ECA Special Board Mtg. May 14, 2013

THE ELIZABETH CONDOMINIUM ASSOCIATION

4601 North Park Avenue

Chevy Chase, MD 20815

Minutes of the Special Board of Directors Meeting   
May 14, 2013

Board Present:

David Robinso                President

Steven Schattman............Vice-President

John McNerney ............  Treasurer

Jim Vuko.........................Secretary

Ted Ariev .......................Director

Jim Jones.......................  Director.................

Alfred Muller        ...        Director

Board Absent:
 All members were in attendance. 

Others Present:

Gregory Roby ..............   Senior Vice President, Legum & Norman
James M. Santos ..............ECA General Manager, Legum & Norman

Call to Order: 
President Robinson called the meeting to order at 7:30 p.m.

MOTION: Dr. Robinson moved that all the tabled and amended motions from the April 23, 2013 Board of Directors meeting be cleared from the table to make way for new business. Mr. McNerney seconded the motion. The motion passed (7-0).

New Business: 
Information Briefings
Dr. Robinson listed the three options before us for increasing the assessments, and asked three board members to summarize each.

Mr. McNerney summarized the 3% option as follows:
The current 10-year financing plan, approved by the board of directors last October, is based on an annual increase of condominium fees of 3% for the next 7 years, with an annual contribution to the Replacement Reserve Fund of at least $1.5M. This ten year plan envisions spending over $16.5M over that time period.  

Despite underfunding of the current budget in the amount of approximately $150,000, that financing plan remains viable. The Operating Fund had excess cash available to absorb that deficit, and there are options to mitigate the effects of any future shortfalls, not least of which are the delay of low priority projects. The current plan calls for the expenditure of nearly $5M in FY2014, followed by expenditure of another $4M in the two succeeding years, FY2015 and FY2016. That means that $9M, or 55%, of the total program cost will be expended in the next three years. Those expenditures cover all of our major programs, including repairing the balconies, replacing all the sliding glass doors, and all the unit windows, as well as the corridor renovation.

Mr. Schattman summarized the 4% option as follows:
We are approving one year of expenditures based on three options. This Board cannot compel future Boards to follow a plan approved today. At the previous Board Meeting there were two factions: one favoring 3% as proposed by McNerney and the other favoring a 5% as proposed by Ariev. Schattman proposed the 4% option as a compromise in order to achieve a productive outcome within the Board.

Mr. Ariev summarized the 5% option as follows:
Ariev said the issue was fundamentally a money-in versus money-out question. Current projections show that we will spend $18.5 million over the next 10 years on MRR and other capital projects, while at the same time the current plans project only $17.5 million in income. There is a $1 million shortfall that has to be funded which is why the 5% increase on assessments is necessary.

President Robinson invited comments from the floor:
Judy Gann #711: Contrary to what Muller thinks, I can understand budgets. The Elizabeth is very marketable. Buildings in the neighborhood are being assessed large amounts. We need to redo the hallways.

Molly Frantz #107: This discussion is confusing. I disagree with Ariev. 3% should be sufficient. The decision tonight is really about how large the operating reserve should be.

Charles Bressler: Reminded the Board that we do not yet have the line of credit approved. And, the size of our Operating Reserve should equal 3 months of operating expense. Approved-FINAL 

Mr. Mark #419: We look for stable, clear projections. We dislike the large, one-time assessments that are common in neighboring buildings. A 1% or a 2% difference is really a small amount.

Mrs. Sebeok #419: Our experience is that any endeavor will always take longer and cost more than you plan.

Diana Brosnan #1402: At the Carrollton, owners have to buy their own windows. I would rather face a 5% increase now than a 10% increase later.

Elin Winthrop #1114: We could increase our condo fees in mid-term if we agree on 3% today and then discover later that it was not enough. We can stretch out MRR expenditures if needed. It might be wise to slow down.

Karren Alenier #301: If you have new information, we will have to accept info whenever it arrives. It’s better to fix things and make the place livable. We live in a building that does not allow for large one-time assessments. That’s great! We need to go forward, don’t live in the past.

Dorothy Marette #1701: We need to make improvements. We can do without the contention. Let’s talk about what is on the table.

Mr. Marette #1701: John McNerney was chosen by the board as Treasurer knowing that he favored a 3% increase. Why not follow his recommendation?

Herman Stekler #708: The Board assured us last fall that we would not exceed a 3% increase. We should continue to support a 3% increase for moral reasons.

President Robinson closed discussion on the floor.

MOTION: Dr. Robinson moved that the budget be approved with a three (3%) increase. Mr. McNerney seconded the motion. Only three voted in favor (McNerney, Schattman and Muller). Motion failed.

MOTION: Dr. Robinson moved that the budget be approved with a four (4%) increase. Mr. Schattman seconded the motion. Four voted in favor (McNerney, Schattman, Robinson, and Vuko). Motion carried.

Adjournment: The meeting was adjourned without objection by President Robinson at 9:00p.m.
Respectfully submitted,
_____________________________________
Jim Vuko, Board Secretary