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
Showing posts with label Fiduciary Duties. Show all posts
Showing posts with label Fiduciary Duties. Show all posts

Thursday, January 9, 2020

Letter to the board January 6, 2020

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This went to management:

"Hello Dave & Rosemary
Please forward this to the board and include it in the January packet. I’m looking forward to a detailed response by the board.  It was stated by the board that email addresses would be in the newsletter. That did not happen.  Why not?
Thank you!

1     1. The board did not perform the following maintenance items in 2019. These were scheduled in 2018. I want to point out that once an association falls behind in maintenance it is difficult or impossible to catch up.  Here’s a few items the board decided not to do in 2019:
A.      Apply GSB-88 preservative to Lakecliffe Blvd after repairing it and preparation. A proposal was obtained in fall of 2018 but the board agreed to delay until 2019. This approach is used by nearby communities including Wheaton and it was recommended by the project engineer for the street replacement. This was discussed and the info was given to the entire board including Bailey, Scudder and Seery. In 2018 they all agreed to proceed.
B.      Replace 3 or more garage floors per survey with management in 2018. Some are in poor condition and 40+ years old. Damaged floors can be a hazard for residents.
C.      Replace at least 4 driveways in 2019 per survey with management in 2018. Poor driveways can be a hazard for residents and visitors.
D.      Resurface Plymouth including curb and basin repairs in 2019, per board and management.
E.       Resurface the remainder of Dover and curb and basin repairs in 2020.
F.       Etc.  Detailed lists were provided to the board including Bailey, Scudder and Seery in 2017, again in 2018. A summary was provided to owners in the August-September 2018 newsletter under “Guidance”.  See newsletter at www.blmh.org

 2. I received the 2020 Approved budget. I noticed that 1) there is an approximate 0% fee increase and 2) the projected year end 12/31/2019 indicates a budget surplus of $58,214 (Projected total year end income minus Total all expenses).  Such a surplus could justify a 0% fee increase.

 3.  Certain board members cannot comprehend my position about the October 2018 decision of the board to raise fees.  At that time President Sheryl Bailey insisted a fee increase was “absolutely necessary” and the entire board voted for an increase of 1.88%. However, at the time the projected budget surplus for 2018 was about $124,000. There was no justification for a fee increase, yet the board decided to arbitrarily and capriciously raise fees for no purpose. That’s a breach of fiduciary duty.  At the time Bailey, Scudder and Seery had a combined 40 to 50 years of board experience. Calvo also had board experience. A board should never raise fees simply because it can and has the power to do so.

4.   I suspect some board members don’t understand the role of a fiduciary. In fact, board members don’t represent or work for the benefit of the association. They are elected to represent all owners who they are to treat equally and fairly.  The board should treat owners as the shareholders of this not-for-profit corporation.  

5.      On the matter of budgeting the legal statutes for the board are clear.  Read the Illinois Condominium Act and governing documents. Board members should be intimately familiar with the governing documents and the Illinois Condominium Act. The board should act in accordance with these.

6.       Being on the association board is neither a hobby nor a power trip, where board members exercise dominion over other owners and residents.  Board members should not run their personal agendas. In view of the projected surplus  in 2018 the board members who voted to raise fees because they could each afford the fee increase were in breach of their fiduciary duty. Board members should not cater to the “squeaky wheels”. In other words, treat attendees of meetings courteously and with respect, answer their questions with honesty and integrity and the board should take responsibility for its actions.   All owners are to be treated equally, be they onsite, attend meetings, or remote owners; to do otherwise creates separate classes owners. That is forbidden by the Illinois Condominium Act .

7.      To keep all owners informed requires communications by the board. Doing so is the boards’ responsibility as fiduciaries. Owners may choose to be uninformed, but that does not relieve the board of this fiduciary duty.

8.   Here’s some financial history for the current board, which may explain my position, my caution about fee increases and concern about needlessly inflicting financial pain on our owners. Annual, continuous fee increases of the magnitude which occurred at BLMH for 20 years can financially stress owners. Some will be driven into foreclosure. I was on the board for eight years, 2010-2018.    I discovered that delinquencies were increasing and did reach nearly $80,000. The number of delinquent owners peaked at more than 21%. Each and every year year a few owners went into foreclosure. Some were evicted from their units by the association for lack of payment of fees.  A bad economy and a decade of fee increases averaging more than 7% each year did that. In fact, for 20 years the annual fee increases were about 5-1/2% each and every year.  

8.       Here’s a chart of the estimated surpluses as of the end of the 3rd quarter from 2014 to 2018. This was from the budget worksheets used by boards in October/November planning sessions.  The projected surpluses were determined by subtracting expenses from income. I would say that it was a goal to achieve modest surplus each year.  Furthermore, it is pointless to budget” the worst case scenario.”  From 2010 to 2018 the budgets were the result of improved planning and financial controls. I enrolled a CPA who joined the board for several years. The treasurer, the maintenance director and I monitored this closely throughout the year and periodically discussed the status with the entire board  The board members who were the force to accomplish this are no longer on the board. This planning is why fee increases were reduced. Some board members didn’t see things this way, which is why President Bailey insisted that fees be raised, and the entire board agreed.  Why was that? Possibly because it has been the position of certain board members that small, annual fee increases are better than larger ones at infrequent intervals.   That’s an acceptable statement, but it should not be an excuse for raising fees each and every year, whether necessary or not.  Here are a few of the projected surpluses achieved as of the annual budget planning sessions during my board tenure. This is typical of the information that should be used by boards as part of their annual planning:


110.  Under my board involvement and leadership from 2010 to 2018 average annual fee increases were 1.56% per year. They could have been lower, but in 2010 with the completion of the first ever Reserve Study prepared by an outside firm a 7% fee increase occurred. This was proven to be unnecessary by the reserve study completed the following year.

11.    I really don’t know what the current board will do in 2020, be it fees or maintenance or water mains, etc. I’ll write about that in the coming weeks.

12.   The minutes are incomplete or missing. For example, the January 2019 meeting was never published on the official website www.blmh.org.  These were approved by the board on March 14, 2019. The June 13, July 11, August 8 and September 12, 2019 Minutes contain no information regarding the financial status of the association; nor is there any indication that finances were discussed.  There are no published minutes for October and November 2019 which should have been approved by the board as of the December 2019 meeting.   I doubt if the minutes meet any standards for a non-profit corporation supposedly run by a board of fiduciaries.  The board should provide a statement of each item that was approved. For example, if finances were approved, what was actually approved? How and when did CD  rollovers occur? This is not mentioned in the “official” Minutes. Owners are the “owners” here and the board serves as representatives and fiduciaries. Owners are entitled to know the financial amounts that are being approved by the board.

13.    I have noted some gross inaccuracies in the official Meeting Notes. I’m going to remind the board that I videotaped the meetings I attended including most from 2008-2018 and I kept copious notes. The  March 14, 2019 minutes state: “The prior Board President did not ask for a gate that is why one was not installed.” This is inaccurate. This was discussed with the entire board while I was Maintenance or architecture director and a directive was made to install a gate. A report was made to the board, which included to Bailey, Scudder and Seery. In fact, a verbal report by CCS at the end of that year stated that the gate was not installed because the weight of the design was too great, and it would be done in the following year. It wasn’t.
14.   The board should not ignore the issue of the lakes on our property (lakes 3 and 4). The city of Wheaton controls these retention ponds which periodically overtop and flood the community.  This too should be looked at and the association should be relieved of the burden of maintaining a city run facility. For more see these 22 posts: http://briarcliffelakes.blogspot.com/search/label/Briarcliffe%20Flood

Norman Retzke"




Original material:  https://briarcliffelakes.blogspot.com/

30 minute Educational Video

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Average fees prior to 2019





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As can be seen in the chart above, the fees increases have moderated since 2009. The red line is the trajectory we were on, the blue is the actual. There were good reasons for the moderation after 2008 and it occurred because of new boards, improved financial controls and a lot of work by the boards of 2011 to 2018.  There is a link to an educational video in the post, which helps to explain.

The above chart shows the fees for the average owners from 2001 to 2018.  You will notice that fees increased each and every year from 2001 to 2008. In fact, for 20 years the annual fee increases were about 5-1/2% each and every year.  The final decade of these fee increases the average was more than 7% each year. The board was relentless and continued this even with a disastrous economy, rising delinquencies and foreclosures. The primary reason the fees moderated was because the board that instituted those fees was overthrown in the fall of 2008.  Were these fee increases absolutely necessary? I say no, and the blue line in the graph above shows the actual fees from 2009 until 2018.   Sadly, these relentless fee increases contributed to large delinquencies, foreclosures and eviction of owners. In 2011 the delinquencies peaked with nearly 21% of all owners delinquent and the fees owed reached more than $85,000.  Why in 2011?  In part because there is a delay to foreclosures, etc. Some owners held on as long as they could.

