The second Strategic Financial Planning meeting was held
August 14, 2017. As outlined in June, the purpose of this meeting was to:
—review the Gates-Hudson presentation of options for
Strategic Financial Planning, based on the Reserve Study and need for capital improvements
at the Elizabeth given its current financial condition
—hear recommendations regarding possible restructuring of
the $5 Million loan
—hear Management recommendations with regard to priorities
of projects within the Reserve Study
Copies of all presentations are posted on Building Link for
those who were unable to attend or did not receive copies at the meeting.
SUMMARY OF THE MEETING:
1. —— Lynn Kiley, Gates-Husdon reviewed some of the
original slides emphasizing the importance of Strategic Planning by condo boards
so they could fulfill their fiduciary responsibility to maintain and improve
the building. She explained that there are only three financing options for
paying for capital improvements—condo fee increases, special assessments, or
borrowing. The Elizabeth had maxed out its borrowing capacity. Therefore, the
Board needs to face balancing issues of cost and need and then adopt a plan
consistent with its fiduciary responsibility. She addressed Bylaws changes to
create continuity in Board terms of office, consistent with the practice of
well-manage condominiums. Finally, she recommended that the Board approve the
Year 1 plan for reserve study projects presented by management in the next
presentation.
2. —— Larry Hirschman, Gates-Hudson presented the
results of the Gates-Hudson study of loan refinancing options, requested by the
Board last year. He pointed out that a simple repayment of the loan could be
done with a special assessment to owners, but that would not address the
current needs of the condo. To deal with the cash flow issues, refinancing the
loan seems the best approach. Check meeting handout for specifics.
3. ——Mary Ann Hall, ECA General Manager: she presented
the results of her study of the reserve study items, regarding which had
already been done, which could be deferred, which could be restructured, which
needed to be done this year, and what projects needed special emphasis. Of
increased concern were garage projects and resident load centers which are the
circuit breaker boxes and hydro jetting of riser stacks. Final costs for these
projects are pending. She then went on to present a plan for the halls different
and less costly than the one presented in the past. Because the doors did not
need and could not be replaced because of secondary issues, and because the
hall project could be phased, she believed cost savings were likely. She then
presented her recommendations for projects to be done this year, which did not
include the halls, for a total of $965,300 with the cost information she currently has.
Further information will be available in September so the Board can make
decisions. If the final figure is $965,300,
it could be covered by budgeted reserves, and phase one of the halls could be
added, if additional cash became available, for example through sale of unit 10
or loan refinancing. She finished by adding that looking at reserve study
expenditures on a one to two-year frame was necessary in this older building
because of the risks of non-planned replacement and repair needs.
Board member and resident questions followed. The option and
value of a Bylaws amendment to reduce the required owner majority from 75% to
60% was discussed. Ms. Row asked
everyone to submit further questions, using a question handout by August 28.
HIGHLIGHTS OF THE MEETING:
This week, a selected number of units of the Elizabeth are
being tested for hot spots emanating from electrical breaker boxes. Breaker
boxes are supposed to be inspected every five years and have not been. If
building-wide rewiring is required, this could add an additional and immediate
expense to the current budget.
While it requires a 75% approval of Association membership
to levy a special assessment, if a critical expense arises that jeopardizes
health and safety, then the Board could impose a special assessment without
needing Association approval.
Our general manager MaryAnn Hall has devised a three-part
plan for hall renovation beginning with new carpet and wall refurbishment
(either paint or wallpaper). Phase 2 would address lighting and ceiling tiles.
Phase 3 would deal with furniture. The caveat is that no
structural/construction activities would be allowed which has something to do
with county code requirements.
The next step will be a resident Q and A session on
September 12.
Next Board meeting is September 14, 2017.
