Need Response by 11/15 12:01a

We are an IL HOA.

Would someone please tell me if I am interpreting the following two section from our CCR correctly? Our BOD will be adopting the 2007 proposed budget at the 11/15 meeting; however, even though the letter was dated 11/06 the envelope has a postmark date of 11/11, I just received this information in my mail tonight(11/13). According to Sec. 5.08 it says notice of any meeting of the Board concerning the adoption of the proposed annual budget...owners should receive this information in their mail 10 days before meeting. Am I right? Also, how many homeowners need to attend that meeting to tell the Board this Proposed Budget cannot be adopted that night? Can thoe attending vote on this matter?
Also, what exactly do they mean by a written waiver and who might this person/persons be???
Thanks. ReneeD

5.08 - NOTICE OF BOARD MEETINGS: Notice of each meeting of the Board shall be mailed or personally delivered to each Director at least forty-eight (48) hours prior to the meeting and notice of any meeting of the Board concerning the adoption of the proposed annual budget or any increase or establishment of an assessment shall be given to each Owner in the same manner as provided in Section 4.05 of these By-Laws, unless a written waiver of such notice is signed by the person or persons entitled to such notice before the meeting is convened.

4.05 - NOTICE OF MEMBERSHIP MEETINGS: Written notice of any membership meeting shall be mailed, giving Owners and the Commissioner not less than ten (10) nor more than thirty (30) days notice of the time, place, and purpose of the meeting.

Hi Renee - I am on a BOD in IL. The IL Condominium Property Act requires that the annual budget be provided to the HOs at least 30 days prior to its adoption by the BOD. Go to:

http://www.communityassociations.net/states/illinois/illinois_main.html

Hope this helps - Good luck - Bonnie

Bonnie, thanks; this is good to know but which now takes precedence? Illinois Condo Act or our Bylaws?

It is now 5p and I just have been informed that our BOD meeting is still "ON" for tonight at 6:30. With this information on hand, do I have a right to make a 'point of order' directed to our BOD and inform them that this meeting to adopt our proposed 2007 budget is null and void? If they ignore me and still go ahead, what recourse do I have?

I need an answer quickly from anyone who may have an answer to this!! thanks, in advance. -ReneeD

Thank you, Paul.

Bonnie, now is my turn to apologize for not getting back to you sooner!

Basically, 11/15 meeting adjourned because of no quorum met (only 2 of 5 BOD members showed, another homeowner and myself. Although I did inform our PM that ample notice was not given to homeowners, she said it didn't matter and, that it had always been done this way. Because I know she knows better and that she knows that I caught her lying when she said that really upset her. Ultimatey she refused to discuss it further with me and walked away.

Aside from that, I did have a few other questions I directed to the Board Treasurer (which is like pulling teeth!) and the answers I received concerning our finances especially the financial health of our Reserves troubles me. What it boils down to is that the BOD is communicating no increase for next year and, prefers not to impose a special assessment; however, a line item for a reserves study was created and, if it is determined that we are underfunded we may incur a large increase in our asssessments. Also, our Reserves are set up so that a certain percentage is allocated into 6 separate projects e.g., unrestricted, roofs, streets/parkways, siding, driveways, playground) but both the Treasurer and the PM informed me that for the past two years deposits on capital expenditures were deposited only into the unrestricted reserve account. Following is what I found in our Declarations:

CAPITAL RESERVE: The Association shall segregate and maintain special reserve accounts to be used solely for making capital expenditures in connection with the Community Area and Dwelling Unit Exteriors (the “Capital Reserve”). The Board shall determine the appropriate level of the Capital Reserve based on a periodic review of the useful life of improvements to the Community Area, the Dwelling Unit Exteriors and other property owned by the Association and periodic projections of the cost of anticipated major repairs or replacements to the Community Area, the Dwelling Unit Exteriors and the purchase of other property to be used by the Association in connection with its duties hereunder. Each budget shall disclose that percentage of the Community Assessment which shall be added to the Capital Reserve and each Owner shall be deemed to make a capital contribution to the Association equal to such percentages multiplied by each installment of the Community Assessment paid by such Owner.