From time to time I gave owners a presentation at annual meetings, I began doing so in 2010-2011. This YouTube video includes the slides presented to owners at the annual meeting in the fall of 2016. It was not the first such presentation my me.  The actual presentation was "live" and prepared using my notes and slides.  I prefer that to "canned" presentations. The video was prepared using those materials. It starts slowly, but the pace does pick up.  This link was sent to management on January 2020 with a request to put it in the board packet for the January 9 association meeting:

"Hello Dave;
I’d suggest that all board members view this short,  30 minute video. Please provide to the board. https://youtu.be/_ui4nr44ldw    Thank You"

It is the board's responsibility as fiduciaries to be informed and act in the best interest of the owners. I can't force the board to view this video.Here is the video:






Original material:  https://Briarcliffelakes.blogspot.com/










Wednesday, January 8, 2020

Incomplete Minutes

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"Official" Minutes of the meeting, per WWW.BLMH.org


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Our association is a not-for-profit corporation under the laws of the State of Illinois.  With the election of September 2018, a former board president who had no commitment to communication has been back in the president's seat.  Communications is now so sparse that the owners are seldom provided content information about the official association meetings.

I had to send a 15 item letter to management about this. Boards may not create separate classes of owners. In other words, it is illegal to force owners to attend monthly association meetings to get information about the goings on in the HOA.  Doing so discriminates against remote owners. Approximately 20% of our owners live off the property.

I sent a letter to management on January 6, 2020 and it included the following as Item 13:

"Hello Dave & Rosemary
Please forward this to the board and include it in the January packet. I’m looking forward to a detailed response by the board.  It was stated by the board that email addresses would be in the newsletter. That did not happen.  Why not?
Thank you!

"13. The minutes are incomplete or missing. For example, the January 2019 meeting was never published on the official website www.blmh.org.  These were approved by the board on March 14, 2019. The June 13, July 11, August 8 and September 12, 2019 Minutes contain no information regarding the financial status of the association; nor is there any indication that finances were discussed.  There are no published minutes for October and November 2019 which should have been approved by the board as of the December 2019 meeting.   I doubt if the minutes meet any standards for a non-profit corporation supposedly run by a board of fiduciaries.  The board should provide a statement of each item that was approved. For example, if finances were approved, what was actually approved? How and when did CD  rollovers occur? This is not mentioned in the “official” Minutes. Owners are the “owners” here and the board serves as representatives and fiduciaries. Owners are entitled to know the financial amounts that are being approved by the board."



Original material:  https://Briarcliffelakes.blogspot.com/






Saturday, October 5, 2019

Budgets - What the previous Board did not want to tell you

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Boards are supposed to take a number of factors into consideration when constructing annual budgets and setting owner fees. At our association we have had a handful of board members who steadfastly insist that there must be annual fee increases. Period.

This has led to some battles on the board in recent years and is one of the reasons I am no longer on the board.

So what should board members consider when constructing budgets and levying fees?
  1. Identified cost increases for the following year.
  2. Identified Reserve increases for the following year, in accordance with the reserve study.
  3. Condition of reserves.
  4. Amount of projected surplus at the time the budget is constructed.
  5. Financial condition of the unit owners (this in accordance with the Illinois Condominium Act).
When I was a board member I researched possible utility increases, contract changes, the condition of reserves and expenses projected 5-years into the future.  I also closely monitored the number of owners who were seriously in arrears and constructed 70 consecutive monthly spread sheets which I provided to the entire board.

In fact, the association has been funding reserves at a higher rate than that indicated by the reserve study and has been running Operations & Maintenance surpluses for a number of years. The recent annual surpluses are noted in the chart at the beginning of the post. 

Here is the exact text of the Illinois Condominium Act pertaining to the budgets and  I have highlighted the text that the board chose to ignore when constructing the budget in October 2018, and which the president at the time has chosen to ignore each and every year that she and I served on the board. Of course these issues were discussed:

(765 ILCS 605/9) (from Ch. 30, par. 309) Sec. 9(c) Budget and reserves:

"(2) All budgets adopted by a board of managers on or after July 1, 1990 shall provide for reasonable reserves for capital expenditures and deferred maintenance for repair or replacement of the common elements. To determine the amount of reserves appropriate for an association, the board of managers shall take into consideration the following: (i) the repair and replacement cost, and the estimated useful life, of the property which the association is obligated to maintain, including but not limited to structural and mechanical components, surfaces of the buildings and common elements, and energy systems and equipment; (ii) the current and anticipated return on investment of association funds; (iii) any independent professional reserve study which the association may obtain; (iv) the financial impact on unit owners, and the market value of the condominium units, of any assessment increase needed to fund reserves; and (v) the ability of the association to obtain financing or refinancing."


Here are the board members who ignored the budget surplus in 2018 and voted for a fee increase during the budget meeting of 2018.These are in descending years of service on the board. The first three have a combined 40+ years on the boards of this association:
  1. President: Sheryl Bailey
  2. Vice-President: John Scudder
  3. Welcoming Director: Sondra Seery
  4. Rules & Regulations: Mary Prendiville
  5. Newsletter: Cara Calvo
  6. Treasurer: Andrea Winship
What did the board of 2018 do with the projected surplus?

The October 2018 letter which the board instructed management to send to owners advised owners of about $20,000 in cost increases for 2019 and advised that because of this a 1.88% fee increase was necessary.  The letter ignored the overall budget surplus of about $124,000, although looking at the budget worksheet provided to owners, it was there. Which is how I am aware of this.

A handful of owners attended an association meeting and "testified" that a small increase in fees was okay by them. Apparently they were testifying that the fee increase was fine because they could afford it.  However, the board did not present to the owners the fact that 24 owners were seriously in arrears and delinquent by an amount totaling $19,564. The board conveniently ignored the plight of these owners. In fact, as of August  2018 a total of 41 owners were past due, some by small dollar amounts.

Choosing to ignore the seriously delinquent owners seems to be a breach of board duties, in my humble opinion.

What did the board decide to do with the surplus? We don't know because owners were not informed. The Illinois Condominium Act provides a board with options, as follows.

(765 ILCS 605/9) (from Ch. 30, par. 309) Sec. 9(c) Budget and reserves:

"5) At the end of an association's fiscal year and after the association has approved any end-of-year fiscal audit, if applicable, if the fiscal year ended with a surplus of funds over actual expenses, including budgeted reserve fund contributions, then, to the extent that there are not any contrary provisions in the association's declaration and bylaws, the board of managers has the authority, in its discretion, to dispose of the surplus in one or more of the following ways: (i) contribute the surplus to the association's reserve fund; (ii) return the surplus to the unit owners as a credit against the remaining monthly assessments for the current fiscal year; (iii) return the surplus to the unit owners in the form of a direct payment to the unit owners; or (iv) maintain the funds in the operating account, in which case the funds shall be applied as a credit when calculating the following year's annual budget. If the fiscal year ends in a deficit, then, to the extent that there are not any contrary provisions in the association's declaration and bylaws, the board of managers has the authority, in its discretion, to address the deficit by incorporating it into the following year's annual budget. If 20% of the unit owners of the association deliver a petition objecting to the action under this paragraph (5) within 30 days after notice to the unit owners of the action, the board of managers shall call a meeting of the unit owners within 30 days of the date of delivery of the petition. At the meeting, the unit owners may vote to select a different option than the option selected by the board of managers. Unless a majority of the total votes of the unit owners are cast at the meeting to reject the board's selection and select a different option, the board's decision is ratified."

Why do fees increase even when budget surpluses exist?

For a period of years three entrenched board members voted as a group for fee increases. However, during the budget meeting in October  2015 one of this group swung over to the other side, and so there was a majority vote for a fee decrease.  However, the ringleader of the "fee increase" contingent complained at the next meeting and stated the dissenting board member had changed his mind.   That ringleader also accused the finance committee of "malfeasance" in an attempt to discredit the vote of three board members.

This went to the Association attorney and in a 3-page letter to the board the attorney stated "At this point in time, based upon the information conveyed to me, it appears to be that the 2016 budget is properly in place."

I always broached delinquent owners during the budget discussions I led or was a part of.  During one memorable budget battle one board member stated "We don't cater to the lowest common denominator."

However, permanent damage had been done. I no longer trusted the ringleader in any situation and I decided I would complete the tasks I set out to do and would then depart the board. In September 2018 I did just that.

