Sutherland support dwindles as homeowners shut out of loan process

KNOW WHEN TO SAY WHEN  Being in the driver's seat of our association has its perks - just ask Kit and Stuart Sutherland; they've had their derrieres planted firmly there for the past eight years.  Not only do you get to bend and stretch every detail of the home lives of over one hundred of your neighbors until it can be shoe-horned into something more to your liking, you always have a steady supply of sycophant vendors and homeowners lined up to stroke your ego and whisper sweet yeses into your ear.  And best of all, the job comes with your very own girl Friday, who's commanded by your every wish.


For those that are smart enough not to stay on the job too long, you really needn't even be too concerned about your performance - or lack thereof - because the big problems are usually years in the making and years in the solving.  Then there are those people that aren't.  Much like the dinner guest who enthusiastically offers to put on a CD that everyone will just love, long after the coffee pot is empty and the symphony of jingling car keys has been reduced to an occasional twinkle, they get the idea of a 'beginning' alright, but remain oddly oblivious to its corresponding 'end'.  These unfortunate souls live long enough to have to solve all of their own problems - and, as everyone knows, that can be a very painful experience.

In fact, the Sutherlands have been shifting gears and pressing pedals in the front seat of our association for so long, even that kickable can known as reserve funding has caught up with them.  Years of contorting elections, gossip and punishment campaigns and shirking the responsibility of saving for our maintenance-and-repair-filled-future has landed them squarely in a pile of their own incompetence.  And it's a big pile.  'Big' as in not even the most accomplished of spin meisters can do much more than land a ragged swipe of lipstick somewhere in the vicinity of its mouth to pretty it up.  By virtue of sticking around until the harvest of their own sowing, the Sutherlands have themselves proved what many homeowners have maintained all along - that neither of them have the business acumen or management experience required to run our association all by themselves, tone deaf to the input from those that could have saved them from themselves and surrounded by puckered up 'yes' people.

THE PROBLEM  is not unique to our association.  Many a board has treated the funding of reserves as a "great if we get to it, but no biggie we don't" type issue.  But, despite the comfort that may be had by way of knowing others share our misery, it is still our problem to solve - never mind its baby daddy.  The unfortunate results of the paternity test are in, and here's the inconvenient reality: our reserves are under-funded by about $400,000.  Yes, you read correctly - $400,000 as in you could buy about forty politicians and still have enough money left over to pick up a new Rolls Royce on your way home from the fund raiser.  That's because we have about $450,000 in upcoming repairs with only $250,000 in the bank and, if that wasn't bad enough, per our reserve study, we are supposed to have at least $200,000 in reserves at the end of the year to pay for repairs yet to come.

Speaking of our dusty reserve study, it was conducted eight years ago, and none of the repairs on our plate at present were repairs anticipated in the study.  Nor did it account for the now apparent maintenance needs resultant of corner-cutting by the developer, Miller-Gallman.  Given this fact, a current reserve study would probably put the target for a healthy reserve fund balance much higher than that of the outdated study that we have.  Responsible boards of directors obtain (and many states now require) a new Reserve Study every two to three years, with updates every year. This key metric of an association's financial health is required for FHA loan guarantees and to obtain credit at reasonable interest rates. In fact, every lender that the Blog contacted required a full Reserve Study be done within the last 12 months as a prerequisite for a loan to an association in any amount -  and one is required to have been conducted in the last sixty days for loans the size our Board is pursuing. How the Sutherlands are navigating around that thorny requirement is something that the Blog will definitely be looking into and following up with, should they continue on their present course of zero homeowner involvement.

(CLICK GRAPH TO ENLARGE)

THEIR SOLUTION  Notice I said their and not the.  The Sutherland's proposed solution is that we run - rather, we sprint into the open arms of a $450,000 loan generously put together for us by our management company, CMA, in their well-placed belief that the economic benefit they will be able to wring out of it will have at least one of the owners standing right in line behind you at the Rolls dealership.  I say "sprint' because the Sutherlands have, in customary fashion, decided on this course without so much as a homeowner meeting to answer homeowner questions or hear their concerns.  Further, they are doing like they always do - proceeding forward without any transparency with respect to exactly what is to be done, who is to do it and without sharing any information regarding what the competing bids (it's not even clear that there has been any competitive bidding) and proposed solutions are.  But they are all about transparency when it comes time to pay for all of the costs they sign onto in the smoke-filled back room that always seems to have enough chairs at the table for CMA but never enough for homeowners.  Never mind that, according to an informal poll taken by the Blog, homeowners think the Board should have to seek member approval before borrowing that kind of money, 53 to 1.

(CLICK GRAPH TO ENLARGE)

Homeowners have been clear in their demand that the Board needs to halt the current rush to borrow and spend, and first work to include and involve those that are, unfortunately, going to be stuck paying the tab for the Sutherland's prime rib-sized failure to plan.  Perhaps the repairs can be done in phases rather than all at once.  Or, maybe we can find a vendor that is well qualified and less expensive. There is more than one way of solving every problem, and homeowners have a lot to lose by rushing into the one that leaves our association with a sea of negative equity that will take years to wade through - all the while depressing, if not halting, GIL home sales.

But, if history is any guide, the voice of reason won't reach unit 409.  You see, they have that pesky little 'voting' process down pat and are no doubt relieved they don't have to answer to homeowners or otherwise be held accountable for their epic financial mismanagement and failure to adequately plan ahead.  On the contrary, they proceed apace as though their performance is exemplary - blithely unaware that the music has stopped, every other dinner guest has long since left and it's time for them to go home.  If for nothing else than to get out of the way so that the hosts can start to clean up all the dirty dishes and wax splattered mess the pleasure of their company has left behind.

People who read this post also read :