LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Re written notice for a special meeting, how should the days be counted for a thirty day notice?
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Meeting Notice
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TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
1,2,3,4,5 
You count calendar days, not business days.
You count calendar days, not business days.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
I should have been more clear on my question. Does the time start when the notice is mailed or when it is received by the homeowner?
BobD4 (up north)
Posts: 1,002
Posts: 1,002
Posted:
LindaS27 : unless specified otherwise by law or your governance documents, a good 'safe' way is to count neither the specified date of mailing, nor the day of the meeting being held. Some allow only one of those two to be counted, but a proven margin for safety is worthwhile.
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Linda,
Technically, The clock starts when the last notice was dropped in the mail.
See Mailbox Rule from NOLO
However, as Bob said, it's always good to allow more time whenever possible.
Technically, The clock starts when the last notice was dropped in the mail.
See Mailbox Rule from NOLO
However, as Bob said, it's always good to allow more time whenever possible.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Our board is trying to push through a dues increase for Cluster owners based on a reserve study that has several errors in it. If corrections were made, a dues increase would not be needed. This has been pointed out to the board, but they refuse to address the issue and are still attempting to raise the dues for Clusters only.
Requirements:
* Annual meeting - our bylaws require at least 15 days notice (changed by CCIOA to 10 days)
* Special meeting to raise dues - at least a 30 day notice
1st mailing postmarked 10/6/15 included notices for:
1) Annual meeting on 10/27/15 - delayed from 10/15 (3rd Thursday) because board president was out of town.
2) Special meeting on 11/12/15 for a vote to raise Cluster dues
No problem on timing so far; The only issue I have is that the two notices were combined in one mailing causing many homeowners to miss the fact that the special meeting was included.
Special meeting on 11/12 - quorum for vote on increase was not met. So another meeting can be held with the quorum requirements cut in half and also with 30 day notice.
By chance I noticed a "broadcast message" posted on the website that notice for this new meeting was mailed on 11/16/15 for a meeting on 12/17. So the timing is questionable. Several HOs I talked to did not receive the notice as of today.
I couldn't find anything about the timing but I remember from years ago when I had a rental to allow an extra three days after mailing before starting to count the day.
This just seems like the board's attempt to do more of what they want without following the rules?
Requirements:
* Annual meeting - our bylaws require at least 15 days notice (changed by CCIOA to 10 days)
* Special meeting to raise dues - at least a 30 day notice
1st mailing postmarked 10/6/15 included notices for:
1) Annual meeting on 10/27/15 - delayed from 10/15 (3rd Thursday) because board president was out of town.
2) Special meeting on 11/12/15 for a vote to raise Cluster dues
No problem on timing so far; The only issue I have is that the two notices were combined in one mailing causing many homeowners to miss the fact that the special meeting was included.
Special meeting on 11/12 - quorum for vote on increase was not met. So another meeting can be held with the quorum requirements cut in half and also with 30 day notice.
By chance I noticed a "broadcast message" posted on the website that notice for this new meeting was mailed on 11/16/15 for a meeting on 12/17. So the timing is questionable. Several HOs I talked to did not receive the notice as of today.
I couldn't find anything about the timing but I remember from years ago when I had a rental to allow an extra three days after mailing before starting to count the day.
This just seems like the board's attempt to do more of what they want without following the rules?
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Quote:
Posted By TimB4 on 11/17/2015 11:58 PM
Linda,
Technically, The clock starts when the last notice was dropped in the mail.
See Mailbox Rule from NOLO
However, as Bob said, it's always good to allow more time whenever possible.
Linda,
Technically, The clock starts when the last notice was dropped in the mail.
See Mailbox Rule from NOLO
However, as Bob said, it's always good to allow more time whenever possible.
Tim, just saw your post.
So guess they can squeak this one in.
DouglasK1 (Florida)
Posts: 2,046
Posts: 2,046
Posted:
Quote:
Posted By LindaS27 on 11/17/2015 10:05 PM
I should have been more clear on my question. Does the time start when the notice is mailed or when it is received by the homeowner?