Recently one of the board who voted for the 2019 fee increase and should have known better asked me why I was being “an asshole”. Now you know one of my reasons. ===========================

(c) N. Retzke 2019 "all rights reserved"

Saturday, August 25, 2018

My final year on the board - Part III - "Guidance"

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Board members are fiduciaries. But many are unprepared to perform their duties and responsibilities. In my final newsletter articles I included an insert called "Guidance" which is consistent with my board duties and responsibilities. This was published with sufficient time to advise all owners, remaining board members and any candidates. Our board election is September 27. Here' the content of that insert:

“Guidance” Newsletter Insert - Posted by board member Norman Retzke, August 16, 2018
This newsletter includes some tips and guidance. This is information for owners, candidates and future boards. A working board provides real advantages for the association including firsthand, extensive knowledge of the property, its condition, current problems and solutions.  Working boards are also more familiar with the finances, rules and regulations.  A working board is how everything has been accomplished since 2010.
Our 40 year old association has extensive infrastructure, grounds and mature trees. Every dollar collected as fees will be spent. It is challenging to spend your money well.  Boards may choose to deal with highly visible issues while ignoring or deferring more substantial, difficult or less visible problems. That should never be a long term strategy, but at times this may occur. When this occurs the board should inform owners, but may not. Be watchful!   
Trees, shrubs and landscaping. These are major architectural features. Some of our trees have specific problems. It seems ornamentals may be nearing end of useful life and others are mature. We seldom water trees. We had a very wet spring this year followed by 6+ weeks of drought. This stresses our trees. We do things to deal with specific insect pests, etc. Nevertheless we have removed hundreds of trees since 2010 and our viburnum shrubs are dying. I am of the opinion we could benefit from additional help in making the difficult decisions we face with our landscaping. Would there be a benefit if an independent professional with extensive landscaping and tree knowledge reviewed the plants in our proposals to be sure our boards are completely aware of the maintenance, watering requirements and other implications? Should we get alerts to water specific trees if we are in a mild drought, etc.? Which trees?
Our many Viburnum shrubs are under attack by a voracious beetle. We trim these shrubs to 3 feet, which weakens them and makes them more susceptible to the consequences of insect attacks.  However, because these shrubs are adjacent to buildings there are good reasons for trimming. The board has a proposal to replace about ¼ of these dead shrubs on the property. It will take several years to replace all at a significant expense. I have concerns about the care required by the proposed plants which include hydrangeas. Some of these new plants will require watering if we want them to provide years of trouble free life to the association.
Boards face conflicting financial demands. We spend many dollars for water on the property. To keep water bills “as low as possible” boards may be inclined to underwater our trees and plants, even when stressed. This contributes to their demise. Our large trees are extremely valuable. For which of these should we be taking extra steps to preserve? This goes beyond spraying for pests. When our ash trees succumbed to a drought and the emerald ash borer I realized “Could timely watering of these ash trees have delayed or prevented this?” In recent years we have spent several hundred thousand dollars removing dead and dying trees, grinding stumps, then grading mounds, adding soil, and topping with sod or plants. We’ve had areas which were a tangle of trees; some have been dealt with. In 2018 we’ve identified about 20 dead trees, some large like a mature silver maple, some small like hawthorns.  These are being removed. Long term residents have noticed the thinning of our trees. 

Surveys and “projects”: 
  •  Boards should vigorously pursue the water main replacement negotiations with the city and do the things necessary to make this happen.
  • Streams, driveways and garages need to be surveyed annually or every other year.
  •  The grounds should be inspected multiple times each year. Also review drainage.
  •  To continue current initiatives the following should occur each year: We need 1, 2 or more garage floor replacements, 3 or more driveway replacements.
  • Seal coating and crack/seam filling will extend the life of driveways.
  • In 2019 the board should consider applying an asphalt preservative (GSB-88) to Lakecliffe.
  • From 2019-2022, the viburnum shrubbery should be replaced.
  •  In 2020 the board should consider a reserve study update.
  • From 2019 to 2021 one of our three remaining cul-de-sacs should be repaved each year. This will include storm water basin work and curb work. Patching in other areas may be necessary. Less frequently we need patios, common decks and walks inspected.
  •  Unit decks are usually inspected by our maintenance contractor as part of the annual painting cycle. That occurs once every 6 years.
  •  Other:  Begin “staircase” mortar repairs (epoxy grout) following behind the painting cycle. Ditto for foundation repairs.  Evaluate kynar aluminum flashing to cover remaining brick window. Scarify our walks to remove high areas, and replace sections as necessary. Continue an informative newsletter and the website.                                        


Saturday, November 5, 2016

It really isn't 2001 - Shift from Breakdowns to Preventative, or from Entropy to Momentum

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In recent  blog posts I've emphasized how really different it is here at BLMH as compared to a few years ago. I've conveyed similar information in our HOA newsletter.

The Naysayers take the position "This is an expensive association to maintain." Yes, we do have incredible grounds, streams and so on. But here is one thing to consider. Today, we have about the same infrastructure we had when I purchased here in 2001 (closing early 2002). In fact, the infrastructure is the same as it was in 1978 when this unique association was built.

Little has been added and little has been removed from our infrastructure. In other words, little has changed since 1978 regarding our infrastructure.

Our recent battle with aging trees is being addressed by a program I would call "Landscaping Restoration" and the association is spending a significant amount of money for this, more than $80,000 in 2016, and that is actually the first pass, as we continue to remove trees, deal with the scars left behind and address myriad issues. Compared to the funds expended for the roofing project, replacement of Lakecliffe and pro-active water main replacements, this is actually a pittance.

Let's look at 2001

What follows is the 2001 year end information for this association. Our owners can compare this to the published budget for 2016:
  1. Collections in 2001 = $899,374
  2. Expenses for Operations & Maintenance (including management, etc.)= $834,344
  3. Contributions for Reserves= $108,000
  4. Reserve balances as of 12/31/2001= $295,451
[Note: I recently reviewed my notes per discussion with my attorney and management prior to purchase in 2002. In 1999 this association allocated via the budget $20,000 to reserves; that's $59.52 per owner.]

I recently pointed out to our board and to any owners who were willing to attend the recent HOA meeting, we are now collecting about 4 times the amount this association collected for reserves in 2001. In fact, it is probable that we'll contribute even more this year because any O&M budget surplus is saved and applied to Reserves.

I'd also like to point out that in 2001 this association was facing a major roofing project, which it began in 2002-3 and which, based on reasonable cost estimates for the first roof, it was projected to cost about $1,680,000 at that time. The association also replaced all of the streets in 2002 or so. There were no special assessments to collect the money to do this, simply a never ending series of fee increases.

I can understand why some really long term owners and board members have had some difficulty accepting the current reality. But that was then and this is now. Management stated to any owner who attended a HOA meeting in 2009 that it was reasonable to expect that fee increases required for reserves (infrastructure)  would taper off as the HOA addressed a maintenance backlog and caught up and built those reserves. That is exactly what has happened.

Back in 2001 it would have required 41 years to accumulate the reserves this association is currently accumulating in 10 years, and is applying to the infrastructure of our association. Let's put that into perspective. Our current owners can expect to see results in less than 10 years, whereas owners in 2001 would have had to wait up to 40 years to see the same results.

There is a single word we can use to describe this situation, and it is "momentum." Yes, we are in momentum! What does that word mean? "In physics, the property or tendency of a moving object to continue moving."

This is exactly the opposite of where this association was in 2001. Back then, we were experiencing "entropy." In science, "entropy always increases and available energy diminishes." In other words, back in 2001 this association was dying.

It is useful to realize that this association will collect nearly 5 times the amount for reserves in 2016 as compared to 2001. Since 2009 it has spent a substantial amount of money each and every year on infrastructure improvements and dealing with absolutely necessary maintenance.

If it didn't, we would have no streams and have more than 100 scars throughout our landscaping, the roofs would be languishing, we'd be driving over potholes, driveways would be ruts, and so on.

However, as we close out 2016 we are also addressing one of our "mudholes" on our grounds, and after nearly 6 years this is the final, major one. Back in 2010 I filmed the "mosquito glade" in our association. It took a few years to deal with this affirmatively, in two large steps. The first reduced the amount of standing water, and the project this year should eliminate it. But we had many, many other issues including rainwater handling problems at many other locations, and some of those resulted in ice on driving surfaces. And, of course, there was the problem with our major arterial street Lakecliffe.

 Here's my August 2010 video about the problem behind Harrow and Lakecliffe:

----> Mosquito Glade at BLMH

As I stated in the video "Where there is a will, there is a way." However, that "will" must include realistic financial planning. Only after we set in place the financial planning can we prioritize the problems, develop solutions,  and then, as the funds are accumulated we can look at our "problem list" and put these plans into motion.

This is precisely what I've been doing for six years. Yes, Virginia, it really isn't rocket science.





Tuesday, August 19, 2014

Summary of Board Duties and Responsibilities

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Briarcliffe Lakes Manor Homes is an incorporated not-for-profit, under the laws of the State of Illinois.
All of the board members should become very familiar with the covenants and other governing documents of this HOA. These documents include:
a.    Bylaws.
b.   Rules and Regulations.
c.    Declarations and Covenants.
d.   Illinois Condominium Property Act.