It appears this BOD can direct money wherever it pleases but how they are doing it bothers me. Shouldn't this have been communicated to the homeowners? Why the ruse of 6 accounts? Especially since one of those accounts was earmarked 3 years ago for a new playground (old one was demo'd). The way it looks now I don't think there is even enough money (in our reserves alone) for our ongoing roof replacement project next year--we try to complete 4-5 buildings each year. I don't profess to be an expert in property management but I am so frustrated and feel like I am the only homeowner taking any active interest. I could say more but need to come up for more air--so to speak. Hope to hear your thoughts/comments soon..? Thanks. -ReneeD

Monday, November 20

Hello, Bonnie, I’ve noted my reply to your questions/comments in brackets. Also, the last entry to your question below is that I sent my reply to you directly via your email address only because in the Original Subject line it has an “11/15” date and I figured I wouldn’t get a response from you. Hope to hear from you soon….!!! -ReneeD

Hi Renee - Sorry for my delayed response - please see my replies below in CAPS. Good luck -Bonnie
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Posted:11/18/2006 11:25 PM Quote Reply
Bonnie, now is my turn to apologize for not getting back to you sooner!

Basically, 11/15 meeting adjourned because of no quorum met (only 2 of 5 BOD members showed, another homeowner and myself. Although I did inform our PM that ample notice was not given to homeowners, she said it didn't matter and, that it had always been done this way. Because I know she knows better and that she knows that I caught her lying when she said that really upset her. Ultimatey she refused to discuss it further with me and walked away.

ACTUALLY, I AM SURPRISED THAT YOUR PM EVIDENTLY DID NOT "KEEP AFTER" THE BOD TO APPROVE THE DRAFT BUDGET FOR RELEASE IN A TIMELY MANNER SO AS TO ENSURE THAT THE PROPOSED BUDGET WAS MAILED TO THE HOs TO COMPLY WITH THE 30-DAY REQUIREMENT. AND, THE ACCOUNTABILITY GOES THE OTHER WAY, ALSO - THE PRES. SHOULD HAVE ENSURED THAT THE BUDGET WAS APPROVED VIA THE APPROPRIATE MOTION AT A PRIOR MEETING ENSURING THAT THE PM WOULD BE ABLE TO SEND IT TO THE HOs EARLY ENOUGH TO ALLOW FOR THE 30 DAY COMMENT PERIOD. DID YOU PRES. HAVE ANYTHING TO SAY ABOUT THIS (OR, WAS THAT PERSON ABSENT)?

REPLY FROM RENEE: Our BOD meetings, open to HO’s, are held every other month. I can only assume they might have met in an “off month” to discuss proposed budget for the PM to date the letter ‘11/04’ and, our Pres not following through is par for the course. Pres did not attend 11/15. Actually, now that I am looking at the calendar the timing of events is off anyway. No Agenda was available to homeowners at the October 17th meeting which was rescheduled from the 11th and, I’m assuming they must have discussed the Budget in Executive Session as it was not mentioned during the BOD meeting. BTW, whenever our BOD goes into Executive Session homeowners are told to leave. Since I do attend every meeting, I would think that our PM’s Management Report and Meeting Agenda would include any BOD actions taken and that it be ratified in Meeting Minutes. Anyway, no one will ever know if the Meeting Minutes reflect decisions arrived from any Executive session meetings because Minutes are not read aloud and are not readily available to any homeowner. So, if I am reading correctly what you’re saying is that the BOD should’ve approved the proposed “Draft” Budget at the October 17th meeting, then scheduling the next meeting sometime after November 20th to adopt the Annual Budget for Y2007 as it stands or with recommended changes from homeowner’s input?

Aside from that, I did have a few other questions I directed to the Board Treasurer (which is like pulling teeth!) and the answers I received concerning our finances especially the financial health of our Reserves troubles me. What it boils down to is that the BOD is communicating no increase for next year and, prefers not to impose a special assessment;

IT IS MY UNDERSTANDING THAT THERE SHOULD BE AT LEAST A MINIMAL INCREASE EACH YEAR TO KEEP UP WITH INFLATION. THE RESERVE PLANS I HAVE SEEN ALSO RECOMMEND AN ANNUAL INCREASE TO THE RESERVE ACCOUNT.

SPECIAL ASSESSMENTS SHOULD BE A LAST RESORT APPROACH.