I should have been more clear on my question. Does the time start when the notice is mailed or when it is received by the homeowner?
I just wanted to point out that the board has no control over how long the mail takes to be delivered. The only thing they can control is when items are mailed.
Escaped former treasurer and director of a self managed association.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Douglas, I agree but if they are cutting it to the very day (not allowing any time for mailing at all) then it's not really 30 days notice, is it? And they're trying to do this a week before Christmas when a lot of people are out of town or too busy to deal with it.
Also another thing that bothers a lot of homeowners is the way they wrote up the proxies. They are trying to combine the proxy for the annual meeting with the one for the dues increase. Seems very deceptive to me
Also another thing that bothers a lot of homeowners is the way they wrote up the proxies. They are trying to combine the proxy for the annual meeting with the one for the dues increase. Seems very deceptive to me
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Linda,
When our Association needed to increase assessments by 20% we also failed to have the required quorum for the increase at the first meeting (our annual meeting). Like your Association, the forum requirement could be cut in half at a follow-up meeting.
Ours required a 30 day notice for another meeting. In looking at schedules, time lines for getting annual assessments together and scheduling a meeting place, printing notices & proxies, stuffing envelopes, etc. we also had to cut the notice to the bare minimum. It's not as easy as simply saying lets meet on mm/dd. Planning is required and that takes time, that volunteers may or may not have to give.
We also combined proxies for the annual meeting and increase in assessments. It makes sense and minimizes printing costs. Depending on the number of papers stuffed in the envelope, it may also save on postage.
When our Association needed to increase assessments by 20% we also failed to have the required quorum for the increase at the first meeting (our annual meeting). Like your Association, the forum requirement could be cut in half at a follow-up meeting.
Ours required a 30 day notice for another meeting. In looking at schedules, time lines for getting annual assessments together and scheduling a meeting place, printing notices & proxies, stuffing envelopes, etc. we also had to cut the notice to the bare minimum. It's not as easy as simply saying lets meet on mm/dd. Planning is required and that takes time, that volunteers may or may not have to give.
We also combined proxies for the annual meeting and increase in assessments. It makes sense and minimizes printing costs. Depending on the number of papers stuffed in the envelope, it may also save on postage.
LarryB13 (Arizona)
Posts: 4,099
Posts: 4,099
Posted:
Quote:
Posted By LindaS27 on 11/18/2015 5:21 AM
if they are cutting it to the very day (not allowing any time for mailing at all) then it's not really 30 days notice, is it?
if they are cutting it to the very day (not allowing any time for mailing at all) then it's not really 30 days notice, is it?
So when the law says 30 days it really means 33 days? But if the said 33 days then it really would be 36 days, right? Who said there needs to be an extra 3 days to allow for mail delivery?
Quote:
And they're trying to do this a week before Christmas when a lot of people are out of town or too busy to deal with it.
Will they still own their homes a week before Christmas? Why did these same people not bother to show up at the first meeting?
Quote:
Also another thing that bothers a lot of homeowners is the way they wrote up the proxies. They are trying to combine the proxy for the annual meeting with the one for the dues increase. Seems very deceptive to me
Normally, a proxy is good only for one specific meeting and then it expires, so I assume there are two proxies mailed out together. A single proxy would not be valid for more than one meeting. Anyone can solicit proxies at any time. There is nothing to prevent you from soliciting proxies.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Tim,
Our Annual meeting only requires a 10% quorum (35)and we had well over that amount. But nothing was on the agenda re a dues increase and no mention was even made of it except for me bringing up the fact that a dues increase was invalid since the reserve study it was based on was full of errors. But they pretty much ignored that point.
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
It seems very deceptive that the boxes to check make no mention of any other meeting except for the annual meeting.
They already announced last year that dues for Clusters would be increased $3 as of 1/1/15 and then had to back down because there was no vote taken on that. More than once they stated that a dues increase for Clusters was necessary and now have changed the amount to a $4 increase. I think they don't want to admit that they are wrong in requesting the increase and are trying to get it passed with proxy votes from the annual meeting and other additional proxies that are still worded incorrectly.
