MINUTES of a Regular Meeting of the Board of Directors of the Elizabeth Condominium Association, Inc. (“Association”), held December 16, 2008 in the Party Room of the Condominium pursuant to notice in accordance with the Bylaws. Present were: George (Woody) Cunningham, Monique Fridell, Alexandra Kielty, Judith Barth, Jeffrey Axelrad, Judith Gann and Alfred Muller. Ms. Carolyn Farrell represented Management.
The President, Mr. Cunningham, called the meeting to order at 7:40 p.m.
MINUTES:
A motion to accept the Minutes of the Regular Meeting conducted on November 18, 2008 was made by Dr. Muller with a second by Ms. Barth. Mr. Cunningham, Ms. Fridell, Ms. Kielty, Ms. Barth, Mr. Axelrad, Ms. Gann and Dr. Muller voted in favor of accepting the minutes. The minutes were approved.
PRESIDENT’S REPORT:
Mr. Cunningham cited the following items for discussion:
1. A draft report on the Reserve Study has been submitted for review and comment and preliminary information will be shared tonight.
2. The Energy Audit is in progress and a report should be issued on Friday, December 19, 2008.
3. A selection of designer for the Refurbishment Project will be made tonight during the regular Board Meeting.
4. A meeting will be scheduled in early January to discuss going forward with outside management. This will be an open meeting, and all residents will be notified of the date and time of the meeting.
5. A meeting will be held to discuss consideration of an increase in condominium fees and the amount of that increase. This will be an open meeting, and all residents will be notified of the date and time of the meeting. So far, residents have responded to the energy challenge, but with increasing electric and gas fees, there has not been a reduction in costs.
TREASURER’S REPORT:
We have distributed copies of the utility usage chart which is tracking performance under our 10% cost reduction challenge. For the month of October and YTD we significantly exceeded our cost reduction target. To date we are not meeting the Utility Challenge.
The Treasurer and Management have reviewed the preliminary draft of the Reserve Study (RS) performed by Reserve Advisors. As a reminder, the RS is a budget planning tool that looks at the current status of the reserve fund and the existing state of the building and common elements and identifies a stable and equitable 30 year funding plan to offset the anticipated future major common area expenditures. What the RS has done is to plot over a 30+ year timeframe when the expiry of useful lives occurs assuming proper maintenance along the way, and in what year we would need to replace/overhaul these elements. It then backs out what amount of reserves we need to have in each year to cover these costs from our reserve fund. From that amount, the condo fee increase is then calculated for each year. The RS effectively gives us a roadmap of capital repairs/replacements and how to fund them for the next 30 years.
When the final report is ready, Reserve Advisors will make a public presentation to and answer questions from residents. The following are some key financial points in the draft RS:
• Identified total of $34 million over 30 years, $4.099 million in capital expenditures necessary within next 5 years, our in-house estimate of $3.9 million was not that far off
• Estimates replacement/refurbishment costs for all interior finishes, and update of exercise room at $3.2 million, much higher than the $1.2 million we currently have budgeted
• Suggests specific percentage increases in condo fees to adequately fund capital needs over the next 30 years, beginning with a 6.2% increase next year
• Suggest that expenditures less than $12K be expensed from operating funds rather than reserves (this is quite different from current fixed asset policy) for example, they suggest that we expense the cost of revamping the lobby bathrooms rather than using reserves
• Following the recommended financial and operating plan, our reserves would dip below $1 million in only two years: 2010 and 2024.
Asset Allocation
As of 11/30 we had $2.6 MM in cash and investments, 4.6%Y growth YOY. We have achieved our financial goal of accumulating operating cash balances equal to three months’ worth of expenses. We can use this for emergency expenditures or to bolster reserves if necessary. We have almost $2 million in reserves, slightly more than where we stood at this point last year.
Chevy Chase Bank, our operating bank, was acquired this month by Capital One, which improves the bank’s creditworthiness and financial strength.
