PRESENT at the meeting: Alexandra Kielty, Judi Barth, Charles Bressler, Molly Frantz, Monique Fridell, Al Muller, Jason Fisher, Scott Murdoch, Jim Santos, and recorder of meeting minutes.
PROOF OF NOTICE OF MEETING was read to all members by the secretary, following establishment of a quorum with 51% of members present in person or by proxy.
READING OF MINUTES OF THE LAST ANNUAL MEETING, May 5, 2010, was waived.
PRESIDENT’S REPORT: The following accomplishments by ECA were listed as having been accomplished:
1. Refurbishment of the lobby level by the Hartman Design was completed for $1million.369,547, under the $1.5 million budgeted. This includes improvements to infrastructure, lobby, party room, bathrooms, residential hallway, with replacement of windows and doors by HBW Engineering.
2. Installation of a new emergency generator costing $520,000 was completed despite numerous challenges.
3. An engineering assessment was done by Mendoza Associates with further evaluation needed. This long-term project will continue into 2012, with further evaluation of needs for heat, AC, and McQuay units. The McQuay unit improvements are limited by the individual ownership of the units.
4. A key fob system has been implemented, and new security and video cameras purchased to allow better security for residents and visitors.
5. A new landscape contract with Ruppert Landscaping has been signed, for long-term design, with phase one to be initiated this Spring. There will be an irrigation system implemented.
6. Improvements to the fitness center are planned to begin soon.
7. PERSONNEL: Mr. James Santos joined us June 2, 2010, from Legum & Norman as General Manager; Ms. Wanda Powell began November 1, 2010, as his assistant.
8. Long-term employees (35 years or over) were recognized and praised; Cynthia Edwards, Hollis Alleyne, and Jimmy Keating.
9. Financial state: a fiscal year reduction of 3% of the overall budget after a two year prior reduction.
10. On 4/27, the Board of Directors voted 5-2 for a 10% increase in condo fees for the coming year, noting that the ECA has never had a special assessment, and the Board did not think one could be done
11. Professional management by Legum & Norman was praised.
TREASURER’S REPORT:” Financially sound but more fragile”
Delinquencies below the limit set by the FHA. Over 50% of units owner occupied, rentals at 22%, No single owner of ECA holdings exceeds 10%. The Eiizabeth thus has an FHA seal of approval.
FINANCIAL CHALLENGES:
1. Management of the 5-year plan, with eye to increased spending from the reserves. Spending jumps to $1.5 million each year given the big projects.
2. Need to execute energy saving projects to reduce utility costs.
3. Continued oversight of Legum & Norman financial management.
4. Improve residents’ services, house rules.
5. Improve Board communications
6. Consider revising by-laws
RECOGNITION:
Outgoing Board members recognized, and received appropriate gifs.
COMMENTS FROM THE FLOOR:
Pam Dillon: Budget is null & void because it was not sent out 30 days in advance. Legal Counsel Jason Fisher refuted Ms. Dillon’s claim.
Maurice Trebach: Wanted to be on the record that windows & balcony doors need to be replaced and this was noted in the $25,000 engineering study performed by Mendoza-Ribas.
ELECTION
The following were elected to the Board: Charles Bressler, Dr. Jimmy Cockburn, Ilo-Mai Harding.
The new officers are:
President: Charles Bressler
Vice-President: Seth Levine
Treasurer: Molly Frantz
Secretary: Ilo-Mai Harding
Director: Judi Barth
Director: Dr. Jimmy Cockburn
Director: Dr. Al Muller
Thursday, May 5, 2011
2010 Annual Meeting Minutes
THE ELIZABETH CONDOMINIUM ASSOCIATION
4601 North Park Avenue
Chevy Chase, MD 20815
Minutes of Annual Meeting May 5, 2010
Board Present:
Woody Cunningham ....................President
Alexandria Kielty .........................Vice President
Monique Fridell ...........................Treasurer
Judith Barth ................................Secretary
Jeffrey Axelrad.............................Assistant Treasurer
Charles Bressler ...........................Director
Dr. Alfred Muller .........................Director
Others Present:
Scott Murdoch ...............Community Manager, Legum & Norman
Michael Horan ..............Property Manager
Jason Fisher .................Counsel
Patti Dubuque ...............Executive Vice President, Legum & Norman
Jana Bowcut .................Recording Secretary, On the Record
Call to Order: Mr. Cunningham called the meeting to order at 7:39 p.m. He stated that the main purpose of the meeting is to elect four new members to the Board. Prior to this meeting, the Board held a special meeting on the 2011 budget and voted for a five percent increase in condominium fees, most of which would be used to build the reserve fund. The budget was approved by the Board.
Proof of Notice of Meeting to all members: Mr. Axelrad read the Proof of Notice of Meeting, dated April 21, 2010, which was sent to all residents.
Approval of prior Annual Meeting Minutes:
MOTION Mr. Bressler moved, Ms. Barth seconded, to accept the minutes of the May 6, 2009, Annual Meeting minutes. The motion passed unanimously by acclamation.
Presentation of Certificate to Retiring Board Member:
Dr. Muller made the following comments in honor of outgoing Board President, Mr. Cunningham:
Your Board has asked me to say a few words, on their behalf, about a very special person who is retiring after many years of service to The Elizabeth.
As you all know, every Board faces a number of challenges and works very hard to solve them. For the last few years the Board has had some unique challenges, all at the same time: questions about management, refurbishment, and reserve funds, to name just a few.
In addition to these challenging issues, every Board President also faces the challenge of finding consensus among seven hard-working volunteers, who often have differing strong opinions, sincerely held and sometimes expressed in strong terms. It was once said that getting the Board to reach a decision is a little like “herding a group of cats.”
In the last few years our President, Dr. Woody Cunningham, has faced this daunting task with patience and dedication. By a combination of professional hard work, self-effacing modesty and good humor, he has prodded, pleaded and persuaded this “herd of cats” to make decisions during a difficult, but inevitable, time of transition at The Elizabeth.
By way of recognition, we would like, therefore, to present him with a small token of our appreciation, our respect, and our affection for all that he has done, and, hopefully, will continue to do in the future when we seek his wise counsel. Our Vice President, Alexandra Kielty presented the outgoing President with a Tiffany sterling silver magnifying glass.
President’s Report:
Mr. Cunningham’s report was distributed to all residents at the meeting and is attached to this report (Attachment #1). He stated that major issues confronting the Association will be: installation of the emergency generator, initiation of the construction/refurbishment, and some smaller projects such as the installation of backflow prevention valves for the water system.
Treasurer’s Report:
Ms. Fridell’s report is attached to this report (Attachment #2).
Committee Reports:
Refurbishment Committee: Ms. Barth reported on the renovation project, in that the budget was met and everything on the first floor will be renovated, except for the fitness room. HBW was selected as the general contractor and work will begin on June 2, 2010. The contractors are committed to meeting the deadline, and anticipate four to five months for completion. The renovation committee and advisory committee have arranged for a live auction on May 16, 2010, from 2-4 p.m. A preview of the items to be auctioned will be held on Saturday, May 15, 2010, from 3-5 p.m.
Social committee: Ms. Barth reported that the committee held a number of successful events over the past year: a community brunch, Halloween party, Christmas party and wine and cheese reception. The committee hopes to add additional events, such as a barbecue this summer.
Mr. Cunningham provided a brief overview about the activities of several other committees. The election committee made the recommendation, which was approved by the Board, to use the electronic balloting process. The engineering committee identified three possible consulting engineer groups, which the Board interviewed and then selected Mr. Mendoza’s Company. An ad hoc pet policy committee recommended new pet policies, some of which were approved by the Board. A physical fitness committee evaluated the types of exercise equipment needed and made an evaluation about the use of space in the fitness room.
Comments from the Floor:
A co-chair of the floor representatives committee thanked all of the floor representatives for their work over the past year. The next meeting will be held on Thursday, May 13, 2010, at 7:15 p.m. in the party room. Dr. Muller added that the Board had previously discussed giving a reception of thanks to this committee and hopes that the new board will carry this out.
A resident inquired about when the broken exercise equipment in the fitness room will be repaired. Ms. Kielty stated that she learned about these problems only recently and will obtain more information before the next board meeting regarding the status. She added that the exercise committee will present recommendations to owners for replacing some of the equipment within the next month.
Concerns were expressed about how long it took to establish quorum at the meeting. A resident attributed the delay to confusion among residents about how to hand-in proxies. Also, signs about the meeting were not posted in elevators the week before, Mr. Murdoch apologized for the delay and stated that it was due to each proxy being hand-reviewed by the three judges.
Nomination of Election Inspectors:
Mr. Cunningham proposed the following residents as election inspectors: Ray Quarterman, Jerry Feldman and Jim Vuko.
(R) A motion was made, and seconded, to accept the proposed election inspectors. The motion passed by acclamation.
Explanation of Ballot:
Mr. Murdoch explained that there were six candidates for four vacancies. Each term is for two years. He instructed residents to check the name of the person they would like to serve, voting for no more than four candidates. The new board member candidates were: Judi Barth, Alfred Muller, Seth Levine, Molly Frantz, James Jones and Hongbin Liu.
Adjournment:
The President adjourned the meeting at 9:45 p.m.
The initial draft of the minutes, upon which these minutes are based, was prepared by Jana Bowcut of On the Record.
Respectfully submitted,
Charles Bressler
Charles Bressler, Board Secretary
DATE APPROVED: ______________________________________________________
ATTESTED BY: _________________________________________________________
(Name) (Title)
(R) Resolution/Motion (A) Action
Attachment #1:
PRESIDENT’S REPORT
ELIZABETH CONDOMINIUM ASSOCIATION ANNUAL MEETING MAY 5, 2010
This report provides a summary and highlights of the many activities taken by the Board on your behalf between May 3, 2009 and today. More detailed information is available in the minutes of the numerous meetings held by the Board. Since July 1, 2009, the Board has had 11 regular open meetings and several open workshops.
TRANSITION TO PROFESSIONAL MANAGEMENT
We are beginning to see positive results from our move to professional management by Legum and Norman. Operating costs are down significantly below our approved budget for fiscal year 2010 by more than $70,000 and we expect less than a 2% increase in operating costs tor fiscal year 2011. As discussed below, we do expect major expenditures from the reserve fund for large projects during the next five years. Here again, though, we have seen significant benefits from L&N participation. They have a disciplined approach that requires multiple bids, a detailed analysis of the responses and a recommendation to the Board for vendor selection.
The transition from self-management to professional management has not been as smooth or speedy as we would have liked and we expect to see additional changes in the next year. The Board approved a contract renewal with L&N for fiscal year 2011 on April 19, 2010. Contract terms remain the same which includes an increase in the management fee by “an amount not to exceed the increase in the CPI (U) for the Washington Metropolitan area for the preceding twelve (12) month period plus one and one half percent (1.5%).”
MAJOR PROJECTS
This fiscal year, we have been involved in three major projects requiring significant expenditures from our reserve fund. We have completed most of the design work for the refurbishment and we expect actual construction in the lobby to begin in June. We have contracted with the HBW Company to do the Lobby and first floor construction work for $641,000, which includes work required on the Party room and the rest rooms. It also includes Lobby door replacements even though that cost will be allocated to a new fob or Keyless entry system. Bids are being received for that system and the new Board will select that contractor. We expect the cost of the First floor and Lobby renovations, including the costs of furnishings to remain well within our budget of $1.2 million. The emergency generator has been delivered, a contractor has been selected for installation, and the design has been submitted for county approval. We expect the installation to be completed this fiscal year. We initiated and completed a project to replace all horizontal piping in the lobby area including the necessity for an asbestos abatement to remove insulation and sealant. Total expenditures in FY2010 from the reserve fund are expected to be on the order of $1.1 million.
