Frightened by Reviews???

In a comment to one of my posts, "Anonymous" wanted to know if I have an opinion on the property management company. They said "I've very new to BLMH....I know a lot of this blog is about the board of directors, but I was hoping you could respond to this comment with a quick summary of the HOA company".

Of course I do have an opinion. Everybody has an opinion on just about everything! But posting all of my opinions here poses a problem. The WWW is an open and largely un-moderated place. People post their opinions, which frequently support their hidden agendas, all the time. Some of what is posted is true and some is not. It is my goal to post items here that are accurate, verifiable and are consistent with my stated purpose for this blog. I have posted letters and my interaction with candidates for the board and with the management company. I always advocate the use of letters for anything other than an emergency.

I provide a lot of data in my posts, to substantiate what I am saying. Data includes numbers, dates, places, background information and stuff that people would normally call substantiable “facts”. The WWW has no rules about that. So a lot of what we read, especially that which is written by “anonymous” writers or does not includes names, dates and places must be questioned. If I report on a meeting, you can also attend meetings and compare what I post to what you observed at the meetings. I flag my “comments” so that the reader knows when I have crossed from “facts” to something else.

If you are a concerned unit owner, then I suggest that you attend board meetings.

When I go to public web sites where anyone can say anything about anybody, I know I have crossed into the “Twilight Zone”, that place which, according to Rod Serling, “is the middle ground between light and shadow, between science and superstition. And, it lies between the pit of man's fears and the summit of his knowledge”. So it is with the un-moderated world wide web. Statements made by unit owners at board meetings sometimes fall into the same category. It’s my word against your word, my opinion versus your opinion. We might as well have two TV sets running and facing each other! It would be naive to assume that everyone who uses the web and posts there, does so with altruism. There is ample evidence to the contrary. Ditto for board meetings. Not everything that everyone says is truthful or can be substantiated. That is the nature of certain debates!

I also must point out that while you say that you are “very new to BLMH”, you could be anything but. You could be merely an interested bystander, or a board member. You could also be someone at another homeowners association with an agenda. Who knows?

As a unit owner, I certainly have a bias. I have something at stake at BLMH. Only you can tell me your bias.

Regarding our “board of directors”. These people are the ones who are willing to put their time and personal agendas aside, and be “of service” to our association, or so they have stated. For that I have the utmost respect. However, human beings are also motivated by powerful forces which include fear and greed. "Anonymous", you posted because you say you are "frightened", which could be some proof of what I say. Only you know your true motivation.

I cannot state what motivates each member of our board. But actions do, it is said, "speak louder than words". That is why attending board meetings is of value to unit owners. So that we can see the various members of the board, and other unit owners, at the meeting and observe their actions, interactions, biases and so on. The board is definitely of more interest to me than the management company. Why is that, you might ask? In reply, it is the board that decides what is to be done by whom at BLMH. They hire and fire and they ultimately determine our rules and rule changes, our annual budgets, determine our assessments and determine how our assessments are spent. So the board has a lot of power at BLMH, and my interests rest with those who have the ultimate power, and I am interested in determining if they are acting for the good of the association or not. I have published data which suggests that boards do not always act for the good of the association. They can be and are pressured by unit owners. They can have good intentions and make mistakes. Long term underfunding of reserves was just such a mistake, voted by past boards. The current management company and recent boards were, I understand, instrumental in turning that around. I have written about that elsewhere on this site.

I have observed that some unit owners prefer to ignore the reserve problem as cause for our recent assessment increases. Some also ignore their complicity in the problem; I suppose they would say "the board did it". When a unit owner comes to the board meeting and begins complaining and making statements about "rights", "privileges" and demands for "service" I do have to wonder where they were 15, 20 and 25 years ago. That was a time when the board was awarding negative assessments (giving money back to unit owners) rather than saving for our roof repairs. Now there are those who would have me believe that the recent financial problems are all due to the recent boards and our current management company. The data doesn't support that view.

Currently, there are unit owners who are very unhappy about our assessments. I am certain they are doing all that they can to influence our board and other unit owners. Our board members are also unit owners. They have the same concerns all of us do, but as board members they are to operate to a higher standard and act "for the good of the association". It is unfortunate however, that ethical standards vary greatly. It is also true that one of the best ways to promote a personal agenda is to be elected to the board.

About our Condominium

Our condo complex has eighty-four buildings in a beautiful landscaped setting. Each "unit" is one of four in each building, so the complex totals 336 units. The complex was built about 1978.

There are two lakes near by and some of the units back up to them. Others have views of man-made "streams". A lovely, quiet setting.

As with all condominiums, the unit owners are a more or less agreeable group. Some have difficulties distinguishing the difference between being a condominium owner and an apartment dweller. So some of the occasional requests made by management are sometimes honored but are frequently ignored.

