Outcome of the Bylaw Changes Vote

While the Association did not approve either of the bylaw changes, among those who voted there was momentum toward a significant approval rate.

Here are the numbers:
On the Board election issue, 166 votes (by unit) were cast in favor and 55 (by unit) against which translated into 40% of the weighted votes for and 15.49% of the weighted votes against.

On the Special Assessment, 148 (by unit) voted for and 76 (by unit) against. This worked out to 40.74% of the weighted votes for and 16.61% of the weighted votes against.

The percent of Association approval required:
What you need to understand is that according to the new Maryland condominium law, in order for condo bylaws to be approved, 60% of the condo association by weighted votes must approve the bylaw change. We needed a 51% weighted vote to call this special meeting and in fact, we got 55.08%.

So what does the outcome of this bylaw vote mean?
The outcome means that:
The 40% shows that a large number of Association members are concerned about how we are going to reduce our debt and pay for maintenance of our home. One should keep in mind that as of the budget meeting held on February 28, 2018, we are facing a significantly large bill for garage repairs ($800,000-$1 million).

What about the 45% who did not vote?
—There are approximately 30% of the Association who are non-resident owners, with some smaller percent of these owners being exclusively investors. Typically investors do not want to invest money in their property because the hope is to make money, not spend money.

—That said, there were non-resident owners who do care about their property at the Elizabeth because they intend to move here in the future or expect family members to live here if that isn't already the case. There was a large effort to reach non-resident owners and there was some success in getting them to vote proxies.

—And sadly, there are some resident owners who refuse to step up and take responsibility for being an Association member. I had one man tell me when I asked if he turned in his proxy for the bylaw changes that he didn't want to participate in "house politics." I said this is about your property value but he didn't want to hear that. Some Association members think they are living in a hotel and therefore cannot understand that all Association members are obligated to pay (in one way or another) for common area improvements and maintenance like fixing the garage, putting on a new roof, replacing windows and balcony doors, fixing pipes, refurbishing elevators, ad nauseum.

Summary of ECA Board Meeting January 23, 2018

Board Present: Zlatan Beca, Makarand (Mac) Dehejia, Monique Fridell, Al Muller, Connie Row, Lyle Schwartz, Rhonda Taller

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton, Gates Hudson Portfolio Manager Larry Hirschman, Jeremy Tucker (ECA legal counsel, Lerch Early & Brewer, Chtd.), Goldklang Principal Harold Goldklang

HIGHLIGHTS OF THE MEETING

2017 Audit Report

Harold Goldklang, stepping in for Auditor Jeremy Powell, presented the highlights of the 2017 Audit Report. The report is good and presents no financial issues. The balance sheet shows we are recovering from our financial setbacks of the last several years with a slight increase of funds. Treasurer Connie Row said if we continue in the same path that the last two boards have been following, we will continue to show financial improvement.

President’s Report

Due to certain people abusing our General Manager’s open-door policy and taking far too much of her time for repetitive complaints, President Beca has called a moratorium on walk-in visits to the GM. Unscheduled access continues for our able Assistant Manager Romaine Cureton..

Legal Report

Legal counsel Jeremy Tucker said that a general problem in Montgomery County, MD regarding towing companies illegally holding cars hostage until towing fees were paid has resulted in financial penalties throughout the county. The Elizabeth ordered three tows and is libel for approximately $1200 in penalties. Apparently the Elizabeth has no policy on towing and lacks signs saying if you park illegally in our garage, your car will be subject to towing at your expense. One resident said she urges posting of such signs since she had an unknown car in her space for three days. Towing companies say they cannot enter our garage with a flatbed truck because there is not enough clearance. No action was taken on this issue.

Motions

Hallway HVACs—Board voted six to one (dissenting vote was by Al Muller) to approve new controls for the HVAC hallway system to correct hallways that either freezing in cold weather or over heated. GM MaryAnn Hall said after careful consideration the uncompeted contract for this $64,868 repair should go to Noyes, the contractor who has been sorting out all the problems we have had that were not attended to by past contractors.

