Summary of ECA Board Meeting November 27, 2018

Board Present: Zlatan Beca, Monique Fridell, Al Muller, Lyle Schwartz, Rhonda Taller, Christopher Wemple

Absent: Makarand (Mak) Dehejia

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton, and Jeremy Tucker (ECA legal counsel, Lerch Early & Brewer

Highlights of the meeting:

President’s Report

·      Noted the unexpected deaths of long-time resident owners Alexandra Kielty and Sally Hart.

·      Described dissatisfaction with NFC, the concierge service we currently employ.

·      Mentioned Thomas Downey engineer ongoing investigation of noise issue affecting West side tiers 01 and 10 as well as common areas that include mail corridor and West side lobby areas.

Legal Report

·      Reviewed details related to the Larry Hirschman embezzlement with some new information:

o   Letter with the summary of findings helpful but not complete.

o   Accounting firm Burdette, Smith & Bish did the forensic audit. They only furnished the ECA with the portion that dealt with the Elizabeth.

o   Questions remain:

§  What analytic procedures were used by forensic accountants?

§  Was anyone else involved in the embezzlement?

§  Can we see the paper trail on the analytic work?

·      Look for a mailing on the proposed bylaw on new smoking restrictions at the Elizabeth. This is a draft for comment. There will be a town hall meeting January 16, 2019.

Financial

·      Loan payment—Motion to approve a $75,000 loan pay down per the 2018-19 budget passes with attending 6 directors unanimous.

·      The General Manager is monitoring when ECA needs to refinance the loan.

·      The ECA annual financial audit was delayed by waiting for the forensic audit results but will move forward with new information provided.

Management Report

·      Garage Project

o   Work is being completed on the incoming side of the guest parking entrance. The FOB reader will be moved back to the incoming side around Dec 3. Work will then proceed around Dec 5 on the outgoing side of guest parking.

o   Estimated total completion of the garage project is now set for August 2019.

·      Garage Door Replacement

o   On Dec 4 the resident entrance of the garage will have its door replaced due to numerous people hitting the door with their vehicles.

o   Exiting and entering the garage will be difficult on that day from 9 am to 3 pm. If it is at all possible it is advised to leave the garage before 9 am and return after 3 pm. Instructions for that day, including how to re-enter the garage have been put under resident doors.

·      Plumbing

o   Septic pits in the garage have been cleaned and pipes replaced as needed.

o   In meeting with several plumbing contractors, the ECA GM has determined that main lines should be cleaned quarterly on the lobby, first, and second levels where most of the clogs occur. Additional plans have been discussed.

o   If backups from these lines continue to occur than all drain lines will require replacement which will run into millions of dollars

·      Noise

o   Steve Johnston, Ph.D. from Thomas Downey Limited (consulting engineers) have been onsite to investigate the noise in the building as described in the ECA President’s Report above,

o   The report will be shared with the residents.

·      Landscaping—fall flowers have been installed

·      General maintenance

o   Apartment inspections are proceeding on the East Tower; West Tower is done.

o   Window Cleaning—is completed and went better than last time.

o   Metal and Stone Cleaning—was done on Nov 7, 2018.

·      Roof—Temco Roofing inspected the roof without major issues. Roof inspections are scheduled for every six months.

New Business

·      Concierge Companies were considered:

o   NFC—current, not meeting their contract specifications.

o   S.P. Jones Enterprises—used by the Carleton

o   NVT Staffing—more for temporary staffing

o   Jeffrey Scott Concierge

§  24/7 staffing without extra cost.

§  Pays employees more than minimum wage with built in bonus program.

§  Trains employees in a 40-hour program with exam, includes conflict resolution.

·      Motion to hire Jeffrey Scott Concierge as new concierge passes with attending 6 directors unanimous.

Committee Reports

·      Fire & Safety

o   The committee completed a draft evacuation plan but needs information from the Fire Department to complete the document.

o   General Manager MaryAnn Hall said she has someone working on evacuation instructions which will be posted on each floor since the Fire Department is requiring immediate compliance.

·      Merv Filter for HVACs

o   Molly Frantz brought used filters of various Merv ratings to show how much dust was collected.

o   ECA GM said she would get additional information on pricing. The Board will decide at the next board meeting in January.