Our Annual meeting only requires a 10% quorum (35)and we had well over that amount. But nothing was on the agenda re a dues increase and no mention was even made of it except for me bringing up the fact that a dues increase was invalid since the reserve study it was based on was full of errors. But they pretty much ignored that point.
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
It seems very deceptive that the boxes to check make no mention of any other meeting except for the annual meeting.
They already announced last year that dues for Clusters would be increased $3 as of 1/1/15 and then had to back down because there was no vote taken on that. More than once they stated that a dues increase for Clusters was necessary and now have changed the amount to a $4 increase. I think they don't want to admit that they are wrong in requesting the increase and are trying to get it passed with proxy votes from the annual meeting and other additional proxies that are still worded incorrectly.
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Linda,
I understand. Good of you to bring the issue up.
However, the assessment increase wouldn't be invalid.
It may be wrong and unjustified if the Reserve Study was modified.
However, that doesn't make it invalid.
Was your reserve study done on a cash flow basis or a component basis?
Were there actual math errors or are you simply disagreeing with the numbers (life expectancy, replacement costs, when it was last done)?
I understand. Good of you to bring the issue up.
However, the assessment increase wouldn't be invalid.
It may be wrong and unjustified if the Reserve Study was modified.
However, that doesn't make it invalid.
Was your reserve study done on a cash flow basis or a component basis?
Were there actual math errors or are you simply disagreeing with the numbers (life expectancy, replacement costs, when it was last done)?
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
Linda
You seem to be fighting the protocol hoping the increase will not go through. More than likely the increase is going to happen even if they have to change the protocol.
You have two choices as I see it:
1. Replace BOD Members and rescind the increase.
2. Hire a lawyer and got to court.
You seem to be fighting the protocol hoping the increase will not go through. More than likely the increase is going to happen even if they have to change the protocol.
You have two choices as I see it:
1. Replace BOD Members and rescind the increase.
2. Hire a lawyer and got to court.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Tim,
Both reserve studies are on a cash flow basis but I'm not disputing that or how the calculations were done. Some of the life expectancies are crazy compared to the prior reserve study in 2009 which was done by the same company and had a reasonable history as to when things were done previously. I think a lot of changes were requested by this "out of control board" who don't really know what they are doing. But that's not even my main dispute.
The errors are basic (common sense)errors that a board should know if they were familiar with our governing documents regarding assessments and how they should be applied.
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
Below is a section of another post(8/28/15)that describes the MAJOR errors.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Clusters were charged for Asphalt & Concrete, Sidewalks, Driveways, Clubhouse and Tennis parking lots - all in error.
1) Driveways have never before been paid through the HOA. They are on homeowners'(not common)property - paid by the owner
2) The concrete sidewalks are on common property, used by all 345 homeowners - should be paid from General Reserves
3) The parking lots are being charged to both General and Cluster Reserves - again, should be paid only from General Reserves
4) Asphalt & Concrete (Phases 1-8) nothing scheduled until 2019 with the last area being done in 2030 and nothing after that.
Concrete sidewalks were scheduled every three years in the 2009 Reserve Study and have often been done every year to some extent.
5) Asphalt & Concrete (Phase 9)seal coating/crack filling has a 4/yr life; however, expenses were not added until 2031 – a 16yr delay.
Also part of this coating/filling would be for clubhouse & tennis parking that needs to be eliminated from Clusters expenses.
7) The only asphalt charges to Cluster Reserves should be for “Private Streets Maintenance” per our governing documents.
The same company prepared the 2009 Study so only needed to update the changes since then.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The 2009 study estimated ~$240K over 30 years for concrete which with a 3% yearly inflation rate brings it up to ~$330K. With the other non-cluster items, the total comes to ~$430K extra which is the reason for the increase.
On the other hand, the contribution to General Reserves for 2016 has dropped from ~$42K down to ~36K ($36,116.04 to be exact) because it is over-funded. Well yeah because concrete expenses are not included. That $330K expense over 30 years would necessitate an additional $11K/yr contribution. So the General Reserve contribution should be around $47K/yr - I'd round up to $48K or $4K/mo (or make it $49,680 - so it's $4,140/mo or $12/mo per owner)
Where they got the $36,116.04($3,009.6675/mo)contribution to General Reserves is a mystery. Just another facet that shows they have no clue how to budget.
