Oops - Email is working again

Oops, turned out my ISP had put one of my email accounts to sleep, but didn't inform me of this.

Sorry to those who attempted to reach me via the email link on this blog. I've fixed the problem and my email now works again.

My thanks to Karen for sending me a comment in which she pointed this out.

I guess having my email working will be a fine way to start the new year right!

As 2014 Draws to a Close

How long ago May seems to be, but that is an indicator of our short termed nature.

Here we are on Sunday, December 28th and another year is rapidly setting as with the sun.  This provides an opportunity to reflect on my good fortune and the past year.

Yes, it has certainly been another interesting year. In slightly over 12 months we trekked about 10,000 miles across a good part of this country. I also spent business time from California to New York with other stops of a week or more at a number of states in between. And of course, there were my duties and obligations at BLMH.

Here at BLMH it was another drama laden year with the ongoing developments of the owner fireplace fiasco, the harsh winter of 2013-2014, the dash to complete eight large roofs, the replacement of the bridge on Thames but not the patio, stream repairs and of course, the culmination of four years of effort to get the north half of Lakecliffe replaced, which ended with an intense press to get this done. We even have a very, very modest fee decrease for 2015 via a cliff-hanger board vote with four in favor! This fee would not have happened if we didn't have a fully staffed board.

As I write this a sunny, but chilly day of 35F is drawing to a close. Not at all bad for this time of year, and nary a snowflake on the ground. Great weather for visiting family and friends.

This Year Didn't Simply Occur
This year was a culmination of about 10 years of constructive effort. It didn't simply happen. Some things I began in 2005 finally concluded after years of effort. I suppose I could say these things came to fruition, having been nurtured for a long time. That's the way it sometimes is. The economic meltdown of 2007-2008 certainly didn't help and some things I had underway took longer to complete than planned. In 2008-2010 there were some really angry and mean-spirited people who dumped their personal issues, problems and failures on anyone who was close. Some of this happened at BLMH but I encountered much bitterness elsewhere.  I suppose that is the way it may be when we feel we are trapped in our lives and lack the capacity for action.

I am happy to be at this particular place in my life. I see opportunities and have done what I can to create them. Now to step into them and create others. Living our lives presents choices and opportunities. I think it's a good idea to create those we can in a responsible way and then seize the moment when opportunity does present itself.

Looking for Community
That has always been a desire. However, community also is not something that simply occurs. I've travelled extensively and lived in many communities in the U.S. and so I speak from personal experience. Community doesn't occur naturally and effortlessly. It too is something that must be created. Clearly, there has been some confusion about the nature of the BLMH community. For those who live here it is not merely an investment, or an apartment complex. It isn't a retirement village. It is a unique "city within the City" which is aging and not very gracefully. I think I've successfully recognized what it is and I've honored what it is. That means I've operated consistent with that reality. Simply stated, I think it's a good place to live, had fallen into disorder and is a better place today. I suppose the one real surprise was the attitude of the owners about the board, the lack of interest in participating and the demand of a few that the board make it work "no matter what.". From my personal experience, I was surprised by this. Such is the nature of some communities and ownership in our society.

On a personal level, I was able to connect with my extended community in 2014. I was also successful at creating another community which is the direction I am going in. I was also able to redefine the nature of my relationship with business, various relatives and here at BLMH. Doing so has been a desire and I'm pleased to have accomplished this.

Doing these things creates opportunity in one's life. That's my opinion.

This section of the post is entitled "Looking for Community" and that begs the question, have I found a community?  I have the view that I live in a community and I always have. It will be what I make of it and my extended community includes Wheaton but I am also a member of a business community and then there is my family community and a community of friends. There is also a community of fellow travelers.

The Bottom Line
I'm glad 2014 is drawing to a close and nearly over.

Water Rate Increase January 1, 2015

From the City of Wheaton. The cost of water will increase on January 1, 2015. How much will this cost us in 2015?

Current water rates include a monthly service charge. To quote the City of Wheaton, "water customer bills now include a service fee, which is a flat monthly charge that is based on the size of each customer’s water meter." According to Wheaton's published information, the fee for customers with meters from 5/8" to 3/4" will increase from $9.38 per month to $13.59 per month, which is about 45% more. In addition, water rates per 100 cubic foot (100 c.f.) will increase from $4.49 to $5.05 or about 12.5%.