However, we are generally pleased with the association, the management and our neighbors.

We purchased our condo in 2001, but the closing was in early 2002. At the time it was unoccupied. It was freshly painted and the carpeting had been cleaned. However, in other respects is was in poorer condition. The kitchen was a disaster. I had to convince my spouse that I could “fix” the kitchen in order to purchase the condo. Ultimately, we gutted it and started over. Prior to the purchase we had done our “due diligence” and hired an inspector. Most of the problems he uncovered were due to age. Several were repaired by the seller. However, a problem with the hot water heater escaped us. It had been off for a period of months and when the gas pilot was ignited, it developed a leak.

While doing our research prior to purchase, we of course obtained and read a copy of the by-laws of the association. We requested and obtained a copy of the balance sheet and associated financial records. We were alarmed by the state of the the cash reserves, which were only $297 per unit! I ran the financial data past my accountant without giving him my concerns and he pointed out the same issues I had. After reviewing it all, my spouse and I made a list of questions and concerns, and sent it to the management office. This resulted in a long conversation with the manager, who answered all of our questions in a manner that I believe was truthful and with professional courtesy.

In that conversation, he confirmed that the association was opposed to “special assessments”. In my eyes this was a good thing. However, due to the low reserves, one assessment had been made to unit owners to replace the garage doors. No others were planned and the association was reviewing the monthly assessment to determine how to increase this, so as to cover certain maintenance issues. It was the manager’s opinion that the assessments had been too low for a long period of time. His firm had assumed the reigns recently and he assured me that the board, which were all volunteers, were fully engaged with this process.

We discussed other pressing maintenance issues. This led to a discussion of the state of the roofs. It was apparent that within 5 to 10 years rooftops replacement would be required. As the existing shingles had been covered once with new, this would require stripping the old completely and then placing a waterproof membrane and new shingles. The design of the roof made this a complex project. I did some quick calculations and if the cost were in the range of $15,000 to $20,000 per building, the total reserves of the association were less than 1/5 of that required for this project! It would take a few years to accumulate the necessary funds in the "reserves". Fortunately, the board and the association had time on it's side.

Despite our concerns, my spouse and I decided to purchase the condo. We discussed at length the issue of the low reserves. Obviously, there were two methods for the board to address this. One method was to increase the monthly assessment for the purpose of amassing the necessary cash for the roofing project and other costs and repairs. Another method would be a special assessment levied on each unit owner. We attended a few monthly meetings and asked questions of the board. The annual meetings are held in September of each year. During those meetings the board and professional manager make presentations regarding the financial health of the association, planned projects and address concerns of the unit owners.

Generally, the annual meetings were attended by less than 25% of the unit owners, although the necessary percentages always voted. I or my spouse attended all of the annual meetings. One year I did miss a meeting because of business travel which I could not avoid. The meetings were interesting, but some of the topics that the attending unit owners brought to the attention of the board and management were "interesting" to say the least. One item on the agenda was the banning of pets! Apparently, there were complaints about noise and/or animal droppings. From my observation, most owners who pass below our kitchen window keep their animals leashed and are carry doggy-do bags. But a few do not carry such bags. Another issue was noise due to hardwood floors. The units were originally covered with wall to wall carpeting. Changes to the by-laws at the request of unit owners had expanded allowable flooring to include hardwood. However, there are different grades of sound insulation and padding, and some unit owners were experiencing problems with the installations in the units above them. The management and board promised to review this and to my knowledge the specifications were revised.

Dealing with noise is one of the issues here. These units are generally very quiet and secluded. There was a time I was barbecuing on the deck. I went in and out a few times to check the progress of dinner, each time, forcefully sliding the door behind me to keep the bugs out. I didn't realize it, but this was causing quite a racket. Upon heading outside one last time, I was surprised to see my neighbors daughter standing on the lawn, her hands on her shoulders, face screwed up and glaring at me. I said "hi" and it was only then that I figured out what the problem was! She shook her head and stormed back into her unit. After that, I was much more cautious entering and leaving the deck. However, there have been numerous times my neighbors slammed their doors and on several occasions my spouse asked me if they were having a fight downstairs. I replied "no, I don' t think so" and went about my business.

I have no solution to this unless the ambient, background noise level increases. But that solution would be worse than the problem.

We also have critters of all sorts. Many birds, squirrels, ducks, geese, etc. Some of the unit owners feed them, even though it is against the by-laws. The management brought this up at one of the annual meetings and the manager stated that as far as he was concerned, these animals were all "rats". You should have seen the horror on some of the faces in the audience. The manager went on to say that there was abundant natural food and feeding them simply increased their numbers and when they got into someone's attic they were no longer "cute and cuddly". This sounded suspiciously like some of the stuff I have heard at the forest preserve. I wonder if that's where the manager got it?