I.                                     Being a member of the board:
This association is a business. Board members are volunteers, without pay or any compensation. To be a member means “being of service” to others, and putting in the necessary time; however, this is not an “open ended” agreement. But in a case of unforeseen circumstances, it may require more time than expected.
Each member will have specific duties and responsibilities; become clear what they are. If you have specific issues, ask the manager and discuss with the board. Ask questions and engage in an open dialog and inquiry about running the association. Be open and honest with the other members of the board. 
When the opportunity presents itself, get to know the professionals, and that includes the management company, the landscaper, the maintenance company and the attorney, etc. The more you learn about your job and your professional support team, the better able you will be to perform it, and support the others on the board in doing their job.
In today’s world, you should have daily access to a personal computer, printer and email, which may be as important as a telephone.
Become familiar with BLMH as a Private Urban Development, or PUD. Get to know the grounds and the buildings. Each board member is provided with a map of the grounds detailing each street and building, and also each pond and stream. Walk the grounds frequently and get to know this place. The board of the association is only as strong as its weakest link. Everyone on the board should be looking for rules violations, maintenance issues, etc.
Board members have a larger responsibility. If you aren’t ready to take on that responsibility, then you should not be on the board. An alternative is to be a committee member, which does not have fiduciary responsibilities and usually has very narrow and specific duties and responsibilities.  For more on the “Powers and Duties” of the board of Managers, see the Illinois Condominium Act Sec. 18.4.
II.                                          Know your specific duties and assignments:
Be aware of your job duties and responsibilities, and those of the other members of the board. The duties may be unequally distributed, but each member of the board is responsible for the decisions of the board.  
Failure of board members to understand your specific duties and obligations may do a disservice to the association.
Avoid priority conflicts on the board. Each board member must have a basic understanding of their particular role and how it fits into the organization.
Assignment gaps or overlap can create conflicts or confusion, so if possible, members should consider methods to resolve and avoid these types of problems.
III.                                          Be Prepared:
Study the finances including budgets and the reserve study. Ask questions if you don’t understand something. Keep notes, so you don’t ask the same questions time and time again.
Before each meeting, read the materials contained in the information packet provided by management. Read the reports prepared by other members of the board. Read the agenda for the month. Become familiar with these materials before the meeting so you are prepared to discuss the issues and make sound decisions. Make a list of questions. Each member votes; with that power comes responsibility. It is necessary to make informed decisions, using common sense and sound judgment.
If you decide to cast a “no” vote, you can request that your name be attached to it in the official association meeting notes. This is sometimes prudent, but is usually not required.
It is your ultimate goal to become expert on many aspects of the operations of the association, including the buildings and the grounds. That means you must learn the physical characteristics of the buildings; the roofs, masonry, patios and decks. Learn about what is necessary to maintain these buildings, the grounds, streams and landscaping. Become familiar with the various contracts, including snow plowing, etc. and drainage issues, the streets and driveways. The association will only be run as well as the board is capable of running it.
IV.                                          Be a fiduciary:
All members of the board are fiduciaries, or stewards, for the entire association. What does that mean? Board members must act in “good faith” at all times, and avoid favoritism, and must treat all owners identically. The Illinois Condominium Act prohibits the creation of “subgroups” of owners in the association.
Being a fiduciary means that a board member wears two “hats.” One as owner and one as a board member. Don’t confuse them. Your role on the board takes precedent, for the betterment of the association. It requires that you use your best business judgment. This judgment best applies to the facts before the board, protecting the fiscal (monetary) and structural integrity and security of the buildings, the grounds, and the association, and the well-being of the residents. As a fiduciary, the collective interests of the association comes first, and are most important. The interests of individuals come second.
To be a fiduciary also means using common sense, and good business judgment.
All board members when operating in a fiduciary capacity are entrusted with the operation of the association. They are to do what's in the association's best interest, which means making decisions on the merits. It’s not appropriate to make decisions because you have something to gain, a personal agenda, or animosity toward another, or have a concern for another.
As a fiduciary, it’s necessary to respect the confidentiality of the association, and various owners. Being on the board means that you will be privy to certain private matters. Certain facts and discussions are not to be disclosed to others. Discussions between the board and the attorney may be confidential. Discussions in executive session are confidential. Certain matters, those that the board decides are “confidential” are not to be discussed with others, including owners, contractors and vendors.
Attorneys talk about exercising “good faith” as a fiduciary. That means using good judgment, listening to qualified professionals, avoiding conflicts of interest, and always putting the interests of the association before your own, or your “personal beliefs.”
V.                                          Avoid conflicts of interest:
All members of the board must avoid conflicts of interest. If there is a possibility that such conflict might exist, the member must discuss this with the board. Conflicts might include business dealings and relationships, and financial encumbrances which could compromise the directors ability to make impartial decisions. In such situations, the member should recuse themselves from discussion and voting, or if extreme, may be requested to resign.
Never accept gifts or favors or any form of gratuity. Never accept any gift from a vendor or contractor.
Avoid situations with contractors, vendors or owners who are intent upon influencing the direction or the decision of the board.
VI.                                          Be a working member of the board:
Learn your duties and responsibilities. Do your work, your duties and assignments. Avoid unilateral action. Discuss the business of the board only at board meetings and avoid “ad hoc” meetings. The board is to speak with one voice, as a consensus. It is okay to debate the merits of any issue. However, once that issue is decided, it is the duty of board members to support it, even if an individual member disagrees with the decision. The only possible exception is in matters as a fiduciary. In such conflicts, this can be discussed with the professional manager or the attorney. If the professionals consider the board has avoided its fiduciary duty, that is an acceptable time to “take a stand.”
Attend workshops provided by the association where there are special issues to consider, such as budgeting. Consider attending seminars and gaining knowledge and skills.
VII.                                          Be professional:
Being on the board is “leading by example.” Others should be treated respectfully. Treat the professionals as knowledgeable partners. Treat the other members of the board as co-workers. Avoid making inflammatory statements, and defaming anyone, be they others on the board, owners or professionals including contractors and vendors.
If there are problems to be dealt with, plan and prepare to provide solutions.
VIII.                                          Be Realistic:
It’s true, this association is run by volunteers. That means, each member of the board has time conflicts and is dealing with the duality of being an owner and being a fiduciary. The best you can do is realize that this exists, and operate within these boundaries. By being aware “what is so” for yourself and for others, it is possible to do the best possible job on the board. If we choose to pretend there are no limitations, or that we are professionals, and bow to that arrogance, we are prone to less than optimal achievement.
IX.                                          Maintain the purpose and confidentiality of executive sessions and board meetings:
Only certain, confidential matters are to be discussed in executive session. The association board meetings are required to be open to all homeowners.  (A meeting is an assembly of a “quorum” of the board; “workshops” are a possible exception).
The Illinois Condominium Act Sec. 18 (a) 9 specifies that certain portions of the board meetings be closed to the ownership. This is called “executive” session.  This session requires that the board meet behind closed doors and out of view or hearing of the owners, unless a specific owner is involved and invited to attend. The purpose is to discuss specific topics that must be kept private and confidential.  Any “vote on these matters shall be taken at a meeting or portion thereof open to any unit owner.” These sessions must not be used by the board to meet in private and avoid the presence of homeowners.  
During “executive session” typical authentic topics include litigation involving the association, information involving hiring or firing of an “employee, ” discussions of violations of the governing documents (such as Rules and Regulations) or “a unit owner’s unit owner's unpaid share of common expenses,” and related consultation with the attorney or management.
To enter “executive session” a motion is made stating the purpose of the session. This is to be documented in the notes of the open meeting. However, whatever occurs in the closed session is to be kept in separate notes, which are not available for inspection by the owners.
Once in “executive session” the board, with management, are not supposed to discuss any topics other than those clearly stated in the purpose of the motion.
Once “executive session” is over, the doors are opened and owners are admitted. At that time, the open meeting is reconvened and the board votes publicly on all decisions made during the “executive session.” Only with an open vote are the closed session decisions made effective.


