Updated Surplus Numbers

Updated Surplus Numbers
Updated Surplus Numbers: Actual surplus 2018 per audit was $85,163.
Boards 2011-2018 implemented policies and procedures with specific goals:
stabilize owner fees, achieve maintenance objectives and achieve annual budget surpluses.
Any surplus was retained by the association.
The board elected in fall 2018 decided to increase owner fees, even in view of a large potential surplus

Average fees prior to 2019

Average fees prior to 2019
Average fees per owner prior to 2019:
RED indicates the consequences had boards continued the fee policies prior to 2010,
BLUE indicates actual fees. These moderated when better policies and financial controls were put in place by boards

Better budgeting could have resulted in lower fees

Better budgeting could have resulted in lower fees
Better budgeting could have resulted in lower fees:
RED line = actual fees enacted by boards,
BLUE line = alternate, fees, ultimately lower with same association income lower had
boards used better financial controls and focused on long term fee stability

Monday, August 3, 2015

Can Better Planning Assist a HOA Board?



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Recently several owners in our HOA expressed concern about the progress and condition of the exterior areas of the property.  The exterior areas are reeling from requirements posed by new roofs and the destruction of numerous trees in recent years. The Emerald Ash Borer was one problem which was kept at bay until the drought of 2012. Numerous pines and spruces have succumbed to some insect pests, willows have been removed that posed a danger to buildings or fell, and a lot of smaller ornamentals simply died because of end of life. There will be more!

Escalation of the roofing project as our building roofs have approached and passed beyond normal "lifespan" has aggravated the situation. By escalation I mean moving from 2 or 3 roof replacements per year to 4 or 8. I did this to avoid having roofs on the property which were "scheduled" for replacement in 18-20 years, yet reached 25 years of age. I say "scheduled" in quotes because that is an example of the problem. We all know the condition of the roofs and the lifespan. Management can tell us, Maintenance can tell us, and we have no less than three reserve studies to tell us. Yet for 5 years, it has been a mad dash for me to replace roofs at a high pace, to avoid imminent failure. Am I being melodramatic? I don't think so. There should be a plan in place to replace a roof that was designed and installed for a lifespan of 18-20 years, shouldn't there? But the powers that be from 1990-2000 didn't bother.

So, at the slow pace of previous boards, some of these roofs might not have been replaced for 30 years. Think about that. How would you like to live under a roof designed for 18-20 years which was not replaced for 30 years? Not many of us would, and boards at BLMH had their roofs replaced on schedule.

Here is the larger question. Shouldn't a board put in place a plan to accomplish just that? This is what I mean by "better planning."

Well, this may not be a concern of a board which has units in buildings with new roofs. Sometimes reality will guide planning, but if board members are sequestered within their buildings with new roofs and drainage improvements, and don't track the real condition of the property, then is it a surprise that some of us have roofs more than 20 years of age?

An owner was surprised to learn while I was A&M Director and pressed for the escalation of this project that I reside in a building with a 22 year old roof. He said "I guess that means there is no favoritism on the board." Unfortunately, it only means that in this example, with me as Architecture Director, there is currently no favoritism. I advised that owner that because the roof had no leaks or ice dams that it was not the most in need of replacement. That is true. But I can't say what other board members would have done.

Nor will I make up "good news" stories for poorly acting board members on a variety of boards over the years. The property speaks for itself. But, it is necessary to state that our HOA is well maintained according to some experts. Now. as for the other aspects of aging infrastructure, if plans aren't formulated, then future boards will be struggling for another 5-10 years. After that? It will be entirely dependent upon plans put in place in 2016 and beyond.

Is drainage a problem? With the replacement of each roof, two entrances at each building must be re-worked to prevent water from new gutters with relocated downspouts from entering garages, entering units or inundating entrances.

Various boards dealt with trees for decades on a year-by-year basis. This worked well because the volume was low. Removing one or two trees, or grading two entrances in a year is something that can be dealt with easily. Sometimes stumping occurred with application of new turf, but not always. Only in the past three years has maintenance taken over some of these chores simply to get the work done.

However, boards have failed to do some (any) of these things. That created a backlog of problems which has overwhelmed recent boards, management and maintenance.

In May I presented a diagram to management and the board which depicted the extent of stumps, dirt piles and so on left behind by the removal of trees. This also indicated most, but not all, entrances where drainage work was required. Just a sketch, not rechecked. I'm of the opinion other board members can do that.

Now that it is full summer, some owners have complained about conditions or expressed a concern about a lack of progress. That is their opinion. As usual, we simply can't move fast enough for them. However, there is a good reason for this. Boards generally operate as a reaction. Only after "disaster" has struck will the board move. That's the way it has been at BLMH for decades. Until we clean house, that is the way it will continue. However, a new board does not assure improvement. Remember 2008? We got koffee klatches, hand wringing and kum-bay-ah.

I responded to a recent owner's email about the issues this way:

"Management is on top of this, and a whole lot of other ongoing landscaping and maintenance on the property. This HOA can't move as fast as residents can type. 

In May (nearly 90 days ago)  I presented a diagram to the board and management which defined the current state of the [property] as a consequence of removed trees, the piles of wood chips, dirt spots and drainage work. It will take more than a year to get this all back together. When a tree is cut down it must be stumped. There is a lot of organic material under some of these berms that supported a large pine or ash. That has to be removed before the area can be re-landscaped. Of course, it isn't practical to dig up and pick through this by hand, so the material is removed and new soil brought in to replace the organically laced. .........We could just throw turf over it, let the organic rot and in a year or so you'd have an uneven and browning lawn. That would be a problem for a future board and at additional HOA expense. 

And some owners wonder why fees are where they are?

I'd prefer to publish this type of information in the newsletter so everyone would be up to date, but not all board members agree. So the HOA doesn't. Of course, writing an article takes time and it may provide less than wonderful information to owners and other residents. That information will be published on the WWW with the posted newsletter. Purely conjecture on my part, but I wonder if a "touchy feely" and "feel good" mentality drives some of this. Property values can be driven by perception, can't they? 

It is important to remember that the leadership for decision making is in the hands of multiple board members, but can be driven by the president or another board member.  Because I'm involved in Architecture and projects, my primary concern has been coordinating drainage with landscaping. Funding all of this is of course the responsibility of the entire board which makes the decisions. The stone trim you expressed concern about is landscaping. During a recent HOA meeting the landscaping director stated that this is to be the final year of the replacement of mulch around buildings with stone. He stated that mulch will continue to be spread under trees which are away from the buildings. 

After this is completed, we'll see what is next, and the entire board will make a decision and that will be it. There are of course a range of opinions. One owner expressed the opinion that she didn't  like the color of the stone, the mess created by several dead trees adjacent to the building housing her unit and so on. However, there was no plan in place to deal with this and so we are now punting.  While it is true the existence of a plan would not have prevented the death of trees, it would have been something that .....could have proceeded simply by pulling the trigger. 

But most HOAs don't operate that way. "

And, at times neither does BLMH. So we today are struggling to deal with the accumulation of about 6 years of drainage improvements required by new roofs (this was put in place by the boards from 2002-2010 and before my tenure). I should add that we are also struggling because the boards of 2007-2010 failed to deal with these drainage improvements, preferring to pass the problem to future boards and future owners. Of course, better planning would assist the HOA board, but that planning would be accomplished by HOA boards which include members who may loath to plan and avoid communications. So this is a problem which cannot be resolved without new, and more competent boards.

It is true that organizations sink to the level of the lowest common denominator. After about 50 years in leadership positions, I can say this from personal experience and observation. 



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