Carrying Charges
When the Board re-assumed self management after terminating Halkeen, they reported severe financial issues including that Halkeen left the Cooperative with $130,00 in unpaid bills and the reserve fund had been depleted to $100,000. Since then, the Board has continually prided itself on returning the association to financial health. However, the Board has never accepted responsibility for failing to properly oversee and manage the budget, allowing the management companies, auditors and accountants to create the problems.
Further, they have failed to acknowledge that the primary way they got the cooperative back on its feet was to assess each owner an unprecedented $100 per month increase in carrying charges. This was presented to membership as a one-time event to save the cooperative. Here's the math: $100 per month times 204 units times 12 months per year equals $244,800 a year. That was enough to wipe out the deficit and double the reserve in just one year. Yet the unprecedented $100 per month increase has never been rescinded and we continue to pay it to this day.
The $30 monthly annual carrying charge increase that was announced as part of the long-term financial planning program seems to have been suspended. Will that affect our ability to provide maintenance as planned, or is it a short-sighted ploy by the current Directors to keep their seats on the board?
Refinancing
We have been in a recession for over three years now, with record low interest rates, yet we still have not refinanced.
The Board seems to be finally addressing this issue. But they are again acting in secret and not revealing what refinancing options they considered and how they voted to either:
refinance to reduce monthly payment
refinance to keep monthly payment as is but retire the loan earlier
refinance to leave monthly payment and length as is and used proceeds for major maintenance project(s)
It's our money and we have a right to know how each director is voting to spend it.
And why wasn't this done several years ago when the recession began?
Laundry Rooms
This was another ill-advised financial mess the Board got us into. We used to own and maintain the laundry rooms ourselves. We grossed $27,000 in revenue per year. The Coop charged $ .50 each to wash and dry a load, for any temperature water and 60 minutes of drying time.
But the Board got away from budgeting routine, on-going replacement of the machines and water heaters in order that that an appropriate percentage of the oldest units were replaced each year. After returning to self management, they found most of the equipment was in very poor shape and there were no funds to replace the number that needed to be replaced. So they outsourced the whole service to a private company, including $10,000 in cash the vendor paid the Cooperative for our business. (What do you think that 'loan" wound up costing us?)
So the $3.00 we used to pay to wash and dry three loads (hot, warm and cold water) now costs $8.25 for washers that hold less and dryers that run for 25% less time.
Bidding Out Work
Is the Board actively and properly bidding out all of our work? Occasionally I see some bid numbers from meeting minutes, but not always. I bid out a lot of contracts in my work and found that since the recession started I have switched most of my vendors. We're in a recession and many companies are bidding razor-thin margins to get new business. But I continue to see the same vendors we've had around here for years.
Truck Purchase
The Coop spent $26,300 on a new pickup truck. Why not buy a used truck? You can get great buys in this economy on a repo or short term lease turn-in. The minute that truck drove off the lot we lost thousands of dollars.
Playground
The presidents responsible for the project promised over and over again that no Cooperative funds would be spent for the project. Then they did.
Basic Accounting Practices
One month I received a note from the office that I was being fined because I had not paid my rent for the prior month. I had, and the check had been deposited by the cooperative. I had to go to my bank and get a two-sided copy. But I was most concerned the coop did not do a proper monthly reconciliation to catch the error. Especially since it was under the new financial software system management is so proud of.
I was also concerned with the management attitude. I have never been a problem getting my rent in on time. One would think when they didn't receive it promptly they could just make a quick, pleasant call saying they hadn’t received it and please give them a call back if there was a problem. Instead they waited until after the penalty date. Like they want the penalty fee instead of the check on time. And I never received an apology or clarification.
12 comments:
Yeh, i was ticked when i saw they bought a brand new truck. I can't afford one for myself but have to buy one for the employees?
If the washer and dryers are now energy efficient, why do they cost so much more?
good point! and why dont they have insulation blankets and sleeves on the heaters and pipes?
Interesting observation about no increase in carrying charges this year. The $30 a year bump was essential to funding the 10-year CNA plan. Just like what they did ten years ago that led to all the fiscal problems, like the need to bring in an outside company for the laundry rooms.
I agree with you on 99% of your issues. But the playground was financed by the shareholders. In which there were yard sales and donations from various companies. Also the membership donated (if they wanted). There was a committee but none of whom got paid for there time. They raised over 6,000 every penny was used for the playground and the after party. Also even though the mothers names were used for the committee the fathers were also involved. I'm sorry if you were missinformed on this issue. But everything else is right on target. Also the person with the satellite dish was a board member ( at the time). Seems there is a pattern here.
Management doesn't get the concept of equity. They like to use the example equity has risen from the few hundred dollars original members signed over (from their security deposit) back in 1979 is now worth about $7K. If you had put that same amount of money into a 30 or 40 year annuity savings plan, it would be worth that much. That's more like interest than equity.
The real equity is from the hundreds of thousands of dollars every long term shareowner has paid in mortgage and maintenance costs over the years, for which they now show absolutely nothing! We're really like renters instead of owners because the Board refuses to convert to a Market Rate Cooperative as bound by our 1996 amendment vote.
No mention of refinancing at the annual meeting! OMG what are they up to now?
About refinancing - if you've been reading some of the paperwork that's been sent to all of the shareholders you'll notice that someone said that they're working on refinancing. They've asked for volunteers a few times to assist with this huge task. Instead of complaining, why don't you call the office and ask to speak with our treasurer and offer your help!
There is no refinancing committee. You will not know what they're doing until after it is done, if ever.
Re: Lost check comment:
I had a similar problem. Why doesn't Maloney use the Yardi software so members can set up an on-line autopay system? I write one check a month for all my regular bills, to the cooperative. Everything else I do online and it's great. This would save the office staff some work. Plus, with the carrying charges set to be paid the 1st of the month, we'd pick up a few dollars in interest compared to waiting a few days to deposit the checks, or when the 1st falls on a weekend.
On-line bill paying?
Flintstones, we're the Flintstones
Copalum rewiring project was a big budget expense and not well thought out. When NG was built in the 60s there were no microwaves, toaster ovens, coffee machines etc and no plugs in the kitchen for all the modern appliances we have today. When they redid the wiring they should have installed 4X plugs to replace the 2X plugs to give us enough outlets instead of using extension cords. But no. Instead they wasted money on those tacky ceiling lights.
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