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
Both reserve studies are on a cash flow basis but I'm not disputing that or how the calculations were done. Some of the life expectancies are crazy compared to the prior reserve study in 2009 which was done by the same company and had a reasonable history as to when things were done previously. I think a lot of changes were requested by this "out of control board" who don't really know what they are doing. But that's not even my main dispute.
The errors are basic (common sense)errors that a board should know if they were familiar with our governing documents regarding assessments and how they should be applied.
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
Below is a section of another post(8/28/15)that describes the MAJOR errors.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Clusters were charged for Asphalt & Concrete, Sidewalks, Driveways, Clubhouse and Tennis parking lots - all in error.
1) Driveways have never before been paid through the HOA. They are on homeowners'(not common)property - paid by the owner
2) The concrete sidewalks are on common property, used by all 345 homeowners - should be paid from General Reserves
3) The parking lots are being charged to both General and Cluster Reserves - again, should be paid only from General Reserves
4) Asphalt & Concrete (Phases 1-8) nothing scheduled until 2019 with the last area being done in 2030 and nothing after that.
Concrete sidewalks were scheduled every three years in the 2009 Reserve Study and have often been done every year to some extent.
5) Asphalt & Concrete (Phase 9)seal coating/crack filling has a 4/yr life; however, expenses were not added until 2031 – a 16yr delay.
Also part of this coating/filling would be for clubhouse & tennis parking that needs to be eliminated from Clusters expenses.
7) The only asphalt charges to Cluster Reserves should be for “Private Streets Maintenance” per our governing documents.
The same company prepared the 2009 Study so only needed to update the changes since then.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The 2009 study estimated ~$240K over 30 years for concrete which with a 3% yearly inflation rate brings it up to ~$330K. With the other non-cluster items, the total comes to ~$430K extra which is the reason for the increase.
On the other hand, the contribution to General Reserves for 2016 has dropped from ~$42K down to ~36K ($36,116.04 to be exact) because it is over-funded. Well yeah because concrete expenses are not included. That $330K expense over 30 years would necessitate an additional $11K/yr contribution. So the General Reserve contribution should be around $47K/yr - I'd round up to $48K or $4K/mo (or make it $49,680 - so it's $4,140/mo or $12/mo per owner)
Where they got the $36,116.04($3,009.6675/mo)contribution to General Reserves is a mystery. Just another facet that shows they have no clue how to budget.
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
By the way, I'm not just trying to get out of paying more in dues - even though it must look like that.
My estimates show that if cluster missing monies (~$360K) were paid back, and the errors in the current reserve studies were corrected,
cluster extra dues would drop; but by the same token the base (paid by all 345 homeowners, including me) would have to be increased.
I just want a proper accounting because right now a true financial picture is impossible.
My estimates show that if cluster missing monies (~$360K) were paid back, and the errors in the current reserve studies were corrected,
cluster extra dues would drop; but by the same token the base (paid by all 345 homeowners, including me) would have to be increased.
I just want a proper accounting because right now a true financial picture is impossible.
LarryB13 (Arizona)
Posts: 4,099
Posts: 4,099
Posted:
Quote:
Posted By LindaS27 on 11/18/2015 8:03 AM
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
My understanding of a proxy is that it is good for one meeting only and expires afterward. I have never heard of a proxy that was good for successive meetings. We do not allow proxies in HOA's in AZ, so my knowledge is somewhat limited.
RichardP13 (California)
Posts: 3,868
Posts: 3,868
Posted:
Quote:
Posted By LarryB13 on 11/18/2015 1:55 PM
Posted By LindaS27 on 11/18/2015 8:03 AM
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
The notice of the Special meeting (dues increase) was included with the annual meeting packet but there was only one proxy that appeared to be only for the annual meeting. There were three options for proxy choices that referred only to the annual meeting or any adjournment thereof. But further down, it stated that it was valid for the Annual meeting and all membership meetings that occur until Dec. 31, 2005.
