On April 15, 2019, the Elizabeth Condominium conducted its
annual Meet the Candidate event to allow those running for the ECA Board of
Directors to publicly state why they are
running for the Board and what they hope to achieve. Peg Downey served as the moderator
and Stephanie Olshan assisted in organizing written questions that Ms. Downey
would ask the candidates. Gary Costello acted as timekeeper. Each candidate was
given three minutes for an opening statement, 2 minutes for a closing
statement, and 2 minutes to answer a question.
Six candidates are running for three seats. All are resident
owners, two are currently sitting Board members up for reelection (Beca &
Muller), one is a former Board member who quit before her term was up, and
three would be newcomers to the Board. Everyone running was present at Meet the
Candidates. Their statements can be seen at: http://theelizabethcondo.blogspot.com/2019/04/2019-meet-candidates-remarks.html.
The candidates are:
Zlatan Beca
Babs Eisman
Molly Frantz
Alfred Muller
Elisa Siegel
James Whalen
Thank you to the six candidates for running for the ECA
Board of Directors. Being a Board Director is usually a thankless task/challenge
so I want to be sure at least one thank you is voiced to those running.
I have been owner since 1978 and regularly attending monthly
board meetings since 2007 when I noticed how rundown our building had become. I
have been writing this blog since 2008 when I realized that communications in
the building were lacking and I have served on the Board as a Director. With
that experience, I offer my recommendations for these three candidates because
I see them as the new leadership for our future—all are professionals who bring
valuable skillsets, expertise, and experience: Zlatan Beca, Elisa Siegel, and
James (Jimmy) Whalen.
Here are my reasons for picking these three:
Zlatan Beca is a
sitting Board member who has served as president for two years. His performance
record demonstrated that he sincerely wants to balance the budget and “improve
the health of the Reserve Fund.” Under his leadership, we have seen aggressive
pay down of our large loan. He has said in his Meet the Candidates statement
that he supports projects, like hallway renovation, which will help improve our
property values, while also taking care to keep the condo fees “steady and in
line with the Cost of Living Adjustment.” After all, we know that you can only
make repairs and building improvements with adequate funding.
Elisa Siegel currently
manages a $10 million budget and leads a team of 55 professionals as well as
contractors and vendors. Ms. Siegel brings 40 years of experience in
communications, reputation management, and public relations, a valuable skill
set not yet represented on the Board. She has pledged to apply her expertise to
restore our damaged reputation, including development of a public website to
better position our condominium in the real estate market. At Meet the
Candidates night, she said, “If elected,
you can count on me to take a fiscally responsible approach to balancing the
essential needs we have today with the important work we must continue to
sustain our future, including rebuilding our reserves, completing necessary
repairs to our infrastructure, undertaking preventive and regular maintenance,
completing much-needed renovations to our hallways, and rebuilding our brand as
a luxury building.” As she said in her opening Candidate’s statement, “These
steps are all essential to improving our property values, which is one of the
Board’s primary fiduciary responsibilities.”
James (Jimmy) Whalen
is the current Chair of the ECA Budget and Finance Committee. Since taking this
position, he has managed to conduct meetings that run efficiently by promoting
a good culture in meetings that avoid non-productive activities and negativity.
His accomplishments include reconstruction of the Monthly Financial Reports so
that they are more concise and easier to understand. He has helped build an
investment strategy that includes a laddered CD portfolio to get interest from
our reserve cash. Jimmy Whalen is already making a difference relative to our
finances. He would be a welcomed addition to the Board.
Here are my reasons for why these candidates are not the
best choices:
Babs Eisman as a
30-year resident has made contributions to the social well-being of our
community and I would urge her to continue her participation with ECA
committees. The candidates I am recommending bring a greater set of skills and
experience than Ms. Eisman’s statement indicates.
Molly Frantz and Alfred Muller have both served on ECA
Boards and have records that need to be taken into account.
Molly Frantz
—On Financial Matters
Those who regularly attend monthly board meetings have often
had to suffer through endless questions from Ms. Frantz that hold up our
monthly board meetings. Her line of questions usually indicate that she does
not understand the answers given. On April 10, 2017, Ms. Frantz challenged the
audit prepared by Jeremy Powell of Goldklang Group CPAs. On April 20, 2017, owners
were provided the auditor’s response to her claims via an email from
BuildingLink. The auditor wrote that
based on Generally Accepted Accounting Principles and his own cash flow
analysis, he concluded, [her] “… analysis contained several material omissions
and errors in her formulation which lead her to an improper finding.”
