Are HOA Newsletters Important?

A newsletter may be the only means of communications with complacent or uninvolved and consequently uninformed owners. Here's an example.

I am and continue to be very concerned by the overall owner malaise and lack of participation here at BLMH. Overall I would much prefer a higher participation rate by owners. I think we had about 20% attend the annual meeting and we did achieve a quorum. But I think voting percentages below 50% are too low and I am certainly distressed when fewer than 33% vote. I've provided my perspective in the newsletter. In fact, my primary interest in being the president of our association was that it gave me access to the "President's Message" which is the first item in our newsletter. Why? Because "In communications we can accomplish anything."

The causes are many and some are historical. This association made no demands upon owners for decades other than keeping the rules and paying monthly fees. In fact, paying monthly fees is one of the rules, so I guess I could say that the only requirement to be an owner here is to keep the rules. That is the minimum standard. A very long term board member once quipped to me when we were discussing the impact of budget increases on owners "I didn't think we catered to the lowest common denominator."

Yet, that is precisely what that board member and many earlier boards have done. It is not a surprise to me that we have long term owners (25 years or more) who live on the property and never in the last 15 years do they attend association meetings or even vote in the elections. They have decided they live in an apartment complex and benefit by the labors of the various boards. Of course. they have their complaints to fall back on as an excuse for not participating or attending. "Stupid is as stupid does."

I see the newsletter as a means of supporting all of our owners, be they active or not. I prefer an enlightened and informed ownership over the opposite.

Why are Newsletters Important?
I’ve been observing and attending HOA meetings regularly for about 10 years. For my first HOA meeting only I and my spouse were the owners in attendance. This was in February or March of 2002. We were excited to be new owners. When the president addressed us "What do YOU want?" the wind went out of our sails. Some things haven't changed here at BLMH.  Furthermore, boards have had an adversarial relationship with owners at times. So we have an association history to deal with. That includes entrenched, uninvolved owners and any former board members who have a personal position or legacy to protect.

I do appreciate the resistance of some board members to a newsletter. Newsletters are a lot of work. Board members prepare them and walk the entire property with their committee to distribute them. Via the newsletter board members reveal themselves to the owners, and that can be uncomfortable. One long time board member has had a lot of negative things to say about the newsletter and since 2008 there have been differences of opinion.

I see the need for a factual and far reaching newsletter this way:

1. There is the obligation of the board to communicate with all owners in a fair and balanced way. 
2. All owners should be given as much information as possible and the newsletter is our only method of communicating with all owners and our residents.
3. The newsletter can be an informative and educational tool for owners and for future boards. 
4. We should have a concern about the future of our associations and the ability of future boards to carry on many long term programs and plans. In fact, reserve studies do have a 30 years horizon. Our association expands this to include a 10-year rolling plan. How are future boards to be prepared to continue this? As a matter of fact, all future boards will come from the ranks of our owners. It is best for the association if all owners are prepared to assume these duties in the future, 
5. Owners vote each year for their board, It is my opinion that owners be well informed of the substantive issues in an association. A fact filled newsletter is one very important way of achieving this. 
6. One of the purposes of the newsletter is to engage owners in the operation of their association. 

I do have a real problem with some of the attitudes that have been expressed by board members from time to time over the years, including “If owners want to know what is going on they should come to HOA meetings.”

Yes, owners should attend meetings but there is no formal requirement that they do so. In fact, some previous boards and board members have actively discouraged owner attendance and participation. The most crass think they can do it better than anyone else. So today we have to deal with the 66% of our owners who were trained by those earlier boards, as well as the more recent 33% who may not be aware of the realities of association community living.

It really shouldn't be that difficult, and via our active programs and the current newsletters I intend to lay the foundation to prove that. I stated in our most recent newsletter "Moving from Reaction to Creation-  We are now entering a new chapter at our association because of the capital reserve program that is in place, the completion of the roofing project, the replacement of major portions of our water mains under Lakecliffe and the replacement of Lakecliffe and Salisbury. The past 10 years at our association has included breakdowns and reactions to many factors, including a maintenance backlog and the financial pressure created by both internal and external forces. There is a lot of work to do and for that, see the other reports in this and future newsletters. Even better, come to an association meeting.'