My understanding of a proxy is that it is good for one meeting only and expires afterward. I have never heard of a proxy that was good for successive meetings. We do not allow proxies in HOA's in AZ, so my knowledge is somewhat limited.
Some proxies are written in such a matter that they may be good for specific periods of time, some up to a year.
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Quote:
Posted By LindaS27 on 11/18/2015 10:29 AM
By the way, I'm not just trying to get out of paying more in dues - even though it must look like that.
My estimates show that if cluster missing monies (~$360K) were paid back, and the errors in the current reserve studies were corrected,
cluster extra dues would drop; but by the same token the base (paid by all 345 homeowners, including me) would have to be increased.
I just want a proper accounting because right now a true financial picture is impossible.
By the way, I'm not just trying to get out of paying more in dues - even though it must look like that.
My estimates show that if cluster missing monies (~$360K) were paid back, and the errors in the current reserve studies were corrected,
cluster extra dues would drop; but by the same token the base (paid by all 345 homeowners, including me) would have to be increased.
I just want a proper accounting because right now a true financial picture is impossible.
For those who don't understand what Linda is saying, you may want to re-read her earlier thread:
Subject: Missing Reserve Funds - Atrocious Accounting - Reserve Study Errors - Denial of Records
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Quote:
Posted By LindaS27 on 11/18/2015 10:14 AM
Both reserve studies are on a cash flow basis . . .
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
Both reserve studies are on a cash flow basis . . .
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
This could be part of the problem.
My Association did an internal Reserve study using the component basis.
This year, we paid a professional to do a reserve study who recommended the cash flow basis. Not truly understanding the difference, we agreed.
The professional study was so confusing to us and drastically dropped what we were contributing to the reserves, that we utilized part of the professional study and created a component basis study.
The short version of the difference between the two methods are:
Cash basis - The Association has x amount of money available when needed based on expected life and replacement costs. A buffer is established by setting an amount the funds should not go below. In layman's terms - it's one pot of money (or one savings account).
Component basis - The association sets aside a specific amount for each component each year. In layman's terms it's like having several accounts (or multiple savings accounts) one for each capital component.
One of the issues we had was for concrete work as well. The professional study said that we should expect to spend $25,000 over 5 years. Therefore, the calculation was $5,000 per year set aside. However, with one pot of money, there is nothing preventing the Board from doing $25,000 worth of work in year one and pay back the fund over 5 years. Using the component method, if there was only $5,000 in that line item, that's all the money you had to spend unless your formally borrowed from another line item with a plan to payback the other line item/account.
For more info on the two methods see:
Reserve Studies: Component method vs Cash Flow analysis
Straight Line vs. Cash Flow Reserve Funding (straight line is another way of saying component method)
Reserve Funding
Reserve Funding Strategies: Cash Flow vs Straight Line
Quote:
Posted By LindaS27 on 11/18/2015 10:14 AM
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
I believe that you, like me, believe that funding reserves and reserve studies should be on the straight line/component method.
However, your Board (unlike mine) chose to go with the paid "professional" study and recommendations. You are likely not going to change their opinion. Therefore, the only other option is to gather support and replace them (through a recall or simply not reelecting) and then adjust the budget and put policies in place to go with your thinking of the situation.
To everyone who is reading this - utilizing a cash flow method or a component method is a choice for your Board. Either strategy works and using one over the other doesn't make the other method wrong.
Only time will tell if the method chosen was a good or bad decision for your Association.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Quote:
Posted By TimB4 on 11/18/2015 7:08 PM
Posted By LindaS27 on 11/18/2015 10:14 AM
Both reserve studies are on a cash flow basis . . .
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
Both reserve studies are on a cash flow basis . . .
Our HOA is made up of 345 homes - 181 Clusters and 164 non-clusters. All 345 homes pay a base assessment of $94/mo and Clusters pay an additional amount of $25/mo that is to be used ONLY for our "private street maintenance" per our governing documents.
This could be part of the problem.
My Association did an internal Reserve study using the component basis.
This year, we paid a professional to do a reserve study who recommended the cash flow basis. Not truly understanding the difference, we agreed.
