The following is an open letter of sorts to our new board member, Jane Santogrossi. Despite the improper circumstances regarding her appointment, it turns out that now ironically, she’s the Association’s only hope that ethics and fiscal responsibility become a part of this year’s distorted budget process.
What follows here is an overview of the 2015 Budget, the key issues, and an appeal to her credentials. A CPA with 30 years experience that includes advising Boards of Directors in “corporate governance best practices,” Jane more than any director has got skin in the game, i.e. her professional reputation. And that uniquely gives her the power and motivation to help us avoid a repeat of last year’s budget train wreck. One would hope.
That said, Jane, here’s the poop…
As you may have noted, the 2015 Budget is just a cut-n-paste of the 2014 Budget. Note the cover pages. What was dishonest hyperbole a year ago, now rises to ridiculous.
QUOTE: “The Board is doing its very best to keep assessments as low as possible, while at the same time addressing our Association’s most critical building concerns.”
Low? As compared to what? And what do we actually get for our assessments? Not much. And as to “critical building concerns”… like a dog run? Or how ’bout North BBQ Deck and Chestnut Room furniture? Seriously.
QUOTE: “We [the Board] believe that the actions we’re undertaking at this time will enhance our building’s status, value and appearance.” And “By employing sound ﬁscal management to direct necessary building improvements, we intend to secure your investment as a premier Gold Coast residence.”
And what exactly did that promise mean last year? Look at this place. It’s noticeably deteriorated. And what’s the status of your investment? The only ones makin’ out here at 111 are a few board-prefered real estate brokers lining their pockets as a consequence of turnover, unit discounts and rental commissions.
But it gets worse. Note the claim: “We are currently contributing close to one million dollars per year in excess operating revenue to our reserve account. These excess funds are the result of past assessment fee increases as well as savings realized due to efﬁcient management practices and aggressive contract negotiation.” That’s just plain false and misleading. Fact is, we blow through budgets as a matter of practice here and siphon off that “excess” to cover it up. We then replenish our reserve commitment with credit for appearances. Fact is, we are chronically over a million in debt.
And just how kosher have those “fee increases” been? Not very. Per our By-Laws Article IV Sec. 1, besides “the repair and replacement cost, and the estimated useful life, of the property,” in determining the amount of reserves appropriate for the Association, the Board should consider, “(iv) the ﬁnancial impact on Unit Owners, and the market value of the Condominium Units, of any assessment increase needed to fund reserves.” Just as with last year’s assessment increase, again this year there has been no consideration given to the ﬁnancial impact on Unit Owners, or the market value of the Condominium Units. It isn’t even on the Board’s radar.
That said, look at what they gave us? Look at just a few of the discrepancies between what was budgeted in 2014 and the actual.
“Maintenance Supplies” had $32,000 budgeted and now there’s $60,000 estimated actual? How is that even possible? And what percent of that is walking out of the building?
How did the “Misc. Administrative Expense” double and then some? What is $9,000 in miscellaneous expense? That’s almost a thousand dollars a month of well… ya know… stuff.
And how did our “Legal Fees Association” triple? How did we go from a budgeted $20,000 to more than $65,000. Didn’t our board president brag that our firm Kovitz Shifrin Nesbit was on a monthly retainer?
How did we not anticipate the nearly $200,000 shortfall with the “Union Benefits Doorman”? That’s a BIG oops.
And lastly, how do we simultaneously have a spike in “Late Charges” ($11,000 budgeted and $15,000 estimated actual), while our “Legal Chargebacks” fall by more than half ($25,000 budgeted and $13,356 estimated actual)? According to Cook County Court records, we’re not pursuing assessments any more. And that means that in a span of less than two years, besides becoming known as a transient rental building, we’re apparently becoming deadbeat friendly.
There are a lot of other anomalies that raise questions about one’s investment here. But Jane, presently that endeavor is an exercise in futility. Fellow Board members Del Monico and Gajderowicz tried but were given short schrift. And Ginny Hourigan, the former Financial Committee chair, was booted for asking questions. Bottom line: The budget is designed to be “ratified” (read rubber-stamped) on November 13. It’s a done deal. And the Milazzo-led Board majority doesn’t care. In the words of Director Glen Green: “We are spending way too much time on a status quo budget. But hey, I’m moving.”
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