Owners Make Ciritical Decisions
Our owners vote for their board and decide who will be on the board. That includes themselves. Our association is again understaffed, But we have had two owners step forward and expressed a willingness to be on a committee. Each and every one of us makes a difference. As I stated in the November-December newsletter "Annual Meeting  Thanks to those owners who exercised their right to vote and thanks to those who attended the annual meeting. Thanks also to those who have expressed a willingness to be on a committee; you will be contacted about this.   Each board member gave a concise presentation about the State of the Association. My presentation focused on our 10- and 30-year plans and I presented a series of charts, documents and explanations for about 20 minutes. Each board member was subsequently given a DVD copy with audio added.  I prepared a version for YouTube."

Bottom Line
The obligation to communicate rests with the board as one of our fiduciary duties. Some of our recent newsletters provide more insights into the decision making processes here at our Association. There has been a deliberate evolution of the newsletter since the Fall of 2010. I have pointed out to the board on several occasions that our ownership has shifted dramatically since 2009. Since then about one-third of our units have been sold. I interpret this several ways, including the fact that some of these owners are not really aware of the meaning of community living and they don't carry the baggage of 25 years of living here at BLMH, nor is it likely they are fully aware of our rules and regulations. The newsletter is an obvious way of informing them.

It is fortunate that many of our rules and regulations are common sense items. But one might be surprised by some of the complaints that surface. I use the problems that surface with new owners to support my position that continuous education and reinforcement is a necessity. The Newsletter is the obvious tool. I am hopeful that more owners will participate in our HOA, but I have observed some resistance by board members since I purchased here in 2001 (closing early 2002).

It may be that the board is at times its own worst enemy. However, I do appreciate that some board members may be averse to more meetings and more work. I do know that I am.

Our Newsletter:
For the November-December issue of our newsletter, click on the following:

BLMH November-December Newsletter, less our Winter Tips Insert

A Range of Possibilities - An Envelope of Reality

When planning, there are a range of possibilities. Predictions are for the charlatans, the politicians and the fearful. Planning is for the pragmatists.

During a recent HOA meeting in which we were working on the annual budget an owner addressed the board about the future.  The owner's address was probably influenced or triggered by the annual meeting, during which I made a 20 minute presentation about finances, budgeting and projects for our association. It may have also been influenced by the contrarian position of a board member.

I brought my crystal ball with me to the budgeting meeting. I've done this from time to time as a tongue in cheek metaphor for what some board members and many owners expect us to do.

The owner who addressed the board about budgeting provided the usual insights. Of course owners want low fees and of course owners want the property maintained. Furthermore, owners who rent their units as he does do intend to make money. And, of course there are some very large projects in our association on the horizon. These include possible tuck pointing, more street replacements or resurfacing, water mains, streams and so on.

The owner wanted to deal in "real numbers" whatever that means. I remind the reader that during the annual meeting I had presented a series of extensive, probable projects which would occur during the period 2016-2025. I gave a DVD of that presentation to each board member. In fact, it is possible there could be reserve expenditures of $3.2 million over that 10 year period. I also stated during the annual meeting that the reserves could reach $2 million in 2025, as the association saves for the really long term mega dollar infrastructure replacement projects.

However, the owner again expressed the need to save for the future. I pointed out that we are doing that. That this is the "New BLMH" and when this HOA began the current roofing project, it didn't have the reserves to do so, and at the then current saving rate could never achieve the project in the required timeline. That was 2003. Today we are already saving for the next roofing project about 25 years from now. The owner stated that he was concerned about how we would do that project.

I pointed out that I will be dead in 25 years. Simply a fact given my current age. It is probable that no one of the current board will be a board member in 25 years. However, precisely how future boards go about projects 15-30 years in the future is not the issue for a current board.

What is the issue is formulating a plan that recognizes the future needs and puts in place a realistic means to fund these very distant projects. We are doing so. I also stated that I am in favor of certain engineering studies to determine how best to go about some of these projects and at what possible future cost.

