fees required to fund these projects.
2. Possible schedule 2015-2024.
3. Projected reserve balances 2015-2024. 

Ideally, the following would also be known for each project. Do do the following will require more work than can be accomplished during a budget meeting. The information I provided to the board and management prior to the budget meeting and during that meeting took many hours. The following will take many more:

1. Percent completion to date and percent remaining.
2. Costs to date.
3. Anticipated or projected costs to complete per items 1 and 2.
4. Anticipated project overages using the above items and the reserve study. 

Why do the above? This is a large HOA. Some of these projects require 5 to 10 years to complete. Some are very complex. This implies a lot of planning. Many of us have difficulty planning our personal budgets. Image the difficulty facing our boards. With professional help our boards are required to develop plans for decades, determine the finances and savings required to accomplish those plans and then collect and save the funds so those plans can be realized.

Masthead Photo
The newsletter always contains a masthead photo which shows one aspect of the grounds and property. These are recent photos. The purpose is to indicate what residents see each and every day, somewhere on the property. Those photos provide a sampling of the 44 buildings, walks, grounds, streams and lakes. Each and every one of these and the acres they occupy are to be maintained with owner fees.

I'm including the masthead photo for the coming newsletter here. Other photos in the newsletter are also taken on the property where that is practical. One can assume all outdoor scenes are at BLMH unless otherwise noted. That includes wildlife, grounds, trees, shrubs and the lakes.

The photo above was taken early the morning of October 19, 2014. That's frost on the hill in the background with the sun rising behind the trees to the east-southeast.