SMALLER PROJECTS
We have continued an excellent maintenance and engineering effort by our own staff and in addition we have completed a number of projects to enhance safety, security, and structural integrity. The lighting in the garage and other common areas has been replaced with lower wattage, higher efficiency lights that not only make those areas brighter, but also will reduce our electricity use significantly. Façade work on the East tower has been completed. The security camera system has been updated. Bids are being evaluated for water system backflow preventers.
FINANCIAL MANAGEMENT
The treasurer will report on the Elizabeth finances, but I do want to say that our financial health is good and the Board has worked hard to keep it that way for the future. As mentioned in my budget letter, the Elizabeth operating budget is well under control and we expect to maintain expenditures very close to the same in the next Fiscal Year. Our reserve funds are essentially managed by our treasurer, Monique Fridell, who is to be commended for her excellent efforts on our behalf. The Board has set a policy that calls for a minimum balance of $1 million in the reserve and the ability to borrow a million dollars in the event of a major catastrophe. The Board has just approved a new budget with almost all of the increase going to assure an adequate reserve fund without asking for any special assessments.
COMMITTEES
Various committees have been active this year and have provided valuable advice and recommendations to the Board. To highlight some of the results, the Board has made changes in the pet policies, adopted the electronic balloting process we are using tonight, made major energy conservation efforts, selected an engineering firm for assessments, developed a plan for improving the fitness facilities, expanded our social activities, and improved our security.
ENGINEERING ASSESSMENTS
We are currently conducting an engineering assessment that is evaluating our mechanical systems (boilers, chillers, pumps, fans, etc. including our heating, ventilation and air conditioning systems). The study also is evaluating structural integrity of the building including windows. The results are expected to include recommendations for saving energy and replacing aging equipment with new high efficiency equipment. As an example, the study has already shown that our old exhaust systems are continually causing large energy losses that can be corrected with new equipment. The study will be completed in a few weeks and will be used to update our current five-year plan.
UTILITIES
Utility costs remain high and represent almost one third of our operating budget. However, the weather, our conservation efforts, and lower gas prices will permit us to stay under the budget for this year.
PERSONNEL
Our continuing and loyal personnel have worked extremely well during the transition to L&N management. They also took the initiative during the winter storms to assure our safety and security by volunteering to work long hours. We have moved for the first time to a merit-based performance evaluation system and salary increases are in effect as of May 1, 2010. We have some necessary changes in the front desk operation and expect to see more improvements there.
BUILDING INSURANCE
With the help of our insurance agent, John Manougian, and the L&N Community Manager, we have been able to negotiate a new contract for building insurance that will reduce our costs by at least $35,000.
George W. Cunningham
President
Attachment #2:
TREASURER’S REPORT
Our financial condition as we finish FY 2010 is generally sound, although not without challenges. Sound means basically that ECA does not have most of the issues that are negatively affecting the condo association universe at this time.
• Delinquencies < 2%, far below the 15% limit for lenders, although our delinquencies have doubled this FY in absolute $ amounts • No history of assessments • Adequate operating budget and on track to come in below budget for the year • No debt • No foreclosures • Rentals = 82/353 or 23% of total units, maximum of 30% rentals • No single entity over 10% ownership, highest ECA = 0.9% • Commercial use < 20%, ECA = 3.5% The financial factors I cited above are the basic underwriting metrics that mortgage lenders look to and which is the bottom-line factor in the market value of our properties – i.e., if buyers cannot finance their purchases of ECA condos, there is effectively no market for our condos, and our property value suffers. FY 2010 Year to Date (YTD) Results
Over the past year, we have shifted most of our cash portfolio to Morgan Stanley Investment A/C from individual bank CDs, as directed by the Board. As of 4/30 (unaudited/unreported by L&N yet) we had approximately $ 2.3 MM in cash and investments. We have $500K in operating fund cash, which we have been accumulating over the last two years as part of our strategy to build approximately three months of operating expenses in operating savings. Our reserves currently stand at approximately $2.1 million in reserves. This FY we will have transferred approximately $700K to reserves, and expect to spend approximately $1.0 MM, principally on the refurbishment project, the lobby horizontal piping and payments on the emergency generator.
We had a significant increase in condo fees last year, based on the recommendation of the Reserve Study and the Board distributed a budget which reflected another material increase this year. I would like to stress that we are proposing to hold operating expenses flat and that whatever increase we agree upon tonight will be entirely dedicated to boosting our reserves. We have all received your comments, letters and your wrath, and many of you have shared your views on what increase you believe is “enough.” Frankly I think it is very difficult even for the Board to judge what number is “enough” without extensive financial analysis, a long-range Reserve Study and supporting engineering analysis (which we are currently commissioning) to project what our future reserve expenditures may be.
This is probably the most difficult decision that a condo Board has to make, and I would like to explain to everyone why there are financial risks no matter what number we decide upon. The condo fee increase is linked to the amount we save in our reserves every year. The only way to increase the reserve contribution without increasing condo fees is to cut operating expenses, which is something many condos have been forced to do, but which this Board to date has not been willing to undertake. If we keep the fees low, the short term marketability of our homes is boosted by competitive condo fees vis-Ã -vis our peers. However, this could lead to not putting enough in reserves, which might leave us of short of money to take proper care of the building, and ultimately our market values will fall. If we have sustained high fee increases as we had last year, we could make our homes uncompetitive due to high condo fees and we risk increasing delinquencies, as ours did in this last year. On the other hand, we would have more money to put into our reserves and into preserving the value of our homes and building. This is a very simplified explanation, but I hope it will help everyone understand that the decisions of the condo fee increase and the corresponding amount to contribute to reserves are a matter of individual judgment and risk tolerance, and there are no “right” answers.
I see the following issues as challenges for FY 2010 for the next Board:
• Execute the lobby phase of refurbishment project on time and within budget and begin hallway phase of the project.
• Execute energy savings projects, based on the recommendations of the Energy Conservation Committee and the consulting firm that we have hired and in accordance with the decision-making process that the Board has publicly described, in order to control utility costs which are 1/3 of our operating budget.
• Continue to manage the transition to L&N management, improve resident services, consistency in front desk professionalism and customer service, accuracy of financial reporting, management organization and discipline, house rules enforcement.
• Treat Reserve expenditures as a scarce and precious resource to be used extremely judiciously. The low interest rate environment is not allowing us to invest at decent interest rates. Our weighted average interest rate is below 2.5-3% long-term inflation rate. As long as we are investing below inflation, our reserves are losing value in real economic terms.
• Increase owner participation in governance and Board projects through committees.
• Improve Board/owner communication both in terms of explaining our decision-making and processes more clearly as well as providing more up to date communication tools such as a web site.
Monique Fridell
Treasurer
4601 North Park Avenue
Chevy Chase, MD 20815
Minutes of Annual Meeting May 5, 2010
Board Present:
Woody Cunningham ....................President
Alexandria Kielty .........................Vice President
Monique Fridell ...........................Treasurer
Judith Barth ................................Secretary
Jeffrey Axelrad.............................Assistant Treasurer
Charles Bressler ...........................Director
Dr. Alfred Muller .........................Director
Others Present:
Scott Murdoch ...............Community Manager, Legum & Norman
Michael Horan ..............Property Manager
Jason Fisher .................Counsel
Patti Dubuque ...............Executive Vice President, Legum & Norman
Jana Bowcut .................Recording Secretary, On the Record
Call to Order: Mr. Cunningham called the meeting to order at 7:39 p.m. He stated that the main purpose of the meeting is to elect four new members to the Board. Prior to this meeting, the Board held a special meeting on the 2011 budget and voted for a five percent increase in condominium fees, most of which would be used to build the reserve fund. The budget was approved by the Board.
Proof of Notice of Meeting to all members: Mr. Axelrad read the Proof of Notice of Meeting, dated April 21, 2010, which was sent to all residents.
Approval of prior Annual Meeting Minutes:
MOTION Mr. Bressler moved, Ms. Barth seconded, to accept the minutes of the May 6, 2009, Annual Meeting minutes. The motion passed unanimously by acclamation.
Presentation of Certificate to Retiring Board Member:
Dr. Muller made the following comments in honor of outgoing Board President, Mr. Cunningham:
Your Board has asked me to say a few words, on their behalf, about a very special person who is retiring after many years of service to The Elizabeth.
As you all know, every Board faces a number of challenges and works very hard to solve them. For the last few years the Board has had some unique challenges, all at the same time: questions about management, refurbishment, and reserve funds, to name just a few.
In addition to these challenging issues, every Board President also faces the challenge of finding consensus among seven hard-working volunteers, who often have differing strong opinions, sincerely held and sometimes expressed in strong terms. It was once said that getting the Board to reach a decision is a little like “herding a group of cats.”
In the last few years our President, Dr. Woody Cunningham, has faced this daunting task with patience and dedication. By a combination of professional hard work, self-effacing modesty and good humor, he has prodded, pleaded and persuaded this “herd of cats” to make decisions during a difficult, but inevitable, time of transition at The Elizabeth.
By way of recognition, we would like, therefore, to present him with a small token of our appreciation, our respect, and our affection for all that he has done, and, hopefully, will continue to do in the future when we seek his wise counsel. Our Vice President, Alexandra Kielty presented the outgoing President with a Tiffany sterling silver magnifying glass.
President’s Report:
Mr. Cunningham’s report was distributed to all residents at the meeting and is attached to this report (Attachment #1). He stated that major issues confronting the Association will be: installation of the emergency generator, initiation of the construction/refurbishment, and some smaller projects such as the installation of backflow prevention valves for the water system.
Treasurer’s Report:
Ms. Fridell’s report is attached to this report (Attachment #2).
Committee Reports:
Refurbishment Committee: Ms. Barth reported on the renovation project, in that the budget was met and everything on the first floor will be renovated, except for the fitness room. HBW was selected as the general contractor and work will begin on June 2, 2010. The contractors are committed to meeting the deadline, and anticipate four to five months for completion. The renovation committee and advisory committee have arranged for a live auction on May 16, 2010, from 2-4 p.m. A preview of the items to be auctioned will be held on Saturday, May 15, 2010, from 3-5 p.m.
Social committee: Ms. Barth reported that the committee held a number of successful events over the past year: a community brunch, Halloween party, Christmas party and wine and cheese reception. The committee hopes to add additional events, such as a barbecue this summer.
Mr. Cunningham provided a brief overview about the activities of several other committees. The election committee made the recommendation, which was approved by the Board, to use the electronic balloting process. The engineering committee identified three possible consulting engineer groups, which the Board interviewed and then selected Mr. Mendoza’s Company. An ad hoc pet policy committee recommended new pet policies, some of which were approved by the Board. A physical fitness committee evaluated the types of exercise equipment needed and made an evaluation about the use of space in the fitness room.
Comments from the Floor:
A co-chair of the floor representatives committee thanked all of the floor representatives for their work over the past year. The next meeting will be held on Thursday, May 13, 2010, at 7:15 p.m. in the party room. Dr. Muller added that the Board had previously discussed giving a reception of thanks to this committee and hopes that the new board will carry this out.
A resident inquired about when the broken exercise equipment in the fitness room will be repaired. Ms. Kielty stated that she learned about these problems only recently and will obtain more information before the next board meeting regarding the status. She added that the exercise committee will present recommendations to owners for replacing some of the equipment within the next month.
Concerns were expressed about how long it took to establish quorum at the meeting. A resident attributed the delay to confusion among residents about how to hand-in proxies. Also, signs about the meeting were not posted in elevators the week before, Mr. Murdoch apologized for the delay and stated that it was due to each proxy being hand-reviewed by the three judges.
Nomination of Election Inspectors:
Mr. Cunningham proposed the following residents as election inspectors: Ray Quarterman, Jerry Feldman and Jim Vuko.
(R) A motion was made, and seconded, to accept the proposed election inspectors. The motion passed by acclamation.
