North Entry Landscaping Project, Landscaping Issues, and Supporting Budgets

Landscaping after Demolition - South side of north entry -May 2021

Landscaping after Demolition - North side of north entry - May 2021

Before the North Entry Landscaping Project began:

What went wrong at the North entry project?

During the annual meeting one owner inquired about the torn up landscaping and improvements at the Northern entry, and asked about the unusual delays. "There have been additional 6 weeks delays in materials." was the board response.  However, the September 9 agenda included this item: "North Entrance Landscaping Proposal.......".  Apparently the board didn't put all of the pieces of the project into place when the demolition began. It seems it was unable to direct management to purchase the landscaping until the September 9 meeting. 

Work began in May and here we are, 5-months later.  A better approach would be to get the drawings made, get bids, get any permits necessary, order the materials, hire the contractors and then schedule the work as necessary to coincide with material delivery.  That apparently did not happen.

Instead, early in spring the association contractors, as directed by the board via management, demolished both sides of the entry landscaping. 

The delay may also be attributed to permitting issues. But that would be a smoke screen by the board. It is really important for boards to put on their "thinking caps" and ask pertinent questions during the board meetings. The board has not offered any information to owners to justify a 5-month delay.

The new stone entry marker in the photo below is close to the street and the City of Wheaton does have frontage restrictions.  In the photo below the stone monolith is about 18 feet from the Lakecliffe Street curb. The distance to Briarcliffe Blvd is about 35 feet. I don't know if this created a permitting issue, but the board does. 

Situation as of late September

Finances and Fees required to pay for this - from where?

The association budgets do not reveal the actual state of association reserve finances. The budget merely shows the allocation of fees to reserves.  It does not indicate how much was spent in the current year from reserve accounts (the "Replacement Fund").  See Note 1 at the end of this post.

After significant effort on my part and a year of delays I received a copy of the 2018 audit in October, 2020. It indicated the following:

• $1,057,921 reserve balance 2017 ("Replacement fund").
• $683,539 reserve balance 2018 ("Replacement fund").
• $265,765 Operating Fund Balance 2018 (unspent).
• $939,304 Combined Operating Fund and Replacement Fund balances.

From the above, it can be construed that the boards 2010 to December 2018 did an exemplary job, pushing forward and completing many maintenance and replacement initiatives while controlling fees. Using tight budget controls it seems that a surplus of more than $250,000 was accumulated in the O&M budget. That is money collected, but not spent for operations and maintenance. Kudos to my pro-active board members. (Note 2).

Yet, in October 2018 the board voted for a 1.88% fee increase, completely aware that according to their budget a substantial O&M surplus, about $124,000, had been created by the board that preceded them.

The 2015 reserve study update with board input allocated $170,639 for landscaping replacements for the entire property for the period 2015-2024. That included trees, grass, shrubbery and any other plantings.   According to the budgets provided to owners, during the period 2014-2021 the boards allocated an additional $188,349. 

There is no specific line item to improve, rather than replace, the entry landscaping. However the board decided to do this in 2021.  That decision and this "improvement" is the subject of this post. 

The board has discretionary power of how to spend the reserve "Replacement Fund". Money can be moved from one category to another.  For example, street funds can be moved to landscaping replacement. 

Boards can also increase annual funding of the reserve categories in the "Replacement Fund" and it is prudent to do so if special issues are identified.  This is why boards added annually to the funding for trees and landscaping in the budgets.

However, the purpose of the reserve funding is the long term replenishment of funds for the Replacement Fund.  For example, the first roof at 1777 Gloucester as part of a large, nearly $1.5 million re-roofing project which began in 2002 is already almost 20 years old. The next phase of the roofing project will begin within 10 years. 

The boards of 2014-2018 were aware of the issues the association faced because of dying and diseased trees.  Our Operating & Maintenance budgets include an Arborist firm for care of the trees. Even if a board does not walk the property and take notes, the board is given status reports as to condition by the arborist. This information is forwarded to the board via monthly Management Packet for each meeting. Pro-active board members do frequently walk the property and take notes, leaving their pet behind. 

As the costs and magnitude of the tree problem was revealed, the boards over the period 2014-2018 allocated additional funds annually to deal with it. The boards increased the funding of reserves allocated to this (the "Replacement Fund"). However, other categories were not reduced. This was not a "rob Peter to pay Paul" situation. Overall reserve funding objectives were maintained. I can't state what occurred in October 2018 to the present because I left the board at the end of September, 2018.

