Budget Woes

I have attended part of the two ECA budget work sessions held this month and I believe that there will be no solution that will please many Association members. This is not to criticize the current Board, but we all need to face extremely hard facts.

• We have an ageing building that has not been properly cared for for far too long.
• We have not planned well over the years to maintain a reserve fund that can adequately address the money currently needed to start three large projects—replacement of windows/balcony doors, refurbishment of the heating/cooling system that supports our McQuay units, and refurbishment of the hallways in our two towers.
• Managing all three projects at the same time is not reasonable for a variety of factors that include the disruptions that would be imposed on the residents as well as the feasibility of any management team being able to control these three big projects if they were started at the same time.
• Historically speaking, the ECA has not been able to get 75 percent of the Association to agree on any many issues of importance. This means that getting the Association to approve a special assessment is likely to be extremely difficult. This directly relates to how our bylaws are written.

As I understand what was said in the first budget meeting, the cost of borrowing money for these afore-named projects would exceed over $1 million. The sitting Board does not think borrowing the $4 million that it would take for these three projects is a financially responsible approach.

In the second meeting, the discussion centered on how to raise the reserve funds to make it possible to begin only one of the projects in the near future, followed by a second project. As I left the meeting, the suggestion was to raise the condo fee 10 percent in our next fiscal year (which begins in July) followed by a campaign to see if it would be possible to get the Association to agree to a one-time assessment of $1100. If the Association does not approve an assessment, it seems inevitable that condo fees would have to rise again the following the year, but probably at a lower rate. There was some discussion that it might be possible in the future, if the reserve funds were adequate and the big projects were completed, that the condo fees could be decreased. However, that seems unlikely. The most economical way to retain our property values (since high condo fees affect getting mortgages and therefore the flexibility in selling units at the Elizabeth) is to have a one-time assessment. As assessments go in other condominium buildings, $1100 is a remarkably small sum.

Coupled with this approach was a discussion about how to sequence the projects. Clearly, the heating/cooling refurbishment is at the bottom of the list. The question then remains whether to go for the lower-cost refurbishment of the hallways versus the replacement of windows/balcony doors. More of the Board seemed to favor the hallway refurbishment because they feel the Association will have the money needed for this project.

Two factors affecting the Board’s thinking are that replacement of windows/doors will be done from the outside of the building and therefore there would not be doing the damage to newly refurbished halls feared in their original discussions. The Board also seems to believe that the energy savings would not be so dramatic that we would be gaining much by immediately replacing our severely leaking windows/doors. This remains to be proven to people like me.

Because the Board is under a time constraint to produce a budget by the end of the month, it’s a safe bet to assume that they will be making conservative decisions. The six Board members present (Seth Levine was absent for both of these meetings) asked Scott Murdoch to get more info to them, including a comparison of what 4620 North Park charges for condo fees. Short of a deus ex machina, we are not going to improve our individual quality of living at the Elizabeth any time soon.