Explanation of Ballot:
Mr. Murdoch explained that there were six candidates for four vacancies. Each term is for two years. He instructed residents to check the name of the person they would like to serve, voting for no more than four candidates. The new board member candidates were: Judi Barth, Alfred Muller, Seth Levine, Molly Frantz, James Jones and Hongbin Liu.
Adjournment:
The President adjourned the meeting at 9:45 p.m.
The initial draft of the minutes, upon which these minutes are based, was prepared by Jana Bowcut of On the Record.
Respectfully submitted,
Charles Bressler
Charles Bressler, Board Secretary
DATE APPROVED: ______________________________________________________
ATTESTED BY: _________________________________________________________
(Name) (Title)
(R) Resolution/Motion (A) Action
Attachment #1:
PRESIDENT’S REPORT
ELIZABETH CONDOMINIUM ASSOCIATION ANNUAL MEETING MAY 5, 2010
This report provides a summary and highlights of the many activities taken by the Board on your behalf between May 3, 2009 and today. More detailed information is available in the minutes of the numerous meetings held by the Board. Since July 1, 2009, the Board has had 11 regular open meetings and several open workshops.
TRANSITION TO PROFESSIONAL MANAGEMENT
We are beginning to see positive results from our move to professional management by Legum and Norman. Operating costs are down significantly below our approved budget for fiscal year 2010 by more than $70,000 and we expect less than a 2% increase in operating costs tor fiscal year 2011. As discussed below, we do expect major expenditures from the reserve fund for large projects during the next five years. Here again, though, we have seen significant benefits from L&N participation. They have a disciplined approach that requires multiple bids, a detailed analysis of the responses and a recommendation to the Board for vendor selection.
The transition from self-management to professional management has not been as smooth or speedy as we would have liked and we expect to see additional changes in the next year. The Board approved a contract renewal with L&N for fiscal year 2011 on April 19, 2010. Contract terms remain the same which includes an increase in the management fee by “an amount not to exceed the increase in the CPI (U) for the Washington Metropolitan area for the preceding twelve (12) month period plus one and one half percent (1.5%).”
MAJOR PROJECTS
This fiscal year, we have been involved in three major projects requiring significant expenditures from our reserve fund. We have completed most of the design work for the refurbishment and we expect actual construction in the lobby to begin in June. We have contracted with the HBW Company to do the Lobby and first floor construction work for $641,000, which includes work required on the Party room and the rest rooms. It also includes Lobby door replacements even though that cost will be allocated to a new fob or Keyless entry system. Bids are being received for that system and the new Board will select that contractor. We expect the cost of the First floor and Lobby renovations, including the costs of furnishings to remain well within our budget of $1.2 million. The emergency generator has been delivered, a contractor has been selected for installation, and the design has been submitted for county approval. We expect the installation to be completed this fiscal year. We initiated and completed a project to replace all horizontal piping in the lobby area including the necessity for an asbestos abatement to remove insulation and sealant. Total expenditures in FY2010 from the reserve fund are expected to be on the order of $1.1 million.
SMALLER PROJECTS
We have continued an excellent maintenance and engineering effort by our own staff and in addition we have completed a number of projects to enhance safety, security, and structural integrity. The lighting in the garage and other common areas has been replaced with lower wattage, higher efficiency lights that not only make those areas brighter, but also will reduce our electricity use significantly. Façade work on the East tower has been completed. The security camera system has been updated. Bids are being evaluated for water system backflow preventers.
FINANCIAL MANAGEMENT
The treasurer will report on the Elizabeth finances, but I do want to say that our financial health is good and the Board has worked hard to keep it that way for the future. As mentioned in my budget letter, the Elizabeth operating budget is well under control and we expect to maintain expenditures very close to the same in the next Fiscal Year. Our reserve funds are essentially managed by our treasurer, Monique Fridell, who is to be commended for her excellent efforts on our behalf. The Board has set a policy that calls for a minimum balance of $1 million in the reserve and the ability to borrow a million dollars in the event of a major catastrophe. The Board has just approved a new budget with almost all of the increase going to assure an adequate reserve fund without asking for any special assessments.
COMMITTEES
Various committees have been active this year and have provided valuable advice and recommendations to the Board. To highlight some of the results, the Board has made changes in the pet policies, adopted the electronic balloting process we are using tonight, made major energy conservation efforts, selected an engineering firm for assessments, developed a plan for improving the fitness facilities, expanded our social activities, and improved our security.
ENGINEERING ASSESSMENTS
We are currently conducting an engineering assessment that is evaluating our mechanical systems (boilers, chillers, pumps, fans, etc. including our heating, ventilation and air conditioning systems). The study also is evaluating structural integrity of the building including windows. The results are expected to include recommendations for saving energy and replacing aging equipment with new high efficiency equipment. As an example, the study has already shown that our old exhaust systems are continually causing large energy losses that can be corrected with new equipment. The study will be completed in a few weeks and will be used to update our current five-year plan.
UTILITIES
Utility costs remain high and represent almost one third of our operating budget. However, the weather, our conservation efforts, and lower gas prices will permit us to stay under the budget for this year.
PERSONNEL
Our continuing and loyal personnel have worked extremely well during the transition to L&N management. They also took the initiative during the winter storms to assure our safety and security by volunteering to work long hours. We have moved for the first time to a merit-based performance evaluation system and salary increases are in effect as of May 1, 2010. We have some necessary changes in the front desk operation and expect to see more improvements there.
BUILDING INSURANCE
With the help of our insurance agent, John Manougian, and the L&N Community Manager, we have been able to negotiate a new contract for building insurance that will reduce our costs by at least $35,000.
George W. Cunningham
President
Attachment #2:
TREASURER’S REPORT
Our financial condition as we finish FY 2010 is generally sound, although not without challenges. Sound means basically that ECA does not have most of the issues that are negatively affecting the condo association universe at this time.
• Delinquencies < 2%, far below the 15% limit for lenders, although our delinquencies have doubled this FY in absolute $ amounts • No history of assessments • Adequate operating budget and on track to come in below budget for the year • No debt • No foreclosures • Rentals = 82/353 or 23% of total units, maximum of 30% rentals • No single entity over 10% ownership, highest ECA = 0.9% • Commercial use < 20%, ECA = 3.5% The financial factors I cited above are the basic underwriting metrics that mortgage lenders look to and which is the bottom-line factor in the market value of our properties – i.e., if buyers cannot finance their purchases of ECA condos, there is effectively no market for our condos, and our property value suffers. FY 2010 Year to Date (YTD) Results
Over the past year, we have shifted most of our cash portfolio to Morgan Stanley Investment A/C from individual bank CDs, as directed by the Board. As of 4/30 (unaudited/unreported by L&N yet) we had approximately $ 2.3 MM in cash and investments. We have $500K in operating fund cash, which we have been accumulating over the last two years as part of our strategy to build approximately three months of operating expenses in operating savings. Our reserves currently stand at approximately $2.1 million in reserves. This FY we will have transferred approximately $700K to reserves, and expect to spend approximately $1.0 MM, principally on the refurbishment project, the lobby horizontal piping and payments on the emergency generator.
We had a significant increase in condo fees last year, based on the recommendation of the Reserve Study and the Board distributed a budget which reflected another material increase this year. I would like to stress that we are proposing to hold operating expenses flat and that whatever increase we agree upon tonight will be entirely dedicated to boosting our reserves. We have all received your comments, letters and your wrath, and many of you have shared your views on what increase you believe is “enough.” Frankly I think it is very difficult even for the Board to judge what number is “enough” without extensive financial analysis, a long-range Reserve Study and supporting engineering analysis (which we are currently commissioning) to project what our future reserve expenditures may be.
This is probably the most difficult decision that a condo Board has to make, and I would like to explain to everyone why there are financial risks no matter what number we decide upon. The condo fee increase is linked to the amount we save in our reserves every year. The only way to increase the reserve contribution without increasing condo fees is to cut operating expenses, which is something many condos have been forced to do, but which this Board to date has not been willing to undertake. If we keep the fees low, the short term marketability of our homes is boosted by competitive condo fees vis-Ã -vis our peers. However, this could lead to not putting enough in reserves, which might leave us of short of money to take proper care of the building, and ultimately our market values will fall. If we have sustained high fee increases as we had last year, we could make our homes uncompetitive due to high condo fees and we risk increasing delinquencies, as ours did in this last year. On the other hand, we would have more money to put into our reserves and into preserving the value of our homes and building. This is a very simplified explanation, but I hope it will help everyone understand that the decisions of the condo fee increase and the corresponding amount to contribute to reserves are a matter of individual judgment and risk tolerance, and there are no “right” answers.
I see the following issues as challenges for FY 2010 for the next Board:
• Execute the lobby phase of refurbishment project on time and within budget and begin hallway phase of the project.
• Execute energy savings projects, based on the recommendations of the Energy Conservation Committee and the consulting firm that we have hired and in accordance with the decision-making process that the Board has publicly described, in order to control utility costs which are 1/3 of our operating budget.
• Continue to manage the transition to L&N management, improve resident services, consistency in front desk professionalism and customer service, accuracy of financial reporting, management organization and discipline, house rules enforcement.
• Treat Reserve expenditures as a scarce and precious resource to be used extremely judiciously. The low interest rate environment is not allowing us to invest at decent interest rates. Our weighted average interest rate is below 2.5-3% long-term inflation rate. As long as we are investing below inflation, our reserves are losing value in real economic terms.
• Increase owner participation in governance and Board projects through committees.
• Improve Board/owner communication both in terms of explaining our decision-making and processes more clearly as well as providing more up to date communication tools such as a web site.
Monique Fridell
Treasurer
Thursday, April 28, 2011
Summary of ECA Meeting April 27, 2011
Present at the meeting: Alexandra Kielty, Judi Barth, Charles Bressler, Molly Frantz, Monique Fridell, Seth Levine, Alfred Muller, Scott Murdoch, and Jim Santos.
This meeting had two parts:
--Discussion of the recent survey of ECA members
--Discussion/Decision about 2011-2012 condo fees: Board has set a 10% condo fee increase.
Discussion of the recent survey of ECA members
Monique Fridell presented preliminary results on the “ECA Reserve Expenditure Survey.” Her discussion was based on 164 responses although more surveys came in after the initial 164.
(SURVEY ANALYSIS METHODOLOGY: All surveys are available for inspection in the Management Office and the total count is about 178. 400 were sent out including all 353 unit owners, commercial owners, and park space only owners. Ms. Fridell randomly selected 17 responses, about 10% of her base, to audit accuracy of raw data tabulation and found 100% accuracy in this 10% sample. However, she cautioned that her calculation had not been validated. The Management Staff did the tabulation. The bottom line is that analysis is incomplete because it was done in a hurry.)
BACKGROUND:
--Board has considered the following major projects to be paid for from reserve fund: hallway renovation, window/balcony door replacement, and heating/cooling infrastructure refurbishment.
--How to prioritize these projects affects Five Year Plan.
--Determination of condo fee increase based on Five Year Plan.
--Condo fee increases can only be decided one year at a time.
--Survey developed to get ECA members feedback on these funding issues before the 4/27/11 meeting.
ANALYSIS (as developed and presented by Ms. Fridell)
--164 responses, 36% of 353 units, 51% were 2 bedroom owners.
--80% of respondents were resident owners.
--49% of respondents attend Board meeting occasionally.
--65% of respondents receive info about ECA through friends/neighbors (Although this percentage does not mean that is the exclusive method for how respondents get their ECA info and this is a corrected number, not the percent Ms. Fridell presented).
--58.4% are worried to some degree about ECA finances.
--38% would vote for a special assessment to fund one or more projects.
--55% would vote to change By-laws to make ECA responsible for replacement cost of McQuay HVAC units.
--46% would postpone major project execution for one year.
PROJECT RANKING (summary, see the chart in handouts passed out last evening and now available at Management Office)
--First priority: Windows/Doors Replacement (based on 154 votes with 56 surveys indicating that Windows/Doors Replacement was the respondents first priority.)
