Jeffrey Axelrad’s Prepared Statement Opposing Approval of the Minutes of the January Special Board Meeting.
Although I fear that the Board may well approve the proposed minutes that Monique has submitted notwithstanding the objections I will state, I must urge rejection as a matter of principle. In doing so, let me state at the outset that Monique is a superb Treasurer and has done a reasonable job of summarizing all comments made at the Special Meeting other than her own statement. However, I must object to her distorting the minutes by including a verbatim statement of her views as delivered at the Special Meeting while only providing brief summaries of other Board Members’ views.
Monique may suggest that she included Woody’s opening statement verbatim. A draft of the opening statement was shared with each Board Member in advance of the meeting, other Board Members’ comments on a draft of the opening statement were included in the opening statement and the opening statement explained how and why the Special Meeting came to be called. The opening statement did not purport to state any individual member’s final conclusions of the ultimate issues it raises and was delivered by the Board President on behalf of the entire Board. The opening statement thus stands in sharp contrast to any Board member’s statement of his or her individual views.
Also, Monique may suggest that her statement was written verbatim while other Board Members’ statements were not written and read at the meeting from a prepared text. That argument should not provide a rationale for favored consideration of her views, as compared to any other Board Member’s views. For instance, I consider my views to be every bit as well considered, if not better considered, as views delivered from a prepared statement. A secretary should be reporting comments, not passing judgment on their relative value as compared to her comments. It just isn’t fair.
I urge that the Board reject approval of the proposed minutes for the foregoing reasons and that minutes deleting Monique’s text and substituting a statement “Monique Fridell reiterated her reasons for opposition to the motion” be approved.
If my opposition fails, I ask that the entire text of this prepared statement be included verbatim in the minutes of tonight’s meeting.
Wednesday, February 18, 2009
January 2009: SPECIAL MEETING of ECA Board
MINUTES of a SPECIAL Meeting of the Board of Directors (BOD) of the Elizabeth Condominium Association, Inc. (“ECA”), held January 14, 2009 in the West Lobby of the Condominium pursuant to notice in accordance with the Bylaws. George (Woody) Cunningham, Monique Fridell, Alexandra Kielty, Judith Barth, Jeffrey Axelrad, Judith Gann and Alfred Muller were present. Ms. Carolyn Farrell represented Management.
Jason Fisher of Lerch Early was also in attendance. [ECA legal counsel]
The President, Mr. Cunningham, called the meeting to order at 7:00 p.m.
Mr. Fisher explained that this meeting was an opportunity for owners to share comments with the Board regarding the hiring of a professional condominium management company (MC). He emphasized that under no circumstances was it appropriate to discuss issues relating to personnel at this meeting.
PRESIDENT’S REPORT:
Mr. Cunningham presented a summary of the BOD’s due diligence process and analysis of the benefits of hiring a MC. The President’s full statement is attached hereto and should be considered an integral part of these Minutes. The BOD has expended a great deal of effort over the past six months to evaluate the need and potential benefits of contracting with an outside MC, rather than continuing with self management. The BOD gathered information on MCs from a variety of sources. It then used that information to prepare requests for proposal and sent those RFPs to three highly recommended companies. The BOD held a bidders conference to tour ECA facilities and to give the bidders an understanding of our operations. We received responsive bids from all three companies. As part of our due diligence, the BOD commissioned a cost study by ECA’s audit firm, Deleon & Stang (D&S), to estimate costs of moving to an outside MC.
Mr. Cunningham explained that in general, MCs have centralized systems that offer standardized and cost effective tools, but may lack some of the close personal interaction of self-management. He then summarized the benefits of a MC in each of the following areas: financial management, personnel, building insurance, operations, maintenance and repair projects, utilities and communications.
Mr. Cunningham stated that evaluation of costs is complicated because of the way various MCs set the fee structure. He said that the analysis done by D&S suggests that the initial net increase would be about $30,000. The management fee could be as high as $90,000, but significant savings in financial management result in an anticipated net increase of $30,000. Nevertheless, the administrative cost can vary from month to month making it difficult to project costs. ECA may ultimately realize cost savings if we select an outside MC in areas such as insurance, repairs, and utilities (and possibly others).
After Mr. Cunningham finished his presentation, Ms. Fridell stated that the cost figures cited by the President were not the same as those stated by D&S in the cost analysis report. Ms. Fridell quoted the following statement from the D&S cost analysis: “A conservative estimate of the add-on fees for L&N for the first year is $28,128. The base management fee is $89,850…..[after some financial cost savings] the net cost to the Association would be approximately $66,550 for the first year of L&N.”
COMMENTS FROM THE FLOOR:
Charles Bressler, 1806: He estimates the cost of a MC to be approximately $100 thousand. He said that the success of ECA was the result of many factors. He noted that not many residents are willing to get involved and/or volunteer, although we all want ECA to be successful. He said that previous ECA boards were willing to accept responsibilities, but that the present BOD has made wrong and costly decisions such as doorman and refurbishing. He said he had met with six of the BOD members to discuss his views that Betty Haven should be invited to return as ECA General Manager.
Dorothy Maret, 1701: She has lived in ECA since 10/86. She is pleased with the management of building, and often recommends living here to prospective buyers. She asked how this change would affect residents’ lives. She hoped the BOD has not already made up its mind.
