THE ELIZABETH CONDOMINIUM ASSOCIATION
4601 North Park Avenue
Chevy Chase, MD 20815
Minutes of Board of Directors Meeting May 26, 2009
Board
Present: Woody Cunningham President
Alexandria Kielty Vice President
Monique Fridell Treasurer
Judith Barth Assistant Treasurer
Jeffrey Axelrad Secretary
Charles Bressler Director
Dr. Alfred Muller Director
Also present: Jason Fisher Lerch Early and Brewer Chartered
Martha Morris Recording Secretary
Call to Order: President Cunningham called the meeting to order at 7:30 pm.
President’s Report
Mr. Cunningham stated that the meeting had one agenda item, to vote on a proposed contract with Legum and Norman Inc. to provide management services to the Elizabeth Condominium Association. He stated that the Elizabeth needs a major restructuring of its management system and that it may be internal or external. He added that the Board will have in place a good five-year plan later this year. He then opened the floor for discussion.
Residents’ Comments
Jim Rich #301 reminded the residents that Board members are unpaid volunteers and should be addressed courteously.
Jim Jones #307 West Tower asked each Board member to state his/her position on the issue with their reasons. Mr. Cunningham responded that such discussion is on the agenda.
Alicex Robinson #917 noted that in the last election, the three Board members who are in favor of approving the management contract received 33% of the vote. She asked that the Board defer this decision for one year and to give owners the opportunity to vote.
Pam Dillon #718 referred to a spreadsheet of costs that the Board had distributed and expressed concern that the Association will be subject to annually rising personnel costs. She also expressed concern that Legum and Norman has been purchased by Associa, and that losses in other Associa companies could trigger increased fees charged by Legum and Norman. She further expressed concern about the possibility of losing current Elizabeth staff. Lastly, she noted some numbers in the spread sheet that appeared to be in error.
Wally Mannheimer #1109 and #1110 recalled that when Ms. Dillon was on the Board, she recommended that the Association consider outside management. Ms. Dillon responded that she recommended a consultant-type role for the outside company.
Ellen Winthrop #1114 stated that in her opinion the current staff has been exemplary. She reminded the Board that the staff possesses a large reservoir of knowledge and asked if the decision could be delayed for six months. She also expressed concern about the amount of Legum and Norman’s insurance bond.
Judy Gann #711 noted her participation when she was on the Board in the deliberations on changing to outside management. She spoke favorably of current staff but said that outside management can provide backup, which is important in light of the repairs that need to be carried out prior to the refurbishing project.
Mary Andreresen #1107 agreed with the comments on the insurance bond. She suggested that the rating of Associa’s insurance ratingprovider be investigated.
David Dreisen #517 East Tower asked that if the Board votes to approve, they create benchmarks to evaluate if the company is meeting the community’s expectations.
Kevin Barker #101 asked that the Board wait one year before making a decision.
Sanford Meracle #1405 expressed his need for more specific cost information on the contract, such as hidden fees, asked whether resident satisfaction levels were included in the analysis, questioned the company’s proposed role in the refurbishment project, and feels the Board spends too much time on legal matters. He asked the Board to postpone the decision.
Pat Larson #1619 East Tower moved in in 1997 specifically because the building was individually managed. She has concernss about the Associa acquisitionbuyout and is worried costs will rise. She emphasized the family-like atmosphere of the Elizabeth.
Keith Burrell visiting #501 noted that he is a Board member of a condominium in downtown Washington DC. He reported that a good management company can help an Association reduce costs such as energy; however, he was not favorable about L&N, feeling they are too large.
Angela Richardelli, 26-year resident and 12-year owner, stated that it is difficult to achieve an outcome which achieves speed, quality and contentment. She suggested the Board develop a counter-contractproposal to the L&N contract which limits increases in assessments and ensures performance reviews.
Karen Alenier, owner since 1978, acknowledged that change is difficult but urged residents to consider the need for change in order to protect their investments. She commended the Board for taking action.
Stephanie Olshan #1014, 10-year owner, thanked the Board for their hard work on the owners’ behalf. She stated there is misinformation circulating about the relative authority of the Board and of the management company over the determination of the assessment.
Barbara Sandler #211, owner since the building opened, expressed her fondness for the community. She has attended as many Board meetings as possible and complimented the Board on its work. She reminded the residents that it is they who elect the Board members and it is the residents’ responsibility to respect the Board and to allow them to do their job. The Bylaws give authority to the Board to make certain decisions. She asked that the community try to work together, knowing that everything will not be perfect.
Clay Nettles #508 introduced a vote of no confidence two meetings ago but it did not pass. He appreciated the Board letting the residents speak their opinion tonight.
Linda Kotner #919 was dismayed that the Board was voting the same night as the residents’ comments and asked that in the future, the Board build in extra time to consider owners’ input.
Board Discussion
Mr. Cunningham asked each Board member to make a statement before voting. He asked if there were any questions for Mr. Fisher regarding the proposed contract.
MOTION
Mr. Axelrad moved to accept the final version of the proposed contract with Legum and Norman Inc. to provide management services to the Association. Ms. Barth seconded the motion.
