Victoria Village - Community in Crisis
Mark
I have to tell you, I'm sad, so very very sad, at what has become of our wonderful little community. Here are some hard truths we have to face:
- Our association is in a leadership crisis:
- The process of attempting to change the governing documents has been an utter failure:
- The spirit and letter of the Colorado law have not been followed - This has lead to huge legal bills and still no changes
- The bills keep piling up and piling up and the board still refuses to operate in a transparent manner
- The worst of it is they are doing this all with our money...money we can't spare
- Recent questions concerning the authorization and payment of services by a Board member and his family have arisen again
- This isn't the first time and I fear not the last
- This is an issue of integrity and ethics; Victoria Village is a business that we all have an ownership stake in - our board is not acting in our best interest
- This is nepotism at its worst
- Decisions are being made in a vacuum and it is causing us a lot of trouble:
- We are going to have to pay over $15,000 in legal fees awarded by the court. Why?
- Because the board made the decision to move forward with great malice and indifference to those at the 2011 Annual Meeting begging to have open discussion on whether or not to proceed to court to have the covenants installed by a Judge.
- This latest round of expenses could have been completely avoided if the board had NOT just made a decision in a vacuum.
- Our association is in very serious financial trouble:
- Read the financial statement for the last few months, the outlook is dismal
- There is one simple truth - We are spending more than we are taking in
- Marcia has been telling us all for a very long time about the financial strife, but it appears that we are collectively too afraid to believe this is real. It is.
- My best estimate is we are tipping the scales at about $80k just for the expenses for the failed attempts at changing the Covenants
- That's over $300 out of pocket for each and every one of us - Don't worry though, that's pocket change for what is coming
- The board appears to not have the money at hand to pay the legal fees ordered by the court and have requested a payment plan - That's not good
- The board has passed a resolution (and spent a lot of money to send you a postcard) explaining that you'll now only have 10 days to pay for a fine imposed by the board
- The board has also been looking for other ways to move the expenses we pay our dues to cover directly on to you (such as individual water meters for your unit)
- Best estimate was about $1000/unit to install...wow, we're going to pay $1000 to have them installed and then we start getting a water bill?!?!?
- We haven't been putting away money into reserves (or at least we haven't as we should be)
- Here's the eye opener - Big expenses are coming:
- Resealing the parking lots is expensive - Soon we'll have to REPLACE the parking lots at a cost that will be 10-15x the cost of resealing
- Roofs don't last forever and getting lucky with a hailstorm isn't much of a strategy
- Our complex is over 25 years old now and a lot of the construction components have gotten to the age that they need replacing
- Where do you think the money will come from?
- Realize it or not, it's you.
- How are we going to get ourselves out of this hole we're in?
- I hope you're ready for a special assessment.
- How does an extra $100-150/month for a year sound?
- What if the special assessment has to stay for 5 years?
- What if it is just permanent? Do you think you're going to get your money's worth out of $240 - $300/month dues?
Sincerely,
-Mark Olson
Andrew Riis
Mark,
Allow me to address a couple of your comments. I would agree with you that VV is in dire straits. I think we might find different reasons why, but that is a moot point now.
I am most disturbed at what you purport as “fact” in your post. I will not deal with all of the comments as I do not have the time or energy; just a few that jump out at me as false or misleading.
o Recent questions concerning the authorization and payment of services by a Board member and his family have arisen again
o This isn't the first time and I fear not the last
o This is an issue of integrity and ethics; Victoria Village is a business that we all have an ownership stake in - our board is not acting in our best interest
o This is nepotism at its worst
While I share your concern for the issues that were discovered (note that this discovery was by the board not anyone else) Actions have been taken to eliminate this possibility in the future. I honestly believe that what happened in this case was a mistake. A foolish mistake? Yes. But a mistake that has been dealt with. “Nepotism at its worst”? No. This was one man trying to help out this village and save his son in law some money on taxes. That is all. I don’t agree with what went down, but ultimately we have taken steps to correct the issue and move forward. We have acknowledged that the circumstances that surrounded this were not the best. Parties responsible have taken that responsibility, and we are moving on.
o The board appears to not have the money at hand to pay the legal fees ordered by the court and have requested a payment plan - That's not good
Simply not true, we are negotiating the payment plan as we want to do what is best for this community.
o The board has passed a resolution (and spent a lot of money to send you a postcard) explaining that you'll now only have 10 days to pay for a fine imposed by the board
Also misleading, Z&R pays for the postage. Not us. Rick Poole negotiated that into our existing contract with them, so you have him to thank for postage being absorbed by Z&R. Also this was done so that issues in the village (aggressive dogs, messy owners/tenants) might be dealt with within one month, perhaps at the next board meeting. In the past because of our rules we have always had to sit on our hands for at least a full month thereby missing the chance to resolve an issue until 45-60 days after the violation. This move was to increase efficiency, not to collect more fines faster.
o The board has also been looking for other ways to move the expenses we pay our dues to cover directly on to you (such as individual water meters for your unit)
o Best estimate was about $1000/unit to install...wow, we're going to pay $1000 to have them installed and then we start getting a water bill?!?!
