Board Goes on Offensive to Woo Investors; Slaughters Goat Before Monthly Meeting

  • Posted on: January 26, 2015

The ScapegoatIn a response to mounting scrutiny over a cascade of recent debacles, last Wednesday the 111 Board of Directors marshaled an offensive to woo investors. Curious to many, frightening to some, they publicly slaughtered a goat before the Monthly Meeting. In light of that, here we rise above the drama to give you the meeting minutes. Here we get beyond the subsequent front-desk gossip and stockholder outrage. Rather than “what the Hell?!,” here we answer why and put it all in context.

If you haven’t seen it, last Thursday’s board meeting came with a primer. The night before the board and management issued a Bulletin. Titled “Winter Newsletter,” it was/is a 2,000-plus-word rant essentially blaming a single, labeled “disgruntled,” homeowner for our many, serious and mounting woes.

By way of background, in the words of Mark Twain, “Denial ain’t just a river in Egypt.” Pun aside, denial is a powerful psychological defense mechanism. When a person or group is faced with facts too uncomfortable to accept, they’re rejected despite what may be overwhelming evidence (i.e. the blog).

How’s that typically manifest? The Bulletin demonstrated all three classic ways: 1) Literal (nothing happened); 2) Interpretative (what happened is really something else); and 3) Implicatory (what happened was justified). And how is that then typically manifest in a community? Scapegoating. Someone’s gotta pay.

In Biblical times, a goat was designated to be outcast in the desert as part of the ceremonies of Atonement. Practically speaking, in a community such as a condo, it starts with ad hominem attacks, i.e. if you cannot afford a goat, ya make one. Then the prevailing power uses that construct to appeal to group prejudices and special interests, that is, rather than to intellect or reason. That makes that goat especially heinous. He/she/they then become an embodiment of the community’s ills. And that facilitates the slaughter. And VOILÀ!, atonement… the debt is paid and sins are all gone. It’s that simple.  Well, that’s at least in theory.

Here’s how effective the tool is in practice. As bad as the facts were that were relayed at last Thursday’s meeting, the negative buzz now is all about the Bulletin. In the opening words of the rant, “The dynamics at 111 E. Chestnut can be confusing.” Sure is, especially when done by design. Here, from the meeting, is what they don’t what you to hear:

TREASURER’S REPORT – Thursday our treasurer reported that we still carry the chronic burden of over a million dollars in debt (Barrington loan $656K, the line of credit $494 and a mere $198K in reserves).  The Winter Bulletin claims that…

– “[The Board] accomplished this by pursuing a disciplined strategy that leveraged a period of low interest rates and recessionary economic conditions.”
– “The blog fails to state the extent to which building improvements have successfully proceeded over the past few years, and the value they’ve added to our building.”
– “The speed at which our reserve account is projected to regenerate” and that “reasonable people should not doubt that our Association’s current borrowings can be repaid and our reserves brought to desirable levels within a few years.”

And all said with a straight face while we kick the can down the road, while situations like the Lifesafety mess render us totally exposed and unprepared. Accomplished? Look at the tremendous cost overruns and misspending that been the hallmark of the last few years. Value? Our investment is and has been flat. In the last three years our curb appeal has deteriorated considerably. Despite the attractiveness of our address, the property has gone from a B to a C minus. And more than a few former board members say that’s being kind.

As our treasurer reported, the 5-year term for the Barrington loan is up in November. Contrary to the Bulletin, the plan in 2010 was to be debt free by then. Fact is, despite the Bulletin’s insistence that “the Board does not currently anticipate the need for a special assessment,” our chronic debt is a special assessment. It’s just not fair, not honest, and not tax deductible.

MANAGEMENT REPORT – At the meeting, our property manager Sara Rudnik reported that due to the Lifesafety situation, the Association will be replacing some 42 doors to the tune of $55K, and replacing drywall for $25K. As to homeowner doors, she said that doors in violation will receive follow up letter especially the A and K units.

Even that brief assessment grossly underestimates the severity of what we are calling the “Lifesafety Debacle.” Aside from the fact that this is not in our just recently approved 2015 budget, and aside from the blank-check potential of the anticipated City fine, Director Brush asked the most important question: “Are the repairs all doable?” Rudnik paused and then answered, “Well, I’d like to think so.”