Monthly Performance November
For the month of October, we had net income of $38K. We had a relatively good month in terms of expense control. A number of items which exceeded budget:
• Printing due to printing of draft House Rules copies for residents
• Other Administration due to down payment for new phone system
• Structures & Finishes due to purchase of laminate glass for arcade skylight
• Housekeeping supplies due to cleaning on 14th tier after façade work
• Window Washing due to cleaning on 14th tier after façade work
In September, we transferred almost $44K to reserves and spent only $3K from reserves on façade repairs.
FY 2009 Year to Date (YTD) Results
For the five months ending 11/30, net income was $63K. Specific line items over budget (and not mentioned above) are:
• Accounting due to timing of payment relating to audit services and extra services incurred due to wait for Reserve Study
• Real Estate taxes due to timing annual payment of real estate taxes due
• Uniforms due to higher service cost and additional uniforms purchased
• Other personnel due to replacement of time clock
• Sauna & Exercise Room due to purchase of new rower machine
• Other Amenities due to purchase of TV for West Lobby
• Electricity due to our failure to meet “Utility Challenge”
• Maintenance equipment due to bulk purchase of supplies for plumbing system maintenance
• Elevator maintenance due to inspection and repair work on several elevators out/malfunctioning
• Inspections due to fire system/sprinkler inspections
• Security systems due to locks purchase
• Trash removal due to additional bulk pickups
We have transferred $218K to reserves this year to date and spent $157K from reserves mostly on façade repairs, fire horn installation and correction of electrical system deficiencies.
A YOY comparison of growth in actual expenses reveals that overall we are 13% below net income at this time last year, meaning that we have not done as good a job in controlling expenses as we did last year.
OLD BUSINESS:
Management Report.
Ms. Farrell presented an update on the generator bids. Proposals should be back on December 17, 2008. There was a delay in preparation of proposals by bidders because of various issues within the RFP.
Ms. Farrell reported that Mr. Fauss is currently working on an RFP for the oil tank.
There will be a meeting with Mr. Hardy of American Renovation Company at the end of the week to discuss the energy audit. Mr. Hardy spent time with the engineers testing major equipment. There will be a meeting with the Energy Committee, and results will be made public in approximately a week.
NEW BUSINESS:
COMMITTEE REPORTS:
Exercise Room/Pool Committee: Ms. Kielty, Chair, has met with Ms. Fridell, Mr. Jim Jones, Mr. and Mrs. Steven Schattman and Mr. Jim Lawson regarding both the exercise room and the pool. They discussed short-term and long-term approaches to these two areas and will visit various local buildings to look at their respective areas. The Committee will also look at the study that Mr. Lawson has already done regarding televisions for the exercise room. Ms. Kielty noted that she is in the process of investigating alternative pool companies.
Energy Conservation Committee: Mr. David Drazin, acting chair in Ms. Rosenbach’s absence, noted that the Committee has met and developed an Energy Conservation Mission Statement for potential buyers, realtors and others interested in living at the Elizabeth. The statement will be presented to the Board for discussion.
Social Committee: Ms. Barth said 206 residents attended the Holiday Party on Sunday, December 14, 2008. She thanked Ms. Peg Downey for setting up an assembly line for residents to prepare 182 boxes of toiletries, gloves, hats, etc. for the charity SOME (So Others May Eat).
On December 28, 2008, the lobby television will be available for the last Redskins game of the season. The game is set for 4:15.
The Committee will meet in January to finalize other activities.
On January 20th, the Committee will have the television available for the Inauguration/Swearing In of Barack Obama as President.
Ms. Downey is arranging a program to discuss reverse mortgages. As soon as plans are finalized, residents will be informed of the date, time, etc.
Mr. Steven Schattman has offered to hold a Wine Tasting Class in February.
Miscellaneous:
Ms. Farrell noted that the new arcade sign has been installed. The Board has requested that she speak with the landscaping company about replanting the sign’s container.