I reminded that owner that the first ever professionally prepared Reserve Study in this association by an outside, unbiased firm occurred in 2010, when this HOA was 32 years old.  No prior board had ever done that.

I took some time to go into details about a number of projects, including streets, streams, decks, water mains and so on. I stated the precise amount we are currently saving each year for that future roofing project, I pointed out that recent boards are not "kicking the can down the road." We are addressing all of the issues head on.

I also pointed out to this owner that this is a very different association than it was when he was a treasurer and architectural director prior to about 8 years ago. Since then we've removed more than 100 dead and dying trees, and are in the midst of a landscaping revitalization project. Since then our major street has been replaced even though it failed prematurely and it has been replaced with a properly engineered 30 year street, our roofing project has been completed (70% since 2010), we have pro-actively replaced more than 300 feet of water mains, rather than simply apply bandaids. We have replaced 63% of our driveways and the remaining are in "good" condition, We have replaced a number of garage floors, some unit decks, several unit patios, replaced portions of streams, removed a failing bridge and common deck and installed new walks and a bridge. We've addressed numerous rainwater handling issues throughout the entire property involving most entrances and the common areas. We have developed a rolling 10-year plan which dovetails into our 30-year plan. We perform annual site infrastructure surveys. Obviously, something has changed. I also pointed out that since 2009 we have about 33% new owners. Since then it seems we have a shortage of quality units for sale.

One of my goals is to leave this association in much better condition than I found it. We are accomplishing that. I also want fees to be consistent with the needs of the property, the financial ability of the owners and with the recognition of the value of our units.

To accomplish this requires recognizing that there are a range of possibilities encapsulated in an envelope of reality.

A Range of Possibilities
What does a "range of possibilities" mean? It means that there are many possible outcomes to our plans and one of my goals is to provide the association and future boards with the tools and finances to provide reasonable flexibility.

I have no interest in spending all of the money, nor do I have an interest in taxing current owners for nebulous and uncertain "worst case scenarios." I stated that the "worst case scenario" is the immediate failure of serious infrastructure, such as our water mains. That isn't happening and it won't, crystal ball notwithstanding. I do want owners to live comfortably in a sufficiently maintained property in which the streets are good, the driveways maintained, the garages and roofs are functional and so on. I have stated that I am suspect of those who say "we have enough money" and I am also suspect of those who say "we don't have enough money." The real question is this "Do we have sufficient funds to deal with current reality and provide for future replacement?" We are annually saving more than three times the amount that this association was saving when I purchased a unit it 2002. We also have three times the reserves. We also don't have three large mega dollar projects coming upon us (back then it was roofs, driveways and streets; everything else was kicked to future boards.).

Yes, something has changed.

Our property is aging, yet we are no longer under duress. We have a plan and with that and the financial plan we do truly have options. We aren't practicing breakdown maintenance, or kicking the can down the road. We have shifted into preventative maintenance as a preferred standard. It is probable that we will begin replacing our front entryways, mailboxes and intercom and electric door closure systems within the next 10 years. However, it is impossible to state precisely when that project will begin. Future boards will determine this. So too for completion of street repaving, major stream work and so on. I cannot take responsibility for what boards did here prior to fall of 2010. Nor can I take any responsibility for the future. I can honestly say we do have a realistic plan. A range of plans which provide for a range of possibilities. That is propelled by my vision. Isn't this one of the duties of the president of an HOA?

We are collecting the reserves necessary to do this work. However, the begin and end, or completion dates will be determined by others in a range of dates. This creates a range of possibilities.

Of course, we must also set priorities. I do, each and every year. The setting of these priorities determines what in fact does occur each year. Running the numbers and doing those infrastructure surveys are a priority. It seems for many years that they weren't. But that was then and this is now.

However, all of this is contained within an "envelope of reality." Our units are, in fact, selling for about one-half the price of the average condominium in Wheaton. Our association is nearing 40 years of age. Not everyone gives a hoot about extensive grounds with walking paths, rolling grassy areas, waterfalls and streams. Yet, many of those who live here do really love it. Some say they plan on dying here. Almost everyone comments on how quiet and peaceful it is. No bars in sight. This isn't for everyone.