Using the new fee and the new water rates, the bill for a customer who uses 500 c.f. per month will increase from $31.83 per month in 2014 to $38.84 per month in 2015. That's an actual increase of about 22% in 2015.

Your actual bill will be calculated by adding the usage plus the monthly service fee. Here is the published rate chart:

2015 Water rates and fees

Rate per 100 c.f. - $5.05

Meter Size

Monthly Service Fee

5/8”

$13.59

5/8” x 3/4”

$13.59

3/4”

$13.59

1”

$27.18

1 ½”

$54.35

2”

$86.96

3”

$163.06

4”

$271.76

6”

$543.53

Here is Wheaton's bulletin on the rate increase:

Water Bill Increase Begins in January

To support infrastructure improvements and to offset the increase in the amount the City of Chicago and the DuPage Water Commission will charge Wheaton for water, Wheaton’s water rate increases on Jan. 1, 2015. The rate the DuPage Water Commission charges Wheaton for water increases 17% on Jan. 1, 2015.

The water use rate will increase from $4.49 per 100 cubic feet to $5.05 per 100 cubic feet on Jan. 1. While the service fee differs based on meter size, the fee for most Wheaton customers will increase from $9.38 per month to $13.59 per month. The specific increases for each water meter size are reflected in the tables in this section of the City's website. Nearly 90% of Wheaton customers fall into the first three meter sizes (5/8-inch, 5/8-inch by ¾-inch, and 3/4-inch). The typical user’s bill, with a ¾” meter and 600 cubic feet of usage, would increase from $36.32 per month to $43.89.

For more information about water billing changes, see the City’s website atwww.wheaton.il.us/waterbill.

City of Wheaton Posted Date: 12/19/2014 2:27:09 PM

Financial Planning for Retirement

Financial planning isn't my expertize; I earn my money another way. However, recently I received a request for some help in that area. Here is what I provided to that individual. Disclaimer - I'm not a financial professional.

Financial Planning for Retirement – Checklist for those within 10 years of retirement

As we approach retirement we should look at our financial plans and make adjustments. Once in retirement, income from employment is replaced by income from pensions or social security plus the draw-down of our savings and retirement investments.  This may require changes in spending habits.  

It is helpful to review our financial plans and then to make adjustments prior to retirement. Earlier is better than later simply because we have time to adjust our spending and savings. Retirement at 65 means it is possible to live for 30 years in retirement, with our only income from pensions and various savings. Retirement offers new possibilities, and most experts recommend we plan and prepare for that 30 years in retirement.  What are we going to do for 30 years? What will it cost? How will we deal with old age health issues? Where will we live?

The early retirement years may offer travel and other possibilities while we are relatively young and healthy. These things can be costly and must be planned for. Our health in later years will degrade and we may see less opportunity for travel, etc. and much higher health care expenses. These possibilities should be included in our financial plans.

Many experts recommend that we retire debt free. In other words, pay down our mortgage and other loans prior to retirement. However, personal situations do vary. Here are a few things to consider:

Financial Liabilities which will require retirement income:

1.       Mortgage

2.       Student Loans

3.       Credit card debt

4.       Auto or other loans

5.       Taxes on income

Basic Living Expenses In Retirement:

1.       Mortgage and real estate taxes or rent

2.       Condominium or HOA fees

3.       Homeowners or Renters Insurance

4.       Long Term Care Insurance or special savings for this purpose

5.       Utilities (gas and electric)

6.       Phone

7.       Groceries

8.       Household expenses

9.       Clothing

10.   Auto insurance, gasoline and repairs

11.   Health Insurance premiums

12.   Out of pocket dental and medical expenses

Discretionary Expenses in Retirement

1.       Entertainment

2.       Cable TV

3.       Dining out

4.       Travel and vacations

5.       Smart phone and other electronic packages

Unusual Retirement Expenses

1.       Unusual trips or purchases

2.       Unusual Medical costs

3.       Home maintenance expenses (furnace and HVAC, fireplace, water heater, roof, windows, exterior trim, bathroom and kitchen fixtures, plumbing, appliances, etc.)