Michel Maret, 1701: He thanked the BOD for its work. He has concerns about this vote being taken in the middle of the fiscal year. He believes the decision should be made by the entire condo association at the Annual Meeting. He requests that this decision be delayed until then, and hopes that residents can have more information.
Jim Jones, 307: He said that the time allotted to make such a big decision seemed short. He believes that residents ought to be able to participate substantially in due diligence, which should include cost figures and a list of pro/cons, and that all residents ought to receive a full dossier. He suggested a referendum in which all residents could participate in this decision. He said processes of this kind are not legally viable. He believes residents have a right to participate in this decision.
Pam Dillon, 718: She noted that the decision between self-management and outside MC does not have to be an either/or decision. She said that three other neighboring condos have hybrid situations using both management structures. She believes hiring a professional MC is positive due to the wide array of resources the firm can bring ECA. She believes ECA is thin in our management ability, and that a MC can provide valuable assistance to in-house management staff. She emphasized that the decision does not have to be either/or -- generally it is both. She hopes the BOD will consider this option.
Elin Winthrop, 1114: She thinks this decision should be the subject of a referendum. We need to carefully examine the pros/cons. ECA is a “vertical neighborhood”, she believes we should make this decision together. The planned renovation will require intimate knowledge of the building. At a time when the economy is contracting, she believes it is ill-advised to take on added costs and multiple projects at once. She does not think this is the right decision, and believes residents have a right to more information. She stated that there is no harm in delaying this decision six to twelve months.
Dorothy Mudd, 1617: She was appalled by the meeting notice in the elevator. She believes it is inconceivable to vote on this matter tonight. Residents have not been polled. Her Kent Island condo switched to Legum & Norman as MC and unfortunately it has not worked out as well as expected. She said that the BOD is terribly deficient in not keeping residents advised.
George Bason, 110: He shared six reasons why the BOD should not vote on a MC tonight: 1) it is the only way to dispel the belief that this meeting is a sham, 2) undue haste results in faulty decision-making, 3) hiring a MC will result in higher costs, 4) a MC represents an extra layer of bureaucracy, 5) a MC is no “magic bullet”, and 6) ECA might lose long-time valued staff. He remarked that the January 2nd meeting notice said that this would be an “opportunity to hear about the pros/cons of a MC” not necessarily to make a final decision.
Mary Katherine Curran, 310: She agreed that a packet of material should have been sent to residents prior to this meeting. She agreed with Ms. Dillon’s statement that a MC could assist in-house management. She has financial concerns. She asked that residents be advised what are the effects of hiring a MC, who will have oversight for ECA’s Reserves, and whether ECA will have enough in Reserves to avoid special assessments. She agreed that the BOD should table the MC discussion for six months or until October 2009.
Jim Rich, 301: He and his wife are long time owners, having returned recently to live in the building. He sees that things have deteriorated in the building since the mid- 1990s. He is in favor of hiring a MC because he believes that the building is not well managed now. He agreed that a referendum is warranted. He liked Ms. Dillon’s idea of a MC assisting in-house management to make sure things get done.
Sharon Bobb, 911: She is in favor of hiring a professional MC. She is concerned that property values are declining and that the building is deteriorating. She stated that hiring a MC will improve residents’ quality of life. She reminded those in attendance of numerous problems which have had been neglected such as roaches, spiders in the garage, moldy plants in the lobby, and flooding caused by clogged pipes. She said it was no wonder property values have declined to such an extent. She reminded residents that ECA must continually invest in the building. She felt that not to hire a MC would be a “penny wise and pound foolish” decision and that old buildings such as ECA need professional MCs, which have large engineering staff available to solve problems and to provide backup to on-site engineers. She believes ECA would benefit from management by credentialed professionals with condo management industry certifications. She stated that it is clear that self-management has not worked, and urged the BOD to vote for a MC.
Henrietta Asen, 817: She has lived happily at ECA for 25 years. She said declines in property values were global. She is pleased with self-management, and believes that the MC decision should be made by all owners, and not a “done deal” announced by the BOD. She is concerned about long-time personnel. She asked that the BOD postpone its decision, give residents more information, and let residents have more input.
Robert Bosma, 1818: He is indifferent to having a MC or not. He only hopes that long-term ECA employees would be guaranteed employment for as long as they want to work here.
Chip Mudd, 1118: He doubts that hiring a MC will result in a discernable improvement to the building. His major concern is how the change might affect ECA employees. He said that ECA has a dedicated staff, and that it is essential that the decision be made in the best interests of ECA employees. Current employees should remain employees of ECA to ensure their benefits are maintained. He considers it a social and moral obligation to protect the benefits of ECA employees.
Linda Kontnier, 919: She echoed Ms. Winthrop’s concerns and Ms. Dillon’s suggestion of moving to a hybrid MC structure. She said ECA did not have sufficient information to make a decision tonight. She complimented the BOD for taking on major issues, and hopes that enough time could be taken to make the right decision. She asked about the economic impact on the condo MC industry and whether the latter was undergoing a consolidation process or facing financial challenges. She said that the MC issue is more important than the refurbishing project yet only the latter topic warranted a committee which studied the issue for over a year.
Alix Robinson, 917: Having spent five years as ECA Treasurer, she is concerned about how this decision will affect condo fees. She noted that in the past, ECA boards had used MC for recruiting operations management and supporting ECA engineering staff. She said their performance/knowledge was no better than those of ECA engineers. She is not sure that a MC is a panacea. She thought that residents would appreciate the BOD’s providing more information on the subject.