Certainty versus Chaos - Why I choose to run the numbers

This week we began the budgeting process for our association. However, one board member was unable to attend the meeting and so we were unable to complete. He and I did discuss the issues that came up during the meeting and I did provide a letter with the text about this to the missing board member. I'll get a copy to management and each board member early next week.

I was asked if I really like running the numbers. My response is that in fact, I don't. But I consider it better than the alternatives, which include uncertainty, breakdowns and chaos.

This is something I learned in real life, in my business and in my work in financial planning, which includes retirement planning, saving and investing. I also learned it is far, far better to practice preventative maintenance rather than breakdown maintenance.

I am also certain that no matter what we do there will be unforeseen circumstances and breakdowns. That's normal. However, diligent and rigorous planning can reduce the occurrence of these problems, which the unprepared will erroneously call "accidents." Boards can and do become completely ensnared dealing with the consequences of breakdowns and that includes angry or upset owners. IMHO it is far, far better to spend the time planning and preparing. However, not all agree with this approach.

It is a process
It does require many steps to put in place a workable plan for a large association like ours. The same approach has benefits for all home owners associations. Our larger association covers about 40 acres with two lakes, 44 manor style buildings, 15 acres of turf, three streams with waterfalls and ponds, our infrastructure including 84 driveways, 84 patios and decks, the electrical systems for our street lighting, the streets, walks and water mains.

What are some of the things that have been put into practice in recent years, and which I've emphasized in my 6 years on the board?

1. Regular, professionally prepared reserve studies (by outside, unbiased firms).
2. Regular condition surveys of the property. This includes nearly all aspects of our infrastructure includes the streets, driveways, garages, walks, drainage and rainwater conveyance systems, roofs, patios, decks, streams, waterfalls, ponds, gazebo, building entries, carpeting and other common area elements,
3. Regular consultation with our management and contractors and also with engineers about identifying perceived problems, dealing with maintenance and infrastructure repairs and replacements and so on. 
4. Frequent cost estimates and proposals to obtain the best possible numbers for updating the reserve studies using our internal data as well as that of the reserve study professionals. 
5. Annual or semi-annual financial reviews of the state of capital programs. Are we on track? Are we falling behind? Are we missing anything? 
6. All of the above is then incorporated into our regularly prepared reserve studies. These are prepared by outside, unbiased firms.  
7. Using professional contractors for all aspects of maintenance has additional benefits. Our managers and contractors provide regular assessments of the state of the infrastructure to the board. Obviously, there is also a real benefit to working with the same firms on a repeat basis. However, we have had board members take the position that an army of handy men could do as well, and some board members have taken the position that it is easier to hire a new firm than work out the issues with an existing firm. 

After we have done the above we also do the following:

1. Additional analysis of the 10-year plan on an ongoing, annual basis, This is in addition to the 30 year plan, The 30 year plan is "fuzzy" but we can really get a good picture for the 10-year plan. 
2. Avoid kicking the can down the road. This can create false security because reserves that are not spent in accordance with timetables will accrue. When boards and owners see these growing numbers there is a natural tendency to think that we might be collecting too much for reserves.A failure to keep current also creates "time bombs" which will show up at the most inopportune time. Certain repairs are impossible or extraordinarily expensive during our winters. Furthermore, future boards may be unprepared to deal with the cumulative effects of maintenance backlogs. 
3. Avoid knee jerk or automaticity when designing budgets. We do try to come up with realistic annual budgets, but we can't predict everything. For example, our association does maintain the streets in winter. That means snow plowing and the application of ice melt on streets, drives and at building entrances. We really can't predict how much snowfall we'll get in any year/  

There are financial choices to be made and balance to be achieved
We also have to face the issue that really long term infrastructure problems, those beyond 20 years, can be difficult to properly save for or to implement.  Can anyone really predict the cost of a replacement program 30 years distant? For example:

1. Determining how much to save for a large and distant infrastructure program can be difficult. Factors to be considered include long term inflation, impact on savings (return on investment). In recent years and for planning purposes we've seen annual inflation numbers promoted from 2.0 to 3.8%. That is quite a spread over 30 years. 
2. To prepare for really long term projects may require supplemental analysis such as engineering studies. I have a moderate amount of confidence in the professional firms who prepare our reserve studies. However, we've seen projects promoted which would have required several million dollars, one of which we determined was unnecessary and we could and were addressing via annual maintenance programs. That program was already in our Operation and Maintenance budget in the amount of $20,000 per year. That's $500,000 that will be spent over 25 years and that is much less costly than the $1 million to $1.5 million that was expected to be required. This is an example where regular preventative maintenance is superior to deferred maintenance accomplished by reserves.  
3. The above example is also superior because it more fairly applies the fees of owners. Each year a small portion of the current owners' fees is applied to this infrastructure work. 
4. In considering our fees for reserves and the amounts to be saved, the Illinois Condominium Act requires that the "budgets adopted by a board…..shall provide for reasonable reserves for capital expenditures and deferred maintenance for repair of replacement of the common elements. “ It is also stipulates that “the board of managers shall take into consideration the financial impact on unit owners, and the market value of the condominium units, of any assessment increase needed to fund reserves. “  
5. I would also think that balance dictates that we consider both current and future owners. "Kicking the can down the road" can result in lower fees for current owners to the detriment of future owners. After all, the maintenance will have to be done one day. On the other hand, Saving for nebulous and uncertain projects 20 to 30 years into the future can result in higher than necessary fees for current owners, which essentially transfers wealth into the pockets of future owners who might be the beneficiaries of lower fees in the future. 
6. In some circumstances there may be alternatives to be considered for large and expensive capital projects. There can be undesirable outcomes to be considered. For example, in 2003 a board decided to begin a more costly roofing project. That will have long term benefits for owners as it may increase the life of the roofs by 10 years. This was also the approach used in replacing a common street used by all 336 units. 
7. Earlier boards made a decision to go with a less costly street replacement and that necessitated significant repairs commencing six years after that street was put in and complete replacement at an age of about 12 years. So a street which should have had a life of 25-30 years failed, and this caused major disruption for all owners. We should strive to avoid these types of problems. 
8. Balance dictates that all owners, both current and future be treated fairly. This means that reserves must be fairly accumulated. For example, all owners should pay for the benefits of maintaining infrastructure, That includes roofs, driveways, streets and so on. If future owners want to add amenities such as swimming pools, community buildings and so on, they should pay for this in part via a special assessment and future owners should be fully responsible for paying for the benefits. Charging current owners for such distant improvements and benefits is inappropriate, in my opinion. 
9. Saving millions of dollars for distant projects can be problematic for another reason. Current owners may pay for these benefits, but future boards and owners may be inclined to spend the money saved over decades in different ways. We cannot control the actions of future boards and owners. So amassing large reserves may simply prove to be too tempting to future owners who will vote for boards to reduce their fees. There is a balancing act for current boards to consider. 

Good boards take all of the above into account. It can require more work to establish certainty for future capital intensive infrastructure projects. In HOAs comprised of volunteer boards, there may be some resistance by current board members to doing this work. It may also be viewed as something that is optional and will benefit future owners. Current boards may be inclined to pass this duty to future boards. That is a mistake as it does take many years to accumulate the necessary funds. Here at BLMH, the real saving for our mega dollar roofing project began about the same time as that project began. Too late in my opinion and it did require some large fee increases for reserves over a 10-year period to accomplish. I've pointed out that this was a major contributor to recent fees increases. In 2001 12.28% of the fees in thour HOA went toward reserves. By 2011 is was nearly 34%. Over one 10-year period the contributions to reserves increased an average of 9.64% each year. Two of those years the increases were more than 22%. In two of the years the increases were 0%. 

Note: 

1. The annual fee to deal with Operations & Maintenance for the average owner at BLMH has increased about 40.7%. However, over that same period the annual fee to deal with Reserve requirements has increased 227%. These large Reserve contributions were embedded in the total fee, so it was not readily apparent to owners what was actually occurring. 