4.       Emergencies

Life Insurance. Insurance is one of the realities of modern existence. Most of us have life insurance. Approaching retirement it is prudent to re-evaluate our insurance needs. Life insurance is generally purchased to cover large financial liabilities in the event of our death. As we reduce our financial liabilities, life insurance requirements may become much smaller and we may be able to reduce our life insurance needs. Things for which we might want the proceeds of life insurance in retirement include:

1.       Mortgages

2.       Student Loans

3.       Other debts

4.       Funeral costs

5.       Additional funds for surviving spouse

Long Term Care Insurance. According to the U.S. Government Department of Health and Human Services “70% of people turning age 65 can expect to use some form of long-term care during their lives. “ Long Term Care Insurance or LTC is an important aspect of retirement planning. Here are some websites that can help:

Click to go to New Window> http://longtermcare.gov/

Click to go to New Window> http://www.aaltci.org/


Longevity Insurance. As the human lifespan is extended, there is a possibility we may outlive our financial resources. After completing our financial plan if that is a possibility what to do? Some 401(k) or 403(b) plans allow the purchase of  a deferred income annuity. On July 1, 2014 the U.S. Treasury Department and IRS announced tax rules that would allow the use of up to 25% of their 401(k) or IRA balances to purchase a deferred income annuity. The goal of these annuities is to provide a lifetime income stream later in life. “A longevity annuity is an income stream – a type of “deferred income annuity” – that begins at an advanced age and continues throughout the individual’s life.”

Financial Assets Available as Income in Retirement. These should be considered:

1.       Pension

2.       Social Security

3.       Savings

4.       Retirement Accounts – 401(k), 403(b), IRAs and Roth IRAs

5.       Annuity

6.       Other (rental income, etc.)

Financial Planning 101. Planning for a 30 year retirement is not a trivial exercise. Here are a few things to consider:

1.       What will be my annual basic expenses at the age of 65, 75, 85 and 95?

2.       What will be my sources of income and the amounts at the age of 65, 75, 85 and 95?

3.       What will be my discretionary spending each year from 65 to 75? What about thereafter?

4.       Where will the money come from?

5.       Will there be enough to support my retirement plan?

6.       Have I included inflation in my plans? Have I included reasonable returns in my plans for my retirement accounts?

7.       Have I considered rising health care costs as I age?

8.       Have I considered unusual expenses, my health and my family’s health history in making my plans?

9.       Do I have a long term care plan?  Do I have the necessary funds for this?

10.   When will I draw from my retirement accounts? At present, the Internal Revenue Service requires that we each draw from our 401(k), 403(b) and other IRAs, but not our Roths beginning at the age of 70-1/2.  IRS Publication 590 “Individual Retirement Arrangement” provides detailed information.

Planned or Programmed Maintenance versus Emergency Maintenance

I advocate a combination of Programmed Maintenance and Delayed Maintenance. Deciding where and when to apply these approaches may be impossible for a board. There will always be emergencies for boards, management and maintenance to deal with. It should be preferred to replace emergencies with anticipatory action.  In other words, I prefer more programmed maintenance and less delayed maintenance.

Some might call this "proactive" behavior, but that word has been overused and requires a definition here. Proactive behavior by individuals refers to anticipatory, change-oriented and self-initiated behavior as a response to situations. Proactive behavior requires acting in advance of a future situation, rather than reacting after that situation has occurred. It means taking control and making things happen rather than adjusting to a situation or waiting for something to happen. Proactive individuals and groups do not need to be asked to act, nor may they require detailed instructions.

I could have also entitled this post "Look Before You Leap" versus "He Who Hesitates is Lost". These two idioms summarize the problem faced by boards. Owners may choose the idiom of choice to criticize any board action, or boards may paraphrase these to justify action taken or not taken. Of course, both can't be correct, or can they?  How long can maintenance be delayed while serious problems are avoided? Are we gambling? Do we feel lucky? I suppose we could ask Dirty Harry:

Delayed Maintenance

Previous boards have stated an overwhelming preference for delaying some maintenance as long as possible in the interests of saving money and growing reserves.   It seems there is a preference to be a reaction to events. Are there advantages to this approach? Here are a few pros and cons.

