November 11, 2013 - Budget Meeting Minutes

posted Jan 26, 2014, 3:39 PM by peterc@saxonyhoa.org

Saxony Condominiums

2014 Budget meeting Minutes

November 11, 2013


Meeting called to order at 7:07PM

  • Roll call – all members present except Jordan Wallace.  Quorum is met.

    • For quorum 25% of 159 Owners required. Meeting attended by 50 and in proxy by 4 (54 total or 33%).

  • Proof of notice of meeting or waiver of notice

    • Board presented proof of meeting notice via sealed envelope.

  • Present 2014 budget

    • Patrick Bybee (Property Manager) gave homeowners overview of reserve study results.  Explained increases, necessity for increase and purpose of reserve study as it pertains to home owner associations.

    • F105 asked about reserve cap, Patrick explained we don’t have one.

    • C104 places motion on the floor to delay vote, TH20 2nds motion.  Motion fails.

    • Discussion - Board explained that vote has already been delayed since July, a delay which has cost significant increases in construction costs and further expert costs to educate homeowners about construction project.  C104 insisted they needed more time to familiarize himself, since they were just informed of the project.  

    • TH20 asked question regarding maintenance vs repair breakdown on reserve study

      • Patrick answered that reserve study focuses on maintenance work and not on repair, particularly this kind of construction defect work.

    • C305 asked the percentage by which the budget will be increased his year.

      • 30% increase for 2014 annual budget

    • A103 asked how much of the increase will go to funding reserves

      • Nearly all of the increase is going to fund reserves

    • D306 asked about association owned units 21 and 38.

      • Status is pending, association plans on renting to try and recuperate costs and owed money on ledger.

    • A104 asked if we can postpone the increase until 2015.

      • Currently we are only financing the reserves at 7.6%—an extremely low amount. Delaying the increase will leave reserves severely underfunded, and may jeopardize the association in qualifying for a loan.

    • Cece Moves to vote on 2014 budget. Peter seconds motion.  

  • Vote on 2014 operating budget

    • Townhomes voting: 10 YEA, 2 NAY, 21 NOT VOTED = Townhomes Budget is Ratified

    • Condos voting: 31 YEA, 6 NAY, 89 NOT VOTED = Condo Budget is Ratified

    • Budget is Ratified

  • Vote to Repair

    • C305 asks can we tear down existing garage and build a new one as that would be cheaper

      • Boardmembers explain that since garage slab holds 3 buildings it is not feasible to tear structure down and start over.  Furthermore, structurally the slab has been deemed ok. It does however need to be resealed and waterproofed to sop further water seepage into garage and first floor units of C, D and E buildings.

    • C104 moves that we suspend all activities until we interview different management companies.  

      • TH20 seconds motion.  

      • Motion fails

  • Vote to Repair (results)

    • With respect to the Construction Defect Repair, 80% owner vote of all owners required NOT to repair.

    • Voting: 42 YEA, 6 NAY, 111 NOT VOTED = Repair is approved

  • Present 2014 Supplemental Budget

    • C305 asks whether 25 year loan option was considered.

      • Board explained that 25 year loan options are not usually available or common with condo association loans.  Most range between 5 and 15 years. Research suggests that most are paid off within 7-8 years.

    • C305 asks what are the monthly fees associated and why do we have them?

      • Most fees are due to accounting (Suhco) and amortization fees. Exact fees will be determined once terms of loan and lender are finalized.

    • TH19 – Worst case scenario, what if people default what happens?

      • The loan is to the association and does not directly affect the equity or credit of any individual Owner. Failure to pay the supplemental budget assessment is no different than failure to pay maintenance assessments and the delinquency and collection policy of the Association apply.

    • TH19 also asks about clarification as to how long until loan approval?

      • We are expecting about 90 days from now, should the association approve budgets and repair.

      • (*) on presented budget states subject to change. What does this mean?

        • Budget is subject to slight changes due to bid updates or having to obtain new bids altogether due to construction prices going up over the last 6 months. The bid obtained for this project was completed in July. Board is hopeful that Remco Deacon will work with architect to update pricing, without having to undergo a whole new time consuming and costly bidding process.  

    • TH20 states that he wants a less expensive less intrusive solution to the problem that our community faces, and expresses concern that the board has not looked into all possible options.  

    • C104 wants to delay voting until his he has had a chance to look through all paper work.

    • TH20 states that free re-amortizations must be available to homeowners.

    • C104 asks why we have to take out a loan to repair future items.

      • Peter answers we are not taking out a loan to repair future items. That is what reserves are for.  This loan is to pay construction defect work that must be repaired as soon as possible as the association is under obligation according to the Declaration to do so. We cannot pay for this work with current funds, and the settlement costs do not cover the entirety of project costs.

    • TH20 asks what other options were considered to fund the project besides the one presented by the Board

      • Board explained that there is a lump sum option, in which the board has the authority to ask that all homeowners pay their share of the assessment at once, right away. Given the economy and the grave concerns expressed from homeowners, the board opted not to follow this option.  

      • Construction Loan. This is the option the board is currently seeking to approve, and believes gives homeowners the greatest number of options. Homeowners can pay it off in in one instalment if they wish, they can participate in the loan on a month to month basis, or do a mixture of both, by paying off a later time. The loan will go through the association and is NOT reflected on the credit of individual homeowners. Homeowners are also encouraged to seek out personal loans, which may have lower interest rates, should they choose or have the option to.  

      • Stretching the work out in a series of phases over a number of years. In this option the board looked at the potential to stretch work out over a number of phases through a number of years, to potentially minimize costs. The board opted not to do this, as there are concerns over ability of association to fund future work, given the incredibly low reserve account balance. It is unlikely to qualify for multiple loans, over multiple years, and board has been advised by architects, attorneys and loan professionals that it is much more cost effective to qualify and complete one project, rather than multiple ones. There are also issues which need attention right away, and action on repair has already been delayed 3+ years since initial investigative work found defects and damage. Warranty issues are also a concern, as piecemeal work is rarely warrantied. Lastly, homeowners have expressed a want to refinance and sell their condos with a clean resale certificate. This is a HUGE concern, as litigation, damages and pending assesment has kept prices of units at Saxony low compared to market value. This has further burdened homeowners, as banks are unlikely to approve loans on properties with our characteristics. Thusly, a one year project vs an undefined time table was deemed preferable by board.

  • Vote on 2014 Supplemental Budget

    • Voting: 39 YEA, 11 NAY, 109 NOT VOTED

    • Supplemental Budget is Ratified


  • Unfinished business

    • D305 wants to know about any hallway painting scheduled in the near future.

      • Board explains that although it would be nice and there are lots of similar fixes around the property that we would love to do, given our current financial status and the pending project it is not something that is prioritized at this time.

      • Board did obtain bids for door painting last year and it was substantially more money than we could afford at this time.

    • A104 asked about update on roof leakage and insurance claim denial.  

      • Board will follow up with A104 privately.


  • New business

    • C104 proposes to compensate or acknowledge  committee members who volunteered to review project scope

      • Patrick B.  explains that according to governing docs, compensating board or committee members is not allowed. Committee members were acknowledged and thanked at meeting.

  • Adjournment

    • Cece motions to adjourn meeting, Travis seconds.

    • Meeting adjourned at 9:30m

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