Planning for 2017, one of "the good new days"

We are beginning the planning for 2017, and more details about this later in this post. The next association meeting will the budget meeting. The board will determine the annual budget and then the fees to meet the budget. Last year it took two months to hammer the budget out. It nearly required three. It shouldn't be this difficult, but there are two opposing positions about how to run this HOA. One is based upon "the good old days" which really weren't all that good. Then we have the "good new days" which is my position. This post looks at some of the planning details.

In the current election we achieved a quorum. But the majority of owners didn't attend the annual meeting. For them the annual election came and went. The four members who were on the board and were running again were elected. No one volunteered or stood up to take on the 7th position. However, we do have two owners who expressed their willingness to be committee members.

The October meeting will include the annual positioning of board members to fill the available slots. With a board comprised of six, the position of president has importance beyond the implied leadership or possible cache of that position.

I view the role of president as significant, but there are limits when we are a volunteer board. However, there is one overlooked responsibility for the president. With a board of six, there will be times when tie votes are cast with three "ayes" and three "nays." In such circumstances, the president casts a second ballot, which is the tiebreaker. So the president's vote carries unusual weight and this might not be a good thing. For example, if the board was deadlocked about budgeting with three favoring a lower fee increase and the other three favoring a higher fee increase. This did recently occur and at the time the president (me) did cast the tie breaking vote, so the lower fee increase was passed. I'd prefer we have seven board members, but the owners have again decided otherwise.

What will happen during the October budget meeting? Who knows? But we again have an even numbered board. This isn't the best way to run a homeowner's association. It leads to strife and more backdoor machinations by the politicians among us. However, I will try again. But I may not be able to do much beyond making recommendations and it remains to be seen who the president for 2017 will be.

Whatever happens, here will be my planning priorities for 2017. However, what happens will be determined by the other five board members. All it takes is one to stonewall a project, or push a personal agenda. For example, it didn't take much to champion and spend about $15,000 on lock boxes on the property. It didn't take much to stonewall the common area patio behind Thames:

1. Continue the expanded, topical newsletter.
2. Continue to reach out to owners to engage them in the business of this HOA. An entirely different board than the one we currently have will be completing the current 10 year plan. Who will this be and how will they be prepared? 
3. Continue street repairs in the cul-de-sacs.
4. Complete the rainwater handling (drainage) improvements required by the new roofs. 
5. Continue dealing with the numerous scars of recent landscaping problems and the death of about 100 trees. 
6. Continue site condition surveys. In 2017 it is time to look again at garage floors. 
7. Continue work on the streams. We have two which are degrading. 
8. Make a decision to repair or replace the gazebo.
9. Make a decision of when to move forward with the replacement deck behind Thames and deal with the drowning duckling issue. 
10. Continue operating in accordance with 10-, 20- and 30- year plans.
11. Update the reserve study and the 30 year plan. 
12. Move forward with the replacement of brick sills on the property. 
13. Engage the board and owners in a responsible 40 year plan for our water mains. An engineering study is required. 
14. Expand my liaison efforts with our city. Our association comprises about 1.25% of the city population, and yet we represent far lower costs to the city than does the average homeowner because we are a PUD.
15. Attend "coffee with the council" and monthly city planning and council meetings. 
16. Continue efforts to influence the management of the city stormwater system which comprises lakes A, 1, 2, 3 and 4 and reduce the impact of serious storms on our association and the neighbors downstream. 
17. Continue to put pressure on Glen Ellyn and the College of DuPage to take responsibility for the consequences of paving over a substantial part of the watershed and piping the rainwater into Wheaton.  One-third of the watershed feeding Lakes 4 is in Glen Ellyn.
18. Continue maintenance efforts to avoid a backlog and to keep efforts current. 
19. Begin a study to determine best way to maintain the masonry on our buildings. This is a very, very long term project; longer in duration than our water mains. 
20. Continue work to maintain the water mains and continue discussions with the city to take responsibility.
21. Continue to push back against owners or board members who run their personal agenda to the detriment of the association and other owners. 
22. Make efforts to convince all residents to use those expensive lock boxes. 