Pros of Delayed Maintenance:

1. Delaying will defer the spending of money. 
2. Delaying may create lower current fee levels, as financial requirements are passed to future owners at the time maintenance occurs.
3. Deferred spending will create larger than expected bank balances. This may be only a facade of better finances and might be deceptive. 
4. Allows the board to pick and choose projects, etc. 
5. Allows the board to micro-manage most aspects of maintenance and capital spending. Provides boards with more power and decision making opportunity. Some boards or board members may prefer this. 
6. Allows the board to select winners and losers in the association. Some boards or board members may prefer this.
7. The planning workload of the board may be reduced. Frequent and regular surveys and inspections of infrastructure is replaced by owner complaints, observations of management and maintenance workers.
8. "Out of sight, out of mind" might become the method of choice. 

Cons of Delayed Maintenance:

1. Delaying maintenance defers the day that money will be spent. Bank balances may temporarily grow, but so too will maintenance obligations for the association. Spending is only delayed; it cannot be eliminated while simultaneously maintain the association.
2. Delaying will create a backlog of issues to be resolved at some time in the future. These are passed to future boards. This may create a minefield for future boards. 
3. Delaying may create large future fee requirements if current fees are held too low by deferring maintenance and reserve funding. 
4. Delaying requires better financial, project management and cost accounting controls.
5. Delaying may create more breakdowns and stress boards and create upset owners.  
6. Delaying may create more emergency situations because the operative approach is "Don't fix it if it isn't broken." In other words, wait until it breaks and then allocate the resources. 
7. A higher skill level on the part of boards is required to avoid delaying too long or beyond the point of no return. Who really knows what that point is? 
8. Delaying too long will overwhelm the board, management and workers with a myriad of priority tasks. 
9. Delaying may overwhelm contractors and maintenance workers with emergency situations. 
10. Delaying may create unusual spending requirements. 

The Programmed Alternative

The association has since 2010 had a reserve study and/or an update. The studies provide extensive lists of overall infrastructure conditions, recommended projects and timetables to deal with infrastructure decay, and a funding program. The reserve studies are a tool to facilitate proactivity by the board and planned maintenance activities. 

The approach advocated by the reserve study and by the experts is a programmed approach to capital projects in which funds are collected via fees, saved and then spent in a timed, programmed method so as to maintain the infrastructure of the association. 

Pros of Programmed Maintenance and Projects:

1. Replaces complaint based management with planned maintenance. 
2. Requires frequent and thorough infrastructure condition surveys. This creates a more informed board and redirects board activities from reactive to proactive. 
3. Creates a more fair system in which owner complaints are no longer the major driving force and planned management becomes the driving force. 
4. Reduces breakdowns and emergencies as "Don't fix it if it isn't broken" is replaced by "lifecycle planning."
5. Smooths finances and provides alternatives to the board most years. "Emergency" is replaced by "planned priorities."
6. Does not create future traps and minefields to ensnare future boards. 

Cons of Programmed Maintenance and Projects:

1. May accelerate projects resulting in the spending of money a year or more earlier than absolutely necessary.
2. Requires frequent, thorough and accurate surveys of all aspects of infrastructure. 
3. Creating those condition reports requires a much higher involvement by boards and management. 

A Realistic Approach

I advocate a combination of Programmed Maintenance and Delayed Maintenance. There will always be emergencies for boards, management and maintenance to deal with. It should be preferred to replace emergencies with anticipatory action.

I am of the opinion that the only way to prudently apply a delayed approach is to do annual surveys and create condition reports. At BLMH this did not happen for a variety of reasons. To do this requires "feet on the street" and annual report updates. It requires frequent board discussions. It requires people on the board who are willing to do this. It can be a lot of work.

It also requires boards which are willing to appropriately spend the money that is being collected as reserves. Should we only replace entry doors after they fail, or streets after they become minefields, or garage floors after they become gravel or roofs after they leak? I think not.