General Manager’s Report

Garage Project—FEA completed the Scope of Work and it has gone out to potential bidders. It is expected that the work will start April 1.

High Rise Window: Six units report cold air coming through the new windows and doors. High Rise Windows says the windows/doors are no longer under warranty and want to charge $199 just for each service call. Our GM is working on this issue.

New Assistant Chief Engineer—Barry Blanton has accepted the position and began work on January 2. He worked at the Elizabeth for several months under a previous management. He has substantial knowledge of the building and is a Class 1 Engineer.

West Tower Inspections—Checking of smoke detectors, leak inspection, condensate line cleaning is underway.

West Tower Patio and Curbing—Work is being done to discover a leak that is damaging the front of the building.  Curb repairs have been done in the front of the building.

Summary of ECA Board Meeting November 28, 2017

Board Present: Zlatan Beca, Makarand (Mac) Dehejia, Monique Fridell, Al Muller, Connie Row, Lyle Schwartz, Rhonda Taller

Others Present: ECA General Manager MaryAnn Hall, Assistant Manager Romaine Cureton, Gates Hudson Portfolio Manager Larry Hirschman, Jeremy Tucker (ECA legal counsel, Lerch Early & Brewer, Chtd.)

HIGHLIGHTS OF THE MEETING

President’s Report

Rescheduled Special Meeting for Bylaw Amendments—January 23, 2018 is the new date for the Association to vote on changes to two bylaws that address board terms and special assessments. The original meeting scheduled in November was canceled because it was uncertain that the required 51% quorum would be met. All proxies continue to be in effect through to the January 23 meeting. Voted proxies may be taken to the management office.

Ethics Training for the Board—The ECA Board will be given ethics training on December 4 to ensure each Board member is acting in the best interest of the Association.

Holiday Party—There will be an official holiday party for residents on December 17. Dress to impress is encouraged.

Board Secretary Elected

Monique Fridell has agreed to serve as Secretary of the ECA Board.

Financial News

The draft audit report shows our financial picture making positive gains.

Motions

Loan Reporting—Board unanimously approved returning to GAAP principles related to accounting for payments on our loan. Generally Accepted Accounting Principles (GAAP) are widely accepted accounting principles, standards, and procedures that companies follow when they make their financial statements. Why this practice had fallen out of use seems to have been a measure to placate a resident who had been a past Board member.

Service fees for in-unit work orders—The Board tabled a motion to raise the fee charged for such services as repairing a leaking faucet.  The proposal was to raise the fee to $50 per hour which is similar to what other condos charge for such services. The Board asked for more clarity on cost of services, which the General Manager will work up.

Strategic Financial Plan—The Board voted 6 to 1 to approve the long-term project and financing component to complete the Strategic Financial Plan. This plan outlines two options to return The Elizabeth to fiscal health while addressing current capital needs: 

• recommends a special assessment be used to pay off the existing loan as the preferred option subject to a separate owner vote. (This is only feasible if the pending bylaw amendment reducing the size of the required vote passes.)
• or, if necessary raising condo fees for the next several years.

Under current conditions, refinancing of our large loan is not feasible.

General Manager’s Report

Water off in Building on November 30—To repair the cooling tower. The time the water will be affected is from 8:30 am to 4 pm. It may be that cold water will be running but not the hot.

Elevator Inspection: Inspection completed. It is now expected that we can delay major renovations to the elevator for several years.

Cleaning Main Sewer Lines—Lower floors continue to be a problem.

EPipe Inspection—Montgomery County is close to completing inspection of EPipe work with no problems reported.

Holiday Fund—Pam Dillon and others will collect donations to the Employee Holiday Fund. Stay tuned for further details.

Things to know about the ECA Bylaw Changes & it’s Meeting November 13

Your participation either by attending in person or sending in your proxy in advance is critical.

Why? This is a special meeting like the Annual Meeting and requires 51% participation or the meeting cannot be held.