Of course, there are different priorities to the above. Some things on the list will not happen. However, it is a certainty I will not be on the board in a few years. It is a certainty none of the other board members will, either. 

Fees - Remember the good old days? I prefer the good "new" days

I'll take the current reality over the smoke and mirrors that were promoted in the "good old days" in this homeowner's association.

An owner who has a complaint brought to my attention the fees back in the "good old days" when he purchased a unit here. I thought the reader would find it interesting. .

When this association was built as a Private Urban Development it required that the owners via their fees would be responsible for all of the following maintenance and operating costs, and more:

• Snow removal on streets.
• Street lighting including electricity (up to 400 watts per fixture).
• Exterior building lighting including electricity (336 fixtures).
• Interior hallway lighting including electricity (756 bulbs).
• Interior hallway electrical heating systems (84 large heaters).
• Water closet utility room electric heaters (84 heaters).
• Electricity for stream pumping systems.
• Pumps and concrete and piping for the stream systems and waterfalls. 
• Cost of water for grounds maintenance and three streams.
• Maintenance of the exterior of 44 buildings, halls and garages, including masonry, panels, trim, roofs and entries.
• Maintenance and replacement of all streets, parking areas and curbs.
• Maintenance and replacement of all water mains. 
• Maintenance and replacement of all walks (about 1/3 miles).
• Maintenance and replacement of 84 driveways.
• Maintenance and replacement of all common area patios and decks.
• Maintenance of 336 limited common element patios and decks.
• Maintenance of the common area electrical systems. 
• Landscaping including maintaining 15+ acres of turf and about 800 trees and 3000 shrubs.
• Shoreline maintenance for two lakes
• Professional management fees.
• Professional accounting fees.
• Professional legal fees. 
• Professional reserve study fees. 
• Saving and growing reserves as required by State statute. 

Here is the trick question: What were the fees in the good old days for each of the 336 owners per month to do all of the above? Pick one:

• $75 per owner per month
• $55 per owner per month
• $45 per owner per month
• $35 per owner per month

To help you in guessing which of the above is the amount of the fees "back in the good old days" here is the total annual Operating, Maintenance and Reserve Budgets that the above fees would support:

$75 per owner = $302,400 per year for the association, including reserves.
$55 per owner = $221,760 per year for the association, including reserves.
$45 per owner = $181,440 per year for the association, including reserves.
$35 per owner = $141,120 per year for the association, including reserves.

Answer: Apparently the association was collecting $35 per month in fees per month per owner back in the "good old days." Of course there were no reserves. I'd love to see that original budget. 25 years later the fees were less than a "staggering" $195 per month for the average owner. In fact, over those 25 years fees increased about 7.25% each year, on the average.  If fees had been a more realistic $75 per month "back in the good old days" then the required annual increase would have been 4%. And, this association would have been saving substantial reserves commencing with day one.

 Who is to blame for this? I'd prefer to look at root causes.

Our legislature requires the association save for reserves. However, how one arrives at the numbers is not defined. Builders are not required to put up substantial reserves. So this passes to new boards. The boards can cobble together any reserve program they choose. Here at BLMH they called it a "replacement fund." Here at BLMH the first comprehensive reserve study prepared by outside professionals for this purpose occurred when the association was 32 years old. That is a long time to avoid opening Pandora's Box, as one manager described the possible consequence in 2007.

It would be better if our legislature had a statute which forced boards to use competent, professional companies to arrive at a 30 year reserve study in year one. Better still, have the builder or developer do this so owners pay appropriate fees from day one. But the legislature didn't do that, and it never will. Now the legislature has qualified all realty professionals as being qualified to manage a homeowners association. I ask, what does selling have to do with maintaining a HOA, in particular one of 40 acres, etc.? But the legislature passed this decision to a board comprised of amateurs. Which is why our board in 2011 attempted to hire an army of handymen equipped with lawnmowers and attempted to replace management with a realty professional.

If you think this is an isolated problem, think again. A friend purchased a lovely and expensive town home in 2014. That small association has limited reserves and has yet to conduct a proper reserve study. That's another problem in the making.