·      Social Committee—there will be a holiday potluck on Saturday December 29, 2018 from 6-9 pm.

Summary of ECA Board Meeting October 23, 2018

Board Present: Zlatan Beca, Makarand (Mak) Dehejia, Monique Fridell, Al Muller, Lyle Schwartz, Rhonda Taller, Christopher Wemple

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton, Jeremy Tucker (ECA legal counsel, Lerch Early & Brewer), and from The Goldklang Group CPAs: Howard Goldklang, President,  and Jeremy Powell, Associate Principal,

Highlights of the meeting:

·      First on the agenda was the presentation by Howard Goldklang & Jeremy Powell.  The presentation explained the difference between a financial statement audit and a forensic audit, and commented on the recent fraud. Gates Hudson has agreed to provide the ECA a copy of the forensic audit report, i.e., the part that deals specifically with the Elizabeth. The report is expected shortly.

·      Treasurer Lyle Schwartz noted that interest rates on our line of credit are scheduled to be adjusted in 2021 and will likely go up. He suggested that it may be advantageous to refinance the load at a fixed rate. The Board will investigate this and report at the November meeting.

·      Garage repairs continue but some of the areas needing repair are requiring more work than expected, which means the overall time for the project may increase.

·      Given the recent drain line pipe break in the 06 tier in September which also knocked out phone service in the management office and the conce, our general manager has contacted a company which drops a camera down such pipes to determine if they are cracked or crumbling. Look for a report at the next board meeting.

·      Molly Frantz reported findings and recommendations regarding MERV filters. The ECA has enough filters to complete the semi-annual in-unit maintenance, which begins in the West Tower on Monday, November 5, beginning on floors 1 and 2. No decision on MERV filters was made.

·      A question was asked about release of the Management Letters prepared by our auditor for the Board of Directors. Following is the ECA policy, found in the BuildingLink Library.

“Release of Audits and Related Information to Residents”

“The conduct of audits is a routine annual step in assuring competent financial management of any condominium. However, while audits themselves are released to owners when adopted, other related documents such as management letters are not. This is in accord with AICPA AU-C Section 905.5, through which CPA firms restrict such documents to review by the Board and management. These documents are reviewed by the Treasurer and General Manager, and management company, and if warranted, a corrective action plan is developed which is also presented to the Board. The Board may decide to provide summary information about management letters, related documents and corrective action plans to owners. The Elizabeth Condominium will continue to release audits, summaries of management letters and corrective action plans when adopted by the Board for owner information.” 

Beginning with the Transition Audit (July 1, 2015 – January 31, 2016), and at the request of the Board President, a summary of Goldklang’s findings) and recommended corrective actions was sent out to owners and placed on BuildingLink. Additionally, a special meeting was held for owners at which these documents were explained by the auditor. 

This same process was followed in the case of all subsequent audits and Jeremy Powell said he is happy to do this again this year.  In addition, he pointed out that Goldklang provides this service to none of its clients except the Elizabeth Condominium Association.

·      General Manager, MaryAnn Hall, announced that Rakeem’s last day would be November 1. He is moving to North Carolina. Rakeem was an employee of the concierge company and not the Association. We wish him well!

·      GM MaryAnn Hall also announced that the elevators passed inspection and we are awaiting new certificates; the roof anchors passed inspection and the next weight-testing of anchors is not due for five years; and the boilers passed the annual inspection. Additionally, window washing will take place November 1 & 2; and the fall landscaping will occur October 24.

Summary of ECA Board Meeting September 25, 2018

Board Present: Zlatan Beca, Makarand (Mak) Dehejia, Monique Fridell, Al Muller, Lyle Schwartz, Rhonda Taller, Christopher Wemple

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton, Jeremy Tucker (ECA legal counsel, Lerch Early & Brewer)

Highlights of the meeting:

Embezzlement of Funds: our former Gates Hudson Portfolio Manager, Larry Hirschman, a long-time employee, has been Involved in embezzling funds from the Elizabeth.  A total of $72,000 had been taken over a two-year period.  ($68,000 in 2016 and $4,000 in January of 2017).  We have been working closely with Gates Hudson to ensure all missing monies are accounted for.  A forensic audit is being conducted.  Gates Hudson will be responsible for replacing the stolen money, and other costs that may be incurred by the Elizabeth in resolving this issue.

