Proposed 2019 Budget, potential $128,000 surplus = 1.88% Fee Increase

Well, she's back and it shows. With a potential $128,000 budget surplus, the new board led by the "Fee Raiser" has decided upon a "1.88%" fee increase. Why? Well it seems she thinks costs are going up by about $22,415. Yet that board is using the same basic budget that was created in the fall of 2017.

If those numbers seem an odd justification for a fee increase it is because they are.

This board apparently believes that even if they use the 2018 budget for 2019 which projects a surplus from expenses of more than $94,000 that they will be completely unable to generate a surplus in 2019.   Is that the definition of incompetence? I'll let the reader decide.

Even though there are absolutely no numbers to support such an outlandish position, she tells the board that a fee increase is necessary because costs will somehow, magically rise more than $116,000 in 2019. However, she can only identify cost increases of $22,415.  Oddly reserve categories are being ignored and to justify a larger fee, some reserve items are going to expensed in "Operations and Maintenance".  To get her way she'll do just about anything I guess.

I'm sure management will get the blame. Or perhaps she'll throw the new treasurer under the bus.  But here are the facts.

The board is solely responsible for the “Proposed 2019 Budget”. The role of management in these financial matters is to provide a bookkeeping service and to provide sufficient guidance to keep the board from going completely off the rails. Management will not and does not construct the budget. It is really important for the board to ask the right questions of management and prepare. Management will not argue against unnecessary fee increases proposed by any board. Management is well aware that it serves solely at the discretion and whim of the boards. Boards and owners should read the Illinois Condominium Act for further details about the duties, responsibilities and legal obligations of the board.

Now you know why I am off the board. 
I've had to deal with this since 2011. That included ugliness and personal attacks at anyone who didn't agree with a fee increase each year. There was a dislike for a former president who was a CPA. When he left after three years she and the locksteps did not say a "thank you" or even a "goodbye". Even going so far as to accuse the Finance Committee of "malfeasance" because they would not vote for yet another of her unnecessary fee increases.  A favorite expression: "Throw them under the bus."

Our mortal sin? A fee decrease of 2% one year and a 0% fee increase another. Yes, we actually decreased fees one year. That was unforgivable, but we had a valid reason. And what really pissed her off was that a budget surplus occurred. 

The three of us decided not to run and I decided to see what she and her lockstep buddies would do. Well, now we know. Financially flog the owners once more.

I do understand it is a small increase. But it is absolutely unnecessary according to the finance projections. We are not behind in our reserve contributions. In 2018 we identified a multi- million dollar cost saving for owners. I don't think this is the manner in which fiduciaries are supposed to operate.

All I can say is "Owners get the boards they elect". So again at BLMH the owners created this. They decided to sit back. LOL.

She will really make me look good. Here's my leadership record, and let's not forget all of the capital projects that were completed:

• Average annual fee increases of less than 1% from 2014 through 2018 (Actual 0.40%).
• Annual budget surpluses.
• Full funding of reserves during the years 2014 through 2018.
• Approximately an additional $300,000 added to reserves 2014 through 2017.
• A potential addition of $440,000 added to reserves 2014 through 2018.
• Avoidance of 5% annual fee increases while achieving the same results.

I'll say that again. To replicate the results would have required an annual fee increase of 5%.  But that was the preferred method. To me it is apparent that the lazy prefer to raise the fees on the owners. "fiduciary"? what is that? Believe me, to get her eyes to really pop, all I had to do was talk about our owners as the "shareholders" they really are.

So here's some the legacy: Over a period of 11 years, from 1998 to 2009 the boards and I do believe she was president for all of those years, they ramped up fees at an average annual rate of 6.85%. Owner fees nearly doubled over that period, reaching about $295 per month in 2009. But by the fall of 2008 the angry owners had enough. The president and most of that board was replaced.

So what was the state of infrastructure during the above:

• In 1998 I understand the reserves totaled $86,321. 
• In October 2008, with Lakecliffe Drive failing, the board had allocated only $90,208 to Paving and that included all streets and 84 driveways. 
• The roofing project began in 2005 at 1775-1777 Gloucester, the address of the president.
• Only one roof was completed prior to 2009. 
• By 2009 the reserve allocation for roofs was lacking about $1,241,000, which is the reason the board prior to 2009 stated during board meetings that it would replace roofs “at the last possible moment” and maybe one or two per year. This was apparently because of funding issues. 
• There was no money allocated in the budget for water main failures, yet they had occurred frequently commencing 2001 or so. 
• There was a large and growing backlog of other projects. 
• There had never been an independently conducted outside reserve study for the association. 
• Yes, there were real money issues and a lot of angry owners. 

I made the critical error of asking her back as Treasurer in 2011.  She is a good bookkeeper and can sign checks and compare invoices to assure they are ours. She likes to hobnob with the powerful. A typical politician.  She even brags about how she accomplished all of this success with a columnar pad.  Insists that computers including spreadsheets are unnecessary.. Hmmm, perhaps that is a part of the problem. LOL.

How much is enough?
Somehow she intends to spend more than the budget that is being used by the 2018 board under such "leadership". How much more out of Operations and Maintenance? Oh, about $116,922 more in 2019 than was spent in 2018.  How can that be?

Never mind that we've had budget surpluses every year since 2012.

We had a large projected surplus in 2017, but 2018 is the largest ever. How large is this? Back in 1998 this individual was on the board and I understand the entire reserves were about $90,000. I'll be posting more about the consequences of this management style. LOL.

The "Fee Raiser" insisted to the one board member who asked "Is this necessary" that "Yes, it is absolutely necessary". So the board ignored the budget surplus and decided to raise fees, apparently just because they can.

The "Fee Raiser" was voted out in 2008 and may be seeking revenge upon the ungrateful owners who booted her and most of her board that year.

I've done the numbers and frankly this is stupid. ? Instead, the board chooses to ignore the projected surplus and is pretending there is a budget issue when there is none. Why is that?

What are the Owners? 
Well, their sole purpose appears to be to generate income for the association, unless they are friends.

Favorite Quotes
Our Fee Raiser is long on quotes:
"Follow the numbers" (apparently only applies to others)
"You can paint a pig but it is still a pig" (describing BLMH)
"You can throw them under the bus" (describing others)
"Stupid is as stupid does" (describing others, including boards and owners)
"You can't teach an old dog new tricks" (proves that!).
etc.

Perhaps she's living by her mottos. Who knows?

I've sent specifics to a few owners. One of the questions I'm asking the board is "How much is enough?"  Apparently as much as she can squeeze from the owners.

I wonder how long it will take to ruin the association?  Any bets?

Here's the most recent budget. This one is the one that's being replicated for 2019 and this one will apparently generate a six figure surplus:


BLMH 2018 Budget