REPLY FROM RENEE: Personally, I do not think anyone really understands this. This is the first year (2007) that a line item has been created in our Operating Fund specifically for a Reserve Study. I also think this BOD thinks they are doing us a favor by not increasing our fee and, (2) I am getting the sneaking suspicion that when this reserve study is done which has been earmarked as a 20 year recommended guideline –whatever that means—we ARE going to get slapped with a huge increase. I wish I could go into more detail with you from what I’ve read in our Decs on how our monthly fee is calculated; what I still don’t quite understand is how or how much actually should be going into our Reserves.

however, a line item for a reserves study was created and, if it is determined that we are underfunded we may incur a large increase in our asssessments.

ARE YOU SAYING THAT THE LINE ITEM FOR THE RESERVE WAS CREATED FOR THE 2007 PROPOSED BUDGET, OR, HAS IT BEEN IN THE PRECEEDING BUDGETS? HAS A RESERVE STUDY BEEN PERFORMED? OR, IS ONE PLANNED? IT WOULD PROVIDE A PROPOSED FUNDING PLAN.

REPLY FROM RENEE: Yes, Reserve Study created for Y2007. The BOD talked about a reserve study earlier this year but nothing was ever done. The Pres at the time said that they wanted to get all major projects done and out of the way before they do a Reserve Study. IMO, our total cash assets are about 50% less than one year ago!

Also, our Reserves are set up so that a certain percentage is allocated into 6 separate projects e.g., unrestricted, roofs, streets/parkways, siding, driveways, playground) but both the Treasurer and the PM informed me that for the past two years deposits on capital expenditures were deposited only into the unrestricted reserve account.

OK - IT SOUNDS LIKE YOU HAVE HAD THE LINE ITEM FOR THE RESERVE FOR SOME TIME... YOUR RESERVE ANALYSIS SHOULD CONTAIN A FUNDING PLAN FOR THE NEXT 20 YEARS (I.E., FROM THE DATE THE ANALYSIS WAS PERFORMED) AND ADDRESS THE AMOUNT TO BE FUNDED INTO EACH OF THE 6 ACCOUNTS.

REPLY FROM RENEE: I think our Reserves were originally created back in ’91 or ’92. I know a Reserve Study was done in ’93 and, that for the most part, we had been funding (6)future improvements I referred to above. What I recently learned at the 11/15 meeting was for the past 2 years the monthly amount is being deposited into our Unrestricted Reserves ONLY!!!

Following is what I found in our Declarations:

CAPITAL RESERVE: The Association shall segregate and maintain special reserve accounts to be used solely for making capital expenditures in connection with the Community Area and Dwelling Unit Exteriors (the “Capital Reserve”). The Board shall determine the appropriate level of the Capital Reserve based on a periodic review of the useful life of improvements to the Community Area, the Dwelling Unit Exteriors and other property owned by the Association and periodic projections of the cost of anticipated major repairs or replacements to the Community Area, the Dwelling Unit Exteriors and the purchase of other property to be used by the Association in connection with its duties hereunder. Each budget shall disclose that percentage of the Community Assessment which shall be added to the Capital Reserve and each Owner shall be deemed to make a capital contribution to the Association equal to such percentages multiplied by each installment of the Community Assessment paid by such Owner.

THE BOD SHOULD BE FUNDING THE RESERVE ACCOUNT(S) PER THE FUNDING PLAN, ALTHOUGH THEY DO HAVE SOME DISCRETION. BUT, ULTIMATELY, THEY MUST ABIDE BY THEIR FIDUCIARY DUTY - THEY MUST ACT IN THE BEST INTERESTS OF THE COMMUNITY AS A WHOLE, AND, THEY MUST MAKE THEIR DECISIONS IN A REASONED FASHION AFTER SEEKING APPROPRIATE ADVICE.