Yikes! Fact is, we just might be getting a per-day fine for something well beyond our staff’s capability to fix. Rudnik reported that our engineers are now saying that a majority of the door problems may be attributable to the long-standing building issue with of negative air pressure.

Anyway, Director Shay asked about a second inspection. Bob Graf of Sudler reiterated what we reported here earlier, “there will be no follow-up inspections.” That is, this is a recovery mission not a rescue. Our gross violations are headed to court. It’s now only a matter of assessing the damage.

And how did the “Winter Newsletter” characterize this? Well essentially, “the pre-inspection checklist did not cover the vast majority of categories included in the actual inspection.” And “We are exploring our legal options with respect to the findings.” And of course, it’s all the “disgruntled” homeowner’s fault. The board failed to mention how certain members of our board have repeatedly and knowingly violated City building code. THAT’S where lies the blame.

APPROVE 22.1 DISCLOSURE – After some cryptic discussion about “clarification of board expenditures,” the revised 22.1 Disclosure Statement was approved. For those not familiar, 22.1 is the Section of the Illinois Condo Act (ICPA §22.1(a)). It’s purpose is “To encourage disclosure by the seller of a condominium unit for the protection of the prospective purchaser.”

As a sidebar, it was mentioned that now we are defending count ’em 6 lawsuits (5 add 1). The December updated statement regarding litigation was obsolete come January. In summary, we are now defending three that claim Association negligence and three that claim that various individuals on our board violated their fiduciary duty.

How does the Bulletin characterize it? “Any condo association is subject to ‘slip and fall’ lawsuits, arguments over responsibility for repairing leaks, or elevator incidents, and as a 400+ unit building we have our share of those. However, several of the lawsuits against our building and many of our legal expenses are a direct result of”… you guessed it, that disgruntled homeowner.

The Bulletin underscores that “in 2014 alone homeowners have paid over $40,000 in additional assessments to cover the cost of legal fees in defending against this unit owner’s lawsuit. That money could have been better spent on improvements.” Indeed. Ironically, the board’s fiduciary duty is anchored in the word “prudent.” So it begs the question: Why wasn’t the matter just settled? Let alone why did we spend $40,000, how did we find ourselves in that mess?

NEW BUSINESS: REVIEW AND APPROVE CEILING SOFFIT INSTALLATION – After some limited board debate, the motion passed that Oswego-based In and Out Construction would install the hallway conduit covering to the tune of $438K. Of note, it is to be a “not-to-exceed” contract that already exceeds the 2015 budget line item by some 10 percent. Good grief.

Of note, Director Gajderowicz did go down fighting on the owners’ behalf. She again emphatically insisted that we lack a hallway design overview and that a piecemeal approach like other projects here, “will invariable again lead to cost overruns and quality variation.” But apparently the board majority decided that it would be best to keep aligned with the asymmetrical mediocre finish that was the workout area.

Now for the record, even though the Bulletin did not blame this anonymous disgruntled homeowner for the 10 percent budget variance, in all fairness it had not been voted on yet. Surely, going forward, it’s all his fault.

The point of all this? Great piece online re: Communication Failures and Strategies of Denial.  In “States of Denial” sociologist Stanley Cohen argues that a proclivity to deny disturbing facts is the normal state of affairs for people in an information-saturated society. Cohen’s book is based on wide-reaching studies including Nazi Germany, South Africa, Israel/Palestine, among others. The key is getting to the point where denial is acknowledged and actively addressed. Cohen explains: “Instead of agonizing about why denial occurs, we should take this state for granted. The empirical problem is not to uncover yet ever more evidence of denial, but to discover the conditions under which information is acknowledged and acted upon.”

In that and only that, there’s hope.

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EDITORS NOTE: For further reading, we recommend “Communication Failures and Strategies of Denial.”

Comments

  1. At The Top · February 15, 2015 Reply

    Tony Shut You Down! Didn’t he!?

  2. mcummings · February 20, 2015 Reply

    Have read and admired your blog. Want to start one in another building (a Sudler property). Would like to get some help. If possible, would like to hear from you.

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