Among the errors in Ms. Frantz’s analysis cited by Mr.
Powell were the following:
·
“Notably, and as discussed below, Ms. Frantz’s
analysis does not take into account payments to vendors and to the bank that
flow from the balance sheet.
·
Further, as I explained to the community, the
loan payments are not reflected expenses on the income statement, because the
payments reduce an existing liability.
·
We also found it difficult to follow Mr.
Frantz’s analysis and conclusions in certain places, as she combines reports
which reflects information calculated differently, but we did our best.”
Mr. Powell concluded, “… Ms. Frantz’s analysis incorrectly
combines different financial reports, which calculate the financial position of
the Association differently, to arrive at her conclusion. Based on our
review, all funds are properly noted and reconciled in the Association’s
financial statements.”
This is just one example of her inability to understand and
communicate financial matters.
—On Working with Others
In 2011, Ms. Frantz quit the Board saying that the Board was
too toxic to work with. She stated in her resignation letter dated August 16,
2011, that she experienced, “A board replete with personal ill-will, petulance
[sic] behavior, hidden agendas, and a penchant for taking offense at the
slightest opportunity…The personal toll of working in such a dysfunctional
environment has been enormous.” This seems to indicate that she does not have the
necessary temperament to serve on any board of directors.
—On Our Current Auditors
It should also be noted that Ms. Frantz stated in her Meet
the Candidates question and answer session that she would like to replace the
Goldklang Group as our auditors because she feels they didn’t do enough to
prevent the embezzlement that took place by a trusted senior employee of Gates
Hudson. It is important to understand that it was one employee who carried out
the fraud and not the company. In fact, this company showed integrity by
immediately notifying the Elizabeth of the embezzlement, rapidly returning all
funds with interest, paying all associated expenses, and taking step to further
tighten their internal controls.
At the time of that discovery, Jeremy Powell and Howard
Goldklang spoke at a Board meeting about the difference between regular
auditing of financial statements which their firm does for us, and forensic
auditing which is a detailed examination that looks for irregularities in
accounting and financial procedures. The bottom line is that embezzlement is a
sophisticated crime perpetrated by one or more trusted and often highly placed employees
who have access making it possible for them to circumvent controls in place. As
such, it is difficult at best to detect.
—On Our Current Management Company
Ms. Frantz also stated she wished to replace Gates Hudson,
our property management group, for its role in the embezzlement. As stated
above, this was a fraud perpetrated by a single individual. Gates Hudson had no
role in the embezzlement. It’s rare that monetary restitution happened so
quickly for ECA and that an organization like Gates Hudson enacted new
safeguards without hesitation. Unfortunately, embezzlement happens all the
time. CNBC reported in 2017 that workplace crime costs US businesses $50 billion
per year. In 2019, a former Montgomery
County official was sentenced in a $6.7 million embezzlement scheme.
Alfred Muller
—On Our Reserve Fund
In 2013 as a Board member, Alfred Muller supported drawing
down the existing reserve fund which soon led to a Reserve Fund balance of
approximately $1000. This is a position he has continued to defend. This action
resulted in the Elizabeth almost losing our master insurance, making it
impossible for us to secure FHA certification, and making our building
unattractive to prospective buyers due to our poor financial profile. Worse,
the lack of sufficient reserves placed the condominium at great financial risk
in the event of a costly infrastructure or equipment failure. The line of
credit could not be used for anything other than the replacement of our windows
and balcony doors as stated by the terms of the loan.
According to Condominium Association Institute (CAI)
guidance on reserves to board members, “Setting aside adequate reserves for the
future is an extremely important part of the board’s responsibility. It is
important to remember that boards that fail to adequately fund their reserve
accounts have breached their fiduciary duty to the association.”
—On Financial Management
By way of background, ECA boards approved a zero percent
(0%) increase in condo fees in 12 separate years during the period July 1984
through 2009. This failure to adequately provide sufficient funds to maintain
the property led to the deteriorating infrastructure that we suffer with today.
