The $3.4 million hayride

According to information presented by the Board of Directors at the most recent Annual Meeting, our Association ended 2011 with $214,035 and it expects to collect $46,106 in reserve additions from assessments over the coming year.  Those two numbers total $260,141 – which doesn’t sound like we would be doing too badly at the end of 2012, does it?

But in order to leave homeowners with that false sense of financial security, the Board had to perform the budgeting equivalent of moon walking – the act of appearing to make forward motion, when in fact, we will be going backwards.  The only difference being that they arguably did it better than the late Michael Jackson ever hoped to do as we will be going backward over the coming year by about three full stage lengths.  How so, you ask?  Because they skillfully left $400,000 that they plan to spend over the next twelve months out of the budget.

  

The Board stated that the more than $400,000 that they expect to spend off budget in the coming year will be for stucco and window repairs.  This trick is not new.  The Federal Government has been doing it for nearly a decade in the way it accounts for war spending, the only distinction being that (Continued...)
our Board puts the government to shame when it comes to the percentage of off-budget spending.  When added together, the current Board – by their own admission – expects to spend a staggering $863,000 of your money next year ($461,600 budgeted operating expenses which will be collected primary via monthly assessments and an additional $401,979 that will come from a combination of borrowing and from reserves).  This means that more than 46% of spending over the coming year is ‘off-budget’ – a figure that makes Washington's budget tricks look positively amateur by comparison.   In fact, it’s a financial sleight of hand so out-sized that when all is said and done at the end of 2012, our Association will have a negative net worth of $141,838.

Let’s set aside the thorny issue that our Board never sought homeowner approval to spend nearly half of what they expect to spend over the coming year by taking advantage of a loophole in our By-Laws that allows our Board to borrow funds in our name and spend those proceeds without likewise needing to get explicit homeowner approval to do so, as they do with funds spent via the Annual Budget.  Instead, let’s take a look at where we will be as a result of this smoke and mirror subversion of the ‘budget’ process. It’s a sobering vision.  After collecting the epic sum of more than $3.4 million dollars from 2003 through 2012, we will have not only not saved one red cent, but worse; we will owe $141,838 more than we will have in the bank.

If that is okay with you, then you should do absolutely nothing - the status-quo is working just fine for you.  If you think this result at best represents a failure to plan and spend judiciously – and at worse, represents a complete and total abdication of meeting any semblance of a fiduciary duty to homeowners, then you need to act now.  Send an e-mail to the Blog at gil@go.to with the simple subject line of ‘Count me in’.  And, together, we will get our Association back on the right track, by restoring budgeting ability and accountability, and ending the dysfunctional propensity of our Board to be led around by its nose by those that profit from its inexperience in commercial construction, lack of fiscal restraint and its counter-productive tendency to spend its time settling petty personal scores rather than focusing on providing responsible stewardship for our Association.

Your help and support is urgently needed to avoid a financial disaster for our Association.  Get involved and be a part of where Glen Iris Lofts is going.  Send us an e-mail gil@go.to with the subject line ‘Count me in’ and, together, we can – and will – get back on track.

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