Bruce Raven, 208: He would like to see copies of RFPs sent to MCs. He said that ECA should be able to pick and choose desired services.
Sally Hart, 1811, representing herself and Mary Claycomb, 1801: She noted that original owners went through a period of time under a MC, and it was “a disaster”. She said that the President’s presentation was not very informative. She asked to see cost figures. She urged the BOD not to put this issue to a vote tonight.
Charles Bressler, 1806: He asked how can seven people only three months away from Annual Meeting make such a monumental decision. He asserted that the entire assembly of residents should be able to vote on this subject. He reiterated his view that ECA should rehire former General Manager, Betty Haven.
Peg Downey, 615: She believes ECA needs a broader range of expertise than is available in-house, and the way to accomplish that is to hire a MC. ECA is an aging building, and she believes we need more resources.
The President clarified that the BOD is voting to begin negotiations with a MC. He said that residents elected a BOD to make decisions, and that the BOD would not be subjecting the matter to a referendum.
George Bason spoke out of order. He said he would provide copies of his comments to residents in their mailboxes.
Jason Fisher clarified for residents that this decision rests solely with the BOD, according to ECA Bylaws. This decision does not commit ECA to hiring a MC; rather it allows the BOD to enter into negotiations with one. He noted that ultimately there may be many different outcomes as a result of such negotiations.
Sally Hart asked about the inclination of the residents.
NEW BUSINESS:
Mr. Cunningham read a motion to negotiate with an outside MC for financial, operational, administrative and managerial support services. Mr. Axelrad so moved. Ms. Barth seconded the motion.
Mr. Axelrad clarified that the costs cited by Ms. Fridell earlier in the Meeting were for first year of services. He quoted from the D&S cost analysis report which stated that “costs would be somewhat less the second year because initial set-up costs would not apply”. He informed residents that the building has many problems of which they are not aware. He believes a crisis is approaching, and professional management is needed.
Dr. Muller acknowledged the concerns of the residents and thanked those who expressed their views. He affirmed that no final decision had been taken regarding which of many options ECA could take. He reminded residents that this discussion actually started more than two years ago when outgoing President Pam Dillon suggested that hiring a professional MC merited further inquiry. He derived two major concerns from the residents’ comments – the fate of ECA employees and costs. He stated that the BOD is aware of the loyalty of ECA employees and that what happens to them is entirely up to the BOD. He repeated that the estimated net cost was approximately $66 thousand, from which could also be deducted a $50 thousand savings from eliminating the doorman position, as well as other cost savings which the MC might bring. Any further voting on the subject will be done in public session. He stated that the BOD is elected to spend time and make decisions on behalf of residents.
Ms. Fridell provided further clarification of Mr. Axelrad’s statement regarding lower MC costs in the second year. She noted that according to figures in D&S’s spreadsheet Attachment A&B Management Comparison Schedule second year costs would be $5450 less than first year.
Ms. Fridell explained that she planned to vote against the hiring of an outside MC at this time. Her prepared statement is attached hereto and which should be considered an integral part of these Minutes. She said she was not opposed to the concept of MC in principle, and recognized some of the benefits that one can offer to a condominium. She gave two key reasons for her opposition. Firstly, she does not believe it is propitious to increase ECA’s discretionary costs at this time. Secondly, 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 believes we could execute this restructuring and improve management quality and resident services more cheaply and with less upheaval than hiring a MC, and that we could achieve close to the same results. She had asked the BOD to also consider an internal restructuring scenario but there was no interest.
Ms. Kielty stated that her inclination was to oppose the motion. She acknowledged that a MC could assist us in managing operations but did not believe that a MC will turn around ECA to the extent that it would improve property values. She favors a hybrid approach; however, she is concerned that the hybrid structure will not be taken seriously enough by the BOD and that the BOD will move too quickly towards full management. She expressed strong reservations about how the negotiations would turn out. She noted that The Carleton has its own in-house management under a MC, and that their communications and appearance seemed to be no worse than ECA’s. She does not believe moving to an outside MC will be a panacea.
Ms. Barth said she listened carefully to residents’ comments and takes them seriously. She acknowledged that change was difficult, and reminded residents that the BOD has spent the last six months performing due diligence on three firms. She noted the many existing problems in the building -- including falling ceiling tiles, leaking pipes, leaks in garage -- that need to be fixed and ECA does not have in-house resources to fix these things. Management needs the backup of resources large firms can provide. She believes we need the backup of all the array of services a MC can offer, including a website and an engineering department. She noted that all other buildings in Friendship Heights Village are managed by professional MCs.
Ms. Gann asserted that the refurbishment project will call for great deal of time and attention from existing staff and management. She doubts that in-house management will have the time to do this. She does not believe full management is necessary, she thinks we could start with financial management. She said that a good MC will have us working smarter, that we may not save money, but we will not spend as much money. She would like to see a hybrid management structure, not complete outside management.
Mr. Axelrad disagreed with the substance of Ms. Fridell’s comments and called Ms. Fridell’s restructuring concept a “fantasy”. He said that the building has been deteriorating under self-management, and that no previous ECA board had put together the kind of reorganization described by Ms. Fridell, even though such a reorganization could have been attempted 15, ten or five years ago or at any time.
Mr. Cunningham believes it would be wrong to defer the MC decision. He is aware of the concerns of residents and Board members, and hopes that as we negotiate we will reach a solution that is appropriate for ECA. He believes we must go forward to maintain a safe, healthy and attractive building.