--Second, Third, Fourth priority: Heating Cooling replacement (39-35 responses indicated that respondents wanted heating/cooling & McQuay unit refurb/replacement their priority.)
--Fifth priority: complete refurbishment of hallways including replacement of hallway doors, etc. (35 respondents)
One thing to note is that the results of this survey question was hard to gauge because it was an awkwardly stated question. Not everyone filled out this question and because some of the projects were divided up (i.e. hallways had two categories: partial & complete; heating/cooling also had two categories HVAC and McQuay Units. Because McQuay Units are supposed to be the financial responsibility of the unit owner, this was confusing.)
Discussion/Decision about 2011-2012 condo fees
Mr. Bressler proposed that the condo fee be increased 10% starting in July. Despite the Board having based their Five Year Plan for 2011-2012 on a 5% increase, most of the Board voted a 10% increase. (Mr. Bressler made the motion to approve a 10% condo fee increase and this was approved by: Judi Barth, Charles Bressler, Molly Frantz, Alexandra Kielty, and Seth Levine. Voting against the motion was Monique Fridell and Alfred Muller.)
Dr. Muller made an argument for the 5% increase which would involve moving some projects like replacement of various canopies ($300,000) and possible County-imposed metering project (totaling $200,000) further out in time. Monique Fridell argued for a 5% condo fee increase with an approximate $2,000 special assessment. Either of these plans would have been adequate to address windows/door replacement, hallway refurb and a start on heating/cooling refurb.
The other five Board directors said they wanted more money in the reserves to cover unexpected costs. Dr. Muller pointed out that we have a $400,000 contingency fund and a line of credit for emergencies. In his plan, which addressed all the projects mentioned, the reserve fund would not dip at end of year below 800,000. (If I understand this correctly.)
Directors supporting the 10% increase said that bankers giving mortgages would not penalize buyers over the ECA voting this 10% increase. (Note: I checked into this issue with one banking agent I used to refinance my apartment a couple of years ago and learned that bankers are more concerned with condo debt and losses, including the delinquency rate and the percent of renters in the building than they are with this percent of increase. The red flag would definitely go down if the percent increase were 30%.)
What is problematic about the 10% increase is that many ECA members are on fixed incomes (but this figure is unknown since that was not part of the survey data) and that 46% of the survey respondents (close to half of the respondents) voted to postpone major project execution for one year, despite the fact that Dr. Muller’s suggested plan for a 5% increase would still be able to address a systematic execution of major projects over the next five years.
This meeting had two parts:
--Discussion of the recent survey of ECA members
--Discussion/Decision about 2011-2012 condo fees: Board has set a 10% condo fee increase.
Discussion of the recent survey of ECA members
Monique Fridell presented preliminary results on the “ECA Reserve Expenditure Survey.” Her discussion was based on 164 responses although more surveys came in after the initial 164.
(SURVEY ANALYSIS METHODOLOGY: All surveys are available for inspection in the Management Office and the total count is about 178. 400 were sent out including all 353 unit owners, commercial owners, and park space only owners. Ms. Fridell randomly selected 17 responses, about 10% of her base, to audit accuracy of raw data tabulation and found 100% accuracy in this 10% sample. However, she cautioned that her calculation had not been validated. The Management Staff did the tabulation. The bottom line is that analysis is incomplete because it was done in a hurry.)
BACKGROUND:
--Board has considered the following major projects to be paid for from reserve fund: hallway renovation, window/balcony door replacement, and heating/cooling infrastructure refurbishment.
--How to prioritize these projects affects Five Year Plan.
--Determination of condo fee increase based on Five Year Plan.
--Condo fee increases can only be decided one year at a time.
--Survey developed to get ECA members feedback on these funding issues before the 4/27/11 meeting.
ANALYSIS (as developed and presented by Ms. Fridell)
--164 responses, 36% of 353 units, 51% were 2 bedroom owners.
--80% of respondents were resident owners.
--49% of respondents attend Board meeting occasionally.
--65% of respondents receive info about ECA through friends/neighbors (Although this percentage does not mean that is the exclusive method for how respondents get their ECA info and this is a corrected number, not the percent Ms. Fridell presented).
--58.4% are worried to some degree about ECA finances.
--38% would vote for a special assessment to fund one or more projects.
--55% would vote to change By-laws to make ECA responsible for replacement cost of McQuay HVAC units.
--46% would postpone major project execution for one year.
PROJECT RANKING (summary, see the chart in handouts passed out last evening and now available at Management Office)
--First priority: Windows/Doors Replacement (based on 154 votes with 56 surveys indicating that Windows/Doors Replacement was the respondents first priority.)
--Second, Third, Fourth priority: Heating Cooling replacement (39-35 responses indicated that respondents wanted heating/cooling & McQuay unit refurb/replacement their priority.)
--Fifth priority: complete refurbishment of hallways including replacement of hallway doors, etc. (35 respondents)
One thing to note is that the results of this survey question was hard to gauge because it was an awkwardly stated question. Not everyone filled out this question and because some of the projects were divided up (i.e. hallways had two categories: partial & complete; heating/cooling also had two categories HVAC and McQuay Units. Because McQuay Units are supposed to be the financial responsibility of the unit owner, this was confusing.)
Discussion/Decision about 2011-2012 condo fees
Mr. Bressler proposed that the condo fee be increased 10% starting in July. Despite the Board having based their Five Year Plan for 2011-2012 on a 5% increase, most of the Board voted a 10% increase. (Mr. Bressler made the motion to approve a 10% condo fee increase and this was approved by: Judi Barth, Charles Bressler, Molly Frantz, Alexandra Kielty, and Seth Levine. Voting against the motion was Monique Fridell and Alfred Muller.)
Dr. Muller made an argument for the 5% increase which would involve moving some projects like replacement of various canopies ($300,000) and possible County-imposed metering project (totaling $200,000) further out in time. Monique Fridell argued for a 5% condo fee increase with an approximate $2,000 special assessment. Either of these plans would have been adequate to address windows/door replacement, hallway refurb and a start on heating/cooling refurb.
The other five Board directors said they wanted more money in the reserves to cover unexpected costs. Dr. Muller pointed out that we have a $400,000 contingency fund and a line of credit for emergencies. In his plan, which addressed all the projects mentioned, the reserve fund would not dip at end of year below 800,000. (If I understand this correctly.)
Directors supporting the 10% increase said that bankers giving mortgages would not penalize buyers over the ECA voting this 10% increase. (Note: I checked into this issue with one banking agent I used to refinance my apartment a couple of years ago and learned that bankers are more concerned with condo debt and losses, including the delinquency rate and the percent of renters in the building than they are with this percent of increase. The red flag would definitely go down if the percent increase were 30%.)
What is problematic about the 10% increase is that many ECA members are on fixed incomes (but this figure is unknown since that was not part of the survey data) and that 46% of the survey respondents (close to half of the respondents) voted to postpone major project execution for one year, despite the fact that Dr. Muller’s suggested plan for a 5% increase would still be able to address a systematic execution of major projects over the next five years.
Monday, April 25, 2011
Summary of March 20 2011 Elizabeth Condo Board Meeting
Present at the meeting: Alexandra Kielty, Judi Barth, Charles Bressler, Molly Frantz, Monique Fridell, Seth Levine, Al Muller, Scott Murdoch, Jim Santos.
SURVEY SENT TO OWNERS: Ms. Kielty sncouraged ECA members to return their surveys.
FIVE-YEAR PLAN: Ms. Fridell walked through a projected version of the five-year plan as prelude to the meeting that will take place on budget planning on April 27.
BUILDING SECURITY: Building Manager Jim Santos will give residents notice shortly that lobby doors will be locked to increase security. Residents have been issued key fobs which will open the doors.
MICROPHONES: New microphones will be available at the next monthly meeting.
EXERCISE EQUIPMENT: New equipment is under negotiation through a Legum & Norman source that should yield not only replacement of old equipment but at least one new piece because of a 40% discount.
RENEWAL OF LEGUM & NORMAN CONTRACT: Mr. Murdoch offered a 3-year contract with no increase in the first year. The Board will send the contract for review to legal counsel. This was approved by all the Board members except Molly Frantz who abstained. Ms. Fridell recommended that the Board monitor financial data from L&N to ensure accounting principles are followed carefully. If L&N can’t perform satisfactorily, Ms. Fridell suggests that the functions be separated into operational and financial. Ms. Kielty suggested that the L&N performance has been getting better since the arrival of Jim Santos and the later arrival of Wanda Powell.
LANDSCAPING: Phase 1 which addresses the front of building was approved. Ruppert Landscaping will commence at a rate (35%) that is cheaper than Valley Crest, our current landscaping company.
INSURANCE: Our house master policy was renewed at a rate that saved us over $2,000. Also claims have gone down from 2009.
DONATION OF CLOTHING & HOUSEHOLD GOODS: Ms. Frantz led a committee which has identified several charitable organization that will haul away unwanted clothing, furniture and household goods that come from residents. (National Alliance on Mental Illness and Wider Circle are organizations identified for these donated goods.)
SURVEY SENT TO OWNERS: Ms. Kielty sncouraged ECA members to return their surveys.
FIVE-YEAR PLAN: Ms. Fridell walked through a projected version of the five-year plan as prelude to the meeting that will take place on budget planning on April 27.
BUILDING SECURITY: Building Manager Jim Santos will give residents notice shortly that lobby doors will be locked to increase security. Residents have been issued key fobs which will open the doors.
MICROPHONES: New microphones will be available at the next monthly meeting.
EXERCISE EQUIPMENT: New equipment is under negotiation through a Legum & Norman source that should yield not only replacement of old equipment but at least one new piece because of a 40% discount.
RENEWAL OF LEGUM & NORMAN CONTRACT: Mr. Murdoch offered a 3-year contract with no increase in the first year. The Board will send the contract for review to legal counsel. This was approved by all the Board members except Molly Frantz who abstained. Ms. Fridell recommended that the Board monitor financial data from L&N to ensure accounting principles are followed carefully. If L&N can’t perform satisfactorily, Ms. Fridell suggests that the functions be separated into operational and financial. Ms. Kielty suggested that the L&N performance has been getting better since the arrival of Jim Santos and the later arrival of Wanda Powell.
LANDSCAPING: Phase 1 which addresses the front of building was approved. Ruppert Landscaping will commence at a rate (35%) that is cheaper than Valley Crest, our current landscaping company.
INSURANCE: Our house master policy was renewed at a rate that saved us over $2,000. Also claims have gone down from 2009.
DONATION OF CLOTHING & HOUSEHOLD GOODS: Ms. Frantz led a committee which has identified several charitable organization that will haul away unwanted clothing, furniture and household goods that come from residents. (National Alliance on Mental Illness and Wider Circle are organizations identified for these donated goods.)
March 2011 Minutes of ECA Board Meeting
THE ELIZABETH CONDOMINIUM ASSOCIATION
4601 North Park Avenue
Chevy Chase, MD 20815
Minutes of Board of Directors Meeting March 21, 2011
Board Present:
Alexandria Kielty .........................President
Dr. Alfred Muller .........................Vice President
Monique Fridell ...........................Treasurer
Molly Frantz ...............................Assistant Treasurer
Charles Bressler ...........................Secretary
Judith Barth ................................Director
Seth Levine .................................Director
Others Present:
Scott Murdoch ...............Community Manager, Legum & Norman
James M. Santos ...........ECA General Manager
Jana Bowcut .................Recording Secretary, On the Record
Call to Order: Ms. Kielty called the meeting to order at 7:33 p.m.
Approval of Previous Meeting Minutes:
MOTION Dr. Muller moved, Ms. Fridell seconded, to approve the February 23, 2011, regular meeting minutes as amended. The motion passed unanimously (7-0-0).
Dr. Muller moved, Mr. Bressler seconded, to approve the January 19, 2011, regular meeting minutes as amended. The motion passed with one abstention from Ms. Barth (6-0-1).
