Financial Records

Our community is currently under declarent control so we do not have homeowners on the BOD. However, I do take an interest in the budget and financial statements concerning our community and for the past five years have requested and recieved the monthly statements for our community. I will ask questions to clarify expenditures and usually recieve understandable replies. However, this year our Management Company switched its financial recordkeeping over to Quick Books in April and I noticed several errors on budget entries for income and management fee expenses. Basically, the management fees were based on a specified dollar per door per month charge for the past five years of our existance, and we were charged based on the number of homes owned by homeowners until this year. Suddenly in April the budget amount was changed at the same time the Quick Books software was implemented. When I asked what had happened and why the budget amount was changed, I was told that it was a mistake and I even recieved a copy of the budget back with the correction implemented. However, thinking it was resolved I didn't pay attentions to it until August's statement when I saw that it was switched back to the new value. When I asked again why it was changed I recieved very evasive answers regarding the switch. Finally, I scheduled a meeting with the Management Co. to review the 2011 budget in October. What I finally learned was that they had discovered that they should have been charging the HOA based on not only the Homeowners lots but the Builders as well, since they pay an assessment, either 50% or 100%, based on whether its empty or under construction. So our income stream has basically three pieces, Homeowner Assessments, Builder Assessments @100% and Builders Assessments @50%. Now here is the problem, the HOA is being billed by the Management Co for 1280 total lots. However, the budget only reflects 1238 lots and the actual billing indicates we are being charged at the 1280 lot rate, actually its a little higher. I have asked a very simple question regarding where in the budget the 42 lots that are unaccounted for reside, since it would make a difference in the revenue stream on the Builders side if it was at 50% of assessment or 100% of assessment. The only response I recieve back is a confirmation that the billing number is 1280 lots and absolutely no acknowledgement or clarification on the 42 lots unaccounted for in the budget. I have now been accused of being suspicious, which by the nature of their accusation is making me so.

My question is what other recourse do I have? To me the budget and our performance against the budget is a critical tool in maintaining the health of our HOA. I understand that budgets are ultimately estimates, however, over time, they can be invaluable forecasts for future expenditures. Looking forward to your responses.

One thing I forgot to mention in my original document was that our original budget was based on 950 homes, so when we began being billed for 1280 it took me many e-mails and finally the visit I described to understand that they were now charging for the builders as well. What is irritating is that I am treated in a very condescending way, as if I have no right to ask such questions of them. In Arizona we have a process in place to contest their behavior, however, it still costs $580.00 to raise a single issue.

David,
That's the problem, we are not seeing the corresponding increase in income. This was one of the issues I made with the Management Co., given that we had this windfall in
lots that we didn't know about as homeowners, the corresponding income has fallen significantly short of expectations. However, the billing meets and exceeds expectations on the management fee side.Part of it I know has to do with the economy given the foreclosures we are experiencing, however, all I'm seeking is to understand it and what I get is the run-a-round. I agree that the budget should become more accurate as time progresses, however, that will only occur if the Management Co. becomes more open about how it is assembled.The question on the table is, has anyone out there had a similar problem with their Management Co. and been in a decalrent situation with no homeowner representation on the BOD. What exacsrbates this even more, is that the Managment Co. initiated a change to the CC&R's to eliminate homeowner participation on the Board until the last lot is sold, which in this economy could be many many years.