On April 15, 2019, the Elizabeth Condominium conducted its
annual Meet the Candidate event to allow those running for the ECA Board of
Directors to publicly state why they are
running for the Board and what they hope to achieve. Peg Downey served as the moderator
and Stephanie Olshan assisted in organizing written questions that Ms. Downey
would ask the candidates. Gary Costello acted as timekeeper. Each candidate was
given three minutes for an opening statement, 2 minutes for a closing
statement, and 2 minutes to answer a question.
Six candidates are running for three seats. All are resident
owners, two are currently sitting Board members up for reelection (Beca &
Muller), one is a former Board member who quit before her term was up, and
three would be newcomers to the Board. Everyone running was present at Meet the
Candidates. Their statements can be seen at:
http://theelizabethcondo.blogspot.com/2019/04/2019-meet-candidates-remarks.html.
The candidates are:
Zlatan Beca
Babs Eisman
Molly Frantz
Alfred Muller
Elisa Siegel
James Whalen
Thank you to the six candidates for running for the ECA
Board of Directors. Being a Board Director is usually a thankless task/challenge
so I want to be sure at least one thank you is voiced to those running.
I have been owner since 1978 and regularly attending monthly
board meetings since 2007 when I noticed how rundown our building had become. I
have been writing this blog since 2008 when I realized that communications in
the building were lacking and I have served on the Board as a Director. With
that experience, I offer my recommendations for these three candidates because
I see them as the new leadership for our future—all are professionals who bring
valuable skillsets, expertise, and experience: Zlatan Beca, Elisa Siegel, and
James (Jimmy) Whalen.
Here are my reasons for picking these three:
Zlatan Beca is a
sitting Board member who has served as president for two years. His performance
record demonstrated that he sincerely wants to balance the budget and “improve
the health of the Reserve Fund.” Under his leadership, we have seen aggressive
pay down of our large loan. He has said in his Meet the Candidates statement
that he supports projects, like hallway renovation, which will help improve our
property values, while also taking care to keep the condo fees “steady and in
line with the Cost of Living Adjustment.” After all, we know that you can only
make repairs and building improvements with adequate funding.
Elisa Siegel currently
manages a $10 million budget and leads a team of 55 professionals as well as
contractors and vendors. Ms. Siegel brings 40 years of experience in
communications, reputation management, and public relations, a valuable skill
set not yet represented on the Board. She has pledged to apply her expertise to
restore our damaged reputation, including development of a public website to
better position our condominium in the real estate market. At Meet the
Candidates night, she said, “If elected,
you can count on me to take a fiscally responsible approach to balancing the
essential needs we have today with the important work we must continue to
sustain our future, including rebuilding our reserves, completing necessary
repairs to our infrastructure, undertaking preventive and regular maintenance,
completing much-needed renovations to our hallways, and rebuilding our brand as
a luxury building.” As she said in her opening Candidate’s statement, “These
steps are all essential to improving our property values, which is one of the
Board’s primary fiduciary responsibilities.”
James (Jimmy) Whalen
is the current Chair of the ECA Budget and Finance Committee. Since taking this
position, he has managed to conduct meetings that run efficiently by promoting
a good culture in meetings that avoid non-productive activities and negativity.
His accomplishments include reconstruction of the Monthly Financial Reports so
that they are more concise and easier to understand. He has helped build an
investment strategy that includes a laddered CD portfolio to get interest from
our reserve cash. Jimmy Whalen is already making a difference relative to our
finances. He would be a welcomed addition to the Board.
Here are my reasons for why these candidates are not the
best choices:
Babs Eisman as a
30-year resident has made contributions to the social well-being of our
community and I would urge her to continue her participation with ECA
committees. The candidates I am recommending bring a greater set of skills and
experience than Ms. Eisman’s statement indicates.
Molly Frantz and Alfred Muller have both served on ECA
Boards and have records that need to be taken into account.
Molly Frantz
—On Financial Matters
Those who regularly attend monthly board meetings have often
had to suffer through endless questions from Ms. Frantz that hold up our
monthly board meetings. Her line of questions usually indicate that she does
not understand the answers given. On April 10, 2017, Ms. Frantz challenged the
audit prepared by Jeremy Powell of Goldklang Group CPAs. On April 20, 2017, owners
were provided the auditor’s response to her claims via an email from
BuildingLink. The auditor wrote that
based on Generally Accepted Accounting Principles and his own cash flow
analysis, he concluded, [her] “… analysis contained several material omissions
and errors in her formulation which lead her to an improper finding.”
Among the errors in Ms. Frantz’s analysis cited by Mr.
Powell were the following:
·
“Notably, and as discussed below, Ms. Frantz’s
analysis does not take into account payments to vendors and to the bank that
flow from the balance sheet.
·
Further, as I explained to the community, the
loan payments are not reflected expenses on the income statement, because the
payments reduce an existing liability.
·
We also found it difficult to follow Mr.