President’s Report: Ms. Kielty stated that the Board met on February 23 and March 14, 2011 regarding the draft budget. The draft proposed FY2012 budget will be sent to owners on March 27, 2011 and a meeting will follow to give opportunity for feedback. No date is set for the meeting.
Treasurer’s Report: No report.
Old Business: The Landscape Committee has been working with Ruppert Landscape to develop a new design for the front of the building. The proposed plan (phase 1 of master plan), along with pictures, was displayed in the lobby and residents were given an opportunity to provide feedback. The master design plan is not complete; it does not include a sign or fence at this time.
Bill Angelis from Ruppert Landscape explained that he has worked with the committee to accomplish the goals they outlined. He provided a brief overview of the master design plan, and explained that its aim was to incorporate the existing plants, while enhancing the space. Evergreens are used to unify the space, while using annuals for color, and perennials for year-round color and texture. Residents asked if certain trees and plants had been considered, such as: dogwoods, azaleas, camellias, gardenias and hydrangeas. Mr. Angelis provided explanations for not using them; in particular, the exposure to sunlight was not adequate. Crepe myrtles were chosen over other types of trees because they will tolerate full sun all day. Ruppert Landscape’s maintenance plan would involve coming on-site twice per month to prune, weed, check the irrigation system and fertilize and maintain the annuals. The Association will need to proceed quickly in order to capture spring color.
Dr. Muller stated that there were some trees that died in the raised planter, possibly because of poor drainage. He requested that Ruppert thoroughly investigate before moving ahead with replacing trees in that planter. A resident volunteered those three years ago, a drainage system was installed in the three front areas of the building, but no irrigation was installed. Currently, watering of the space must be done by hand, but a new irrigation system would ensure that the plantings are watered evenly.
FY2012 Proposed Budget: Mr. Murdoch reported that in the last budget meeting, the Board requested calculations for three different scenarios for years 2012 and 2013: 4% the first year then 10% the second, 10% then 4%, and 7.5% then 4%. Mr. Murdoch provided printed scenarios and a graph to relate the average condominium fee and the reserve fund balance at the end of those years.
NOTE: THE following paragraph will change according to Board edits that have yet been incorporated into this version of the minutes:
The reserve fund expenditures for 2011, 2012, 2013 and 2014 were reviewed. The expenditure figure for entrance canopies in the building was adjusted from $250,000 to $318,000. A cost of $164,000 from WSSC for sub-metering was shifted from FY2011 to FY2012, as well as the projected $75,000 for window sealants assuming that the windows will be replaced in the next three to five years. Total expenditures reinstated in the cash flow were roughly $500,000. When those changes were made, Mr. Murdoch considered different scenarios that would allow the Association to fund all projects and support operations. Mr. Murdoch stated that more direction is needed from the Board in the timing and costs of various projects before an accurate determination of what condominium fee increase is needed for 2012 and 2013.
Ms. Kielty stated that based on previous discussions, a 10 percent increase was being considered and asked for clarification about whether that would be advisable. Mr. Murdoch stated that an Association can either increase the fees, or impose a one-time assessment in order to maintain lower fees. Based on the figures he provided the Board, a more modest increase would be appropriate. Ms. Kielty stated that the potential project list was formulated from the Reserve Study and the Mendoza Report and was based on estimates from Legum and Norman. She added that the Board needs guidance about what projects could be postponed.
Mr. Santos stated that when he prepared the cost projections before the first budget workshop, he thought the windows and balcony door replacement should be the priority. He was not tasked, however, with determining the best way to fund this project. Mr. Santos recognized Mr. Murdoch’s concern about funding large projects back-to-back without any operational or financial respite. He recognized that from a financial standpoint, there would not be much leeway for unexpected reserve expenditures. Mr. Santos also recently presented the Board with $100,000 worth of new items that he identified for needed repairs or upgrades to the building operation. He added that he is prepared to offer suggestions, but the Board does not have a unified voice on which project to pursue, making it difficult to formulate a plan to implement capital improvements.
Ms. Kielty stated the Board felt it was most reasonable to move forward first with the hallway renovations. At the last budget workshop, Mr. Murdoch prepared projections based on this, but other projects would need to be postponed so that the reserve fund minimum balances would not dip too low. Mr. Santos stated that there is a concern with imposing a large condominium fee increase and then no success with reducing it later. Ms. Kielty stated that if a budget were drafted based on a 10 percent increase, and a $1,000-$2,000 assessment were collected next year, the fees could be reduced. Ms. Fridell added that it is not realistic to think that the condo fee would decrease. She suggested a modest condo fee increase for 2012, and then during the fiscal year proposes owners to approve a special assessment to raise money for the specific project of windows and balcony door replacement. A special assessment would be financially better than raising the funds through higher condominium fees because it would be a one-time cost and the basis for ongoing condo fees would remain lower. She added that the projects probably cannot be done as quickly as the Association would like them to. The hallways can probably be done, but there would be no leeway for unexpected costs.
Dr. Muller stated that three draft options were presented to the Board for years 2012 and 2013: 4 percent followed by 10 percent, 10 percent followed by 4 percent, and 7.5 percent followed by 4 percent. A fourth plan is to rearrange the timing of projects. He added that at the last budget meeting, Ms. Fridell made the following points: 1) the higher the condominium fee, the less competitive The Elizabeth will be with other buildings, making it more difficult for owners to sell or rent their unit; 2) the windows and balcony door replacement project had not been included in the previous five-year plan, and now the Board is faced with the challenge of funding simultaneously this $2.5 million budget item as well as the hallway renovations and Medoza-recommended HVAC/plant improvements all within the same five year period. Dr. Muller proposed delaying the windows project for a year beyond the current options and have a modest four percent FY 2012 condo fee increase. This would provide consistency to the budget and prevent large fluctuations in condo fees for the owners. He added that faulty windows and balcony doors do not affect all residents and the project should be delayed so that the reserve funds can build back gradually with a 4 percent increase for FY2012.
Ms. Frantz stated that at the last working session, the Board discussed proposing to owners a special assessment that Management calculated would be on average $1000 per unit. By Ms. Frantz’s calculation, dividing $2.5 million by 360 units, a special assessment of $7,000 per unit would be needed. Although there are other factors to consider, Ms. Frantz made the point that the special assessment needed would likely be larger than what was discussed at the last work session. Ms. Fridell noted that Ms. Frantz’s calculation is not accurate because it does not take into account the contributions already being made and the funds that already exist in the Reserve.
Ms. Barth expressed concern about the FY2012 operating budget, specifically the Repair & Maintenance category, decreasing; particularly when Mr. Santos has presented a list of $100,000 worth of proposed expenses not originally budgeted. Mr. Murdoch responded that most of the reduction in the operating budget is due to a decrease in utility costs. Mr. Santos stated that some of the items on the list can be pushed to a future time. The list was formed to identify as many things that will need attention while budget discussions are occurring. The Treasurer will need to provide guidance on what items should be funded from Operating versus Reserve Fund. Dr. Muller stated there are some operating funds available to cover expenses that are not in the budget.
Ms. Fridell stressed that overall expenses should stay within the budget. Ms. Frantz stated that the Management and the Board need to work together to identify all potential needed projects and determine their priority. Ms. Kielty confirmed that none of the items on Mr. Santos’s list are included in the HVAC and mechanical line item. Mr. Santos stated that there are items such as environmental testing on the upper floors that were not included in the Reserve Study, five-year plan or operating budget, but are needed in preparation for the hallway renovation work.
Ms. Kielty asked what the HVAC Master Plan includes. Mr. Murdoch stated that it is from a combination of projects from the Mendoza report, and are all accurate, bid-based numbers. Ms. Fridell asked which figures are estimates from the Reserve Study and which ones are estimates from bids.
Ms. Frantz explained that there have been many recent adjustments for projects in the current year’s version of the five-year plan. For example, $48,000 was approved last month for the cooling towers, despite a $10,000 original estimate for that project. Adjustments were made to strive for a viable end-of-year balance. Some of the items from Mr. Santos’s list have been incorporated. She also noted that estimates for the canopy replacement were increased significantly based upon actual bids for that project.
Dr. Muller reiterated that the window replacement project could stretch the Association’s resources. He stated that in his opinion, the hallway refurbishment should go forward, but the window replacements should wait. The Reserve Fund balance will gradually be replenished, and if the Board believes that additional Reserves are needed, the option of raising fees in the future would still be possible. He added that some residents are expressing frustration about rising condominium fees, and the Association also has a line of credit to fall back on.
Ms. Kielty asked other Board members for their opinions. Mr. Bressler stated that raising the condo fee by only 4% in FY 2012 results in very low minimum Reserve Fund balances, and in his opinion, a Reserve Fund balance lower than $1 million is risky. Mr. Levine pointed out that the line of credit amount is based on Reserve Funds pledged as collateral. Dr. Muller stated that in his opinion the budget is reasonable and there is no imminent financial concern. The feedback he has received is that residents would like a reprieve in condo fee increases. He stressed the fact that the projections showed that even with the 4% condo fee increase, the Association would be able to accomplish all proposed large projects with only a one year delay in start of the window replacement project.
Ms. Frantz stated she believes a 10 percent increase is needed to accomplish all of the major projects. Ms. Barth stated she believes it is prudent to have a minimum of $1 million in the reserves. She expressed concern that by delaying projects, prices will increase beyond those projected in the five year plan. Ms. Barth proposed raising the fees by 5 percent, which would enable the Association to pay for the projects identified by Mr. Santos. She expressed that in past years the Board has hesitated to implement significant condo fee increases out of concern for owners who might not be able to afford them. She reminded Board members that there were many years where there were no condo fee increases, and the cumulative effect of those decisions has made it difficult for the Association to catch up.
Ms. Fridell stated that the five year plan shows the window replacement project being split up over a three-year period. If the project were instead split over four years, it could reduce the expense to $625,000 per year, thereby not stressing the minimum reserve balance. Mr. Santos pointed out that by extending the length of the window project, costs could increase by about 20 percent; the economy of production would be affected in that the crews would have to leave the job and return later.
Mr. Levine stated that the Board has a responsibility to protect the common investment of the Elizabeth and that a 4 percent increase will not be sufficient, in his opinion.
Ms. Fridell stated that she believed another workshop would be needed to test different scenarios on the projection spreadsheet and to discuss project priorities again. Dr. Muller stated that all the information is at hand, and different scenarios have been considered. Mr. Santos suggested that Mr. Murdoch could examine the numbers more while the Board continued with the Meeting agenda.
Project Updates: Mr. Santos requested a Board decision about whether an insurance claim should be filed against the master insurance policy for damage related to two drain clogs in tier 11. The deductible is $5,000 and the total amount in repairs has amounted to $10,600 to date. Mr. Levine inquired if making a claim would increase the Association’s rates. Dr. Muller recommended that the Association pay for the repairs without going to the insurance, while other Board members thought it should be submitted. Mr. Murdoch recommended consulting ECA’s insurance broker before making a decision.
Mr. Santos reported at the March Board meeting that there were problems with the server dedicated to video surveillance. A temporary computer has been set up to handle this, but is insufficient. To solve the problem, Mr. Santos proposes to replace the server and to purchase an additional component to store a month of video data.
MOTION Mr. Bressler moved, Ms. Barth seconded to approve the proposal from Teldata Communications for replacement of video computer server in the amount of $5,283.53, which would be an Operating Fund expense. The motion passed unanimously (7-0-0).
Mr. Santos stated that a rebuilt motor is needed for the garage sweeper. Although the machine is 15 years old, it has a resale value of $15,000, and would cost $30,000 if purchased new.
MOTION Ms. Barth moved, Mr. Bressler seconded to approve the purchase of a reconditioned motor for the garage floor sweeper machine engine from Tennant Sales and Service for $7,272.50. The motion passed unanimously (7-0-0).