Judy Gann called the question.
Mr. Cunningham repeated Mr. Axelrad’s motion to negotiate with a professional MC for management, operations, financial and administrative services. He noted that the motion does not preclude a hybrid solution, rather it allows for a broad range of possible structures. Ms. Barth seconded the motion once again.
Ms. Kielty proposed that the motion be amended to state that we negotiate only for a hybrid structure and that we move to hybrid management slowly. Ms. Gann seconded the amended motion.
Mr. Axelrad was opposed to limiting negotiations. Accepting Ms. Kielty’s proposal would be the equivalent of handcuffs; he said that no option should be excluded prior to negotiations. Ms. Kielty replied that given the residents’ comments, this change ought to occur slowly. She asserted that the deteriorated condition of building is not caused by management, but by lack of action and/or funds to address them in a more aggressive manner.
Dr. Muller believed that Ms. Kielty’s option should be one of many options. Different buildings have different management structures. Ms. Kielty noted that even if the structure were initially limited to a hybrid, the range of services could also be expanded upon in the future.
Ms. Gann and Ms. Kielty voted to accept the amendment. Ms. Barth, Mr. Axelrad and Mr. Cunningham opposed. Dr. Muller and Ms. Fridell abstained. The amendment did not pass.
Mr. Cunningham called for another vote on his original motion. Mr. Axelrad, Ms. Barth, Mr. Cunningham and Dr. Muller voted affirmatively. Ms. Gann, Ms. Kielty, and Ms. Fridell opposed the motion. The motion was approved.
Ms. Barth made a motion to select Legum & Norman as the condo management firm with which to negotiate management services. Dr. Muller seconded the motion. Dr. Muller clarified that he agreed with Ms. Kielty’s hybrid option, and said that full management is not a foregone conclusion. Ms. Barth, Dr. Muller, Mr. Axelrad and Mr. Cunningham voted in favor of the motion. Ms. Gann, Ms. Fridell, and Ms. Kielty abstained. The motion was approved.
The meeting was adjourned at 9:00 p.m.
Respectfully submitted,
Monique Fridell
Treasurer
Jason Fisher of Lerch Early was also in attendance. [ECA legal counsel]
The President, Mr. Cunningham, called the meeting to order at 7:00 p.m.
Mr. Fisher explained that this meeting was an opportunity for owners to share comments with the Board regarding the hiring of a professional condominium management company (MC). He emphasized that under no circumstances was it appropriate to discuss issues relating to personnel at this meeting.
PRESIDENT’S REPORT:
Mr. Cunningham presented a summary of the BOD’s due diligence process and analysis of the benefits of hiring a MC. The President’s full statement is attached hereto and should be considered an integral part of these Minutes. The BOD has expended a great deal of effort over the past six months to evaluate the need and potential benefits of contracting with an outside MC, rather than continuing with self management. The BOD gathered information on MCs from a variety of sources. It then used that information to prepare requests for proposal and sent those RFPs to three highly recommended companies. The BOD held a bidders conference to tour ECA facilities and to give the bidders an understanding of our operations. We received responsive bids from all three companies. As part of our due diligence, the BOD commissioned a cost study by ECA’s audit firm, Deleon & Stang (D&S), to estimate costs of moving to an outside MC.
Mr. Cunningham explained that in general, MCs have centralized systems that offer standardized and cost effective tools, but may lack some of the close personal interaction of self-management. He then summarized the benefits of a MC in each of the following areas: financial management, personnel, building insurance, operations, maintenance and repair projects, utilities and communications.
Mr. Cunningham stated that evaluation of costs is complicated because of the way various MCs set the fee structure. He said that the analysis done by D&S suggests that the initial net increase would be about $30,000. The management fee could be as high as $90,000, but significant savings in financial management result in an anticipated net increase of $30,000. Nevertheless, the administrative cost can vary from month to month making it difficult to project costs. ECA may ultimately realize cost savings if we select an outside MC in areas such as insurance, repairs, and utilities (and possibly others).
After Mr. Cunningham finished his presentation, Ms. Fridell stated that the cost figures cited by the President were not the same as those stated by D&S in the cost analysis report. Ms. Fridell quoted the following statement from the D&S cost analysis: “A conservative estimate of the add-on fees for L&N for the first year is $28,128. The base management fee is $89,850…..[after some financial cost savings] the net cost to the Association would be approximately $66,550 for the first year of L&N.”
COMMENTS FROM THE FLOOR:
Charles Bressler, 1806: He estimates the cost of a MC to be approximately $100 thousand. He said that the success of ECA was the result of many factors. He noted that not many residents are willing to get involved and/or volunteer, although we all want ECA to be successful. He said that previous ECA boards were willing to accept responsibilities, but that the present BOD has made wrong and costly decisions such as doorman and refurbishing. He said he had met with six of the BOD members to discuss his views that Betty Haven should be invited to return as ECA General Manager.
Dorothy Maret, 1701: She has lived in ECA since 10/86. She is pleased with the management of building, and often recommends living here to prospective buyers. She asked how this change would affect residents’ lives. She hoped the BOD has not already made up its mind.
Michel Maret, 1701: He thanked the BOD for its work. He has concerns about this vote being taken in the middle of the fiscal year. He believes the decision should be made by the entire condo association at the Annual Meeting. He requests that this decision be delayed until then, and hopes that residents can have more information.