THERE IS A GOOD 3-PART SERIES: "CALL OF DUTY, WHAT IS FIDUCIARY DUTY?" - IN THE NEWSLETTER BY LIEBERMAN MANAGEMENT SERVICES, "ACROSS THE BOARD" (SPRING - SUMMER 2006). THEIR WEBSITE IS: WWW.LIEBERMANMANAGEMENT.COM (I AM NOT ENDORSING THE COMPANY AS I HAVE NO KNOWLEDGE OF THEIR
COMPANY. BUT THEIR NEWSLETTER DOES CONTAIN USEFUL INFO)

It appears this BOD can direct money wherever it pleases but how they are doing it bothers me. Shouldn't this have been communicated to the homeowners? Why the ruse of 6 accounts? Especially since one of those accounts was earmarked 3 years ago for a new playground (old one was demo'd). The way it looks now I don't think there is even enough money (in our reserves alone) for our ongoing roof replacement project next year--we try to complete 4-5 buildings each year.

IT SOUNDS LIKE YOU NEED MORE INFO THAN APPARENTLY YOUR BOD IS WILLING TO ANSWER TO. YOU CAN VIEW THE ASSOCIATION'S FILES AT THE PM OFFICE (PER IL CONDO LAW) WITH APPROPRIATE NOTICE. YOU CAN ALSO PHOTOCOPY DOCUMENTS. BASICALLY, THE ONLY PORTIONS OF THE FILES THAT CAN NOT BE DISCLOSED ARE RELATED TO ENFORCEMENT ACTIONS AGAINST HOs. IF YOU HAVEN'T SEEN THE RESERVE ANALYSIS, IT MIGHT HELP ANSWER SOME OF YOUR QUESTIONS RE NUMBER OF RESERVE ACCOUNTS AND HOW IT IS TO BE FUNDED. YOU CAN ALSO CHECK THE PROPOSED AND PAST BUDGETS TO SEE IF THE RESERVE IS BEING FUNDED ADEQUATELY. THERE SHOULD ALSO BE INFO RE ACTUAL COST OF THE ROOFING PROJECT AND THE ROOFING CONTRACT, EOY ANNUAL FINANCIAL REPORTS SHOWING ALL OF THE EXPENDTURES FOR THAT YEAR AND HOW THE HOA STANDS, FINANCIALLY, AT YEAR CLOSE - PLUS, THE FINANCIALS (USUALLY DONE ON A MONTHLY BASIS), MEETING MINUTES, ETC.

REPLY FROM RENEE: This Mgmt Co, PM, and our BOD has made it difficult or near impossible to look –let alone receive any information. I have told them as it is a portion of my money that funds all these projects and indirectly pays our PM’s salary that I have a right to access this information. Homeowners are directed to request information through the Management Company who in turn submits it to the BOD for their approval. But, if you have a disorganized PM who rarely if ever returns phone calls, loses paperwork and is never prepared for meetings then I think you get a pretty good picture of what I am up against! The BOD takes it one notch further ---they completely ignore most homeowner requests.

I don't profess to be an expert in property management but I am so frustrated and feel like I am the only homeowner taking any active interest. I could say more but need to come up for more air--so to speak. Hope to hear your thoughts/comments soon..? Thanks. -ReneeD

PLEASE KNOW THAT I AM NO EXPERT EITHER - SIMPLY A HO WHO HAS BEEN ON OUR BOD FOR ~12 YEARS AND PRES. FOR MANY OF THOSE YEARS. OUR HOA HAS BEEN FORTUNATE ENOUGH TO HAVE AN EXCELLENT PM WHO HELPS US KEEP ON TRACK WITH EVERYTHING. PLUS, I AM PROACTIVE (TO THE POINT OF MY BOARD MEMBERS COMPLAINING "ENOUGH ALREADY") BECAUSE I HAVE SEARCHED OUT ANY AND ALL INFO AND SENT IT TO THEM FOR THEIR OWN EDUCATION. PERHAPS YOU SHOULD CONSIDER RUNNING FOR THE BOD AND GETTING INVOLVED IN HOW THE HOA AFFAIRS ARE BEING MANAGED.

I UNDERSTAND AND EMPATHIZE WITH YOUR FRUSTRATION. YOU ARE A GEM OF A HO TO BE TAKING AN ACTIVE INTEREST! 99.9% OF HOs, IN MY EXPERIENCE, DO NOT GET INVOLVED (EXCEPT WHEN THERE IS SOMETHING TO COMPLAIN ABOUT!). :-)

REPLY FROM RENEE: Thank you for your kind words. I will keep persisting until I am satisfied with answers to my questions. In the meanwhile, I believe part of the problem within our community is turnover of home ownership, apathy and I hope I am being politically correct when I say that I’ve noticed a greater number of a certain ethnic origin are making this their home here as well. Therein lies another hurdle this BOD needs to master.