Mr. Santos stated that locksmith services are needed to ensure building security. Mr. Santos recommended having all common area doors (under key fob control) re-keyed from Medeco cylinders. Staff will be able to open the doors open if the key fob system fails in an emergency. Keys will not be distributed to residents, but held in the office.
MOTION Dr. Muller moved, Ms. Barth seconded to approve the proposal for Sure-Fit Security locksmith services to re-key the cylinders on common area doors and take the locks off of stairwell doors and garages at a cost of $2,425.34. This will be an Operating Fund expense. The motion passed with one vote in opposition by Ms. Fridell (6-1-0).
Mr. Santos stated that one bellman’s cart was previously purchased, and he inquired if more should be purchased at a cost of $1500 to $1600 each. Ms. Fridell stated that she did not believe this purchase rose to the level of a Board decision and in her opinion, Management could affect this purchase as long as it was within budget. Ms. Kielty reminded Board members and Management that in its January 2011 Regular Board Meeting, the Board had previously granted authorization to Management to make purchases under $3,000. Mr. Santos would like to purchase three additional carts, making it a $4,500 expense. The Board agreed with the purchase.
Management has identified five additional common area doors where fob readers are needed. A $4,425.00 credit was issued on the original contract due to a different type of lock being used. A contract of $12,811.27 was proposed by Mr. Santos for adding the additional readers and control panels, leaving a net expense of $8,387.26. Dr. Muller questioned whether a FOB reader is needed on the business center. Ms. Barth stated that she believed it is important because it will provide a record of who uses the center in case equipment is damaged.
MOTION Mr. Bressler moved, Dr. Muller seconded to approve Electronic Security Services to install five additional fob readers and control panels at a net cost of $8,387.26. The motion passed unanimously (7-0-0).
Mr. Santos has identified some spring cleaning and painting projects, and proposed to the Board to have the outside retaining walls cleaned and painted. Dr. Muller asked if these must be done now, to which Mr. Santos stated that the algae build-up is from several years of not performing this maintenance task. In addition, the masonry coating on the retaining walls is failing in several places and needs preventative maintenance. These expenses could be considered Reserve Fund items under masonry repairs.
MOTION Ms. Frantz moved, Mr. Bressler seconded to approve Manders Decorating Company to clean and paint the brick retaining walls at a cost of $7,600. The motion passed unanimously (7-0-0).
Masonry repairs are needed on a concrete curb on the east garage ramp, on an elevated walkway, arcade architectural column and concrete steps on the arcade level. These repairs would be considered Reserve Fund expenses.
MOTION Mr. Bressler moved, Ms. Barth seconded to approve Manders Decorating Company to make masonry repairs at a cost of $9500. The motion passed unanimously (7-0-0).
Mr. Santos stated that painting and stair treads are needed for the steps to the retailers’ and doctors’ offices. Ms. Fridell inquired if it would be possible for staff to do this work. Mr. Santos responded that staff does not have the expertise to attach the treads and it would take them away from other necessary tasks. Ms. Frantz moved, Dr. Muller seconded to approve Manders Decorating Company to paint and attach treads on the east stairwell for $6,200.00. The motion passed with one vote in opposition by Ms. Fridell and one abstention by Mr. Bressler (5-1-1).
Energy Tax Credit: Mr. Murdoch reported that based on his due diligence there is no indication that owners would be eligible for an energy tax credit for their unit’s share of the expense related to the party room air handler replacement. At 30 percent, even if the expense were eligible, he estimates that the tax credit would only amount to $25 per unit on average. He will continue to pursue the issue of eligibility, but he does not think that the air handler will qualify as an energy tax credit item because it is a piece of equipment within a larger system. On a similar subject, Ms. Frantz added that Mr. Murdoch has determined the low-e windows replacements in the west lobby do not qualify for an energy tax credit.
New Business:
Landscaping Committee: Jim Rich stated that 57 out of 350 units responded to the landscaping survey and he believes that the committee has a sense of residents’ preferences. With a budget of $20,000 the committee was tasked to buy a landscape design plan and to purchase plants. The committee obtained three bids for three areas in the front of the building (driveway circle, left and right planters) that includes infrastructure repairs and new irrigation system. Ms. Fridell asked for clarification on what the irrigation system would entail. Mr. Rich stated that it would be for new drains and piping to irrigate the planters and to automate the sprinkler system for the driveway circle.
Ms. Kielty inquired why the cost of the landscaping maintenance proposal is so high. Mr. Rich stated that using another company is possible. Mr. Santos stated that Service Contracts account of the Operating budget had $20,000 remaining that will accommodate the Phase I planting of $16,650 and the $4,219 irrigation work. Lasting Impressions gave the lowest bid for irrigation. Ruppert does not have an irrigation service, and other vendors did not demonstrate interest/responsiveness for this contract.
MOTION Dr. Muller moved, Ms. Barth seconded to approve the proposals for new planting irrigation system from Lasting Impressions for $4,219. The motion passed unanimously (7-0-0).
The landscape committee recommended the proposal from Ruppert Landscaping for plantings at a cost of $16,650. A separate proposal for maintenance is $8,281, which includes annual plantings. A credit of $2,250 is available to the Elizabeth from Ruppert if the firm is hired to do all the planting work outlined by the master plan. However, if Ruppert is hired to do only a portion, the credit will be pro-rated.
Mr. Murdoch asked whether Ruppert provides a guarantee on the plants. Mr. Rich stated that if Ruppert installs the plants and has the maintenance contract, there is a lifetime guarantee.
The Board had questions about the contract such as the ability to terminate the maintenance contract early and penalties for doing so. Given the lack of certain contractual information key to its decision-making, the Board agreed to table this discussion until next month and have the contract on hand to review.
Committee Reports:
Fitness Committee: Ms. Kielty stated that Mr. Levine has agreed to lead the effort to purchase new fitness equipment. Mr. Santos recommended Heartline Fitness, a firm with which Legum and Norman/Associa has a relationship and which provides a discount to L&N clients. Mr. Bressler also recommended looking at the fitness equipment at Chevy Chase Point condominium.
Ms. Fridell commented that Mr. Murdoch should schedule on the monthly contracts calendar for March a Board decision to fund ECA’s contribution to employees’ SEP. She also stated that the Board needed to vote on this year’s decision at next month’s Board meeting.
Library Committee: The Board considering a request from the committee for additional equipment, such as a magazine rack, step stool and identification of book genre on doors.
Budget (continued): Mr. Murdoch stated that several meetings have been held to consider different projection scenarios for funding projects over the next five years. Mr. Murdoch recommended imposing a 4 percent increase, and that the Board studies the costs of future projects to determine what funds are needed. If additional funds are needed, a special assessment tied to specific projects can be proposed so the condominium fees do not have to increase. Dr. Muller added that approving 4 percent for FY2012 does not lock the Association into this for future years.
MOTION Dr. Muller moved, Mr. Levine seconded to approve a 4 percent condominium fee increase in the 2012 budget draft. The motion failed (2-5-0).
MOTION Mr. Bressler moved, Ms. Frantz seconded to approve a 10 percent condominium fee increase in the 2012 budget draft. The motion failed (2-5-0).
MOTION Dr. Muller moved, Mr. Levine seconded to approve a 5 percent condominium fee increase in the 2012 budget draft. The motion passed with two votes in opposition by Ms. Frantz and Mr. Bressler (5-2-0).
Comments from the Floor:
-A resident responded to Dr. Muller’s comment that not all residents would enjoy the benefits of window replacement; he affirmed that all residents would indeed benefit due to lower energy costs.
-A resident expressed concern about being able to enter and exit the doors where the common area Medeco cylinders are being re-keyed. Mr. Santos stated that this is not a concern and the engineers live on-site to handle any problems. The resident also stated that there was no mention in the Board meeting of repairing balconies. Mr. Santos is planning to assess the balconies and the repair work will probably commence at the beginning of the next fiscal year.
-A resident referred to a letter written by a resident owner to the Board who suggested suspending large projects for one year for two reasons: 1) To allow the Reserve Funds to accumulate, and 2) to mellow differences of opinion regarding the lobby refurbishment. The resident also pointed out that the building has two boilers that will need to be replaced in the near future at a substantial replacement cost.
-An opinion was voiced that the Board is too concerned with expenditures and not enough with saving. A resident expressed his opinion that the lobby refurbishment was lavish and the Association is wasteful with energy.
-A resident stated that a decision about landscaping needs to be made soon and it will be too late to plant in April.
Adjournment:
The President adjourned the meeting at 10:55 p.m.
The initial draft of the minutes, upon which these minutes are based, was prepared by Jana Bowcut of On the Record.
Respectfully submitted,
Charles Bressler, Board Secretary
4601 North Park Avenue
Chevy Chase, MD 20815
Minutes of Board of Directors Meeting March 21, 2011
Board Present:
Alexandria Kielty .........................President
Dr. Alfred Muller .........................Vice President
Monique Fridell ...........................Treasurer
Molly Frantz ...............................Assistant Treasurer
Charles Bressler ...........................Secretary
Judith Barth ................................Director
Seth Levine .................................Director
Others Present:
Scott Murdoch ...............Community Manager, Legum & Norman
James M. Santos ...........ECA General Manager
Jana Bowcut .................Recording Secretary, On the Record
Call to Order: Ms. Kielty called the meeting to order at 7:33 p.m.
Approval of Previous Meeting Minutes:
MOTION Dr. Muller moved, Ms. Fridell seconded, to approve the February 23, 2011, regular meeting minutes as amended. The motion passed unanimously (7-0-0).
Dr. Muller moved, Mr. Bressler seconded, to approve the January 19, 2011, regular meeting minutes as amended. The motion passed with one abstention from Ms. Barth (6-0-1).
President’s Report: Ms. Kielty stated that the Board met on February 23 and March 14, 2011 regarding the draft budget. The draft proposed FY2012 budget will be sent to owners on March 27, 2011 and a meeting will follow to give opportunity for feedback. No date is set for the meeting.
Treasurer’s Report: No report.
Old Business: The Landscape Committee has been working with Ruppert Landscape to develop a new design for the front of the building. The proposed plan (phase 1 of master plan), along with pictures, was displayed in the lobby and residents were given an opportunity to provide feedback. The master design plan is not complete; it does not include a sign or fence at this time.
Bill Angelis from Ruppert Landscape explained that he has worked with the committee to accomplish the goals they outlined. He provided a brief overview of the master design plan, and explained that its aim was to incorporate the existing plants, while enhancing the space. Evergreens are used to unify the space, while using annuals for color, and perennials for year-round color and texture. Residents asked if certain trees and plants had been considered, such as: dogwoods, azaleas, camellias, gardenias and hydrangeas. Mr. Angelis provided explanations for not using them; in particular, the exposure to sunlight was not adequate. Crepe myrtles were chosen over other types of trees because they will tolerate full sun all day. Ruppert Landscape’s maintenance plan would involve coming on-site twice per month to prune, weed, check the irrigation system and fertilize and maintain the annuals. The Association will need to proceed quickly in order to capture spring color.
Dr. Muller stated that there were some trees that died in the raised planter, possibly because of poor drainage. He requested that Ruppert thoroughly investigate before moving ahead with replacing trees in that planter. A resident volunteered those three years ago, a drainage system was installed in the three front areas of the building, but no irrigation was installed. Currently, watering of the space must be done by hand, but a new irrigation system would ensure that the plantings are watered evenly.
FY2012 Proposed Budget: Mr. Murdoch reported that in the last budget meeting, the Board requested calculations for three different scenarios for years 2012 and 2013: 4% the first year then 10% the second, 10% then 4%, and 7.5% then 4%. Mr. Murdoch provided printed scenarios and a graph to relate the average condominium fee and the reserve fund balance at the end of those years.