Dr. Muller noted that when a dead Village tree at the curb in front of the Elizabeth was removed, it was noted that there was not enough room to plant another tree. Sidewalk will be replaced in this area.
Comments of appreciation from Board members were made about the holiday lights around the Elizabeth that were installed by the new landscape contractor.
CONTRACTS:
Structural Preservation Systems Contract. Mr. Axelrad made a motion to ratify a contract to Structural Preservation Systems for $2,500 for repair of a leak into Unit #6. Dr. Muller seconded the motion. Mr. Cunningham, Ms. Fridell, Ms. Kielty, Ms. Barth, Mr. Axelrad, Ms. Gann and Dr. Muller voted in favor of the motion. The motion was approved.
Densel Company Contract. Dr. Muller made a motion to approve a contract to Densel Company for $24,800 to provide maintenance on the Carrier Chiller Unit. If an additional $10,000 were required for replacement bearings, that work would also be completed. Ms. Barth seconded the motion. Mr. Cunningham, Ms. Fridell, Ms. Kielty, Ms. Barth, Mr. Axelrad, Ms. Gann and Dr. Muller voted in favor of the motion. The motion was approved.
Doorman Position. Ms. Fridell suggested revisiting the Doorman issue. She does not feel the establishment of this position has met expectations. She suggested returning the position to that of a Security Guard.
Ms. Kielty suggested that, if we return to the regular security approach, we eliminate the 7 a.m. to 3 p.m. shift since staff members are around the building during those hours.
Dr. Muller said he is upset with the situation and feels that management has not been involved, as it should have been. He agrees with Ms. Kielty’s recommendation.
Ms. Barth asked Ms. Farrell if management had contacted Securitas and was told they had been. She noted that the Post Orders, created by Dr. Muller, were not being followed and promises made by Securitas had not been met.
Mr. Axelrad asked about the limitation of the contract regarding elimination of a position. He was told that there is a thirty-day notice requirement.
Ms. Fridell made a motion that, after giving legal notice, the morning doorman position (from 7 a.m. to 3 p.m.) be eliminated and the other two shifts (3 p.m. to 11 p.m. and 11 p.m. to 7 a.m.) be security guard positions. Ms. Gann seconded the motion. Dr. Muller amended the motion so that the 7 a.m. to 3 p.m. shift be eliminated but the 3 p.m. to 11 p.m. position remain as a doorman. Ms. Barth seconded this amendment. Ms. Barth and Dr. Muller voted in favor of this amendment. Ms. Fridell, Mr. Cunningham, Ms. Kielty, Mr. Axelrad and Ms. Gann voted against the amendment. The amendment was not approved. The original motion was voted upon and Ms. Fridell, Mr. Cunningham, Ms. Kielty, Mr. Axelrad and Ms. Gann voted in favor of the motion. Dr. Muller and Ms. Barth voted against the motion. The motion was approved.
Refurbishment Committee (deferred from Committee Reports):
Mr. Cunningham began the discussion by noting the only issue to be decided tonight would be selection of the designer for the refurbishment project. The work to be performed, costs involved and priorities would be discussed later. He noted that the budget of $1.2 million is not to be exceeded.
Mr. Axelrad said it is vital to keep within budget and there should be consensus among the Board to do so.
Ms. Gann gave a brief update. She noted that the Board had recently met with Blue Ribbon and CMC Design, both of whom presented proposals to do the work. These meetings were held because these companies had not been considered originally. The Board did not meet with BIDA, who also submitted a proposal but received poor references. Three members of the Board had met privately with Ms. Hartman of Hartman Design Group. Dr. Muller, who attended this meeting, noted that many on the Board did not feel that her proposal had given a clear projection of cost and they wanted clarification. He also felt that the other designers’ references did not measure up to those of Ms. Hartman.
Ms. Kielty commended the Committee for the many hours spent in meetings with designers and research into other options. She noted that it became clear that many designers do not want to work on condominium refurbishment projects.