Jim Jones, 307: He said that the time allotted to make such a big decision seemed short. He believes that residents ought to be able to participate substantially in due diligence, which should include cost figures and a list of pro/cons, and that all residents ought to receive a full dossier. He suggested a referendum in which all residents could participate in this decision. He said processes of this kind are not legally viable. He believes residents have a right to participate in this decision.
Pam Dillon, 718: She noted that the decision between self-management and outside MC does not have to be an either/or decision. She said that three other neighboring condos have hybrid situations using both management structures. She believes hiring a professional MC is positive due to the wide array of resources the firm can bring ECA. She believes ECA is thin in our management ability, and that a MC can provide valuable assistance to in-house management staff. She emphasized that the decision does not have to be either/or -- generally it is both. She hopes the BOD will consider this option.
Elin Winthrop, 1114: She thinks this decision should be the subject of a referendum. We need to carefully examine the pros/cons. ECA is a “vertical neighborhood”, she believes we should make this decision together. The planned renovation will require intimate knowledge of the building. At a time when the economy is contracting, she believes it is ill-advised to take on added costs and multiple projects at once. She does not think this is the right decision, and believes residents have a right to more information. She stated that there is no harm in delaying this decision six to twelve months.
Dorothy Mudd, 1617: She was appalled by the meeting notice in the elevator. She believes it is inconceivable to vote on this matter tonight. Residents have not been polled. Her Kent Island condo switched to Legum & Norman as MC and unfortunately it has not worked out as well as expected. She said that the BOD is terribly deficient in not keeping residents advised.
George Bason, 110: He shared six reasons why the BOD should not vote on a MC tonight: 1) it is the only way to dispel the belief that this meeting is a sham, 2) undue haste results in faulty decision-making, 3) hiring a MC will result in higher costs, 4) a MC represents an extra layer of bureaucracy, 5) a MC is no “magic bullet”, and 6) ECA might lose long-time valued staff. He remarked that the January 2nd meeting notice said that this would be an “opportunity to hear about the pros/cons of a MC” not necessarily to make a final decision.
Mary Katherine Curran, 310: She agreed that a packet of material should have been sent to residents prior to this meeting. She agreed with Ms. Dillon’s statement that a MC could assist in-house management. She has financial concerns. She asked that residents be advised what are the effects of hiring a MC, who will have oversight for ECA’s Reserves, and whether ECA will have enough in Reserves to avoid special assessments. She agreed that the BOD should table the MC discussion for six months or until October 2009.
Jim Rich, 301: He and his wife are long time owners, having returned recently to live in the building. He sees that things have deteriorated in the building since the mid- 1990s. He is in favor of hiring a MC because he believes that the building is not well managed now. He agreed that a referendum is warranted. He liked Ms. Dillon’s idea of a MC assisting in-house management to make sure things get done.
Sharon Bobb, 911: She is in favor of hiring a professional MC. She is concerned that property values are declining and that the building is deteriorating. She stated that hiring a MC will improve residents’ quality of life. She reminded those in attendance of numerous problems which have had been neglected such as roaches, spiders in the garage, moldy plants in the lobby, and flooding caused by clogged pipes. She said it was no wonder property values have declined to such an extent. She reminded residents that ECA must continually invest in the building. She felt that not to hire a MC would be a “penny wise and pound foolish” decision and that old buildings such as ECA need professional MCs, which have large engineering staff available to solve problems and to provide backup to on-site engineers. She believes ECA would benefit from management by credentialed professionals with condo management industry certifications. She stated that it is clear that self-management has not worked, and urged the BOD to vote for a MC.
Henrietta Asen, 817: She has lived happily at ECA for 25 years. She said declines in property values were global. She is pleased with self-management, and believes that the MC decision should be made by all owners, and not a “done deal” announced by the BOD. She is concerned about long-time personnel. She asked that the BOD postpone its decision, give residents more information, and let residents have more input.
Robert Bosma, 1818: He is indifferent to having a MC or not. He only hopes that long-term ECA employees would be guaranteed employment for as long as they want to work here.
Chip Mudd, 1118: He doubts that hiring a MC will result in a discernable improvement to the building. His major concern is how the change might affect ECA employees. He said that ECA has a dedicated staff, and that it is essential that the decision be made in the best interests of ECA employees. Current employees should remain employees of ECA to ensure their benefits are maintained. He considers it a social and moral obligation to protect the benefits of ECA employees.
Linda Kontnier, 919: She echoed Ms. Winthrop’s concerns and Ms. Dillon’s suggestion of moving to a hybrid MC structure. She said ECA did not have sufficient information to make a decision tonight. She complimented the BOD for taking on major issues, and hopes that enough time could be taken to make the right decision. She asked about the economic impact on the condo MC industry and whether the latter was undergoing a consolidation process or facing financial challenges. She said that the MC issue is more important than the refurbishing project yet only the latter topic warranted a committee which studied the issue for over a year.
Alix Robinson, 917: Having spent five years as ECA Treasurer, she is concerned about how this decision will affect condo fees. She noted that in the past, ECA boards had used MC for recruiting operations management and supporting ECA engineering staff. She said their performance/knowledge was no better than those of ECA engineers. She is not sure that a MC is a panacea. She thought that residents would appreciate the BOD’s providing more information on the subject.
Bruce Raven, 208: He would like to see copies of RFPs sent to MCs. He said that ECA should be able to pick and choose desired services.