1.             Examples of Fiduciary Duties
Example 1:
The board is conducting budget workshops and is discussing fee increases or special assessments. These discussions are decided to be confidential. Members of the board may not discuss these matters with other owners, tenants, former board members, etc.
Example 2:
There is a rules violation, and the board has two points of view on how to deal with this. Some owners side with the violator. However, the board decides to uphold the rules and cites the owner as a violation. As a fiduciary, your first duty is to the association, and after the decision to uphold, you should do so. 
Example 3:
The association is looking for a unit to purchase. You are aware of one, for a very good price. So you purchase it for yourself. You have breached your fiduciary duty to the association.  What should you have done? You should have told the board and management of the availability, so the board could decide. Only after the board voted not to purchase, would you be free of your fiduciary duty so you could purchase it for yourself.
Example 4:
Failing to pass proper budgets, treating some owners differently (for example, providing leniency on fees and assessments to some owners, while failing to do so for others),.
Example 5:
Failing to uniformly uphold the rules.
2.             Examples of conflicts of interest:
Example 1:
A vendor agrees to attend a “meet the board” coffee for the association. That vendor agrees to provide coffee and cake for the meeting. This cannot be accepted.
Example 2:
You have a relative in the contracting business, and that relative wants to be a bidder for some of the business in the association, and approaches the management company. You must announce that this is a relative who will be bidding. You should also not take part in any discussion of this project, bids and the award of contract, to the extent of leaving the room during any of these proceedings. Avoid any possibility or suspicion of unethical bid practices, including viewing competitor’s bids. Any meeting notes should include a statement that you have recused yourself from these discussions and these portions of the meetings.
Example 3:

The association is considering a special assessment. You however, have been cut back in your hours of employment and are concerned that you might not be able to financially handle such an assessment. You should announce to the board that you have personal issues, and cannot participate in this discussion. You should recuse yourself from the discussions, and abstain from any vote.


Notes:

  1. 1. The above was prepared by me in June 2011. The board of BLMH has been reticent to use the above. Now, I ask the reader, is that a good thing or a bad thing for a HOA?  Why would a board or a variety of boards decide that the above isn't something to promote? I can guess why. For one thing, if candidates realized that it was a job and they were fiduciaries, could not run their personal agenda or that of their friends, or to be on the board for the sole purpose of reporting back to the "club" and voting that agenda, well, that would reduce the field of candidates, wouldn't it?  I have learned from hard and practical experience that boards are eager and willing to put anyone in a seat. Boards are at times desperate for help. If a bad apple shows up, and things get ugly, well we can then delegate to management or to someone like me to clean up the messes created by dysfunctional or incapable board members. It's not that easy. Getting someone off the board who is dysfunctional, even someone who is going through a "deed in lieu" (which is a form of foreclosure) can be very difficult if management has been gagged, and the rest of the board wants to take care of the individual. I know, I've been there and seen the "good people" in action (gag). In some situations, the board simply refuses to deal with the mess. That's the way it has been from 2009-2013. What a terrible way to run a business! But then, it's your money we're spending isn't it? As a board stated back in 2009 when things got ugly "I guess we don't look very good." But nevermind. One can always run for the board and ignore their fiduciary duties. Integrity? What the heck is that? If things really get difficult, simply resign and spread malicious gossip aka "libel and slander." I know, because in 2011 I hired an attorney to deal with this, at my personal expense.
  2. 2. For anyone on the HOA board, the issue is how to get through the next year or two with delinquents who revel at shooting at you, or retirees who want their fees reduced, or anyone who purchased at the top of the real estate bubble and now feels trapped. Ditto for those who thought they would sell and move on to somewhere else with a nice retirement nest egg. Now we have more than a few who feel our fees are "too high", broken fireplaces, failing infrastructure and upset neighbors on the other side of lake #4. So what is a board member to do? Let me see, should we be honest about the problems, or downplay them in an attempt to lure some unsuspecting individual to join our ranks?
  3. 3. Most of the owners at BLMH apparently think they live in an apartment complex, and so this post is completely irrelevant.
  4. 4. Oh, and I just sat at my computer and wrote this document, just like the tens of thousands of words I've written, or the many spread sheets I've created for this HOA. What a hobby!

Sunday, April 14, 2013

Catch Me If You Can!

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An Unpopular and Difficult Chore
I've been in this association for over 10 years I've observed that maintaining and enforcing the rules in a large association is one of those unpopular chores. Enforcement of the rules has been an obvious issue to anyone attending association meetings. Several years go it was usually reported at the meetings that there were no rules violations. At the time, another unit owner remarked "In an association with 336 units that's difficult to believe!" Some Rules & Regulation Directors (R&R) or boards apparently preferred only to act if there were a violation reported by an owner. I guess that rules enforcement was considered police work.  It apparently didn't fit in with an agenda for a "kinder and gentler" community, and anarchy was preferred!

As it is with all things here at BLMH, there are differing points of view on rules enforcement. Some expect the rules to be vigorously enforced, and others do not. Some see it as unnecessary and an infringement upon their personal rights. Some owners are for it, if it is the board that does the dirty work. For example, if they purportedly see a violation they may call a board member and complain "You should do something about it" or, after the fact, they may come to an association meeting and complain "Why didn't you do something about it?" What they won't do is report it using the required procedure which is a "Written Initial Complaint by a Resident, Association Board or Association Management." You'll note that "Resident" is first on that list.

Should owners expect another owner or the board to do the "dirty work" that they are unwilling to do? Should owners expect the board to insert themselves between some of their differences? We're not mediators or policemen. We will do what we can to keep the peace but we're not here to arbitrate disputes. However, if an owner won't even fill out the basic paper work and expects a board member to do this, I suggest it becomes unreasonable.

We've experienced R&R enforcement which was lax simply because the director didn't do it. It's difficult to say why this occurs. I concluded that the reasons might be the fact its unpopular with some at BLMH. One doesn't enforce the rules with their "friends" does one? Why not?

Time is another problem. Monitoring our extensive property can be time consuming. Simply walking from address to address on the property can take 45 minutes. Add another walk along the patios and it can take hours. Then let's walk along Briarcliffe Blvd to 1825-1827 and around the lake.  I've spent the better part of a half-day doing the walk I describe, and so I know.

In an association management will take its cues from the board. There is a lot to do in an association this large and I can appreciate a position that doing a task that alienates one to the board is not a good use of time. The board will also take it's cue from the president and the R&R director. If the director simply doesn't do the job, then what? Should another board member take on double duty and perform that duty? Why? Board members are equals. Work on the board is supposed to be more or less equally distributed. Board members have specific duties and responsibilities.

Taking up the challenge is a good way for a board member to become a target of the 5%.

A Growth Opportunity
Serving on the board is a growth opportunity. Taking away one's duties and responsibilities is not a good approach with a recalcitrant board member. However, it remains that the board does have serious work to do and some how it must get done. If not, then stagnation and serious problems can occur. There is no "auto pilot" in our association.

In society the "do bees" might be penalized and given more and more to do. The "don't bees" may succeed by simply dragging their feet and allowing the "do bees" to get the job done. If this were a row boat and one side were manning the oars and the other coasting, we'd be going in circles. So too with boards and organizations.


This can lead to animosity on boards, and I'm sure directors walk off from time to time. Last year, an owner addressed me at a meeting and told me "You are not the board." I said "You are absolutely correct, and there is an empty seat here for any owner who wants to take on the empty position." They didn't take me up on that offer.

Rules enforcement, like all other tasks in the association fall to board and the R&R director is the leader in that task.


Practicing Good Citizenship
Keeping the rules is inconvenient and at one time or another, we'll each step over that line. It may be excessive trash in the garage, or a failure to pick up doggy do, or not moving our car during a snowstorm so the plows can complete the street, or leaving it unattended on the property for two weeks while we're on vacation. However, keeping the rules is not to be a burden; I'd suggest it is an opportunity to make an expression about what type of association we want and what part we fulfill in it.

Keeping the rules is another aspect of maintaining our unit and our personal property. When we understand and follow the rules, we're practicing good citizenship. We're maintaining our relationship in this community association and we're putting it into action.

If we do break a rule, we should expect a letter of correction. If we fail to comply we can expect a fine. That fine has been looked upon from time to time as "board repression." It isn't. Owners are given an opportunity to comply and if they fail to do so, then a fine is used as a means to encourage compliance. Our association does not "make money" levying fines. I'm sure management and the board have much better things to do than this. But it is a part of the duties and it is necessary to take steps to assure compliance. Or would owners prefer anarchy?

In some situations compliance may not be easy. Most boards are not comfortable with discussions about circumstance as a criteria for rules enforcement. In other words "For some individuals and under certain circumstances rules violations are acceptable." That's creating distinctions and different classes of owners. A definite no-no under the Illinois Condominium Act.  All owners are equals and all owners have the same responsibilities in the association. Of course, we don't all behave identically. We have different perspectives and different views on what is important and what is not. The rules assist us in establishing community priorities we can live with.

Living and working in a community is not a social club. We do need guidance from time to time about what is appropriate behavior and what is not. It's not a popularity contest.

Rules and Fees
Looking into this more deeply, one can't discuss the rules without looking at fees. Paying fees in a timely manner is one of the rules. In fact, paying the fines is one of the rules! So, some observations about fees will be included in this post.

I walk the property frequently in the warmer months. This is to do various condition inspections and look for maintenance problems. Of course, this also picks up various rules violations, which are reported. I usually include a photo which is date stamped and with location etc. on the face. This is accompanied by a brief description and I frequently copy the specific rule text and provide the necessary references. Of course, the camera is mine, etc.  With management, I've done thorough garage interior and patio surveys and inspections.

