Pressed for time? Aren’t we all. Add to that, patience and attention spans today are at a all time low; and G-d knows the 111 investment can be challenging. With that in mind, here’s a brief summary of an insider’s perspective. Think of it as a 111 Cliff Notes. The following is especially geared for owners who don’t reside here, and for prospective buyers. Here are the top five things you need to know.
1. Debt pay-down rate steady but slooooow. According to Board Treasurer Jane Santogrossi, our pay-down rate on our chronic debt is about $29K per month. Given that we are approximate $900,000 plus in debt as she reported at the last Board Meeting on June 25, we have about 31 months until we’re free and clear. Note: That’s February 2018.
Not so fast. Santogrossi did not include the things on the immediate horizon on our Reserve Study. She only added that the payoff scenario was “given no new mandates from the City.” Which brings us to the status of our recent and rather prolific failure of the City’s Life Safety Evaluation (LSE).
2. Like we need another lawsuit. According to our sources at the City’s Department of buildings, we’re next in line to be sued by the City over violations of the LSE. Here’s where we’re at: As last we reported on this, having failed the LSE meant a fine, do not pass go. Fixing everything prior to court would only serve to reduce the fine. So what’s the status? According to Property Manager Sara Rudnik, “We’ve fixed a number of things.” However, the violation list is extensive, and at the last Board Meeting Ms. Rudnik articulated our posture concerning the remainder. Rudnik said, “We’ve gone back and forth with a consultant. Our position is we were in code at time of construction. So we are trying to meet with the City to determine what needs to be done.”
Ummmm, no. Well, yes and no. According to Jose Aparicio, who’s now the City’s point person at the Department of Building for LSE issues, it’s yes, “some condo associations have complained that the violation notices are confusing and we, of course, are available to clarify where needed; but as to the position that ‘we were in code at time of construction,’ no. The code is the law.”
For the record, the City lawsuits are asking the Court to require each building owner to correct violations or else pay $500 for every day not in compliance. For example, one of the first buildings sued, 1500 North Lake Shore Drive, has not resolved its case for 113 business days and could be fined as much as $56,500. (Source: LoopNorth.com)
Insult to injury, add a pending fine for not submitted/posting a certificate of compliance for the elevators (presently in court Docket #15BT02774A), and a fine for no permits for A and K units that moved their front doors sans permits.
3. Speaking of lawsuits, Milazzo’s formed a Litigation Committee. See the second last paragraph of the approved minutes from the May 28 Board Meeting. The reference is typically cryptic but here’s what we know: First off, we’ve spent a helluva lot of money on litigation since Milazzo took the reins. Four years ago, our spend was about $22.5 per year. And in 2014 alone, our spend was nearly 80 grand! To that add that board-member defendants in two of the current suits are now complaining that they did not know anything. Here’s the deal with that: like the management contract, our legal services contract designates a single point of contact, i.e. Milazzo. Single point of contact equals single point of failure. The point: distributing the information and decision making hopefully will minimize mistakes and shield individual exposure. However, as the new committee is made up of board members exclusively, there’s a twist. As none on the committee are attorneys, the committee itself could open its members up to lawsuits for practicing law without a license. See “ISBA and the Unauthorized Practice of Law.”
4. Speaking of money, have you had a chance to review this year’s audit? To start, let’s underscore the second paragraph on page one from the auditor, Picker & Associates:
“Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.”
Translation: beware of garbage in, garbage out. But that aside, look at our total liabilities and fund balance deficit (page 4); look at our cash beginning of year (page 7); again, look at the spend on legal fees (page19); look at the cost of maintenance supplies and plumbing repairs (page 17); look at miscellaneous administrative (page 18); and especially look what’s coming down the pike (pages 20 thru 22).
In summary: We are grossly underfunded. Our loans are giving us a competitive black eye depressing homeowner value. There are non-essential expenditures being made and there is evidence of overpayment for various services. In the words of one HOA expert who asked to remain anonymous, “It’s certainly not the worst I’ve seen, but it is far, far, far from the best.” Considering our potential as an address, it’s downright depressing. To quote Asia Gajderowicz, former board member who’s been in the real estate and condo field for 20 plus years: “We’re 20 percent undervalued. How we’re being managed is a joke.”
5. Sara just got a nice raise… for no apparent reason. At the last Board Meeting, under “Other Business That May Come Before the Board” was “Ratify Property Manager’s Compensation Addition.” And they blithely did. Milazzo, in his typical fashion, did not report it as a 15 percent raise but rather spun it as a $1,000/month increase as recognition for her service. Regrettably, other than a slew of qualitative niceties, there was no quantitative assessment, i.e. there was no reference to any performance review, no reference to any job marketplace comparison, no quantitative anything to prudently provide a raise, period. Bottom line: individuals can spend on whim; fiduciaries cannot. But in the last four years, that prohibition hasn’t been a concern.
Again, it’s steady as she goes.
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EDITOR’S POST SCRIPT: On a related note, Vince Scott, an association broker at Berkshire Hathaway HomeServices KoenigRubloff Realty Group, still cannot sell his Unit 11A. After two price reductions, he just cannot seem to unload it. This August 20 will be a year.