NOTE: THE following paragraph will change according to Board edits that have yet been incorporated into this version of the minutes:
The reserve fund expenditures for 2011, 2012, 2013 and 2014 were reviewed. The expenditure figure for entrance canopies in the building was adjusted from $250,000 to $318,000. A cost of $164,000 from WSSC for sub-metering was shifted from FY2011 to FY2012, as well as the projected $75,000 for window sealants assuming that the windows will be replaced in the next three to five years. Total expenditures reinstated in the cash flow were roughly $500,000. When those changes were made, Mr. Murdoch considered different scenarios that would allow the Association to fund all projects and support operations. Mr. Murdoch stated that more direction is needed from the Board in the timing and costs of various projects before an accurate determination of what condominium fee increase is needed for 2012 and 2013.
Ms. Kielty stated that based on previous discussions, a 10 percent increase was being considered and asked for clarification about whether that would be advisable. Mr. Murdoch stated that an Association can either increase the fees, or impose a one-time assessment in order to maintain lower fees. Based on the figures he provided the Board, a more modest increase would be appropriate. Ms. Kielty stated that the potential project list was formulated from the Reserve Study and the Mendoza Report and was based on estimates from Legum and Norman. She added that the Board needs guidance about what projects could be postponed.
Mr. Santos stated that when he prepared the cost projections before the first budget workshop, he thought the windows and balcony door replacement should be the priority. He was not tasked, however, with determining the best way to fund this project. Mr. Santos recognized Mr. Murdoch’s concern about funding large projects back-to-back without any operational or financial respite. He recognized that from a financial standpoint, there would not be much leeway for unexpected reserve expenditures. Mr. Santos also recently presented the Board with $100,000 worth of new items that he identified for needed repairs or upgrades to the building operation. He added that he is prepared to offer suggestions, but the Board does not have a unified voice on which project to pursue, making it difficult to formulate a plan to implement capital improvements.
Ms. Kielty stated the Board felt it was most reasonable to move forward first with the hallway renovations. At the last budget workshop, Mr. Murdoch prepared projections based on this, but other projects would need to be postponed so that the reserve fund minimum balances would not dip too low. Mr. Santos stated that there is a concern with imposing a large condominium fee increase and then no success with reducing it later. Ms. Kielty stated that if a budget were drafted based on a 10 percent increase, and a $1,000-$2,000 assessment were collected next year, the fees could be reduced. Ms. Fridell added that it is not realistic to think that the condo fee would decrease. She suggested a modest condo fee increase for 2012, and then during the fiscal year proposes owners to approve a special assessment to raise money for the specific project of windows and balcony door replacement. A special assessment would be financially better than raising the funds through higher condominium fees because it would be a one-time cost and the basis for ongoing condo fees would remain lower. She added that the projects probably cannot be done as quickly as the Association would like them to. The hallways can probably be done, but there would be no leeway for unexpected costs.
Dr. Muller stated that three draft options were presented to the Board for years 2012 and 2013: 4 percent followed by 10 percent, 10 percent followed by 4 percent, and 7.5 percent followed by 4 percent. A fourth plan is to rearrange the timing of projects. He added that at the last budget meeting, Ms. Fridell made the following points: 1) the higher the condominium fee, the less competitive The Elizabeth will be with other buildings, making it more difficult for owners to sell or rent their unit; 2) the windows and balcony door replacement project had not been included in the previous five-year plan, and now the Board is faced with the challenge of funding simultaneously this $2.5 million budget item as well as the hallway renovations and Medoza-recommended HVAC/plant improvements all within the same five year period. Dr. Muller proposed delaying the windows project for a year beyond the current options and have a modest four percent FY 2012 condo fee increase. This would provide consistency to the budget and prevent large fluctuations in condo fees for the owners. He added that faulty windows and balcony doors do not affect all residents and the project should be delayed so that the reserve funds can build back gradually with a 4 percent increase for FY2012.
Ms. Frantz stated that at the last working session, the Board discussed proposing to owners a special assessment that Management calculated would be on average $1000 per unit. By Ms. Frantz’s calculation, dividing $2.5 million by 360 units, a special assessment of $7,000 per unit would be needed. Although there are other factors to consider, Ms. Frantz made the point that the special assessment needed would likely be larger than what was discussed at the last work session. Ms. Fridell noted that Ms. Frantz’s calculation is not accurate because it does not take into account the contributions already being made and the funds that already exist in the Reserve.
Ms. Barth expressed concern about the FY2012 operating budget, specifically the Repair & Maintenance category, decreasing; particularly when Mr. Santos has presented a list of $100,000 worth of proposed expenses not originally budgeted. Mr. Murdoch responded that most of the reduction in the operating budget is due to a decrease in utility costs. Mr. Santos stated that some of the items on the list can be pushed to a future time. The list was formed to identify as many things that will need attention while budget discussions are occurring. The Treasurer will need to provide guidance on what items should be funded from Operating versus Reserve Fund. Dr. Muller stated there are some operating funds available to cover expenses that are not in the budget.
Ms. Fridell stressed that overall expenses should stay within the budget. Ms. Frantz stated that the Management and the Board need to work together to identify all potential needed projects and determine their priority. Ms. Kielty confirmed that none of the items on Mr. Santos’s list are included in the HVAC and mechanical line item. Mr. Santos stated that there are items such as environmental testing on the upper floors that were not included in the Reserve Study, five-year plan or operating budget, but are needed in preparation for the hallway renovation work.
Ms. Kielty asked what the HVAC Master Plan includes. Mr. Murdoch stated that it is from a combination of projects from the Mendoza report, and are all accurate, bid-based numbers. Ms. Fridell asked which figures are estimates from the Reserve Study and which ones are estimates from bids.
Ms. Frantz explained that there have been many recent adjustments for projects in the current year’s version of the five-year plan. For example, $48,000 was approved last month for the cooling towers, despite a $10,000 original estimate for that project. Adjustments were made to strive for a viable end-of-year balance. Some of the items from Mr. Santos’s list have been incorporated. She also noted that estimates for the canopy replacement were increased significantly based upon actual bids for that project.
Dr. Muller reiterated that the window replacement project could stretch the Association’s resources. He stated that in his opinion, the hallway refurbishment should go forward, but the window replacements should wait. The Reserve Fund balance will gradually be replenished, and if the Board believes that additional Reserves are needed, the option of raising fees in the future would still be possible. He added that some residents are expressing frustration about rising condominium fees, and the Association also has a line of credit to fall back on.
Ms. Kielty asked other Board members for their opinions. Mr. Bressler stated that raising the condo fee by only 4% in FY 2012 results in very low minimum Reserve Fund balances, and in his opinion, a Reserve Fund balance lower than $1 million is risky. Mr. Levine pointed out that the line of credit amount is based on Reserve Funds pledged as collateral. Dr. Muller stated that in his opinion the budget is reasonable and there is no imminent financial concern. The feedback he has received is that residents would like a reprieve in condo fee increases. He stressed the fact that the projections showed that even with the 4% condo fee increase, the Association would be able to accomplish all proposed large projects with only a one year delay in start of the window replacement project.
Ms. Frantz stated she believes a 10 percent increase is needed to accomplish all of the major projects. Ms. Barth stated she believes it is prudent to have a minimum of $1 million in the reserves. She expressed concern that by delaying projects, prices will increase beyond those projected in the five year plan. Ms. Barth proposed raising the fees by 5 percent, which would enable the Association to pay for the projects identified by Mr. Santos. She expressed that in past years the Board has hesitated to implement significant condo fee increases out of concern for owners who might not be able to afford them. She reminded Board members that there were many years where there were no condo fee increases, and the cumulative effect of those decisions has made it difficult for the Association to catch up.
Ms. Fridell stated that the five year plan shows the window replacement project being split up over a three-year period. If the project were instead split over four years, it could reduce the expense to $625,000 per year, thereby not stressing the minimum reserve balance. Mr. Santos pointed out that by extending the length of the window project, costs could increase by about 20 percent; the economy of production would be affected in that the crews would have to leave the job and return later.
Mr. Levine stated that the Board has a responsibility to protect the common investment of the Elizabeth and that a 4 percent increase will not be sufficient, in his opinion.
Ms. Fridell stated that she believed another workshop would be needed to test different scenarios on the projection spreadsheet and to discuss project priorities again. Dr. Muller stated that all the information is at hand, and different scenarios have been considered. Mr. Santos suggested that Mr. Murdoch could examine the numbers more while the Board continued with the Meeting agenda.
Project Updates: Mr. Santos requested a Board decision about whether an insurance claim should be filed against the master insurance policy for damage related to two drain clogs in tier 11. The deductible is $5,000 and the total amount in repairs has amounted to $10,600 to date. Mr. Levine inquired if making a claim would increase the Association’s rates. Dr. Muller recommended that the Association pay for the repairs without going to the insurance, while other Board members thought it should be submitted. Mr. Murdoch recommended consulting ECA’s insurance broker before making a decision.
Mr. Santos reported at the March Board meeting that there were problems with the server dedicated to video surveillance. A temporary computer has been set up to handle this, but is insufficient. To solve the problem, Mr. Santos proposes to replace the server and to purchase an additional component to store a month of video data.
MOTION Mr. Bressler moved, Ms. Barth seconded to approve the proposal from Teldata Communications for replacement of video computer server in the amount of $5,283.53, which would be an Operating Fund expense. The motion passed unanimously (7-0-0).
Mr. Santos stated that a rebuilt motor is needed for the garage sweeper. Although the machine is 15 years old, it has a resale value of $15,000, and would cost $30,000 if purchased new.
MOTION Ms. Barth moved, Mr. Bressler seconded to approve the purchase of a reconditioned motor for the garage floor sweeper machine engine from Tennant Sales and Service for $7,272.50. The motion passed unanimously (7-0-0).
Mr. Santos stated that locksmith services are needed to ensure building security. Mr. Santos recommended having all common area doors (under key fob control) re-keyed from Medeco cylinders. Staff will be able to open the doors open if the key fob system fails in an emergency. Keys will not be distributed to residents, but held in the office.
MOTION Dr. Muller moved, Ms. Barth seconded to approve the proposal for Sure-Fit Security locksmith services to re-key the cylinders on common area doors and take the locks off of stairwell doors and garages at a cost of $2,425.34. This will be an Operating Fund expense. The motion passed with one vote in opposition by Ms. Fridell (6-1-0).
Mr. Santos stated that one bellman’s cart was previously purchased, and he inquired if more should be purchased at a cost of $1500 to $1600 each. Ms. Fridell stated that she did not believe this purchase rose to the level of a Board decision and in her opinion, Management could affect this purchase as long as it was within budget. Ms. Kielty reminded Board members and Management that in its January 2011 Regular Board Meeting, the Board had previously granted authorization to Management to make purchases under $3,000. Mr. Santos would like to purchase three additional carts, making it a $4,500 expense. The Board agreed with the purchase.
Management has identified five additional common area doors where fob readers are needed. A $4,425.00 credit was issued on the original contract due to a different type of lock being used. A contract of $12,811.27 was proposed by Mr. Santos for adding the additional readers and control panels, leaving a net expense of $8,387.26. Dr. Muller questioned whether a FOB reader is needed on the business center. Ms. Barth stated that she believed it is important because it will provide a record of who uses the center in case equipment is damaged.
MOTION Mr. Bressler moved, Dr. Muller seconded to approve Electronic Security Services to install five additional fob readers and control panels at a net cost of $8,387.26. The motion passed unanimously (7-0-0).
Mr. Santos has identified some spring cleaning and painting projects, and proposed to the Board to have the outside retaining walls cleaned and painted. Dr. Muller asked if these must be done now, to which Mr. Santos stated that the algae build-up is from several years of not performing this maintenance task. In addition, the masonry coating on the retaining walls is failing in several places and needs preventative maintenance. These expenses could be considered Reserve Fund items under masonry repairs.
MOTION Ms. Frantz moved, Mr. Bressler seconded to approve Manders Decorating Company to clean and paint the brick retaining walls at a cost of $7,600. The motion passed unanimously (7-0-0).