With the arrival of spring, I'll again be doing specific surveys and inspections.

When doing past surveys, we have determined that a large majority of owners do not have apparent and visible rules violations. The most frequent violations include patios or decks with things on railings or other than outdoor furniture. Another is lawn chairs, feeders and barbecues in the common areas. We have found some rules violations in garages. These are usually inoperative vehicles or storage of boxes and bags. Large oil stains sometimes occur. This might not be considered a violation, but it is true that the owners of these vehicles can expect a fee for extra effort spend to clean up those stains by our cleaning crews.

One re-occurring problem is residents who set things on second floor patio railings. This is dangerous. One resident stained the new railings with run-off of plant watering; those plants were on set on the railing. Of course, this also flowed onto the patio below. That might be the source of the problem. Residents may be setting the plants there so the run off doesn't fall through the deck and onto the belongings of their neighbor below. However, nothing is to be set on the railings.

There are occasional complaints about satellite antennas and that includes wandering cables.

In some buildings there is a complaint about mice. We caution owners about storing anything edible in non-metallic containers in the patio and garage storage closets. Some owners do feed the animals in violation of the rules and others do use grass seed as allowed by past boards. Unfortunately, these seeds not only attract birds but also mice and squirrels, who can be very prolific. I suspect some of the issues in specific areas of the association are caused by such feeding. Reoccurring mouse complaints is an indicator of some sort of food source.

Before continuing, I want to emphasize that rules violations aren't an epidemic at BLMH. However, I also think many residents are not aware of the rules. That includes renters who see this as an apartment and have no interest or involvement in this association; so too for some of our remote owners. However, ignorance is not a valid excuse. If it was, the best defense for any problem would be "I don't open my mail or answer the telephone." I guess we could call that the "ignorance is bliss defense." That's why this association has found that it is necessary to inform owners that "Failure to receive a monthly invoice is no excuse for not paying your monthly fee."

The Board and Residents - Apparent Aloofness or Ambivalence
Our association has one Rules & Regulations Director and what seems to be an aloof or ambivalent population. So he is outnumbered! Yes, the owners do generally agree that "We want and expect the rules to be enforced." However, that is not always true if it interferes with a personal perspective, results in inconvenience, or interferes with personal activities.

Rules enforcement is a hot button for a few owners and may be an embarrassment for some violators. It shouldn't be. Rules have nothing to do with being a "good" neighbor or a "bad" neighbor. Nor have they anything to do with convenience. In other words, we all make mistakes and while we may have the opinion some rules are "good" and should be enforced, it is also true that what I may consider a "bad" rule does not allow me the choice to violate it. I think some of our owners have been given very poor coaching by self styled "experts" in the association. The rules are the rules!

If a rules violation is reported using the proper procedures (when, where and by whom) a letter is issued and the resident is given a reasonable amount of time to correct the situation. Most of us have done a violation at one time or another. So how to react on receipt of that letter? Fix the problem, ignore it, or stonewall the board? Of course, there is a procedure for formally contesting a violation letter. However, saying "The rule is stupid or unfair" is not a defense. The question is "Did I violate a specific rule?" If the answer is "Yes" then it's best to consider correcting the problem. The resident can then take all the time in the world to attempt to change the "stupid" rule. And some have. Others say "I won't and you can't make me!" That approach will result in multiple letters and a fine or fines. It may be a way for some owners to get attention and divert the board from more important matters.

When owners take a position that the rules are "stupid" or "I don't like it" I am of the opinion that they are making a personal statement about the association. The board does review the relevance of the rules, and not just on occasion. We're aware that the rules are a part of the social fabric that binds us all. Believe me, I don't like or agree with all of the rules. That however, is not the issue, nor is it an opportunity to avoid keeping a rule or enforcing it. Board members are required to uphold the rules, just as they are required to collect fees and do their best to maintain the property. Owners too are required to keep the rules and pay their fees and do what they can to be "good neighbors." All residents are expected to keep the rules and be good neighbors.

As is true for all things in an association, this is not a popularity contest.

However, if a resident insists upon the "stupid rule" tack, then I am inclined to say "You are entitled to your opinion. However, if you really don't like it here, then consider living somewhere else." It's a fact that most of these rules have been in place for decades. These documents are provided to all owners before purchase and are to be provided by owners to their tenants as part of any lease agreement. Discovering that we don't allow 2 or more dogs and cats in a unit after purchasing is not an acceptable excuse. You can't just have a garage sale, park your RV or 6-wheeler, have a lawn party for your church, or whatever. That grassy expanse is not "your" lawn, or mine. It is shared by all and is for no one's exclusive use.

That is the center of this issue. We are not really "owners" of the association. We are shareholders, and we share everything. Selfish or antisocial people have great difficulty adjusting to living in an HOA. If you think you are the center of the universe, then I guarantee that you will make life miserable for your neighbors and be a disruption to the board.

The vast majority of our association rules were made decades ago and have a sole purpose and that is to promote harmony in the association. The most recent changes were made to accommodate advances in technology and to recognize the change in the value of the dollar because of inflation over the past 35 years.

I am of the opinion that a few may actively practice rules violations. Some residents see rules enforcement as repression or an infringement on personal rights. Some are antisocial and see any form of exterior control as a challenge to their personal domain.  Others say what they are doing as not harmful and so it's okay!

I've been here for over a decade. I've watched owners attend association meetings and denigrate the board about rules and rules enforcement. Some play both sides, arguing that the rules are unfair and also arguing that they aren't properly enforced. A few years ago we entered a time of a "kinder, gentler" board accompanied by minimal rules enforcement. Is it a coincidence that delinquencies doubled during the next 18 months or was that solely the result of a weak economy? The fact is, what we each do as individuals does make a difference.

Is there a Purpose to These Rules?
Our rules have several purposes. These include keeping things civil and harmonious, assuring that everyone pays their fees, and assuring that the association is operated with only one class of owners. I suspect these are the principal motivators for rules in most well run associations.

Most of the rules are common sense and many are obviously designed to assure a harmonious society.

Yet, some owners and other residents attempt to skirt the rules. Informing management "after the fact" doesn't make it right. It does, of course, make it difficult for the board to enforce the rules, and that may be the purpose of residents who skirt the rules.

When these things occur, other owners will sometimes join in the sport. Common complaints to the board and to management include "How could you allow this to happen?", "Why aren't you doing your job?" And "Someone should do something about this!"

Sometimes violations occur unbeknownst to the board. The fact we didn't know this was going on is no excuse!

Apparently, even our legion of walkers is unawares or oblivious. They walk and talk but ignore rules violations. It seems that maintenance issues such as peeling paint is occasionally reported, but for example dilapidated, rusting air conditioners are ignored. I suppose the thinking is these will have no negative impact on property values! (The rules state that these are to be painted a neutral color). Pots or other objects teetering on balconies, barbecues and chairs or benches on the lawns, these too are generally ignored. Yes, there is collusion among the owners. It might be "quid pro quo" where some owners assume that if they ignore rules violations that this "courtesy" will be extended to them. I suggest the ultimate motivation to look the other way is simply "It isn't my duty or responsibility." If so, then some of our owners think they are living in an apartment complex.

Because of a lack of resident involvement, enforcing the rules has devolved into a game which is the title of this post.

How Extensive are These Rules?
We have rules about the use of the common elements. Our grounds can't be used beyond walking with friends and family, or your pet. If you walk your pet it is to be on a short leash and you are supposed to pick up that doggy-doo. That's a requirement of Wheaton Municipal code. We have several trash receptacles on the property for deposit of these little bags. Some use them. At times, we see a proliferation of small bags accumulating adjacent to some of the buildings. How are we to determine who owns these?

All owners are required to complete an annual census form and to have Condominium Owners Insurance. They are required to provide proof of that insurance. The reasons for such insurance would be obvious. However, if an owner doesn't comply and doesn't produce these documents, exactly how is the association to enforce this and make them get insurance? I have yet to get an enforceable answer from anyone to this question. Yes, there are fines, but some owners apparently prefer to pay those fines than produce the necessary documents. Go figure!

Satellite antennas are allowed, in accordance with FCC rulings but we do stipulate where they can be installed. That stipulation is an attempt to achieve a trouble free installation for both the association and the owners of these antennas. The buildings were designed long before individual satellite antennas were popular. The association uses owner paid fees to maintain the exterior of the buildings; exterior repairs caused by antennas and the interaction with the elements come out of general maintenance because we don't have a specific fund for antenna related repairs and damage, holes, etc. Why should we? The association does not own these antennas and the majority of owners don't have one. Similarly, we don't have a fund to maintain the cable TV system and repair is by the owner and their vendor. That antenna is the property of the respective owner or resident and all maintenance of it is their sole responsibility. Owners are required to get a variance form and fill one out before the installation. They are then given an approval letter via the management office. But it seems some don't follow the procedures and simply install that antenna whenever and wherever they wish. When a wind storm occurs and that antenna is ripped off of the building with a part of the fascia it was fastened to, management will get a call to "Fix the building NOW so my TV works!" Some will argue that the fee to remount or re-aim the antenna should be paid by the association. In other words, from the fees of the other owners.