Again, simply not true. Individual meters have not been on the table for over a year. and actually the best estimate was $2,000/unit. We know that this is too expensive to be feasible. This did come up at the last meeting, though I do not recall if it was a board member or a community member that brought it up, but it was shot down immediately because of the expense. I do wish that the community at large would realize that the HOA dues are going up for two reasons… Water and legal fees… saving on water is something we can all participate in.
- Resealing the parking lots is expensive - Soon we'll have to REPLACE the parking lots at a cost that will be 10-15x the cost of resealing.
This is true; however this is the precise reason why we are putting EXTRA money aside each month to hopefully reseal the parking lot THIS year. Since this initiative started we have already set aside an EXTRA $6,000. Not enough I know, but hopefully if the saving trend continues we will be in good shape for the resealing effort.
o I hope you're ready for a special assessment.
o How does an extra $100-150/month for a year sound?
o What if the special assessment has to stay for 5 years?
o What if it is just permanent? Do you think you're going to get your money's worth out of $240 - $300/month dues?
A special assessment has not even been discussed. Certainly not a permanent one, and certainly not even close to the numbers you are throwing out there. You are suggesting that we might try to collect $1,530,000 over the next 5 years. Not true, and frankly a petty scare tactic if you ask me. The board is actively searching for ways to help save the community money, especially in the area of water. Any input would be welcome, and in fact will be requested soon.
“I don't know what may encourage you to get actively involved in these issues, but the reality is you are involved already. You can sit by quietly as the complex disintegrates around you and your dues double or you can demand accountability with the board. It is your option.”
We desperately need everyone to take an interest, or at least more than the 3-4 units that show up at the board meetings.
I did not seek board approval on this post. The thoughts and comments in it are my own. I only decided to write this post because I felt it important to have a second perspective on the goings on. I am not perfect, the board is not perfect (obviously) I may not even have all of my facts 100% straight, but my intentions are good. I want there to be more than one side to this discussion.
I hope that we all can be party to a civil discussion on how we can save this community money in an ugly financial climate.
-Andrew Riis
Sharon
I appreciate your perspective, and hope you will continue to use the
blog. Understand it is your opinion not that of the board, but it is
refreshing to know as a board member you are concerned enough to
interact with VV owners. I apologize my readdress is so lengthy, but
I want to be clear for those who may not be aware of the details.
Check Signing. We all would like to believe the check signing related
issues with Rick and his son-in-law were merely “foolish mistakes”,
but the circumstances leading to such indiscretion are what are
skeptical and disturbing. I trust when you say this has been “fixed”
and responsible parties acknowledged. However, not knowing
specifically what the board considered or exactly “how” it is fixed,
I offer the following because only by addressing the real reasons can
we move forward in a manner to avoid future incidents of this nature
and preserve integrity.
> First let me be clear; I do not insinuate these were intentionally
deceptive actions against VV.
>With Rick being a businessman, and in a position of trust as a board
member, it is difficult to believe he had no doubts about co-signing
checks to himself and his son-in-law. I don’t fault him for asking
some of the checks be made out to himself to help save his son-in-law
tax money nor that he paid the taxes, but rather Kerry for admittedly
permitting it. This type of handshake deal might be overlooked
between neighbors, but as a non-profit business this type of
arrangement shows a lack of integrity and trust, and puts all parties
of the HOA at risk.
>Then there is the fact that Rick did not wait for the regular cycle
when the Treasurer signs HOA checks, but specifically went to Z&R and
received the payments out-of-cycle.
>Adding to that is the question of when the bank signature
authorizations changed; why was Rick’s check signing even acceptable
when he was no longer board vice-president; where was the financial
oversight by the board and the management company, and adherence to
the Bylaws?
> Rick has been involved with the VV board for many years and is
well aware of the financial incongruities by other parties in the
past. This alone should make all board members and management company
reps more wary of even the slightest infraction or appearance of
“foolish mistakes”.