Mr. Cunningham noted that Mr. Allan Lockman, who is an architect and resident, provided expertise not only in preparation of the RFP but also in evaluating the proposals. He further stated that it is important not to issue an open-ended contract and tough negotiations and firm costs are essential.
Mr. Axelrad said he asked Ms. Hartman if she was interested in doing this project. She said she was. She also noted that she would prefer to work with a four-person (only) committee. She felt the $1.2 million is a reasonable amount but not for the scope stated in the RFP. Her priorities would be: 1. corridors, 2. vestibule, 3. party room and 4. public bathrooms. She noted that accurate prices and designs must be approved prior to the designer’s beginning work. She said a designer should have Errors and Omissions insurance, and she has it.
Dr. Muller personally thinks three of the four designers who submitted proposals did not measure up. He supports Ms. Hartman.
Ms. Kielty said she had participated in all the presentations and would like to vote at this time rather than postponing the vote to a later date. She noted that Ms. Hartman was clearly the superior design firm compared to the other three. She noted that not all areas can be completed within the current budget and that we probably need to look at a longer- term strategic approach. Ms. Kielty stated her support of Ms. Hartman as the superior designer, who would also have the expertise to guide the Elizabeth through a longer- range strategic approach to the refurbishment project.
Ms. Fridell is concerned about the costs. The proposal listed a per-hour cost but did not explicitly state her fee and the total cost of the project could not be estimated at this time.
Mr. Axelrad answered that Ms. Hartman said she can do three or four parts of the project for $1.2 million and her design fee is 15-20% of that amount. The first stage would be to establish a menu of work to be done and have a discussion with the Board.
Ms. Kielty asked about negotiating with contractors. Ms. Hartman has indicated, according to Ms. Barth, that she will be in charge of a bidders’ conference for contractors.
Mr. Cunningham said the Board must meet with Ms. Hartman and be satisfied that she will do the work within budget, etc. If the Board has any doubts, he indicated that we would be back to “Square One”.
Mr. Axelrad made a motion to approve Ms. Hartman and Hartman Design Group to perform the refurbishment project at the Elizabeth, subject to contract review by Counsel, Jason Fisher. Ms. Barth seconded the motion. Mr. Axelrad, Dr. Muller, Ms. Barth, Ms. Kielty and Ms. Gann voted in favor of the motion. Ms. Fridell voted against the motion. Mr. Cunningham abstained. The motion passed.
COMMENTS FROM THE FLOOR:
Charles Bressler, #1806: He is pleased about the decisions on the doorman and the refurbishment project. He thinks the lobbies should come first.
Sharon Bobb, #911: She asked why other buildings use Securitas and have no problems with security or doormen but we do. She feels management should have been firmer with Securitas. The Security Guard at Loehmann’s impressed her.
Stephanie Olshan, #1014: She said that at 10:30 p.m., the Security Guard was asleep. She noted that Van Ness South had replaced windows and she will get information.
Karren Alenier, #301: She has sent a proposal to the Energy Committee to replace windows and wants the matter to come back to the Board. She wants a notice in elevators regarding Christmas trees and returning carts to the cart room.
She said the blog is up, and she has received good comments on it. There are Holiday Party photos on the blog. She asked November minutes to be sent to her as soon as possible. Ms. Gann assured her that she would send them immediately.
Peg Downey, #615: She is happy the Reserve Study is being done. She is pleased that the energy audit will look at window replacement.
Helen Huntley, #719: She said the lifeguard at the pool is constantly on the computer and/or phone. He is dressed in street clothes and not a bathing suit. She also noted that a resident sleeps in the lobby. That resident, Anya Siegal, denied the charge.
The meeting was adjourned at 9:35 p.m.
[These minutes were prepared by Judith Gann, Secretary of the ECA, and Karren Alenier posted these minutes to this blog. Alenier has bolded some of the issues for ease of locating specific topics. The ECA Board Meeting Minutes is a public document and available in paper copy at the ECA Management office.]
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