As an example, in FY 2009, Al Muller voted for a zero
percent (0%) increase in condo fees. In fact, as he did in the Budget Town Hall
meeting April 10, 2019, he has continued to push for the lowest possible
increase in condo fees (1%) than what is currently being considered (2%-3%) by
the Board Treasurer and Budget & Finance Committee. (Note: the increase in
condo fees has not been voted on yet.) It appears that Dr. Muller thinks that
keeping assessments from going up is the primary obligation of a director rather
than ensuring that there are sufficient funds to properly maintain the
community.
Montgomery County Commission on Common Ownership Communities
(CCOC) in its chapter entitled “The Wrong Way to Budget” counsels that keeping
condo fees down at the expense of maintenance and upkeep is transparently
foolish because everything structural and mechanical requires more maintenance
and repair as it gets older. The CCOC further advises that this practice will
“diminish the appearance of the community and make it a less desirable place to
live. This will adversely affect its resale value relative to nearby
communities that are better maintained.” This is precisely what happened to the
Elizabeth.
As his record shows, Al Muller works to keep condo fees down
at the expense of adequate maintenance and sufficient reserves. For these
reasons, I do not think Al Muller is the right person to lead us to improved
property values and a financially stable future.
You are urged to vote for Z Beca, Jimmy Whalen, and Elisa
Siegel—owners who will work to improve the financial position and
infrastructure of The Elizabeth, our property values, and our quality of life.
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5 comments:
Ms. Alenier's biased and inaccurate critique of my record deserves a response. She says:"As his record shows, Al Muller works to keep condo fees down at the expense of adequate maintenance and sufficient reserves." That is simply not true. As I have consistently said, and repeated at the candidates' forum, all three financial aspects are important. There is no major maintenance or capital expenditure that I have not supported. Yes, I strongly opposed borrowing money so a budgeted project (windows and door repairs) could be started two years before we would have had the funds to pay for the expenditure. It was a necessary project which I supported but was not an emergency and the early borrowing of money resulted in the financial difficulties that ensued. I have always been a proponent of "pay as you go" rather than borrowing. I ALSO support lower condo fees when we have adequate reserve funds AND necessary capital expenditures. The BOD, at my suggestion, is considering a modest 1% condo fee increase this year because we will have more than $300,000 surplus and our condo fees are not competitive with other nearby condominiums despite faulty claims to the contrary. I also believe it is hypocritical for Ms. Alenier to critique candidate Frantz for resigning years ago from the Board, when Ms. Alenier herself resigned only a few months after her appointment, citing time constraints. It was worth noting, however, that shortly after resigning Ms. Alenier had time to write a critical blog against remaining candidates.
Karren -- as always, we will have to agree to disagre on my comments, qualifications, and motives. I am always available -- to you and certainly your readers -- to address any of the points you make -- and, interestly, have removed from the blog -- about me. Molly Frantz mollyf70@msn.com 301-657-3854. I hope you will come on Wednesday, April 24 to the Informal Town Hall meeting about the Proposed Amendment concerning Board Membership, 7 pm to 8 or later in the Party Room. We can have a lively back and forth on my motives -- are they principled or self-serving and/or a vendetta. Molly
Karren -- In the interest of fairness I am providing my May 1, 2017 response to Jeremy Tucker about the letter Jeremy Powell wrote about me.
On Mon, May 1, 2017 at 3:01 AM, Molly Frantz wrote:
Jeremy – I literally just returned from Costa Rica at 9 pm (having left at 6 am on April 18) and so was unable to respond to your email. I learned from a neighbor tonight that your correspondence to me – via email – has now been circulated quite widely without my having an opportunity to respond. This is very unfortunate and frankly your action is quite unfair as you did not see fit to include my correspondence and table so the owners can put your response in context and make their own judgment about accuracy and transparency in the Elizabeth Condominium’s finances.
While I need time to fully absorb Jeremy Powell’s response to you, I am frankly quite dumbfounded by his saying the approximate $132,000 in loan principal payments to Pacific Premier Bank “are not reflected as an operating expense...” (last bullet in Mr. Powell’s email to you) because those funds are reflected as an expense in line item 58010 Loan Interest in the February 28, 2017 Income Statement (INCO). In fact, the January expenditures for line item 58010 were specifically adjusted upward to begin including the loan principal payments.