Patios and decks are "limited common elements" and are maintained by the association. We replace and repair decking materials, repair concrete patios and recently completed the replacement of all railings. Owners are permitted lawn (outdoor) furniture on their patios and decks, but that spare couch can't be moved from the living room to the patio. Indoor-outdoor carpeting (green or brown) on the patio or deck is permitted. The lawns are not part of an owner's living room. So while first floor owners may walk onto the lawns from their patios, that's onto property owned and maintained by the fees of all owners, including those living on the second floor.

We also have stipulations about dumpsters on the property, storage in the garages and on patios and decks. There are rules about what can be parked on our privately maintained streets. Automobiles must be in working condition and cannot be stored on the streets. There are restrictions to the use of the driveways and streets. Motorcycles need a protective plate under support skids to protect the asphalt; these are readily available. Approved dumpsters must be for a very short duration and on timber or plywood to protect the asphalt driveways. And so on.

Do the Rules Interfere with a Good Time?
Some want to party on the property. They see all of these grounds and say "That's ideal for a party." True, and we could have games and sports of all sorts, too. But ideal doesn't mean that's a proper use.

Yes, we all like to use these grounds, and some would like more extensive use. Some also want private gardens off of their patio. Others would like more outdoor activities and some would like extensive barbecues and evening lawn parties for family, friends and acquaintances. But we are limited under the rules.

There have been really lengthy discussions about this over the past 5 years. In fact, it seems owners would rather discuss this than discuss foreclosures and delinquencies. Yet most owners would also like to see lower fees, if that were possible. I find that interesting. I suppose one could say it is a matter of priorities.

When owners have approached the board to discuss this rule and to promote a rule change, or contested the rule about such activities, they have also declared they won't get the additional insurance to indemnify the association for damage or if someone is injured on the common elements. The argument has been "That isn't necessary. No one will get hurt, and there will be no damage" When told during such discussions that alcohol cannot be a part of the proposed festivities unless specifically allowed by the insurance rider of the owners, and that under age drinking is illegal they will say "No one will be drinking." Perhaps, but if things do go wrong, who will pay the consequences? If someone is injured or there is property damage, then what of the insurance and future premium increases levied on the association? The cost of those fees and any judgments will be distributed to the other owners.

Owners have different opinions about what might be acceptable activities during lawn parties. One person's nuisance might be another's entertainment. Some think it should be a quiet and dignified affair. Others see an opportunity for lawn bowling and games for children and adults. Some would certainly enjoy soccer, volleyball and horseshoes or other lawn games. There has been no consensus brought forward that I am aware.

Wheaton has a lovely park with pavilion immediately across the street. We encourage residents to use it for their large parties, sports activities and so on. If that park lawn is damaged, if there is trash left behind or if there is an injury, the consequences won't be paid by the fees of the rest of our owners. Yet that has been argued as "inconvenient."

The fact is, the owner body pays a lot of money each year for insurance, to maintain the 15 acres of turf, the lake shorelines and the hundreds of trees and shrubs on our property. So too for the park benches, streams,  waterfalls and central decks. None of us has an exclusive right to these facilities and this association does not  have an army of janitors to clean up behind anyone, or extra money in the budget to restore lawns or take care of any damage. Most of our owners would say they would prefer no fee increase this year, or the next.

Inconvenient Fees
One of our rules involves the timely payment of fees. Our fees have been described as a major inconvenience. Some owners will state that they are "too high." I'm sure we all have some other use for that money each month. But we also expect our roofs to be replaced in a timely manner, the exterior of the buildings to be properly maintained, and that includes the driveways, patios and decks. Ditto for the shorelines of the lakes and oh, those 800 or so trees, the streets, water mains and sewers. Let's not forget about the hallway and garage lighting, the street lighting and so on. Snow plowing is not an option and neither is association insurance. Accounting is done and reserves are a necessity.

I have been told that there was a time this 40 acre association, a PUD, had fees of about $35 a month. Think about that! Some of our old timers will probably say that things were wonderful back them. I'm sure they were. Extraordinarily low fees, few reserves and no apparent plan for adequate reserve accumulation. Yes, those were the good old days. Ask them and they will also tell you that the hat was passed on more than one occasion to collect enough to pay the association bills.

How many owners today could deal with a special assessment?

I suspect that 20 years ago owners were probably delighted. Things looked wonderful. True, there were financial issues, but those were mere "details." Some of the shrewder ones probably expected to move on before the rest of the owners woke up to the reality and the special assessments arrived. I have been told that many owners argued to maintain fees at a low level.

But something changed. New management about 15 years ago pointed out that fees were not adequate for an association of this breadth and depth. The fees increased. But this association had some catching up to do. Owners continued to argue that "fees are too high."

Today, after two paid reserve studies, we seem to be on a sustainable track. But each of our owners certainly would prefer to keep that money and spend it on their personal wants and needs. That is understandable.

The board has put three studies to very good use; one was internally prepared. These studies have been an important source of the recent decision to make a fee decrease for reserves. Yes, you read that correctly. This association was able to reduce the fees collected for reserves in 2013! The board instead put funds into a contingency for infrastructure breakdowns such as water mains, fire hydrants and so on. How many associations can say that?

Do Those Opposed to Rules have a Point?
Interestingly the same people who make arguments against many of these rules sometimes come to association meetings over the years to complain.  The theme for these owners is "I don't like this and the board should change it to satisfy me."

To be honest, I do understand where people are coming from with respect to inconvenient rules and fees. What's a reasonable annual increase? What's an expected annual increase? This association not only had one, but several negative annual fee increases, back in the "good old days." You've read this correctly. This association, with minimal reserves, actually reduced fees back in the "good old days." So some owners have come to expect a fee decrease if we have money in the bank. I say that because the buzz about 5 years ago was "We have enough money; a fee increase is not required."

That was only true if one ignored the state of the roofs and driveways, and the costs necessary to complete the programs in progress.

Back in the 1980s and 1990s some owners made their financial decisions based upon the monthly fees. Before purchasing here I discussed this association with owners. Some owners told me that the fees were too high! I gave the financial documents to my accountant and asked his candid and unbiased opinion. His first remark was a concern about the reserves. He didn't know this association was a PUD, which actually puts more financial pressure on it.

Unfortunately, a lot of owners apparently didn't do their "due diligence" or didn't run the numbers. I also suspect they didn't have an appreciation for "the miracle of compounding." It worked in their favor for a while, and they saw a $50,000 condo rise to the stellar heights of $190,000 after 15 years of annual property value increases. Unfortunately, the same is true for budget shortfalls. That's why this country has a multi-trillion dollar debt and is running huge annual deficits. You don't have to look that far. We all know the financial condition of the State of Illinois, don't we? We didn't get to that place in one year or five. Borrowing and spending more than is collected is a good way to build a large financial hole. Illinois made the same mistake some individuals and associations have made; they didn't save for the future, preferring to spend today and defer planning to tomorrow.

What is true for our government is also true for individuals.  If an association underfunds reserves for a few years, it creates a financial hole and it is very difficult to catch up. An association and the owners should expect to replace roofs every 18-20 years, repair or replace driveways, and so on. It should also expect that costs will rise over time. If the owners don't accept this and refuse to plan accordingly, then those bills will be paid by future owners. That's what apparently occurred in the 1980s.

Fees weren't comfortable then and they aren't comfortable now. Owners will always prefer to spend any money sent to the association as fees for their personal satisfaction or needs. It's just like taxes. However, in our association we can see how the money is spent. Yes, there are cycles in which funds are accumulated. At those times when the association is building reserves for these very expensive capital projects it's not obvious that there will be new roofs in 5, 10, or 15 years. I suppose that is when some owners are prompted to say "What do we get for our money?"

What Other Rules Do We Have?
Household pets are allowed, and these are defined in the R&R documents. If we didn't do that, I suppose a chimpanzee or panther would be expected to be normal on the grounds. Owners can have one cat or dog. Not two or three, and while four 5-pound dogs may weigh the same as one 20 pound dog, our rules aren't based on weight.

There are stipulations about the hours permitted for certain types of noisy activities and "construction" in the units. While "hardwood" floors are permitted, there are specification about the quality of noise abatement and professional installation is required, with proof of that.