Sally Hart, 1811, representing herself and Mary Claycomb, 1801: She noted that original owners went through a period of time under a MC, and it was “a disaster”. She said that the President’s presentation was not very informative. She asked to see cost figures. She urged the BOD not to put this issue to a vote tonight.
Charles Bressler, 1806: He asked how can seven people only three months away from Annual Meeting make such a monumental decision. He asserted that the entire assembly of residents should be able to vote on this subject. He reiterated his view that ECA should rehire former General Manager, Betty Haven.
Peg Downey, 615: She believes ECA needs a broader range of expertise than is available in-house, and the way to accomplish that is to hire a MC. ECA is an aging building, and she believes we need more resources.
The President clarified that the BOD is voting to begin negotiations with a MC. He said that residents elected a BOD to make decisions, and that the BOD would not be subjecting the matter to a referendum.
George Bason spoke out of order. He said he would provide copies of his comments to residents in their mailboxes.
Jason Fisher clarified for residents that this decision rests solely with the BOD, according to ECA Bylaws. This decision does not commit ECA to hiring a MC; rather it allows the BOD to enter into negotiations with one. He noted that ultimately there may be many different outcomes as a result of such negotiations.
Sally Hart asked about the inclination of the residents.
NEW BUSINESS:
Mr. Cunningham read a motion to negotiate with an outside MC for financial, operational, administrative and managerial support services. Mr. Axelrad so moved. Ms. Barth seconded the motion.
Mr. Axelrad clarified that the costs cited by Ms. Fridell earlier in the Meeting were for first year of services. He quoted from the D&S cost analysis report which stated that “costs would be somewhat less the second year because initial set-up costs would not apply”. He informed residents that the building has many problems of which they are not aware. He believes a crisis is approaching, and professional management is needed.
Dr. Muller acknowledged the concerns of the residents and thanked those who expressed their views. He affirmed that no final decision had been taken regarding which of many options ECA could take. He reminded residents that this discussion actually started more than two years ago when outgoing President Pam Dillon suggested that hiring a professional MC merited further inquiry. He derived two major concerns from the residents’ comments – the fate of ECA employees and costs. He stated that the BOD is aware of the loyalty of ECA employees and that what happens to them is entirely up to the BOD. He repeated that the estimated net cost was approximately $66 thousand, from which could also be deducted a $50 thousand savings from eliminating the doorman position, as well as other cost savings which the MC might bring. Any further voting on the subject will be done in public session. He stated that the BOD is elected to spend time and make decisions on behalf of residents.
Ms. Fridell provided further clarification of Mr. Axelrad’s statement regarding lower MC costs in the second year. She noted that according to figures in D&S’s spreadsheet Attachment A&B Management Comparison Schedule second year costs would be $5450 less than first year.
Ms. Fridell explained that she planned to vote against the hiring of an outside MC at this time. Her prepared statement is attached hereto and which should be considered an integral part of these Minutes. She said she was not opposed to the concept of MC in principle, and recognized some of the benefits that one can offer to a condominium. She gave two key reasons for her opposition. Firstly, she does not believe it is propitious to increase ECA’s discretionary costs at this time. Secondly, 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 believes we could execute this restructuring and improve management quality and resident services more cheaply and with less upheaval than hiring a MC, and that we could achieve close to the same results. She had asked the BOD to also consider an internal restructuring scenario but there was no interest.
Ms. Kielty stated that her inclination was to oppose the motion. She acknowledged that a MC could assist us in managing operations but did not believe that a MC will turn around ECA to the extent that it would improve property values. She favors a hybrid approach; however, she is concerned that the hybrid structure will not be taken seriously enough by the BOD and that the BOD will move too quickly towards full management. She expressed strong reservations about how the negotiations would turn out. She noted that The Carleton has its own in-house management under a MC, and that their communications and appearance seemed to be no worse than ECA’s. She does not believe moving to an outside MC will be a panacea.
Ms. Barth said she listened carefully to residents’ comments and takes them seriously. She acknowledged that change was difficult, and reminded residents that the BOD has spent the last six months performing due diligence on three firms. She noted the many existing problems in the building -- including falling ceiling tiles, leaking pipes, leaks in garage -- that need to be fixed and ECA does not have in-house resources to fix these things. Management needs the backup of resources large firms can provide. She believes we need the backup of all the array of services a MC can offer, including a website and an engineering department. She noted that all other buildings in Friendship Heights Village are managed by professional MCs.
Ms. Gann asserted that the refurbishment project will call for great deal of time and attention from existing staff and management. She doubts that in-house management will have the time to do this. She does not believe full management is necessary, she thinks we could start with financial management. She said that a good MC will have us working smarter, that we may not save money, but we will not spend as much money. She would like to see a hybrid management structure, not complete outside management.
Mr. Axelrad disagreed with the substance of Ms. Fridell’s comments and called Ms. Fridell’s restructuring concept a “fantasy”. He said that the building has been deteriorating under self-management, and that no previous ECA board had put together the kind of reorganization described by Ms. Fridell, even though such a reorganization could have been attempted 15, ten or five years ago or at any time.
Mr. Cunningham believes it would be wrong to defer the MC decision. He is aware of the concerns of residents and Board members, and hopes that as we negotiate we will reach a solution that is appropriate for ECA. He believes we must go forward to maintain a safe, healthy and attractive building.
Judy Gann called the question.