Motion proposing a House Rule to ban smoking on balconies was withdrawn by Dr. Muller. Residents were invited to provide their comments on the proposed rule at this point in the meeting.  Many residents spoke out against the motion, citing difficulty in enforcement (i.e., locating smokers) and the concern that it would force smokers inside the building where smoke would enter our ventilation system, while smoking on balconies allows the smoke to dissipate into the environment. Only two residents spoke in favor of the House Rule. 
 

Instead of a House Rule to ban smoking on balconies, the Board asked Counsel to draft a bylaw amendment to ban smoking in the Elizabeth.  Counsel pointed out that the current proposed bylaw amendment is modeled after ones used by the Promenade and two of the Grosvenor condos.  He explained that violations of the smoking ban are handled in the same way as violations of other house rules, such as noise violations.  That is, the complaint is investigated, probable cause determined, a hearing held, evidence presented, after which the Board then determines if a violation occurred. If the Board so determines, the Board then sanctions the offender in accordance with the provisions of the bylaw.  A new proposed bylaw will be presented to the community sometime in the future.

Factors to be considered in drafting this bylaw are whether to grandfather-in current smokers (and the details of such a provision), whether to have a designated area outside for smoking, and how to handle e-cigarettes and medical marijuana.  When asked about whether leases would have to be modified should the bylaw pass, counsel responded that such would not be necessary as all leases are subject to association bylaws.

Board voted to approve the new health insurance plan for employees at a cost of $64,826.28, a United Health Care National Point of Service (NPOS) plan.  Employees are currently covered by a CareFirst PPO, which is appropriate for a large company with many employees that travel world-wide.  We have six (6) employees.  The renewal would have cost the Association approximately $92,180.52.  In its deliberations, the Board considered the CareFirst POS, which is less expensive than the current PPO, as well as the United Health Care NPOS. 

The Board chose United Health Care NPOS, which will cover all of our employees’ current primary care physicians and specialists and provides comparable service, but at a savings of $27,354.  MaryAnn Hall was given kudos for her investigation of health care providers and policies leading to this savings.

Treasurer, Lyle Schwartz led a discussion of a proposed Financial Investment Plan for the Association which would guide the Treasurer, our financial management team at Gates Hudson, and our representative at Morgan Stanley in moving cash into appropriate investment vehicles.  Morgan Stanley provided a draft or template for such an investment policy.  The Board approved a modification of this draft investment policy.  It now goes to Counsel for legal review and approval. 

As of August 31, the Association had $601,242.61 in cash in our Operating Contingency Fund at Union Bank, earning little interest.  The plan is to establish a separate Operating Contingency Reserve Fund at Morgan Stanley into which we will transfer this money.  It will still address any unanticipated operating expenses, but with a better return.

Mr. Schwartz mentioned that all inter-fund transfers will be delayed until we have a full audit from the Goldklang Group, providing accurate numbers for transfer of funds from the Reserves and Operating Contingency Fund to an Operating Fund. 

The Board approved an additional $59,700 for Corrosion Inhibitor Treatment (CIT) to be applied to concrete repairs to prevent corrosion.  The only other option to prevent corrosion is a procedure that costs about twice that much, Vector XP 2 Anode, and our consulting engineer, FEA, recommended the less expensive CIT treatment, explaining the treatments are equal.

Empty Apartments: The ECA president asked that residents report any odors coming from vacant apartments. Some apartments have been unoccupied for many years.

Two Issues from August 2018 Board Meeting

After talking to a number of people, I decided that I should add this post to the last one concerning the August meeting of the ECA Board.

There were two items I left out because I felt disappointed by how the Board leadership handled them.

The first concerned Molly Frantz insisting again that we should be using MERV 8 filters in our HVACs. So, the Board president made Frantz chair of a new committee on HVAC filters instead of reviewing the history of this request. Luckily the problem was quickly solved and of course there is no reason to have such a committee.

