At the previous Board of Directors Executive session, on 9/23/04, I brought to the attention of James, Euclid Management's representative, that it is rather difficult for the board to make informed decisions with financial statements from a month ending 7 weeks prior to the board meeting. The board packet for the 9/23/04 Board of Directors meeting had July statements. The board packet for the 10/21/04 Board of Directors meeting had August statements. I also expressed my concern with the large number of checks Euclid Management prepared for the board to sign due to both the July and the August Financial Analysis Statements included the same warning: "Operating cash is less than 1 months' budgeted expenses." I asked if there was enough money in the account to cover the checks and James, Euclid Management's representative, stated Euclid Management wouldn't send them out if there wasn't. With my own personal checking account not only do I have my current account balance in my check book, with my computer I can go on-line and view my current account balance and other checking account information. But Euclid Management gives financial statements 7 weeks old, not current, to the Board of Directors. To me that is unacceptable.
I believe it was at the organization meeting right after we were elected that Euclid Management stated the procedure on the utility bills has been Euclid Management does not make out checks for the board to sign, but just goes ahead and pays them. The October board packet had a surprise for some Board Members, but not to me. I predicted it four months ago on my website.
The July Financial Analysis Statement lists budget variances for trash, electricity, water and sewer with the note "paid monthly usage." The August Financial Analysis Statement lists budget variances for the same utilities, but the trash is the only utility with the note "paid monthly usage." The August Financial Analysis Statement budget variances for electricity, water and sewer state "paid first week in September." So the trash is the only utility bill that was paid in full. Alex Taylor's Board of Directors mismanagement of the money was so bad the July and the August Financial Analysis Statements included the same warning: "Operating cash is less than 1 months' budgeted expenses" so the HOA, maybe the first time in its 26 year existence, did not have enough money to pay its utility bills in full.
At my website page 2004-06-17-bod-meeting-petition-handed-to-president.htm I wrote: "An association dues increase from $266 per month to $319 is $53 per unit times 142 units is $7,526 more per month, but even that association dues increase is less than the drop rate so without belt tightening we will soon have negative balances in our operating and reserve accounts." Four months ago I made that prediction. The 7 week old August Cash Flow statement showed bank deposits and checks written with a negative total of $20,786.18. It also shows operating cash of $19,000 while we ideally should have enough for 2 months of operating expenses, $72,000.
At the same website page I wrote: "If Park Mediterrania Homeowners Association was not a nonprofit corporation, but a business, Alex Taylor's Board of Directors would be considering bankruptcy and how to keep the utilities turned on. Can you imagine trying to live in your condo after the water was shut off due to non-payment and therefore not having any hot and cold running water in your condo to take a shower, wash the dishes, wash your clothes and flush the toilets ?"
Both the July and August Financial Analysis Statements show "The last reserve study was completed in March 1999 with a required reserve balance of $391,849.23 at December 31, 1999." Subtract from that amount some for the asphalt work that was done and add to that amount some for inflation. At the time of the 1999 study we were 47% ideally funded. The August Financial Analysis statement also shows reserves assets of only $6,936.24. So going by the 1999 study, presently we are less than 2% ideally funded. At Euclid Management's semi-annual seminar last week-end our Homeowners Association attorney said the California legislature is again considering making it mandatory that associations meet their "required reserve balance." If they ever enforce this law, how are the owners going to come up with thousands of dollars per condo to bring our reserves up to the "required reserve balance" when the August Financial Analysis Statement showed the association couldn't even pay in full its utility bills?
Both the July and August Financial Analysis Statements claimed the latest reserve study was in March 1999, but that was not the latest. The Independent Auditors' Report dated 2/10/04, that Alex Taylor's Board of Directors withheld for 5 months from the owners, states "An independent reserve study was conducted in August 2003 … " The estimated current replacement costs went from $467,988 in 1999 to $864,451 in 2003. The recommended fund balances ("required reserve balances") went from $394,861 in 1999 to $619,289 in 2003. Subtracting from that $619,289 the August Financial Analysis statement reserves assets of only $6,936.24 leaves a difference of $612,352.76. That amount divided by 142 units equals $4,312.34. That is an awful lot of money to cough up if the California legislator makes it mandatory that associations meet their "required reserve balances."
The 2004 Budget stated "The monthly assessment will remain at $266.00 per month." A few months after receiving the 2004 Budget we received a Budget Analysis dated 2/29/04 that stated in part "Park Mediterrania is $31,899 over budget for the first two months of the fiscal year." Then contrary to what the 2004 Budget stated the previous board increased the association dues.
At the 10/21/04 meeting the new Board of Directors approved the 2005 Budget given to them by Euclid Management "as is" without any discussion. Amazing, the Board of Directors received a monthly packet for that meeting that included the August Financial Analysis Statement giving budget variances for electricity, water and sewer showing only partial payments for 3 of the 4 utilities and then right after finding the HOA couldn't pay all of its utility bills in full, the board approved the 2005 Budget without even bothering to discuss it.
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