Mr. Cunningham repeated Mr. Axelrad’s motion to negotiate with a professional MC for management, operations, financial and administrative services. He noted that the motion does not preclude a hybrid solution, rather it allows for a broad range of possible structures. Ms. Barth seconded the motion once again.
Ms. Kielty proposed that the motion be amended to state that we negotiate only for a hybrid structure and that we move to hybrid management slowly. Ms. Gann seconded the amended motion.
Mr. Axelrad was opposed to limiting negotiations. Accepting Ms. Kielty’s proposal would be the equivalent of handcuffs; he said that no option should be excluded prior to negotiations. Ms. Kielty replied that given the residents’ comments, this change ought to occur slowly. She asserted that the deteriorated condition of building is not caused by management, but by lack of action and/or funds to address them in a more aggressive manner.
Dr. Muller believed that Ms. Kielty’s option should be one of many options. Different buildings have different management structures. Ms. Kielty noted that even if the structure were initially limited to a hybrid, the range of services could also be expanded upon in the future.
Ms. Gann and Ms. Kielty voted to accept the amendment. Ms. Barth, Mr. Axelrad and Mr. Cunningham opposed. Dr. Muller and Ms. Fridell abstained. The amendment did not pass.
Mr. Cunningham called for another vote on his original motion. Mr. Axelrad, Ms. Barth, Mr. Cunningham and Dr. Muller voted affirmatively. Ms. Gann, Ms. Kielty, and Ms. Fridell opposed the motion. The motion was approved.
Ms. Barth made a motion to select Legum & Norman as the condo management firm with which to negotiate management services. Dr. Muller seconded the motion. Dr. Muller clarified that he agreed with Ms. Kielty’s hybrid option, and said that full management is not a foregone conclusion. Ms. Barth, Dr. Muller, Mr. Axelrad and Mr. Cunningham voted in favor of the motion. Ms. Gann, Ms. Fridell, and Ms. Kielty abstained. The motion was approved.
The meeting was adjourned at 9:00 p.m.
Respectfully submitted,
Monique Fridell
Treasurer
Sunday, February 15, 2009
December 2008 Minutes of ECA Board Meeting
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.]
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.]
Wednesday, February 11, 2009
A Few Quick Comments on February Board Meeting
Just in case you are wondering what happened in the February 10, 2009, meeting of the Board, I will note a few highlights but hope to give a more complete summary Monday Feb 16 after I recover from a writers' conference I go to early tomorrow morning in Chicago.
Two committees are being formed to work with Phyllis Hartman on the building refurbishment. One committee will be board members and the other formed from people who worked on the committee in the past. Contract must be signed first.
Delinquencies doubled in January and February. (I understand this to be non-payment of condo fees.)
New issues about security services with a request from our in-house manager for an additional security guard on the weekend. more info needed. no action.
Preliminary energy audit delivered and will be reviewed by the energy committee Thursday Feb 12 at 7;30. (check with a board member if you need more info.)
House Rules -- 12 sets of comments received and some incorporated into the new house rules.
Look for an offer to get your heat/ac ducts cleaned. there will be a price break if enough residents purchase this service. Info will be distributed soon.
Some informational events upcoming: 02/24/09 -- Reverse Mortgages 03/0/509 neighborhood security tips (listed at left column) as well as Oscar night and some basketball championships TBA.
No news yet on outside management.
Two committees are being formed to work with Phyllis Hartman on the building refurbishment. One committee will be board members and the other formed from people who worked on the committee in the past. Contract must be signed first.
Delinquencies doubled in January and February. (I understand this to be non-payment of condo fees.)
New issues about security services with a request from our in-house manager for an additional security guard on the weekend. more info needed. no action.
Preliminary energy audit delivered and will be reviewed by the energy committee Thursday Feb 12 at 7;30. (check with a board member if you need more info.)
House Rules -- 12 sets of comments received and some incorporated into the new house rules.
Look for an offer to get your heat/ac ducts cleaned. there will be a price break if enough residents purchase this service. Info will be distributed soon.
Some informational events upcoming: 02/24/09 -- Reverse Mortgages 03/0/509 neighborhood security tips (listed at left column) as well as Oscar night and some basketball championships TBA.
No news yet on outside management.
Monday, February 2, 2009
Super Bowl Party
On February 1, 2009, a small but lively group of folks were found at half time watching the Pittsburgh Steelers win over the Arizona Cardinals. I don't know who was in the West Lobby when Arizona pulled ahead and then the Steelers, true to their metal, pulled out a win at the last moment. Whew! What a game!
Thursday, January 22, 2009
Summary of January 14 Special Board Meeting
The Elizabeth Board held a special meeting of the Board (as opposed to the usual monthly Board meeting) on January 14, 2009, to vote on the next step in its process of exploring the procurement of services from an outside management company. In attendance were all seven board members and about 60 people of the Elizabeth Condominium Association (ECA).
Based on various reports from those who attended, here are some of the highlights of what our Board president, Woody Cunningham, said:
• He outlined the process that the Board has been engaged in for the past six months. This has included talking to neighboring condo associations, meeting with representatives from several management companies, both here in the Elizabeth and at their offices, issuing writing a Request for Proposal, receiving and analyzing proposals (with help from experts), entertaining a bidders’ conference at the Elizabeth, receiving bids based on what the responding management companies learned in the bidders’ conference, and generally learning about the new advances in the field of large building management.
• In the area of financial management, an outside management company could offer significant savings to the ECA because of state of the art software, a centralized system, and their handling of large sums of money through the banking system.