However, even though there are replacement fund categories, precisely how and when reserves (Replacement) funds are spent is solely at the discretion of the board, which is why the replacement of dead shrubbery, or other remediation such as replacement with sod,  was passed over in 2019-2021.

Budgeted Replacement Fund Increases, don't necessarily result in owner fee increases

Here are the board budgeted increases to the the Replacement Fund to address dying and diseased trees. Landscaping related directly to drainage was handled in other categories, including O&M maintenance contract hours. 

It is to be noted that reserves can be increased without raising fees, which is why there was no fee increase to owners in the budgets of 2015 and 2017.  The budget of 2014 included a 1.00% increase, and the 2016 budget included a 1.50% fee increase; from 2014 to 2018 the increases totaled 0.50%.  Furthermore, any annual O&M budget surplus may be moved to the Replacement Fund.  However, because budgets are prepared in October, surpluses in the budget are merely projections and may not actually be realized:

• 2014 budget: Additional $18,852 budgeted to the Replacement Fund to deal with issues related to condemned fireplaces (funds never used for this purpose, because it was unnecessary).
• 2016 budget: Additional $57,739 to deal with trees.
• 2017 budget: Additional $22,902 reserves for Landscaping issues (dying shrubs).
• 2018 budget: Additional $22,902 reserves for Landscaping issues (dying shrubs).

The boards of subsequent years 2019-2021 maintained the posture of the earlier boards. Replacement fund allocations to reserves were increased above the base reserve amounts:

• 2019 budget: Additional $22,902 reserves for Landscaping issues.
• 2020 budget: Additional $22,902 reserves for Landscaping issues.
• 2021 budget: Additional $20,150 reserves for Landscaping issues.

The reserve studies completed prior to 2018 did not include the Viburnum Shrub die-out as a need for fees expenditures, because the problem had not yet been identified. The problem was noticed in July 2017 as I was walking the grounds. I took photos, the arborist was consulted, and the board and management were notified shortly thereafter.

The budgets do not reveal the actual state of association finances in the reserves, the "Replacement Fund".  The budgets do indicate the allocation of fees each year to reserves.  The budgets do not indicate how much was spent from reserve accounts. 

Only the financial documents including the annual audit, Balance Sheet, Income and Expense Statements, etc. indicate actual reserve fund spending. The annual audits provide additional information, including any transfer of O&M budget surpluses to reserves, or short term borrowing from reserves for O&M expenses. That information is not readily available to owners. For example, it is not on the official Association portal.  (September 26, 2021).

Avoiding dealing with other Landscaping Problems

I have to assume that the boards of 2019-2021 decided to defer dealing with the Viburnum shrub problem, which exists throughout the property. Instead they decided to improve the North entrance landscaping. This indicates a different priority or agenda. It also implies that the board decided there are ample funds allocated in the reserves (the "Replacement Fund") at current fee levels to deal with the dead and dying shrubbery. 

As for the delay to the North entry project, I assume the board presidents 2019-2021 did not provide sufficient board oversite or were perhaps the champions for the new entry landscaping. It seems the Treasurer ignored the reserve studies, and the entire board ignored the die-out of the Viburnum shrubs.  

What will the board of 2022 do? (Elected September 2021)

There are currently three board members with combined board experience exceeding 50 years. They have been, and will continue to be, the motive force on the board and should bear the brunt of responsibility for the issues.  The Landscaping Director did not get sufficient votes to remain on the board. She/he has been thrown under the bus.

Will the three most experienced board members advocate the raising of owner fees to deal with acute landscaping problems? Or will they move funds from streets, concrete and so on to deal with the landscaping replacements?  Will they "kick the can down the road" as some did prior to 2008?

A sampling of the Photos by me, provided to earlier boards:

Fireblight identified in 2018

Dead Tree 2018

Infected and dying Viburnum shrubs July 2017

Click for link to "About these Dying Shrubs"

Allocation of Resources, Board awareness and the Reserve Study

Boards were made aware of the Viburnum shrubbery issue via photos and discussion during association meetings. The problem did not surface until July 2017.  To make future boards as well as all owners aware, the "Guidance" insert of the September 2018 newsletter included this under the item Surveys and Projects: "From 2019-2022, the viburnum shrubbery should be replaced."

