Financial info shared at BOD Meetings

Few questions here....thanks!

1) BOD holds meetings every other month. Treasurer only reports Total Cash Assets; refuses to elaborate how much is collected/spent. When asked, PM comes to his defense saying they are not obligated to report this information at any meeting and, have never done so in the past. So, do homeowners have a right to know how much was collected/spent in any given month and amount deposited into our reserves?
2) Are homeowners also bound to a two year contract agreement that only the BOD members (actually BOD president)sign even though our governing documents refers to a one year renewal?
3) Is the BOD obligated to share Reserve Study findings with its homeownership especially if a recommendation was made in Study to replace roofs immediately and, the BOD secured a loan instead? In this instance, roofs were being replaced at approximately $7700 each and we only 12 more buildings remained...imo, completing 4 buildings each year there should have been ample reserves. Now, we are stuck with having to repay a $200K loan at 7% interest over 10 years. Currently, we pay $95 per month and in the past 4 years, we've had 2 increases. I thought if expense exceeds a certain percentage of current budget homeowners have a right to know before BOD increases monthly fees or special assesses. -Renee

Mary, explained several things although I'm not so sure I agree with her statement that the board took a loan as opposed to bothering to ask the owners for an assessment. How can they get a loand without asking the owners? My board can't.

Anyway, Renee I don't understand you wording; if they took a loan why are they not replacing all the roofs now? Or are they but your wording is incorrect? Have you seen the Reserve Study? What is the board's explaination for taking the loan?

Do you go to meetings? Are their minutes available to owners? How are you obtaining your information?

Dana

Ditto for mine!

There is no cap.

Dana,

The CCRs of my former assn state the "assn may borrow money in such amounts, as such rates, upon such terms, and security, and for such period of time as is necessary or apporpriate." IMO, that gives the BOD the license to obtain a loan in any amount they deem appropriate w/o a vote of the members.

The CCRs of my current assn are silent on this issue. I take that to mean the BOD does not have the authority to borrow money.

Sorry for the delay in responding--family emergency. Anyway, thank you Mary and appreciate everyone's response.

1) I know we have right but am only 1 person to 5 on the BOD. I know they each receive copy of finances in the meeting packet but, I don't believe any of them understands our finances so asking is futile. And because they don't know or have an intelligent answer that's when the pm intervenes. As far as reviewing finances, meeting minutes or reserve study, I have asked in the past but refuse to pay $200 or more for copies or having to pay $50+ per hour for someone to breathe down my neck. IMO, this pm is most comfortable doing things her way and has been doing so for the past 10 years; she does not embrace "change" well. I'm not sure what you mean BOD is in control and can be held liable for inconsistencies though.

2) This is management company contract that is renewed every two years that BOD signs. And, unless a previous BOD agreed in their Meeting Minutes to honor a 2 year contract rather than what is stated in our governing document, should it have been amended/recorded to reflect this change as well?

3) I recall hearing of a Reserve Study done over 3 years ago but findings/recommendations were not shared with homeowners when known. It is only over time some of us have learned e.g., most recently, completion of roofs for 12 buildings needed to be done right then and there; yet, this project had been going on awhile and would've been completed by 2010. Now we're stuck with this loan. I checked our governing documents and all I could find (caps?) is if expense exceeds $100 x number of units--in our case $25,800 for any alterations, additions, improvements affecting our community area it required a vote to be special assessed. I just think they took the "easy" way out with a loan; in my thinking our roof replacement project had been funded over the past 8 or so years from our Reserves. Also, within the past 3 years our assessments went up $20 overall. I think just enough to have covered the completion of this project had they diverted that amount into our Reserve Funds. Couldn't tell you how much is in there now because this again is something the BOD Treasurer will not divulge. When reporting Total Cash Assets, it wouldn't hurt knowing how much was actually collected/spent/saved in any given month.

Overall, communication IS a huge problem but as long as our BOD doesn't think so and our PM could care less it is a losing battle for us homeowners.

Bonnie, what amazes me is that the PM is charging a BOARD member!

Yes, per this post:



By the way, to Renee, the board is where the "buck stops." The PM works for the board and not the other way around, so the board (as in all the board members, even if you are only 1 in 5), is ultimately responsible and may be liable for any failures the PM executes.

Michele, sorry for the confusion. No, I am not currently a Board Member but have been trying the past 4 years. What I meant to say is that I am outnumbered when I attend these BOD meetings---me against 5.

Bonnie, I have been ribbing and even quoting to the BOD the following 2 Sections from our governing docs, the first which they have NEVER done since I've lived here. [my apologies for length of this thread as it is easier copy/paste then to type it]

ANNUAL STATEMENT: Within a reasonable time after the close of each fiscal year the Board shall furnish each Owner with an itemized accounting of the Community Expenses for such fiscal year actually incurred and paid, together with a tabulation of the amounts collected pursuant to the Annual Assessment budget, and showing the net excess or deficit of income over expenditures plus reserves.