The professional study was so confusing to us and drastically dropped what we were contributing to the reserves, that we utilized part of the professional study and created a component basis study.
The short version of the difference between the two methods are:
Cash basis - The Association has x amount of money available when needed based on expected life and replacement costs. A buffer is established by setting an amount the funds should not go below. In layman's terms - it's one pot of money (or one savings account).
Component basis - The association sets aside a specific amount for each component each year. In layman's terms it's like having several accounts (or multiple savings accounts) one for each capital component.
One of the issues we had was for concrete work as well. The professional study said that we should expect to spend $25,000 over 5 years. Therefore, the calculation was $5,000 per year set aside. However, with one pot of money, there is nothing preventing the Board from doing $25,000 worth of work in year one and pay back the fund over 5 years. Using the component method, if there was only $5,000 in that line item, that's all the money you had to spend unless your formally borrowed from another line item with a plan to payback the other line item/account.
For more info on the two methods see:
Reserve Studies: Component method vs Cash Flow analysis
Straight Line vs. Cash Flow Reserve Funding (straight line is another way of saying component method)
Reserve Funding
Reserve Funding Strategies: Cash Flow vs Straight Line
Quote:
Posted By LindaS27 on 11/18/2015 10:14 AM
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
So yeah, I think raising the cluster dues would be invalid because it is based on faulty information. The board has been told of these errors and ignore the problem.
I believe that you, like me, believe that funding reserves and reserve studies should be on the straight line/component method.
However, your Board (unlike mine) chose to go with the paid "professional" study and recommendations. You are likely not going to change their opinion. Therefore, the only other option is to gather support and replace them (through a recall or simply not reelecting) and then adjust the budget and put policies in place to go with your thinking of the situation.
To everyone who is reading this - utilizing a cash flow method or a component method is a choice for your Board. Either strategy works and using one over the other doesn't make the other method wrong.
Only time will tell if the method chosen was a good or bad decision for your Association.
I think maybe I didn't explain the accounts correctly.
It's not that the money is in the same bank account as the General Reserve items and should have been allocated to the separate components.
We have three banks accounts: Operating - General Reserves - Cluster Reserves.
So Cluster extra dues (%4,525 mo/$54,300 yr) should be deposited into the Cluster bank account and ONLY "private street" expenses should be paid from that same bank.
$105,550 - not transferred to the Cluster bank
$242,165 - paid from the Cluster account for non-cluster expenses
The above $347,715 is the missing money as of 9/30/15.
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
Linda
I do not see the money as missing. I see that you say it is not in the right account and some was spent for what you say was improper expenses. Is that correct?
I do not see the money as missing. I see that you say it is not in the right account and some was spent for what you say was improper expenses. Is that correct?
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Linda,
With that new information, be aware that the Board may "borrow" from the reserves.
They should not do this without a plan on how to repay the loan (in fact, some States like CA require such a plan).
If the meeting hasn't happened yet, I'd suggest creating a document showing the misuse/missing funds (actual numbers) and take that to all cluster owners. Ask that they attend the two meetings and, if they are not attending, to give you their proxy and ask the question of where the money went to the Board.
I would also encourage you to have copies of that document at the meeting and to hand it out when the budget is being discussed then ask the questions:
1) What was the money used for and why?
2) What, if any, plans are there to repay the account?
3) if there is no plan, why not?
With that new information, be aware that the Board may "borrow" from the reserves.
They should not do this without a plan on how to repay the loan (in fact, some States like CA require such a plan).
If the meeting hasn't happened yet, I'd suggest creating a document showing the misuse/missing funds (actual numbers) and take that to all cluster owners. Ask that they attend the two meetings and, if they are not attending, to give you their proxy and ask the question of where the money went to the Board.
I would also encourage you to have copies of that document at the meeting and to hand it out when the budget is being discussed then ask the questions:
1) What was the money used for and why?
2) What, if any, plans are there to repay the account?
3) if there is no plan, why not?
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
The board didn't try to "borrow" from the Cluster account. They didn't even know that the money was missing until I brought it up. I think it was and is bad accounting from the management company.