The most recent reserve study included this board approved communications exchange with the firm doing the study:

Board Committee: "Items 4.500 and 4.501. In 2016 we expended more than $100,000 for landscaping restoration. We have lost about 100 trees in three years and more are diseased. A substantial amount was expended to remove these trees, some large. In the 2016 budget the association allocated an additional $57,739 for trees and related restoration. The project of 2016 removed scars, did grading, installed turf, removed and replaced trees and  added plantings. This is in addition to the drainage work as part of the current phase of the roofing project. Because of the age of this property, no trees will be planted where water main replacement would damage them. We anticipate an additional $66,270 in 2017-18. About $17,195 in 2019, and similar amounts adjusted for inflation in 2020 and 2021. We can certainly include these expenditures. We will also show a subsequent project [per year] of approximately $17,200  + inflation [commencing] in 15 years. " (Emphasis mine).

In 2016 the board approved these comments. At the time there had been no discussion of improvements to the North entrance, nor were there subsequent discussion in 2017 & 2018 for a replacement of the North Entrance landscaping and signage. 

In 2017 there was no mention in the Reserve Study notes and board comments about the replacement of thousands of dying shrubs, because that need had not yet been identified. The beetle was first identified in July 2017. At the time the full magnitude of the problem was not realized.

I have a concern that the boards of 2019-2020 are pursuing a narrow agenda, preferring to defer the shrubbery replacement while doing less urgent entry re-landscaping.  This board approach may increase owner fees in the future as needed replacement is deferred and the "can is kicked down the road".  Problems will eventually surface as they did in 2008.  

That is similar to the situation I encountered while a board member in 2010.  During eight years I did a lot, but some board members may have a personal agenda. That is why I am no longer on the board.

Cost of grass goes beyond replacement and includes water consumption

Furthermore, the board has returned to the old, ineffective method of covering dead spots or tree removal scars with grass mat.  We shifted to sod in select areas during the period 2014-2018.  If the board insists upon grass mat they could specify a better quality and might get better results. There were good reasons to use sod on our non-level, rolling grounds.  After grading, the placement of sod held the soil beneath in place, and quickly took root. Yes, sod may be more costly, but all of the water to grow grass is costly.. as is the labor to put the hoses in place.

Sod and grass mat each use a lot of water to stimulate growth, so why spend owner fees to water inferior mat?  The association is paying about $5.05 per 100 cu. ft. of city water. A 3/4 inch hose can use 23 gallons per minute. Furthermore, we are paying maintenance workers to string hoses and collect them each day for this purpose. 

Watering for one hour consumers about 200 cubic feet and costs the association $10.10 in water bills.  The association has about 15 acres of green.  A few year ago we had 95 scars under repair. If each scar was repaired and was watered for one hour, once per week the cost to the association for water to grow grass was $960 per week.  Drainage work and repairs require even more grass.  

Our landscaping is complex. I've posted about that in the past. Perhaps it is time to post about the contractors involved, methods and coordination issues.

Too bad the board doesn't read this blog. But then "You can't fix stupid" and it is largely the other 330 owners money that is being spent. Ditto for the owners who pretend they live in an apartment. When I decided no longer to be on the board it was with the realization that I was at best a servant. One can argue the pros and cons, but I had eight years of experience on the board to draw upon when I post here.  I honored all of my agreements and kept my fiduciary duties and commitment. Owners have benefitted. I'll be selling or renting my unit.

Here's a link to the viburnum issue:

Link:  Viburnum Shrub Issue

Dead Viburnums, July 2018, one year after this problem was identified

For a little perspective and history about the landscaping at the association, I suggest one click on the following link.  It will include all posts with the labelling Landscaping which includes the posts about the Viburnum issue already linked, above. Only six posts are visible at a time, and so to view the older posts, one must click on "older posts" at the end of the sixth.

Link: Landscaping Posts

Notes:

1. I question the accuracy of the "Assessment Income" numbers in the budgets.  For example, the 2020 budget presented to owners showed that 75% of the annual assessments had been collected as of September 30, 2020.  In other words, all owners were current at that time and there were no delinquencies. If anyone reading this checks earlier budgets, they will see that this is consistent.   I do appreciate that management cannot predict the future, so it is not possible to predict with certainty what will occur from October 1 to December 31, each year, pertaining to assessment income. Yet the annual budgets and owner fee adjustments are prepared using September 30 data each year.  The assumption is made that all owners will pay their fees fully and on time. The "Contra" or "Bad Debt" items in the annual financial reports provided to the boards finds this to be inaccurate. 
2. Many of the projects were described in the official Association newsletters. Here is a link to a blog post which includes a series of links to view 10+ years of newsletters, or download individual PDF copies.  As of 9/27/2021 these are not available at the Association portal. Link:  Click to view or download newsletters

(C) 2021 Norman Retzke