Owners can't cut holes in the exterior walls, modify the structural elements and supports of the buildings, extend into the common areas including wall spaces, garages or attics. (What! I can't have a sky light or an attic penthouse?). They are not to use extension cords cut and wire-nutted to install their ceiling mounted "can" lighting and such lighting must be suitable for direct contact with insulation. They are to adhere to City of Wheaton codes and ordinances.

Installing kitchen ventilators which discharge in the walls or attic is not permitted; they must vent into the kitchen space. Apparently this may be difficult to comprehend because we have had owner(s) vent their kitchen exhausts into the attic and even the space between units. Wood saturated with grease is not a good thing. This creates a fire hazard!

Owners are required to fill out architectural and maintenance variation forms and get letters with specific permission from management for many modifications. That includes exterior window replacement and patio doors. They are to keep these in a permanent file so they can be produced if there is an issue or a complaint in the future. Of course, turning these over to a new owner at the sale would be helpful. We're all good neighbors, I have been told.

This association allows rentals. Tenants are surrogates for the remote owners; this is not a rental community. There is no superintendent. All residents are expected to pitch in with the application of snow melt on the driveway and entrance walk. They should help with brushing snow from the entrance. Yet how many remote owners have such a conversation with their tenants and provide a shovel and broom for that use? Owners are required to fully inform their tenants of all rules and regulations and are required to provide them with a copy of these rules. Owners are also to get a one year lease and provide a copy to management. How many actually do these things, and how many don't? And some owners wonder why there is tension from time to time between renters and onsite owners?

Feeding of the wildlife is not permitted. Yes, we have residents who persist in doing this. Walking the property will sometimes reveal bird feeders, or seed thrown around patios. This attracts many of the birds who live in and around the property, and will provide a nice show. It also attracts mice and adds to the diet of the many squirrels on the property.  We have some buildings from which we receive complaints of mice. In some cases, we've discovered that someone in the building is feeding the animals. We can't always determine who the culprit is.

We have a lot of shady areas. That makes growing grass difficult. Some owners have complained and so the association allows them to plant additional grass seed in the common areas adjoining their patios. We also allow lawn sprinkling to grow that seed. This is a compromise. One must wonder how many mice are feeding on that grass seed? However, owners may not extend into the common areas. They don't own that lawn! Staking out an area to allow grass to grow is understandable. But if it becomes a area that fences in a lawn adjacent to a patio and limits general access, some may wonder what is going on. Access to that area should be available to all owners. We can walk anywhere we wish on the property. It is also true that walking immediately adjacent to patios and window may not be courteous. Of course, the management and our landscaping director may prefer we adhere to the walks so the ground is not compressed and the grass not flattened.

We've discovered other "bootleg" plantings from time to time. Some owners have argued these are desirable. Some really aren't.  Last year, our arborist spotted a shrub which he identified as a pest harborer. Where did  that shrub come from? He suggested we remove it because that specific plant harbors a species of mites that attacks our pines. We did remove it. After all, we have hundreds of trees and spend thousands of dollars each year maintaining and spraying them.

There was a move afoot a few years ago to create "gardens" on the property. In particular, to allow special plantings by owners off of patios. In other words, to allow first floor owners to extend their exclusive area beyond the patios and into the lawns. As was pointed out, that might seem fine to a few, but who pays for trimming those special bushes and shrubs? Our landscapers are not gardeners. If you walk the grounds you will see the occasional plant that deviates from the planting scheme. How did that get there, if not by an owner or tenant? Beauty is in the eyes of the beholder. Shrubs, turf, groundcover and trees are generally agreed to be acceptable. However, some of our flowering trees drop fruit and that has been objectionable to some owners, and some of these trees have been removed.

One of the rules is the timely payment of monthly dues (maintenance fees). If these fees are late, the association sends a letter and for this and other violations there is an additional "fee" schedule. Rules violations get a letter first; continued non-compliance will result in a fee. This too has been considered "repression" by a very few in the association. In fact, this is to assure compliance. One of the things owners may not be aware of is the expense born by this association chasing owners who are delinquent. It takes letters and in some cases, an attorney.  All of this takes the time of management. There is a finite amount of that and as we say, "time is money." So why should owners who are timely, pay their bills with alacrity and keep the rules, have a portion of their fees diverted to dealing with those who don't? That question is the flip side of the "fairness" argument that some used to stonewall board activities to maintain a healthy associations. I think there are some really distorted viewpoints about "neighborliness" and "fairness."

Garages are shared. Each owner has a stall and a place to store their trash and recycling receptacles. All vehicles must the operable and we don't allow engine, automobile or motorcycle repair in the garages and on the driveways. Ditto for boats, etc. Bicycles are permitted, but must be stored in such a way as not to obstruct walkways, etc. General storage in the garages is not permitted. Each owner has a closed and locked closet in the garage for their exclusive use. Additional lockers, shelving and cardboard containers are rules violations. The association maintains the interiors of the garages with the exception of the overhead doors which are owner property. We've replaced ceilings, floors and repaired walls. Owners may paint the walls a neutral color, but they must obtain a letter from management. For all such activities we require an insured company so in the event of a mishap the other owners don't pay for someone else's mistakes or accidents.

Yet, some owners attempt to turn the garages into an extension of their storage lockers. Well, if these weren't shared facilities and if all interior maintenance costs were paid by that owner, it might be acceptable. But it isn't.

Conclusion
The game will continue because of the mistaken beliefs of some owners about what they are entitled to do and how they expect "their" fees to be used in the association. This will continue because of an unawareness of the current Rules & Regulations, the apathy of other owners, and some antisocial tendencies in society.

There is also a history to contend with. When a board decides to get lax about the rules, this is quickly telegraphed to the other owners. Once precedent is set, it may be difficult to get owners and other residents back on track. A board may find itself with the difficult task of rehabilitating the association.

It's an interesting observation to make, but if asked, many owner will say they are in favor of vigorous rules enforcement. But it seems that's not true when they receive that rules violation letter.

As I said, most of this is common sense. Some is designed to protect us from each other. Some is to assist in the maintenance of the property and avoid spending fees unnecessarily.

Its been argued that for some violations it is difficult to see the harm in some of the infractions. I'm skeptical of that defense. Most have a simple basis. Keep owners in their units and from infringing on their neighbors. Keep activities safe and prevent damage to the property. Set boundaries so we each know where our "unit" stops and the jointly owned property begins. Have enforcement for fee collection so owners honor their financial obligations to the association.

Some of this isn't going to be popular. Some of it will put owners in a position where they have to make financial choices. Let's see, would I rather have a nice vacation, a new iPhone or automobile, or pay that onerous fee each month?

The board is required to enforce the rules. We are required to do so equally and fairly. In other words, it's not possible to look the other way for some owners and enforce the rules for others because the Illinois Condominium Act prohibits the creation of separate groups or classes of owners. A board that deliberately refuses to enforce the Rules & Regulations may be creating such classes. Of course, some rules may be difficult to enforce. Lack of cooperation by owners and outright collusion may make it impossible to enforce all rules.

Electing board members who refuse to enforce the rules is one covert example of collusion among owners. How many owners would vote for a board if it was made known that "We won't enforce specific rules?" How many such boards would be willing to put that a position into writing? Very few I expect, because we all do really know what is required.

Another way of bending the rules is to pretend "There is enough money" because of a perceived balance in the check book. Ignoring future obligations including reserve requirements when making such statements is deceitful. This may also occur if a group of owners decided to elect a board to keep fees low and in so doing, avoid costly maintenance or the collection of fees to accumulate necessary reserves. This could be a popular approach for owners who hope to sell their units before such an association collapses into disrepair. Of course, the other owners will be left 'holding the bag.'

However, owners have a right to expect that the property will be maintained, that the association will do proper studies and collect the necessary reserves, that the fees will be levied to do so, and that the board will do its fiduciary duty.

Of course, the owners may decided that they don't like the rules. There is a way to deal with this with integrity. Make a list of specific changes, provide them in writing to all owners, and get agreement from the ownership as required in the bylaws.  Another method is to get a board in place who will either not enforce the rules or will selectively enforce the rules.

Why Does it Take So Long?
Sometimes owners wonder why it is that things don't get done, or it takes so, so long. The answer to that question can be complicated, and includes the fact that a board convenes once a month in open meetings. Month 1 = hold a discussion and decide how to proceed. Month 2 = review the bids or whatever transpired in month 2 as a consequence of the decisions of the previous month. Month 3 = the contractor, or whomever was awarded the work has an opportunity to put the work on the schedule. Month 4 = the work is done if all materials arrive and workers are available. A similar scenario occurs for many tasks in an association.

Of course, the Monday morning quarterbacks only see that "their" wants, needs and desires are the most important. The board should deal with that water main break, or that felled tree, or that blizzard "in their spare time" and after you take care of ME!

Owners get the boards they elect, and the boards they deserve.
That's the bottom line, and it is why each and every association is what it is. Some have more and larger problems, and some fewer. It's completely the result of the owners.