• In the area of personnel, a centralized Human Resource Department would help realize benefits associated with health insurance and pension plans.
• Building operations, maintenance & repair: a new approach would allow for refocusing the General Manager’s duties, allowing for better building functioning as well as back up resources should our usual operations personnel, including engineers, fall ill or have some other kind of emergency.
• Utilities: ECA might realize a cost-saving through the larger reach of a management firm.
• Communications: ECA would benefit from already established options for websites, electronic messaging, and news dissemination.
• Building insurance: possibility of getting lower rates because of large-scale operations
• Cost: this is complicated, because the expectation is that while there would be a significant five-figure outlay to hire a management company, there will also be significant savings that could balance out the cost of hiring a management company over the long term. The cost depends on many choices that will be considered. The bottom line assumption is that the cost of an outside management company will fit our budget, but no one has any hard and fast numbers at this time.
• Cost/Benefit Determination is required to make the best decision.
Some of the issues around moving forward with a management company involve:
• The cost.
• The long-time employees who currently work for the ECA.
The Board voted 4 to 3 to move ahead with discussion with an outside management company, and voted for discussions to be held with Legum and Norman. How this will play out is yet to be determined.
Some of the things I believe we need to keep in mind:
• As all property owners know, you must continually invest in your property to maintain and enhance its value as well as keep ahead of repairs, assure proper preventive maintenance, and make the necessary improvements. Failure to continually invest in, maintain, and improve the property will result in erosion of property value.
• Key personnel on our current staff represent valuable institutional knowledge and, despite the problems, the Board appreciates what the current staff has been able to contribute. The Board is considering all options: full self-management, full professional property management, and a hybrid of both.
• The business of running an enterprise like the Elizabeth Condominium has come a long way. We need to move into the 21st Century with our management approach. There is no reason why we should allow our communal home to fall into disrepair.
• In this time of economic downturn, we need to be mindful that property investment requires money for maintenance and upkeep. It’s that old adage about penny-wise and pound-foolish. We need to make sure we spend what’s necessary without going overboard so that our investment will increase in value -- not decrease in value because we did not properly maintain and improve it.
Constructive comments are welcomed.
Based on various reports from those who attended, here are some of the highlights of what our Board president, Woody Cunningham, said:
• He outlined the process that the Board has been engaged in for the past six months. This has included talking to neighboring condo associations, meeting with representatives from several management companies, both here in the Elizabeth and at their offices, issuing writing a Request for Proposal, receiving and analyzing proposals (with help from experts), entertaining a bidders’ conference at the Elizabeth, receiving bids based on what the responding management companies learned in the bidders’ conference, and generally learning about the new advances in the field of large building management.
• In the area of financial management, an outside management company could offer significant savings to the ECA because of state of the art software, a centralized system, and their handling of large sums of money through the banking system.
• In the area of personnel, a centralized Human Resource Department would help realize benefits associated with health insurance and pension plans.
• Building operations, maintenance & repair: a new approach would allow for refocusing the General Manager’s duties, allowing for better building functioning as well as back up resources should our usual operations personnel, including engineers, fall ill or have some other kind of emergency.
• Utilities: ECA might realize a cost-saving through the larger reach of a management firm.
• Communications: ECA would benefit from already established options for websites, electronic messaging, and news dissemination.
• Building insurance: possibility of getting lower rates because of large-scale operations
• Cost: this is complicated, because the expectation is that while there would be a significant five-figure outlay to hire a management company, there will also be significant savings that could balance out the cost of hiring a management company over the long term. The cost depends on many choices that will be considered. The bottom line assumption is that the cost of an outside management company will fit our budget, but no one has any hard and fast numbers at this time.
• Cost/Benefit Determination is required to make the best decision.
Some of the issues around moving forward with a management company involve:
• The cost.
• The long-time employees who currently work for the ECA.
The Board voted 4 to 3 to move ahead with discussion with an outside management company, and voted for discussions to be held with Legum and Norman. How this will play out is yet to be determined.
Some of the things I believe we need to keep in mind:
• As all property owners know, you must continually invest in your property to maintain and enhance its value as well as keep ahead of repairs, assure proper preventive maintenance, and make the necessary improvements. Failure to continually invest in, maintain, and improve the property will result in erosion of property value.
• Key personnel on our current staff represent valuable institutional knowledge and, despite the problems, the Board appreciates what the current staff has been able to contribute. The Board is considering all options: full self-management, full professional property management, and a hybrid of both.
• The business of running an enterprise like the Elizabeth Condominium has come a long way. We need to move into the 21st Century with our management approach. There is no reason why we should allow our communal home to fall into disrepair.
• In this time of economic downturn, we need to be mindful that property investment requires money for maintenance and upkeep. It’s that old adage about penny-wise and pound-foolish. We need to make sure we spend what’s necessary without going overboard so that our investment will increase in value -- not decrease in value because we did not properly maintain and improve it.
Constructive comments are welcomed.
Tuesday, January 20, 2009
Watching the Inauguration of Barack Obama
An enthusiastic crowd of Elizabethans gathered on January 20, 2009, some coming as early as the decoration committee to watch our big screen television to see the events leading up to the inauguration of Barack Obama, our 44th president of the United States. Here is the photo gallery. Kudos to our tireless social committee for their good work!!
After the swearing in of Barack Obama and the delivery of his speech, poet Elizabeth Alexander (in red) presented a poem written for the occasion of this inauguration!