Masonry repairs are needed on a concrete curb on the east garage ramp, on an elevated walkway, arcade architectural column and concrete steps on the arcade level. These repairs would be considered Reserve Fund expenses.
MOTION Mr. Bressler moved, Ms. Barth seconded to approve Manders Decorating Company to make masonry repairs at a cost of $9500. The motion passed unanimously (7-0-0).
Mr. Santos stated that painting and stair treads are needed for the steps to the retailers’ and doctors’ offices. Ms. Fridell inquired if it would be possible for staff to do this work. Mr. Santos responded that staff does not have the expertise to attach the treads and it would take them away from other necessary tasks. Ms. Frantz moved, Dr. Muller seconded to approve Manders Decorating Company to paint and attach treads on the east stairwell for $6,200.00. The motion passed with one vote in opposition by Ms. Fridell and one abstention by Mr. Bressler (5-1-1).
Energy Tax Credit: Mr. Murdoch reported that based on his due diligence there is no indication that owners would be eligible for an energy tax credit for their unit’s share of the expense related to the party room air handler replacement. At 30 percent, even if the expense were eligible, he estimates that the tax credit would only amount to $25 per unit on average. He will continue to pursue the issue of eligibility, but he does not think that the air handler will qualify as an energy tax credit item because it is a piece of equipment within a larger system. On a similar subject, Ms. Frantz added that Mr. Murdoch has determined the low-e windows replacements in the west lobby do not qualify for an energy tax credit.
New Business:
Landscaping Committee: Jim Rich stated that 57 out of 350 units responded to the landscaping survey and he believes that the committee has a sense of residents’ preferences. With a budget of $20,000 the committee was tasked to buy a landscape design plan and to purchase plants. The committee obtained three bids for three areas in the front of the building (driveway circle, left and right planters) that includes infrastructure repairs and new irrigation system. Ms. Fridell asked for clarification on what the irrigation system would entail. Mr. Rich stated that it would be for new drains and piping to irrigate the planters and to automate the sprinkler system for the driveway circle.
Ms. Kielty inquired why the cost of the landscaping maintenance proposal is so high. Mr. Rich stated that using another company is possible. Mr. Santos stated that Service Contracts account of the Operating budget had $20,000 remaining that will accommodate the Phase I planting of $16,650 and the $4,219 irrigation work. Lasting Impressions gave the lowest bid for irrigation. Ruppert does not have an irrigation service, and other vendors did not demonstrate interest/responsiveness for this contract.
MOTION Dr. Muller moved, Ms. Barth seconded to approve the proposals for new planting irrigation system from Lasting Impressions for $4,219. The motion passed unanimously (7-0-0).
The landscape committee recommended the proposal from Ruppert Landscaping for plantings at a cost of $16,650. A separate proposal for maintenance is $8,281, which includes annual plantings. A credit of $2,250 is available to the Elizabeth from Ruppert if the firm is hired to do all the planting work outlined by the master plan. However, if Ruppert is hired to do only a portion, the credit will be pro-rated.
Mr. Murdoch asked whether Ruppert provides a guarantee on the plants. Mr. Rich stated that if Ruppert installs the plants and has the maintenance contract, there is a lifetime guarantee.
The Board had questions about the contract such as the ability to terminate the maintenance contract early and penalties for doing so. Given the lack of certain contractual information key to its decision-making, the Board agreed to table this discussion until next month and have the contract on hand to review.
Committee Reports:
Fitness Committee: Ms. Kielty stated that Mr. Levine has agreed to lead the effort to purchase new fitness equipment. Mr. Santos recommended Heartline Fitness, a firm with which Legum and Norman/Associa has a relationship and which provides a discount to L&N clients. Mr. Bressler also recommended looking at the fitness equipment at Chevy Chase Point condominium.
Ms. Fridell commented that Mr. Murdoch should schedule on the monthly contracts calendar for March a Board decision to fund ECA’s contribution to employees’ SEP. She also stated that the Board needed to vote on this year’s decision at next month’s Board meeting.
Library Committee: The Board considering a request from the committee for additional equipment, such as a magazine rack, step stool and identification of book genre on doors.
Budget (continued): Mr. Murdoch stated that several meetings have been held to consider different projection scenarios for funding projects over the next five years. Mr. Murdoch recommended imposing a 4 percent increase, and that the Board studies the costs of future projects to determine what funds are needed. If additional funds are needed, a special assessment tied to specific projects can be proposed so the condominium fees do not have to increase. Dr. Muller added that approving 4 percent for FY2012 does not lock the Association into this for future years.
MOTION Dr. Muller moved, Mr. Levine seconded to approve a 4 percent condominium fee increase in the 2012 budget draft. The motion failed (2-5-0).
MOTION Mr. Bressler moved, Ms. Frantz seconded to approve a 10 percent condominium fee increase in the 2012 budget draft. The motion failed (2-5-0).
MOTION Dr. Muller moved, Mr. Levine seconded to approve a 5 percent condominium fee increase in the 2012 budget draft. The motion passed with two votes in opposition by Ms. Frantz and Mr. Bressler (5-2-0).
Comments from the Floor:
-A resident responded to Dr. Muller’s comment that not all residents would enjoy the benefits of window replacement; he affirmed that all residents would indeed benefit due to lower energy costs.
-A resident expressed concern about being able to enter and exit the doors where the common area Medeco cylinders are being re-keyed. Mr. Santos stated that this is not a concern and the engineers live on-site to handle any problems. The resident also stated that there was no mention in the Board meeting of repairing balconies. Mr. Santos is planning to assess the balconies and the repair work will probably commence at the beginning of the next fiscal year.
-A resident referred to a letter written by a resident owner to the Board who suggested suspending large projects for one year for two reasons: 1) To allow the Reserve Funds to accumulate, and 2) to mellow differences of opinion regarding the lobby refurbishment. The resident also pointed out that the building has two boilers that will need to be replaced in the near future at a substantial replacement cost.
-An opinion was voiced that the Board is too concerned with expenditures and not enough with saving. A resident expressed his opinion that the lobby refurbishment was lavish and the Association is wasteful with energy.
-A resident stated that a decision about landscaping needs to be made soon and it will be too late to plant in April.
Adjournment:
The President adjourned the meeting at 10:55 p.m.
The initial draft of the minutes, upon which these minutes are based, was prepared by Jana Bowcut of On the Record.
Respectfully submitted,
Charles Bressler, Board Secretary
Tuesday, April 19, 2011
Thank You from Helen Soderberg's Family
The family of Helen Soderberg thanks everyone for attending Helen's Celebration of Life gathering on March 26. It was a pleasure to meet all of the residents and staff who meant so much to Helen during her 35+ years at The Elizabeth. We learned a lot more about our aunt through your personal stories, knowing that she touched the lives of so many wonderful people.
In appreciation,
Karin, Karel, Kristine, Kenneth, Randy and Jan
In appreciation,
Karin, Karel, Kristine, Kenneth, Randy and Jan
Friday, April 1, 2011
Comments from Concerned Residents
A number of Elizabeth residents have emailed me comments about what project they would like to do next. Some are responding to the message Maurice Trebach sent and so I include it here. This will give a snapshot of what people are thinking.
On 3/26/11 8:34 PM, "Maurice & Mildred Trebach" wrote:
Dear Karren, Thanx for the work you do to keep us informed .
After we got our report from Mendoza, and he suggested that we do the windows and doors first,and we paid him for his opinion, it seems that we are not going to take his advice and we are going to spend lots of money without getting any real benefit. We're giving our bldg a dressup job with no concern for getting anything in return.
It's time that we did things to benefit all of the people who live in the bldg. Doing the windows and doors first will result in a big saving in the cost of heating and air conditioning the bldg.In addition to this saving (20-30%) in costs. There is still a rebate available to the owners for having this work done now. The price of doing this work will not be cheaper in the future. The cost of getting loans is only going up now. It makes much more sense to do it now. Doing the halls is not a good idea because there will be some wear and tear on the new floors when they do the windows and doors.
What do you think of putting this information at the desk in the form of a list for the owners to sign and see if they prefer to do the windows and doors which will result in cost savings or fix up the halls to make the bldg look good?
Maurice Trebach 1407
I agree; lets democratically have a vote, including residents out of town if that is feasible. I personally prefer to do windows and doors first, because I'm colder here than in my 1917 non-insulated house. Helen Secrest
It is time the owner occupants had some say in what is done with their money. Doors and Windows are much more important than hall carpeting and more "fashion" in the halls. Carolyn Thayer
As an owner of two apartments in the building, I think that we need to replace the windows and doors first before any other cosmetic work is done ( and yes, I consider the hallway work more cosmetic than practical, although the ceilings seemed to be falling down in some places.) I think that the cosmetic work that was done for the lobby is lovely and gives an initial appearance that the owners care about the building but now we must address the not so glamorous but energy efficient necessities that we will have to face for the long term. Claudia Taskier
The costly refurbishment of the lobby was, in our view, more than financially irresponsible – it was scandalous (including the piano purchase). Such scandal would continue if the Board decides to proceed with a similarly lavish refurbishment in the towers. A decent course of action would be to try to recover some of the excessive cost of refurbishing the lobby (including returning to suppliers some items) and applying the savings to cover part of a more modest refurbishment in the towers, once the more urgent structural needs, such as replacement of windows and balcony doors, have been completed. Cesar and Marcia Queiroz, Unit 1613
I agree totally with Maurice, and have nothing to add, except that the windows should come first. There is no point in having beautiful hallways when our homes are drafty and utility bills go up and up. Ilo-Mai Harding
On 3/26/11 8:34 PM, "Maurice & Mildred Trebach"
Dear Karren, Thanx for the work you do to keep us informed .
After we got our report from Mendoza, and he suggested that we do the windows and doors first,and we paid him for his opinion, it seems that we are not going to take his advice and we are going to spend lots of money without getting any real benefit. We're giving our bldg a dressup job with no concern for getting anything in return.
It's time that we did things to benefit all of the people who live in the bldg. Doing the windows and doors first will result in a big saving in the cost of heating and air conditioning the bldg.In addition to this saving (20-30%) in costs. There is still a rebate available to the owners for having this work done now. The price of doing this work will not be cheaper in the future. The cost of getting loans is only going up now. It makes much more sense to do it now. Doing the halls is not a good idea because there will be some wear and tear on the new floors when they do the windows and doors.
What do you think of putting this information at the desk in the form of a list for the owners to sign and see if they prefer to do the windows and doors which will result in cost savings or fix up the halls to make the bldg look good?
Maurice Trebach 1407
I agree; lets democratically have a vote, including residents out of town if that is feasible. I personally prefer to do windows and doors first, because I'm colder here than in my 1917 non-insulated house. Helen Secrest
It is time the owner occupants had some say in what is done with their money. Doors and Windows are much more important than hall carpeting and more "fashion" in the halls. Carolyn Thayer
As an owner of two apartments in the building, I think that we need to replace the windows and doors first before any other cosmetic work is done ( and yes, I consider the hallway work more cosmetic than practical, although the ceilings seemed to be falling down in some places.) I think that the cosmetic work that was done for the lobby is lovely and gives an initial appearance that the owners care about the building but now we must address the not so glamorous but energy efficient necessities that we will have to face for the long term. Claudia Taskier
The costly refurbishment of the lobby was, in our view, more than financially irresponsible – it was scandalous (including the piano purchase). Such scandal would continue if the Board decides to proceed with a similarly lavish refurbishment in the towers. A decent course of action would be to try to recover some of the excessive cost of refurbishing the lobby (including returning to suppliers some items) and applying the savings to cover part of a more modest refurbishment in the towers, once the more urgent structural needs, such as replacement of windows and balcony doors, have been completed. Cesar and Marcia Queiroz, Unit 1613
I agree totally with Maurice, and have nothing to add, except that the windows should come first. There is no point in having beautiful hallways when our homes are drafty and utility bills go up and up. Ilo-Mai Harding