>Check signing process. I trust when the board says this is fixed
and will not be repeated, but I sent a note to the board regarding the
requirements in our Bylaws for who is authorized to sign HOA checks.
As it states, the Treasurer is the signer, the President is the co-
signer (vice-president only in the President’s absence) on all
checks. I believe this requires the Treasurer and President to both
sign all checks. Where is the arrangement documented allowing Z&R to
sign checks as it is not in the Bylaws? At a minimum, the Treasurer
should sign every check; how else is she to be expected to monitor
costs and run the budget? I suggest the board develop a written
policy detailing the financial management processes, including who is
authorized to incur costs, pay bills and sign checks.
Nepotism. Nepotism is an issue that will always be raised whenever
board members’ relatives are paid for services rendered to VV,
primarily because of undocumented indiscretions of the past. That is
not to say we should never “grab the best deal” to save VV money by
hiring relatives, only that the process for doing so must be
transparent and well-documented. As I suggested at the last meeting,
get 3 estimates to justify it and document the boards’ decision that
the relative does in fact offer the best deal, and that the board
member relative is recused from all discussion/decisions on the
hiring. Prepare purchase orders for work to be done, and have the ACC
inspect and sign-off on work completed before payment is issued. The
HOA Conflict of Interest Policy could be revised to clarify this
issue.
Payment of legal fees: Intentionally or not, the board is projecting
that the extensive legal fees expended are all Marcia’s fault for
hiring an attorney. I want to reiterate and make it absolutely clear,
had the board acted openly and transparently from the beginning of the
Declaration revision process, there would have been minimal legal
costs and we may actually had a good revision. It was the board’s
ignorance of the community’s concerns and lack of transparency in
making the decisions to continue the process to court litigation, even
at the owners’ objections, that cost the HOA over $45,000, and now
$15,000+ for Marcia’s legal fees reimbursement. I was thrilled when
you suggested the board seek reimbursement from OCRH for some if not
all of those costs. I’m sure they will say you knew the risks and
they can’t guarantee the outcome, but your hinge pin will be to argue
the board members were not clearly advised of the legal risks and
costs involved in order to make appropriately informed decisions (as
well as the obvious mistakes by OCRH, particularly not ensuring the
legal requirements had been met before proceeding to court). I am
equally as excited to be on the committee appointed by the board to
seek new legal representation.
Sense of Community. Andrew, we all recognize that none of us are
perfect, and I truly believe as vested owners we all want to do what’s
best for VV and our pocketbooks (HOA and personal). The board has
great responsibility to manage the HOA, and in doing so must self-
educate to attain the knowledge to make important decisions (not rely
so much on Kerry for directions). As the community’s representative
corporate managers, the onus is on the Board to not only be open and
transparent in conduct of business and decision making, but to also be
communicative, receptive and reactive to ideas and concerns from the
community. In doing so, I believe this board can overcome the
animosity created by past and recent incidents, regain owners’ trust,
and eventually attract more community involvement.
(Want community involvement-- suggest closing the pool for a season!
-- Just kidding!)
Sharon
Marcia Fields
Both Sharon and Andrew along with myself were at the April 17th board
mtg. where under some intense questioning by me to Rick Poole and
Kerry Cantrell, I FINALLY was able to uncover the truth about the Rick
Poole disbursements which I was previously left to believe from my
initial letter to board was Poole "earning money" for his own benefit
in violation of the Bylaws. Turns out that was NOT the case at all!
Rick Poole WAS "PAID" but then was NOT PAID for his volunteer
services........how's that for a riddle?? He got the property
manager to cooperate in a scheme whereby a majority of checks for work
Daniel Leanos had performed were made out to Poole to relieve his son-
in-law of the tax burden. He used Association funds to falsify tax
filings and Sharon, this is extremely serious, absolutely despicable
in violation of his fiduciary trust and he has placed this association
in jeopardy of liability. Please stop excusing this man, either for
his stupidity or his deceit! He has enough board members to do that
for him. He has abused his authority and used it to benefit his
family member. We heard over and over during the meeting discussion
his laundry list of justifications but mostly about his
family......... devotion to them, working for them, helping them,
Daniel's tax predicament, his grand babies, all he has done for V.V.
and on and on and on; it's all clearly on the audio tape YET what
Mr. Poole still doesn't get is that he cannot use his board position
in such a deceitful manner to benefit his family.......but he did just
that. And the board thinks that now it's out in the open, and he's
been "talked to" and he promises not to do it again (doesn't that make
us all feel secure!), that it's settled and they can move on.
