New GIL Mega-Loan has CMA sharpening the shears

Editor’s note: Michele Richards from Community Management Associates was twice invited to comment on the subject of this post and have her perspective of events included. The Blog did not receive a reply to either invitation.

The Glen Iris Board is in a big hurry to borrow big – and guess who is celebrating? CMA. And guess who will be picking up the hefty party tab for years to come? You guessed it, GIL homeowners.  Most of whom would be surprised to learn how much they paid in fees and commissions the last time we got the CMA ‘hook up'.

The Blog’s review of accounting records for the $200,000 loan that was arranged by CMA in 2004 revealed not only hefty fees, but some rather amateurish attempts on the part of CMA to conceal the true nature of the costs as well.

Consider the following accounting information, pulled verbatim from CMA financial reports provided to the GIL Board by CMA's Michele Richards:

Note the $4,500 ‘loan setup fee’ charged by CMA on 8/9. That same day CMA drafted $3,000 to ‘Community Funding Corp’ in the amount of $3,000. Then, presumably after a poor night’s rest to think on the matter, CMA comes back around the following day (8/10) to enter a draft for $1,500 to ‘NCB – CMA’ (National Community Bank) for a ‘Documentation Fee’.  Then, someone either realized that the bank itself charges a loan documentation fee and that fact would likely surface on paperwork provided by the bank, or they just got sloppy, as the second draft that day for the same amount carried the inconsistently curious notation ‘2nd Half of Loan Commission’. Where was the first half? Oh, that’s right! We called it a ‘Documentation Fee’ but forgot to go back and change the accounting notes! Doh!

Then, in a flash of something less than genius, they voided the two checks for $1,500 (which they provided copies of to the Board) but then turned right around and debited $1,500 four times from our account by way of general ledger entries. So, unless the report was scrutinized by the Board, it would seem as though the journal entries had something to do with the reversed checks in the same amount. Two of them did, two of them didn't.

In the end, GIL was saddled with a $200,000 loan balance for a job that was quoted at $165,000 – the $35,000 difference evaporated into ‘Contingencies and Fees’ (see Loan Exhibit 'A', below), which included CMA’s bloated fees and accounting chicanery (if not outright theft). That’s 17.5% of the total – gone before one hammer even hit one nail. And that doesn’t include any fee paid back to CMA by the contractor. And given that the bids we had just two weeks before CMA was hired and Michele Richards swooped in out of the rafters with her ‘preferred vendor’s’ quote of $165,000 in-hand, ranged from only $75,000 to $120,000, one has to wonder where the 'fat' came from.  Then there's the fact that her vendor would routinely fax invoices to Michele's attention and have $25K checks cut and ready for pickup before the ink on the fax was even dry. It simply strains credibility to rule out a financial motivation behind Ms. Richards’ ‘preference’ for them.   Further buttressing this presumption are the Board meeting minutes from the time that indicate nothing less than a full-court press by Ms. Richards to seal the deal, seal it quickly and with her contractor choice - despite the fact that their quote was substantially higher than all the others.

Let’s fast forward to the present. Here we stand in front of a veritable pig's trough of high-dollar projects and, in the Board’s estimation, in need of a loan. You can pretty much rest assured that CMA is chomping at the bit for another chance to tap GIL homeowners again. And who wouldn’t be for a shot at 5.25% of the total loan plus whatever sweetheart deal they can arrange with their ‘preferred vendors’?  A conservative estimate would have 2012 conclude with the fleecing of GIL homeowners for no less than $75,000. And all without any homeowner input, review, approval or consultation. Why is that? Because our ‘Board’ consists of Kit and Stuart – the others have consistently proven that they are outflanked, outgunned, outmaneuvered, and lack any real ability to be a truly independent voice that could meaningfully impact policy.

Join the Blog  in demanding that 'the Board' stop and seek homeowner input and approval before saddling our Association with what is likely to be $400,000 in debt.  Head over to the Home page and give your thumbs up or down, via our anonymous online poll.   Raise your voice so that this time around we end up with more than a fleecing and a problem only half solved.

Note: If you are joining us from a mobile device and would like to vote in the online poll, simply scroll to the bottom of your screen and click the 'View Web Version' link. You will see the poll once the web version Home page loads.

NCB Loan, Exhibit A

People who read this post also read :