The annual meeting (10/27)there was no attempt to vote on raising dues.
The 1st meeting 11/12) to vote lacked a quorum so is adjourned until 12/17.
Not too many owners showed up at the 11/12 meeting to vote - maybe 10, if that. However, they said they had 47 proxies so far and they have volunteers attempting to get more proxies for them. Of course, if they ask the non-cluster homeowners for their vote/proxy, I'm sure they'll get a yes because the dues increase doesn't affect them.
I did pass out some documents, but not many were there to get them.
Last night was the first monthly board meeting with the new management company (they just keep getting worse) and I will write more on that later.
As far as I can tell:
1) Money was kept in the Operating bank account instead of transferring it to Clusters. And the other part of it is that a lot of Cluster money was used to pay for non-cluster expenses that should have been paid out of General Reserves.
2) They say they have to look into it but they have known for over 5 months and have only refused producing records and ignored other important issues.
3) Maybe a few reasons. Non-cluster owners don't care about what happened to our money. Board members don't want to admit they were wrong - same with the management company. Maybe even the attorneys have told them not to admit fault/errors so they won't be liable.
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
If you can't get your Board to address the issue, you may need to consult with a local attorney to see what the legal options are.
Sometimes, a letter from an attorney can get the ball rolling to resolution.
Sometimes, a letter from an attorney can have the Board dig in and prepare for a fight.
Sometimes, a letter from an attorney can get the ball rolling to resolution.
Sometimes, a letter from an attorney can have the Board dig in and prepare for a fight.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Tim,
Thanks for the input. Seems with the new management company, we have another problem - or what I see as one. I will start another post for that since it doesn't deal with notices nor proxies but with funding reserves,
Thanks for all you help
Thanks for the input. Seems with the new management company, we have another problem - or what I see as one. I will start another post for that since it doesn't deal with notices nor proxies but with funding reserves,
Thanks for all you help
BobD4 (up north)
Posts: 1,002
Posts: 1,002
Posted:
Quote:
Posted By LindaS27 on 11/17/2015 10:05 PM
. . . . . Does the time start when the notice is mailed or when it is received by the homeowner?
. . . . . Does the time start when the notice is mailed or when it is received by the homeowner?
Linda S27 : I think the relevant "adequate time" issue raised by your revised question is whether or not an adequate number of CLEAR DAYS were provided to owners /shareholders. Subject to your jurisdiction's condo/HOA law, the 'clear days' might be shown in your governance documents.
The 'postal rule' or 'mailbox rule' however is actually about judicial conventions as evolved to disputes about contract formation started by mail. The conventions might not apply to some modern instanteous media contract formation eg ? e-mail ? Fax ? . . Typically at what point in time does an offer-maker (offeror)'s mailed offer get accepted where the offeree ( offer - receiver ) is open by this convention to accept the offer by physically handing the acceptance to the post office.
The convention underlying the postal or mailbox rule is that a mailed offer gets magically presumed to delegate the post office as the offer-maker's agent.
Thus the offeree's written return acceptance letter - once given to the post office ( the 'agent' by convention ) - is magically and immediately effective as if made personally to the offer-maker. Sort of like voodoo.
CLEAR DAYS calculations do not seem to trigger the wars of contract formation/magic assumptions etc from the age of offers /counteroffers dependent on the post office.
Even if a failure occurs to provide a statutory number of clear days, a court might not automatically void - for example - a day short out of necessary 30 clear days, where the "short-notice" complainer nevertheless shows up and participates in the short-notified Meeting . . .
Nevertheless where the statute says minimum 30 ( clear ) days prior notice, good safe idea to count neither the day on which all notices / the final notices are mailed out ( as Tim noted ) nor the day of the Meeting / whatever. 3 or 4 days extra or more a good idea.
Your jurisdiction may tolerate lots of minor irregularities in Condo/HOA governance. Short by a day or 2 may not help you.
LindaS27 (Colorado)
Posts: 236
Posts: 236
Posted:
Bob,
Wonderful explanation. Thank you
Wonderful explanation. Thank you
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