Your financial responsibility for repairing and maintaining the building is not optional.

Owners in a condominium are not only responsible for upkeep of their own units but also for all the elements in common ownership with other Association members. This means if the garage floor needs repairing (as it does now), the Association funds (which come from you mostly by condominium fees) will pay for those repairs.

We have limited ways of getting money into our Association funds: condominium fees, sale of property in common, and special assessments.  

Our condominium fees are at an all-time high price and that in combination with our large loan (which we got to pay off our windows and balcony door project) and our small reserve fund are driving down our property values. We currently have about 20 apartments on the market and lenders, given our poor financial profile, are not willing to give buyers loans. Most buyers do not purchase with cash. So if they can’t get a reasonably priced loan, they won’t buy at the Elizabeth.

As to the Association apartment that we recently renovated, we have been advised not to sell it because we will not get a good sale price at this time, given all the other Elizabeth apartments on the market.

Currently the bylaws say if we want to levy a special assessment, 75% of the Association must agree. Since we have trouble every year getting 51% participation for our Annual meeting and more than 30% of our owners do not live in the Elizabeth, it is impossible to achieve a 75% agreement for something as significant as a special assessment.

Why aren’t apartments selling at the Elizabeth?

There are three main reasons apartments are not selling: the high condo fees with no end in sight for additional increases, the modest amount of money in our reserve fund, and the questionable funding for the long list of major capital improvements. Lenders look at these three things before they will consider giving a buyer a mortgage.

I can’t afford a special assessment.

Since this bylaw change does not address what the cost of a special assessment might be, it remains to be seen whether an individual owner can afford a special assessment. No definitive plan has been offered to any owner. All owners would be invited to participate in articulating special assessment options should the bylaw amendment changing the Association approval from 75% to 60% is ratified.

One way a special assessment might be used is to pay off our large loan. Paying off the ECA loan early has monetary benefits. It is estimated that if we had a special assessment to pay off our loan, we would free up over $650,000 to use for much-needed capital improvements, such as hallway refurbishment.

Why can’t we pay off the loan with small increases in our condo fees?

In theory, we could pay off the loan over a ten-year period as long as we are not hit with unexpected large capital expenditures. The cost of paying off the loan is significant as detailed above and our property values will continue to fall. With old buildings, we should expect the unexpected relative to urgent needs to repair something. No amount of strategic planning can make up for a limited capital reserves fund and the burden of carrying a large loan. That is why 6 out of the 7 board members are supporting the special assessment bylaw change.

Did we really need to take out that loan?

This is water under the bridge but Association members are asking this question.

Yes, we needed to replace the leaking window and doors which were driving up our energy costs and ruining the quality of life for some unit owners, given all the dirt and grime coming in through the worn-out gaskets.  Repair of balconies and the façade provided not only timely safety measures but also improved the real estate appearance of our building.  As an owner since 1978, I know people began lobbying for window replacement in 1997, when I moved back into my unit after 5 years of living elsewhere. It was then that I saw and experienced how run down the Elizabeth had become.

Since our Board knew it was not possible to levy a special assessment and get 75% agreement, taking out a loan was our only option.

What are the consequences if I don’t vote my proxy?

Your inaction would be a NO vote, indicating that you do not want to take responsibility for what happens to our plummeting real estate values and the upkeep of our building. Other condominiums in Montgomery County, Maryland, have gone in to financial failure and building disrepair to bad effect.

Condominiums in crisis: Financial troubles put many communities at risk

By Bill Turque September 18, 2016

https://www.washingtonpost.com/local/md-politics/condominiums-in-crisis-financial-troubles-put-many-communities-at-risk/2016/09/17/07ba32ac-6972-11e6-ba32-5a4bf5aad4fa_story.html?utm_term=.7aae8c00573f

Why should I approve the bylaw pertaining to how directors serve?

The main reason is to provide continuity so that board members have enough time to finish major projects.

More information below in previous blog post.