The second item plays with our financial health and remains tabled for further consideration. Board member Monique Fridell proposed that a cap be placed on ECA debt with a new bylaw amendment. This means that if we had a major expense to fix something that exceeded that debt limit, the Association would have no way of fixing the problem since we cannot impose a special assessment and none of us want to raise our condo fees in any extreme way. A debt limit would affect our ability to take out a loan of an adequate amount to fix something as expensive as replacement of windows and doors.

While Board Vice President Mak Dehejia pointed out that Fridell’s proposal was not realistic, the Board President Z Beca and Board Treasurer Lyle Schwartz lent sympathetic ears to this proposal. Schwartz went so far to suggest (erroneously) that the Board has a limited capacity to impose a special assessment under certain circumstances that might help if we had a debt limit. This limited capacity for special assessment did not apply to replacing windows and doors according to our legal counsel who researched this.

Capping debt is totally wrong headed and speaks to the fact that Fridell doesn’t live in the building and doesn’t care who would suffer if something of major cost breaks without means to fix it.

Fridell’s rule of thumb is to spend as little money as possible no matter the need. All her comments speak to this extreme frugality and doesn’t speak to a balance of quality of life.

In 2007 when folks like me starting lobbying for new windows and balcony doors, Treasurer Fridell and ECA Board President Woody Cunningham subscribed to the rule “run to failure” and they said that those people with water, wind and grit coming in through the failed weathering stripping of the windows and doors were just wanting to spend money unnecessarily. Furthermore, they believed they could control high energy cost by refusing to give people year-round a/c.

So, in the hot days of fall, winter and spring, residents were unable to cool down their apartments. Having a four-pipe system which provides a choice between heat or air-conditioning, such as The Elizabeth has, is a feature of a luxury high-rise building. Some of the owners at The Elizabeth specifically bought here for that option.

The other thing to note is that some people who attended the meeting walked away thinking that Fridell is financially astute and that members of the Board leadership were endorsing her ideas.

Highlihgts of ECA Board Meeting August 28, 2018

Board Present: Zlatan Beca, Makarand (Mak) Dehejia, Monique Fridell, Al Muller, Lyle Schwartz, Rhonda Taller, Christopher Wemple

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton

Highlights of the meeting:

Garage Project: Due to contractor planning error, the repair of the garage will extend into spring (April or May). The error is inconvenient but will not cost us more money or affect the quality of the work. September 4, CPR moves into Phase 2 which includes repair of the driveway on the G-1 side. This too will inconvenience everyone and disrupt the traffic pattern.

Financial Reporting: The Board unanimously approved a new format recommended by the Budge & Finance Committee to improve understandability of some reported categories.

Humidity Problem in East Tower: As the result of a fan coil unit in the common area that had never been cleaned, a humidity problem developed. The fan coil had to be replaced. At the time of this meeting, the new fan coil, an expensive part ($25,500), had been  ordered and expected within a week.

Garage doors: both garage doors have been experiencing problems. Both were repaired but the theory is that the demolition in the garage is causing the problems.

Hall Refurbishment: Committee members, charged with improving the condition of the hallways as an interim meaure while awaiting the start of hallway renovation,  walked all the halls to inventory issues. Biggest problem was the large number of burned out light bulbs. Z Beca called for the bulbs to be replaced as a first improvement step.

MERV Filters for HVACs: Currently, when HVAC filters are replaced during the semi-annual maintenance visits, our staff uses MERV 4 filters.  Molly Frantz raised the issue about using higher-rated MERV filters (i.e., MERV 8 or highter) instead. Sharon Bobb, previous Board President, pointed out that filters with higher ratings than MERV 4 collect more particulates and get dirty faster and, consequently, must be replaced more frequently to prevent the HVAC motors  from burning out. Research after the meeting affirms that Mr. Mendoza advised that if MERV 8 filters are used, they must be checked monthly and replaced as soon as they become dirty to avoid overtaxing the motors.

House Rules: A draft change to the ECA rules was mailed to owners regarding a prohibition of smoking on balconies. Enforcement was not spelled out and would probably be difficult to enact.

Fire & Safety Committee: A new committee has been formed and is headed by Folake Fabunmi.

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