Mr. Powell explicitly states “For example, Ms. Frantz’s analysis omitted the following facts as it related to the cash flows.” The bullet immediately after this statement speaks to approximately $902,000 of Accounts Payable bills as of June 30, 2016 that were paid between July 1, 2016 and February 28, 2017. This is a very curious charge of omission for several reasons. First, I said my table only reflected information made available to the owners. Secondly, you heard me explicitly say at the February 28th board meeting that I assumed and hoped that the $693,309 Surplus YTD revenues were used to pay for obligations from FY 2016. The table I prepared also spoke to this. Contintued in second entry because response too long.
Continuation of Frantz response to Powell letter.
The only reason I “omitted” these expenditures was because the monthly financials for the Elizabeth Condominium omits these expenditures. When Carty Massey came to speak to the owners on January 24 he was explicitly asked by several owners where the prior-year obligations paid in FY 2017 appeared in the financials. He assured all the owners present that these expenditures were included in the general ledger. But he was unable to say these expenditures were included in the financials given the owners. [As an aside, even though Mr. Massey told me that night that he would be glad to go over and discuss the Elizabeth financials with me, I have yet to have him return my calls asking to see the ECA financials.] So, if Mr. Powell is saying I intentionally omitted the $902,000 or did so out of ignorance of the existence of these expenditures, I take exception. If, on the other hand, he is stating a fact – he is absolutely right because none of the owners are given complete and comprehensive financial information which made it impossible for me to know what amount to reflect in the table. FYI: I have now updated the table to include the $902,000 Mr. Powell says has been expended with the result being a DEFICIT of $208,691 instead of a surplus in Revenues of $693,309 YTD through February 28, 2017.
The next example of an oversight on my part was the exclusion of $275,000 in Accounts Payable as of February 28, 2017. I did not put this amount in because I was not preparing a cash flow analysis. I was only dealing with the question “How has the Elizabeth been paying its bills?” I dealt with expenditures – as provided the owners – and not future expenditures.
I am not an accountant but I can and do balance my checkbook. And that is exactly what my table did for the Elizabeth. Could my table be refined – you betcha – since I, as an owner, don’t have access to all the information. But does the fault lie with my work and table or with those who have or should have a clearer picture of the Elizabeth’s financial state and choose not to let the owners – and prospective buyers – know the depth of our insolvency? The ECA is in its third year of red ink, and like FY 2015, we don’t get the facts until way after the damage has been done. Where is the FY 2016 Audit? I just went through my emails and saw no reference to its availability. If the general ledger contains all the ECA expenditures shouldn’t the financials show that information? I can’t why any money manager and/or auditor would condone leaving $902,000 of expenditures out of the public paper trail of Corporate actions; why only selective expenditures would be reported publically. Transparency is everything, especially when trying to right a “broken ship”.
requires a third posting to response to all of Jeremy Powells accusations.
You know, it is very interesting that neither you nor Jeremy Powell chose to answer my question. What happened to the YTD surplus revenues accumulated in FY 2017. A simple answer is that it went toward the unpaid obligations in FY 2016 but for (insert the reason) these expenditures are not reflected in any of the monthly Elizabeth financial reports. Period. Instead it took Mr. Powell one and a half pages to avoid saying this. Checkbooks don’t need balance sheets to tell you where you are financially especially when there are no unencumbered Cash Investments (i.e., savings). Just add up the available money and subtract the expenditures/new obligations. The balance may be off from the bank statement because of the timing of the actual payment, but at least the person knows if there is going to be money to pay the next bill.
As I said in my Opening Remarks for the April 20th Meet the Candidate’s Night “I have never doubted the dedication of our Board members nor questioned how hard they have worked on our behalf.” I do question their ability to make sound decisions if all the information is not available to both the Board members and to the ownership. I don’t understand how anyone or any organization can garner support if they don’t have trust. And how can they garner trust without transparency. There is a reason individuals obfuscate answers to legitimate questions. Why is wanted to know what is happening and what has happened to the ECA resources not a legitimate area of inquiry?!
Molly Frantz
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