Another issue was roof repairs. The board decided on a trial modification to the roof of several units, as part of the roofing repair/replacement. They included a relocation of one of the downspouts. At present, all units have a gutter downspout which discharges into the middle of the driveway. In winter this ices and causes some problems. Well, to alleviate that, someone had the bright idea to move the downspout to the extreme end of the gutter which is not on the driveway. This, unfortunately, meant that in downpours water can collect at the entrance of the building. We had a few very upset unit owners and that is understandable. Perhaps relocation of the downspouts is not possible?

As time went on, the issue of assessments has take on more and more of the conversation at the annual meetings. I'm not surprised. The increases have been continuous, at a rate of about 6-1/2 percent per year. By September 2007 some unit owners were at a breaking point. Natural gas and electricity prices have been spiking upward and since February 2005 my gasoline costs have more than doubles. While the cost of gasoline has no direct bearing on the condominium, it does impact peoples' budgets. So we have been hit by unrelenting increases for several years. It is truly unfortunate that this association had not done better planning. We are caught between the proverbial rock and a hard place. We are not alone. I have been checking out some of the forums and blogs for some of the other condominiums in the area and there are some mighty unhappy people out there. Their complaints are about assessments for paving and the like, some of which have been for $2,000! We have been fortunate and my spouse and I were expecting annual assessment increases to cover the short falls. Nonetheless, it is beginning to hurt.

At least there have been no special assessments. Of course, the board could always resort to that. However, there is some unfairness in that approach. Paving and roofing are things that wear out over long periods of time, for example 10 to 20 years. So I today am enjoying the benefits of a roof that someone else paid for. It would make sense and be fair to assess me for the cost of a roof at a rate of 1/20 each year and for paving at a similar rate. The collected monies are then put in a special fund called a "reserve". If I sell my unit in 15 years the new owner picks up the payments where I left off. When the roof is replaced in 5 years after purchasing the unit, the funds are in place, there is no special assessment, and I enjoyed the benefits of the roof as did the owner who replaced me. Sounds fair to me!

However, if assessments are too low, then reserves are not built up at a rate sufficient to replace the roof when the time comes. Then a special assessment is necessary. Obviously, if I am a "new" unit owner and a roof is installed two years after I move in, I have been unfairly assessed to pay for the previous owner's roof.

Some of this has been explained in a cursory fashion at some of the annual meetings. But this is a delicate topic. No one wants to get into a discussion about "insufficient funds". Many of the unit owners who have attended the meetings don't seem to have the stomach for it, and the board doesn't seem to want to push bad news onto us.

So now, over a period of 6 years, our assessment has steadily increased from $204.64 per month to the current $293.51 per month. While we were not thrilled by these increases, with an average annual rate of 6.2%, they are better than paying special assessments, of which there are none. If our assessment had been increasing at the rate of inflation (about 3.5% to 4.0%) it would today be no more than $248.98. However, the board has been playing "catch up" and the amount of the reserves has increased dramatically as promised and the board has been able to begin roof replacements.

There are no special assessments on the horizon. However, the screams of some of the unit owners over the assessment increases have been quite loud. It is unfortunate that there is no free ride! I have written several letters over the years to the board in which I expressed my concerns and my preference for monthly assessment increases as opposed to special assessments. One of the problems in a complex of this type are fixed costs. We own the streets and the curbs so all street maintenance, repair, curbs and even electric lighting is born by the unit owners. Some of this infrastructure has a finite life. We have had water main failures in this complex and they too are born by the association. That's the bad news of owning the soil, the roads and everything in and around it.

Of course, the danger is that these assessment increases may not stabilize. There is no easy solution. As I expressed to the board in December of 2006, I appreciated the dilemma and I expressed the opinion that the original unit owners had been given a great gift, for which they were probably not thankful, as they were generally unaware of the precarious financial state of the reserves. That had occurred because their monthly assessments were far, far to low.

Now we have a situation where some people, who were spoiled by this "free ride" of unreasonably low assessments now believe they are being manipulated and taken advantage of!

I have owned a home and it is necessary to have savings for maintenance. Roof repairs are costly and I have replaced a roof. There are two choices. Save a monthly amount for the extra-ordinary repairs and hopefully the saved amount, or reserve, will be sufficient when the repairs are required. Alternatively, one can operate on a wing and a prayer and simply get a second mortgage when the roof repair is required, or ‘charge it’ when the furnace fails. However, condo associations are best not operated in that fashion. If they are, then owners get hit with large assessments for various repairs. Or perhaps the plan of some of these unit owners is to bail and sell the condo to some per sucker prior to the levying of such assessments?