I won't even get deeply into the part where the two of them, Poole and
Cantrell, undercut the treasurer's authority and undermined her
ability to maintain control of association finances since these checks
disbursed to Poole or Leanos, many of which were co-signed by Poole
without him being authorized to sign them, were outside of the normal
check runs where she goes into Z&R for her signature.
Much ado was made at the meeting about who was on the signature
card?? Seems the one at the bank had not been updated but when Poole
ceased being vice-president in December, 2010, he no longer had
authority to sign on checks. Anyone can confirm this in the Dec. 21,
2010 minutes. Whose responsibility is it to make sure that the bank
signature card is kept current when officer positions change??
There are serious consequences, or there should be, for throwing the
disbursement process to the winds, for tax trickery to relieve a
relative of some of his tax burden and for this scheme that went on
for 6 months!!
I continue to call for Rick Poole's resignation from the board,
NOTHING LESS WILL SUFFICE for this transgression......and I will be
contacting the board shortly to request that they replace Kerry
Cantrell as our property manager. He, too, has violated his
professional trust to act in the best interest of the assoc. he
manages; his "credibility" over this is toast and he needs to be
gone. Anyone reading this and understanding the enormity of what has
occurred, contact the board to persuade Poole to resign and to replace
Mr. Cantrell. Our association deserves better than such chicanery and
it has sickened me to the core ever since last Tuesday night's
meeting. Stand Up, owners!, Speak Out! in order to salvage what we
can from this mess.
marcia ann
Mark
- With regard to the Director check signature situation I simply disagree with you. Many people have just wanted to help their family members a little, but it is very wrong to do so in this manner. Additionally, I question the integrity of anyone willing to violate federal law to avoid tax burden. How exactly have the responsible parties taken responsibility? Has the money been returned to the Association? Has the IRS been notified of the tax implications? Has an apology been made to the membership as a whole?
- As for the money to pay the court-ordered legal fees of Marcia, I apologize for an incorrect assessment of our financial status. I assume this means that the association is fully capable and shall pay out 100% of the fees immediately.
- As for the rules change, please explain what efficiency the board hoped to gain if it was not to expedite the collection of fine money.
- As for the ways to move expenses on to the owners directly, thank your for confirming that this approach has been considered, even if not recently. I apologize that I had the estimate incorrect, I must have had the $1000/unit number in my head from another association that has been thinking about this approach. I accept that the estimate for Victoria Village was $2000/unit if you say it was. The point I was making was that the board has and is investigating ways to move the expense burden directly on the unit owner. In some cases I think it would be good to assign the cost for use directly to the user of the commodity or service. I don't use the pool and I'd love to be relieved of that cost burden. Be careful though, that approach is in direct violation of our current (and even the draft) declarations. I am accepting of the fact that things cost more than they used to and our complex is aging which leads to additional costs. What I am not very accepting of is costs that could be controlled, such as the legal expenditures, are just not being controlled effectively.
- As for the reserves: $6,000 set aside for the first 4 months of the year translates to $18,000 if contributions stay on target. That is a drop in the ocean for the tsunami of costs that will be coming to Victoria Village over the next 5 years.
- I really hope you are right that there won't be a need for a special assessment. We are in a hole already and not only do we have to dig out, we have to get prepared for expenses that are looming. Let's face the facts about our dues:
- For the last several years our dues have increased at roughly the maximum allowed under our covenants (5% / year)
- I purchased in 1991 and the dues were $79/month; in 20 years the dues have nearly doubled to $155/month. But hold on to your hats, if the dues continue to rise at a rate of 5%/year, our dues will hit nearly $200/month in 5 years, be over $250 in 10 years and more than double in only 15 years. (Not including any special assessments)
- This raise the maximum has not been able to get us financially back to where we need to be, so dues have to be approved to rise faster than 5%/year or a special assessment will have to be utilized. These are the only tools available to generate income for the association.
- The only other alternative is to implement austerity measures and demand fiduciary responsibility now
- Do I think that the board might try to collect an additional $1.5mm over the next 5 years? Yes, I think it is possible and even worse, it think it may be necessary to cover expenses.
- I don't think that we are in this crisis because of the nepotism, but it is an indicator of the entitlement, narcissism, and lack of integrity that some of the board member have. We'll have to agree to disagree about mismanagement; I don't think we'd be having this discussion if the management was good.