Ultimately the problem passes to future owners. Of course, after buying a unit with a $35 monthly fee, who is going to push for higher fees? No one. There is that expression "if it is too good to be true, it probably is" but a sucker is born every minute is the other expression.

Of course, owners did realize that this was unrealistic. I'm sure those who sold homes and moved into a condo at BLMH realized what a "bargain" $35 a month was as compared to what they were paying to maintain their houses including the lawns and exteriors as well as the water for lawns. Which is why fees gyrated to meet bills. Nevertheless the owners simply chose to ignore the elephant in the room and fought to keep fees low for as long as possible. Some owners attacked boards in 2006 and thereafter as fees escalated due to aging infrastructure, but many of the real culprits had already sold their units and moved on. The board members and owners who remained were left to hold the bag in 2008.

This is one of the problems with HOAs. It has given far too many a bad name. There has been a lot of anger in the HOA community since 2002 and I do mean well beyond the confines of BLMH. People bought at very high prices and were squeezed by increasing fees as older HOAs dealt with the realities of aging infrastructure. In 2008 the foreclosures began and HOAs saw declining revenue. It resulted in a death spiral for some associations. Not all were as fortunate as BLMH with 336 units and a small group of owners who were willing to notify owners in writing and at personal expense of the magnitude of the problem in 2010. I was one of that very small group.

I'd suggest that we remember the "good, new days." These are the recent years when the association is being properly maintained, it has the fees necessary to support the maintenance efforts, it doesn't kick the can down the road, current owners are paying their fair share and are seeing results. The association has a 30 year plan and works diligently on a 10-year plan each and every year.

I'll take the current reality over the smoke and mirrors that were promoted in the "good old days."

All it takes is time

I don't want to understate the difficulty of operating with a less than fully staffed board in which tasks are not spread equally. On the other hand, I don't want to overstate the difficulty, either.

However, that old expression "We can do anything, all that is required is time and money" remains as true today as it did 50 years ago. The dilemma for most associations is both a lack of funds and volunteer boards which are understaffed.

Why could there be money issues? Early owners are inclined to press for lower fees and might prefer to ignore the requirements of a 30 year reserve program. If things become too far out of kilter, boards may delay crucial and expensive maintenance. They may undersave for reserves. Later owners won't want to pay the price for these earlier owner and board missteps.

Boards are always under pressure from a few owners. "Personal Agendas Running Wild" could be the title of a sometimes humorous video about the wants, needs and desires of the few. Boards may become insular and I've seen boards "circle the wagons" and avoid or discourage new board members. This may eventually haunt associations.

 It is not unusual to see boards fracture into groups. Come to our association meetings and at times you would think there were two meetings underway. One board member constantly carries on side conversations with a sub-group. This is also an example of undermining. I've attempted to reign in the side bar conversations. I've even interrupted them and asked if they were running their own meeting. I was accused of being rude.

That's how far out of tilt some associations can become.

At some associations the splits may be along age lines. Retirees may approach a board position as their main social activity and power base. Yes, it can be fun getting to know contractors, local municipal officials, members of the police department and so on. There is power in spending money, particular if it is a large sum. Spending the money of others can be fun; watch the politicians in Springfield and Washington. The board job can be expanded to fill all available time. Boards can also dump the difficult tasks on younger or more capable board members. This may keep younger people off the board. After all, they are working, may have family responsibilities and duties far beyond the limited confines of the association. For anyone who is really busy, expanding time for tasks is considered to be a waste of time.

Ironically, with all of the changes in technology dumping on younger members may mean the board fails to retain some of its most capable members. I've also written about the real possibilities of cognitive decline as we age; this can begin as early as 50. I've written about the reality of physical health for people who are 70 and older. A failure to design association boards which are comprised of tiers of ages, or which become very insular, or which don't mentor and attract younger owners is a formula for disaster.

Time is our enemy and there will also be an insufficient amount.  Ultimately we are looking at resources, and human resources in a home owners association may be scarce. In our association with an understaffed board comprised of 1.8 percent of the owners, we are in a resource desert.