BY THE WAY...IN YOUR RESPONSE, DID YOU DO SOMETHING THAT RESULTED IN HOATALK.COM SENDING ME AN EMAIL MESSAGE INFORMING ME YOU HAD RESPONDED? SINCE I HAVE NOT BEEN LOGGING INTO THE DISCUSSION FORUM VERY OFTEN, IT WAS USEFUL KNOWING YOU HAD RESPONDED. OF COURSE, I DID NOT GO INTO MY EMAIL ALL WEEKEND!

Hi Renee - What a situation you and the other HOs are dealing with! This is what I understand about your HOA budget and reserve study issues:
1. Reserve Fund created in eary 1990's with 6 accounts
2. Reserve Study done in 1993
3. Reserves funded in all 6 accounts until 2 years ago; then only one account funded for past 2 years (unrestricted reserves account)
4. BOD meets every other month; much business done in Executive Sessions; results of that business not necessarily reflected in documentation available to HOs nor, possibly, in meeting minutes
5. BOD and PM not responsive to HO requests
6. 2007 budget sent to HOs with inadequate notice (did not provide for 30 days review)
7. 2007 budget contains line item to do another Reserve Study
8. BOD has a roofing capital replacement project ongoing and did not want to update Reserve Report until completed.

Re budget: The IL Condo Act prevails and the 30 day HO notice/review period is required.

The BOD is not required to respond to HO coments nor incorporate them into a final budget.

BUT, a responsible BOD that is adhering to their duties and responsibilities as board members would either respond to comments in writing, or orally should they be made at a meeting. A responsible BOD would carefully consider any and all comments and make revisions as appropriate.

I would suggest continuing to push for the 30 day review period and provide any comments you think appropriate. In additon, I would suggest making a written request to view the specific HOA docs you are interested in and provide an appropriate basis for your request.

Re reserves and new reserve study: I think that at this point I would not be as concerned about which accounts the $$ is being placed into, so long as your BOD has adequate $$ to pay for the current roofing project and is providing an adequate amount overall to Reserves as per the funding plan in the existing Reserve Study. Instead, I would focus on the results of the Reserve Study Update that will be done in 2007 (I am assuming this is the case since they are adding a budget line item for it). The Study will provide a new reserve funding plan based on the current (at that time) situation - including condition of the common elements, any other projects that are planned (i.e., have contracts), and amount remaining in reserve accounts.

A Reserve Study can take 6 months to complete, depending on the extent of your common elements.

Finally, again, I suggest that you run for a spot on the BOD at the next election -perhaps find some neighbors who have similar concerns with the BOD and PM and who would also run. Then find yourselves a new management company if the current one doesn't live up to their contract. The IL Condo Act does provide for removal of board members - I seem to recall other posting(s) on this subject.
Good luck - Bonnie

Hi Renee - thank you for your Thanksgiving wishes! I hope you and your family and friends had a wonderful holiday!

I'll try to answer your questions. The section of the IL condo law you cite is referring to what our HOA calls an "End of Year Report", or more formally, "Financial Statements and Supplementary Information", which is prepared by a certified public accountant. It contains a balance sheet, statement of revenue and expenses, statement of changes in fund balances, and statement of cash flows. He also provides a statement of revenue and expenses detail which shows the actual expenses compared to the budgeted expenses for each budget item, and a summary regarding our capital/major components (roofs, siding, etc.) with estimated remaining useful life and estimated replacement future cost (based on our Reserve Study).

It sounds like the report you have has at least some of the components of the report we receive. It should show an end of year balance for each of the funds - operating, operatng contingency, replacement (reserve), etc. - plus show the beginning of the year balance and the expenditures and revenues.

The report does not provide an itemized accounting month by month, but an end of year balance. The monthly fnancial reports, which are provided by the MC to your BOD, contain this level of detail - they would show revenue, interest earned for your reserve accounts, expenses, etc. If you are interested in this level of detail, you would need to request an appointment with the MC to view these documents, per prior response.

Does this help? - Bonnie