Discussion
Mr Axelrad – stated that the decision on whether to move to Legum and Norman’s professional management relates to effective management of our building, not to personalities. We do not have the breath and depth of support that Legum & Norman can provide. In short, we need professional management’s knowledge and support. Our building’s physical structure is no longer new or even close to new. For example, our pipes leak and have even spewed filth into apartments, the latter being a failure on our part until now to know that our pipes need to be cleaned. While we have excellent personnel running and overseeing our finances, our system is antiquated. In short, we need professional management’s knowledge and support.. Legum & Norman has already, without compensation, pointed us to a very substantial savings: We have needlessly been paying sales tax on costs such as electricity and gas. We need to accept the virtue of delegating day-to-day management (with Board oversight) to professionals rather than seeking to maintain the dead hand of control over a haphazard, poorly organized and insufficiently functioning support operation. Past Boards have had plenty of time to match the advantages of professional management; they did not! It’s a fantasy to think that our current deterioration, including in the value of our property, compared to other condominiums in our neighborhood, will change without professional management. We have many fine employees; professional management will enable us to maximize their efforts for all our benefit.
Mr. Axelrad – had several preliminary points: 1) when he ran for the Board, he made it clear that he had an open mind regarding the issue; 2) the building is in deteriorating condition; and 3) it is now clear to him that the Association needs to move to professional management. He feels that the current staff does an excellent job on financial operations but the Association needs more depth and breadth, knowledge and support. Legum and Norman has already pointed out certain savings that could be achieved on energy bills totaling tens of thousands of dollars. He feels it is the responsibility of the Board to vote for the change.
Ms. Fridell – stated she is voting against the proposal. During the due diligence process, she asked that the Board consider an internal restructuring of the current management system; however, they, which was rejected this possibilitynot done. She would feel much more comfortable moving to outside management if the Board had at least made a good faith effort to effect change based on specific measurable operating performance criteria, and had reached the conclusion that we simply were unable to meet our goals for improvement on our own. She would like to have seen the Board execute an internal restructuring and make wholehearted efforts to improve our operational issues on our own before moving to outside management.
She expressed the need for specific operating goals with measurable outcomes. She feels the Board should work harder with the current situation.
Mr. Bressler – noted that this is an important decision. He reviewed the presentation made last Wednesday night from Legum and Norman company representatives. Due to financial concerns, Hhe asked that the decision be postponed until after the refurbishment project is completed. He noted that communication has not been good the past several years but that any changes that need to be made can be done internally. He asked that if the motion passes, the Board furnish realistic estimateds contract and other of costs to the Association relating to the move to an outside management company. owners.
Ms. Barth – stated that the Elizabeth has been declining in property values and in quality of life. During careful study by the Board over the past year, three companies in the DC area were considered and Legum and Norman was the finalist. Benefits of engaging Legum and Norman include resources not available to individually managed properties and high levels of staff education and training. Legum and Norman’s engineering department can address the Elizabeth’s structural and mechanical problems. She has lived at the property for 30 years and cares about the community. Her fiduciary responsibility is to vote for outside management. Lastly, she noted that the Bylaws confirm her right to vote on the Board.
Dr. Muller – noted that legal counsel advised against discussing personnel in the meeting. He emphasized the Board’s responsibility to keep the Elizabeth competitive in today’s market and the increasing complaints about deteriorating conditions and services. He reminded residents that an open meeting was held four months ago to solicit residents’ input; the biggest concerns were cost and possible staff changes. These concerns have been addressed in the negotiations with Legum and Norman. He noted the cost-savings advantages of a large and experienced company and the access to backup. He is in favor of voting for the contract.
Ms. Kielty – had questions for Mr. Fisher regarding clauses in the proposed contract relating to who has the authority over employee hiring and firing. In all Board discussions it has been consistently stated that only the Board has the right to let go or fire staff, but the contract states that the Site Managers has the authority to discharge employees. Ms. Kielty also mentioned that during the L & N briefing, John stated that they would prefer that their management staff have the right to let staff go and that this issue was still not resolved. She pointed out that should the Association wish to convert to a a “financial managements only” only contract at some point in the future, having certain employees report to the outside company might make the switch difficult since it would also mean letting go of the site manager and the resident service coordinator, as well as any other new staff that are hired as L & N employees. She asked whether L&N would perform legal activities relating to collection services. Mr. Fisher confirmed that Lerch Early and Brewer would continue to provide collections this services. She was involved early on the decision-making process but has decided to vote against the proposal over the issue of hiring personnel. She also noted that the recent vote for new ECA board members was, in a sense, a referendum on outside management which suggested the vast majority of residents did not agree with the Board’s action on this issue. However, should the motion pass, she will work hard to implement the contract effectively.
Mr. Cunningham wrapped up by noting that the Board gives up none of its responsibilities by moving to an outside management company. He originally thought the problems could be solved by revamping the existing management structure but as a result of his day-to-day involvement, he now recognizes the advantages an outside company would bring.
Prepared statements read at the Board Meeting and provided after the meeting by the Board Members who delivered the statements are attached.
VOTE
Axelrad – FOR
Fridell – AGAINST
Bressler – AGAINST
Barth – FOR
Muller – FOR
Kielty – AGAINST
Cunningham – FOR
The motion passed, 4-3.
Adjournment
There being no further business brought before the Board, the President adjourned the meeting at 9:26 pm.
Original draft prepared by Martha Morris, Recording Secretary
Respectfully submitted,
Jeffrey Axelrad, Board Secretary
[This set of minutes were sent to me with Draft written at the top and does contain spelling errors on names. Alenier has bolded the purpose of this meeting.]
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