Frantz’s analysis and conclusions in certain places, as she combines reports
which reflects information calculated differently, but we did our best.”
Mr. Powell concluded, “… Ms. Frantz’s analysis incorrectly
combines different financial reports, which calculate the financial position of
the Association differently, to arrive at her conclusion. Based on our
review, all funds are properly noted and reconciled in the Association’s
financial statements.”
This is just one example of her inability to understand and
communicate financial matters.
—On Working with Others
In 2011, Ms. Frantz quit the Board saying that the Board was
too toxic to work with. She stated in her resignation letter dated August 16,
2011, that she experienced, “A board replete with personal ill-will, petulance
[sic] behavior, hidden agendas, and a penchant for taking offense at the
slightest opportunity…The personal toll of working in such a dysfunctional
environment has been enormous.” This seems to indicate that she does not have the
necessary temperament to serve on any board of directors.
—On Our Current Auditors
It should also be noted that Ms. Frantz stated in her Meet
the Candidates question and answer session that she would like to replace the
Goldklang Group as our auditors because she feels they didn’t do enough to
prevent the embezzlement that took place by a trusted senior employee of Gates
Hudson. It is important to understand that it was one employee who carried out
the fraud and not the company. In fact, this company showed integrity by
immediately notifying the Elizabeth of the embezzlement, rapidly returning all
funds with interest, paying all associated expenses, and taking step to further
tighten their internal controls.
At the time of that discovery, Jeremy Powell and Howard
Goldklang spoke at a Board meeting about the difference between regular
auditing of financial statements which their firm does for us, and forensic
auditing which is a detailed examination that looks for irregularities in
accounting and financial procedures. The bottom line is that embezzlement is a
sophisticated crime perpetrated by one or more trusted and often highly placed employees
who have access making it possible for them to circumvent controls in place. As
such, it is difficult at best to detect.
—On Our Current Management Company
Ms. Frantz also stated she wished to replace Gates Hudson,
our property management group, for its role in the embezzlement. As stated
above, this was a fraud perpetrated by a single individual. Gates Hudson had no
role in the embezzlement. It’s rare that monetary restitution happened so
quickly for ECA and that an organization like Gates Hudson enacted new
safeguards without hesitation. Unfortunately, embezzlement happens all the
time. CNBC reported in 2017 that workplace crime costs US businesses $50 billion
per year. In 2019, a former Montgomery
County official was sentenced in a $6.7 million embezzlement scheme.
Alfred Muller
—On Our Reserve Fund
In 2013 as a Board member, Alfred Muller supported drawing
down the existing reserve fund which soon led to a Reserve Fund balance of
approximately $1000. This is a position he has continued to defend. This action
resulted in the Elizabeth almost losing our master insurance, making it
impossible for us to secure FHA certification, and making our building
unattractive to prospective buyers due to our poor financial profile. Worse,
the lack of sufficient reserves placed the condominium at great financial risk
in the event of a costly infrastructure or equipment failure. The line of
credit could not be used for anything other than the replacement of our windows
and balcony doors as stated by the terms of the loan.
According to Condominium Association Institute (CAI)
guidance on reserves to board members, “Setting aside adequate reserves for the
future is an extremely important part of the board’s responsibility. It is
important to remember that boards that fail to adequately fund their reserve
accounts have breached their fiduciary duty to the association.”
—On Financial Management
By way of background, ECA boards approved a zero percent
(0%) increase in condo fees in 12 separate years during the period July 1984
through 2009. This failure to adequately provide sufficient funds to maintain
the property led to the deteriorating infrastructure that we suffer with today.
As an example, in FY 2009, Al Muller voted for a zero
percent (0%) increase in condo fees. In fact, as he did in the Budget Town Hall
meeting April 10, 2019, he has continued to push for the lowest possible
increase in condo fees (1%) than what is currently being considered (2%-3%) by
the Board Treasurer and Budget & Finance Committee. (Note: the increase in
condo fees has not been voted on yet.) It appears that Dr. Muller thinks that
keeping assessments from going up is the primary obligation of a director rather
than ensuring that there are sufficient funds to properly maintain the
community.
Montgomery County Commission on Common Ownership Communities
(CCOC) in its chapter entitled “The Wrong Way to Budget” counsels that keeping
condo fees down at the expense of maintenance and upkeep is transparently
foolish because everything structural and mechanical requires more maintenance
and repair as it gets older. The CCOC further advises that this practice will
“diminish the appearance of the community and make it a less desirable place to
live. This will adversely affect its resale value relative to nearby
communities that are better maintained.” This is precisely what happened to the
Elizabeth.
As his record shows, Al Muller works to keep condo fees down
at the expense of adequate maintenance and sufficient reserves. For these
reasons, I do not think Al Muller is the right person to lead us to improved
property values and a financially stable future.
You are urged to vote for Z Beca, Jimmy Whalen, and Elisa
Siegel—owners who will work to improve the financial position and
infrastructure of The Elizabeth, our property values, and our quality of life.
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