Train-Wreck Alert: Hallway Project Way Over Budget Before It Even Begins

  • Posted: March 22, 2017

trainwreckHave we learned nothing from our chronic track record of cost overruns? Good Lord, just weeks after our Board voted to approve its take-it-or-leave-it, no other option, strongly-opposed hallway design, we learn the cost has skyrocketed. At the Board meeting last Thursday, our Treasurer Jane Santogrossi revealed that the hallway budget is already about a quarter million bucks outta whack and counting. That’s way over budget before it even begins! That’s all before a single workman steps foot on the property. Insult to injury, YOU were again misled about how YOUR money is being spent.

A Track Record of Project Debacles

The good news first: It’s no longer the Wild West here at 111 East Chestnut Condominiums. In the not-so-distant past, our Board president Milazzo led with an apparent tin ear regarding the marketplace disadvantage of carrying debt. He was a vocal proponent of it, and he spent a ton of money. And consequently, the homeowner value needle didn’t move an inch. Fast forward, at last Thursday’s meeting, fiscal-conservative Santogrossi indicated that reserves minus debt obligations, we are presently about $655,000 cash positive. By any measure, that’s meager for a building our size, but still, FINALLY… we are at least no longer in the hole.

But that aside, our tendency toward spending like a drunken sailor, is still very real. Our history is replete with examples. Two very recent debacles readily jump to mind, i.e. the loading dock and the hallway soffits.

The Loading Dock was a nightmare turned coverup. Where our board president told the owners that we were merely 13 percent over budget, unfortunately, the facts came out to betrayed him.

In November 2012, our property manager Sara Rudnik said, “Draper and Kramer’s loading dock estimate is $200K as is ours [Sudler Property Management].” She said, “Keep in mind the easement agreement splits this cost and the Association only pays 50%. Hence, $100K in the budget.” Not a few months later, the Association entered into a contract with Berglund Construction to the tune of $324,227. And by July 2013, the total project had ballooned to $451,245.

Same scenario with the hallway soffits. In the 2015 Budget, under “Reserve Expenses,” line item #9225 had $400,000 budgeted for the soffits. And as is reflected in the 2016 Budget, the actual spend was $50,000 over budget.

Working Up to the Latest Train Wreck

And now the Hallway Project. In the 2016 Budget, $480,000 was budgeted for “Carpet/Paint Hallways.” At last Thursday’s Board Meeting, the Board was asked, “What’s the estimated cost now?” Santogrossi said that she had just added up the numbers with our Property Manager, and the total presently tops $700,000. That’s 50 percent over budget before it even begins. And that does not even include new door hardware estimated to add another $193,000 to the total. Again note the $655,000 figure above. Bottom line: we’re essentially back to square one.

Five Key Takeaways

1. As the saying goes, a half-truth is a whole lie. The true Hallway Renovation Project, i.e. soffits and carpet, paint, lighting, and wallpaper now exceeds $1 million. That’s a wheelbarrow fulla YOUR money for a half-truth and a single take-it-or-leave-it brand-mismatched design. You deserve better.

2. If our property management company, Sudler, gets us to spend more, they make more. Per their contract paragraph 2.8, Sudler “will provide competitive pricing and services through preferred vendors” and that “these vendors may have a relationship with the Agent that provides a direct or indirect procurement fee.

That in mind, at the February 10, 2017, Board Meeting where the Hallway Design was approved, several homeowners on information and belief accused our property manager of canvassing and soliciting key votes in favor of the project. As Sudler has a vested interest, if that did occur and Sudler had its thumb on the scale, that would be grossly improper.

3. Keep in mind that two former board members, credentialed interior designers, offered to share their professional discounts for the Hallway Renovation with the Association (for free!).  Regrettably, that offer was rebuffed by Milazzo. Why? Politics.

4. The above approach to project management and fiscal responsibility is inextricably related to, and completely consistent with, 111’s depressed home values and stagnant growth rate. NO ONE can claim that their investment here is optimized and aligned with our address.

And lastly 5. THE MOST IMPORTANT TAKEAWAY: Board Elections will be held at our Annual Meeting, Thursday, April 20 at 6 pm.

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