COMMUNITY ASSESSMENT: (a) Each year on or before December 1, the Board shall adopt subject to the provisions of Subsection (b) and furnish each Owner with a budget for the ensuing calendar year, which shall show the following with reasonable explanations and itemizations:
(1) The estimated Community Expenses;
(2) The estimated amount, if any, to maintain adequate reserves for Community Expenses including, without limitation, amounts to maintain the Capital Reserve;
(3) The estimated net available cash receipts from the operation and use of the Community Area, plus estimated excess funds, if any, from the current year’s assessments;
(4) The amount of the “Community Assessment” payable by the Owners, which is hereby defined as the amount determined in (1) above, plus the amount determined in (2) above, minus the amount determined in (3) above;
(5) That portion of the Community Assessment which shall be payable each month by the Owner of each Dwelling Unit which is subject to assessment hereunder, which shall be equal to one-twelfth of the Community Assessment divided by the number of Dwelling Units, so that each Owner shall pay equal Community Assessments.

Anything in this Section to the contrary notwithstanding, during the Initial Development Period the assessment procedure set forth in Section 6.08 shall apply and the budget provided for in this Section need not disclose the information called for in Subsection (5) above, although the budget shall disclose the portion of each Owner’s share of the Community Assessment which shall be added to the Capital Reserve.

(b) No budget may be adopted with respect to a calendar year commencing after the end of the Initial Development Period which would require the Owner of a Dwelling Unit to pay a monthly assessment which increases more than the percentage increase in the Index (defined in Section 6.08(b) below) during the most recent ascertainable twelve-month period prior to the adoption of the budget, unless the budget is affirmatively approved by at least two-thirds (2/3) of the members of the Board then serving.

I have to say in the last 2 years when we do receive the Proposed Budget it now reflects Actuals but only up to the month of August minus any dollar (I'll settle for percentage) amounts allocated into our Capital Reserves. I always have asked about that and I was told in so many words by both our BOD and PM it is not important to break those numbers down for each bucket namely for our Playground equipment, driveways, parkways and unrestricted funds; besides, most homeowners really don't scrutinize this report--all they care is whether our assessment increases or not.

Because they know I am a stickler for info, I feel they have tried to make it as difficult as possible for me to gather any information. They know I wouldn't pay that much for copying costs so their retort was our PM had to be present while I reviewed files and (that) was on the clock for charged time. While I am on the subject, what exactly is 'proper purpose'? Isn't the fact that I am a homeowner, paying their management fee, funding various projects and normal upkeep sufficient reasons to access this information???

Like I said, I attend every meeting and have even gone through all of my own notetaking. Our governing documents are silent regarding loans so does that mean I should have then looked to what the IL Condo Act says? What I have noticed these past few years is that MOST if not every meeting there seems to be an Executive Session apparently to discuss what is not to be known during the meeting either to myself and another homeowner. However, if that is when it is discussed--fine; but then it should be ratified at next Open Meeting.

Finally, I wish I could provide more details on BOD acquiring loan in 2007(seems only like yesterday!). I would be interested in knowing as well but they won't budge. What I have been able to surmise it that it was based entirely on recommendations from Reserve Study done in 2005 even though it is history and a mute cause now.

Renee,

Thanks for the additional info. I can understand your frustration.

Our BOD does not send out the end of year financial report either – they include a notice in the Spring newsletter that it is available upon request. A cost saving measure…

In our case, the proposed budget sent out is the bare minimum to meet the IL Condo Act and our governing docs. But, (I think) a HO may request to see the details (at PM office or pay for a photocopy). If a HO were to send written questions or recommendations to the Board, I would expect the questions would be answered in writing (this has been done in the past) (and after they got up from falling over in a dead faint!). Needless to say we have a lot of homeowner apathy.

I agree that your definition of “proper purpose” given for requests to see documents seems reasonable.

Re the loan – will have to check again, but I could not find specific references to loans either. So, I think our Board could secure a loan without HO approval. Assessment increases, and special assessments, are addressed. I am beginning to think that the loan may be a vehicle for funding a capital replacement when there are insufficient reserves and the Board knows they will not be able to get a special assessment passed (IMO).

Check this out - I found this article from an IL HOA attorney:

http://www.ksnlaw.com/?t=11&la=1145&format=xml&p=1672

Publications
Association Loans
Published March 12, 2005 as
Boards grapple with funding needed repairs

Do you have a finance committee – if not, perhaps propose one be formed with a Board member and some volunteer homeowners (such as yourself), that would report to the Board? Could you find some other homeowners to join you?

Bonnie