Fundraising or Cut Back ideas

November 17, 2008 1:09 PM

Condo Association wants to hit us with a special assessment that is almost $4000 EACH due to the repair of rotten wood trim on the outside of the buildings. Ideas on fundraising or cutting costs?

This past summer it was discovered that there was extensive damage to the exterior of our Townhouses due to crappy building construction. We are now all being asked to pay for the repairs, which is going to run each home owner close to $4000.00. Needless to say this is MIND BOGGLINGLY frustrating in these tight financial times. I’d like to find an alternative to having to fork over this money. I seem to remember a similar post to Metafilter, but I can’t find it by searching. In the previous post there were some interesting fundraising ideas to help lower the costs. Below is an email that was just sent out with the Association Board’s response to a number of suggestions. The meeting to discuss this is 11/20. Any ideas?? Please?? I’ll be checking back regularly, so if more info is needed… please ask.

Hello fellow Homeowners.
You are all aware there is a meeting this Thursday night to discuss and vote on a significant new special assessment. Since the information packet was distributed, we have received suggestions and alternative proposals from some homeowners. We would like to inform you of alternatives that have been submitted and offer a few observations. These are presented in the order received.

1.Pay it all now. One homeowner commented we were risking too much to allow the reserves to be low for so long and suggested we ask those that can pay it in full now, to do so. Use a payment plan suggested by the board for those who indicate a hardship which prevents them from paying it up front. This improves the likelihood that money for repairs would be available during the summer construction season and allows the reserves to be replaced more quickly. They express the concern that resale value on their home would be adversely affected by having no money in the reserves.

2 . A second homeowner mailed an anonymous letter to many of the homeowners in the neighborhood. This letter states that many of us are already feeling financial pressure and this will add to it. There is no question about that. The sender indicates that with appropriate personnel looking into the cost of repairs, a substantial savings can be made. What is meant by “appropriate personnel”? Is the sender suggesting they have the needed skill and are volunteering, or are they suggesting we pay someone, at an additional cost, to do that? We ask the sender to please clarify.

3. Bring suit against Effing Jerks Construction Inc. (EJCI). A third homeowner suggests that this amount of serious deterioration is far greater than what would be expected to occur in such a short time (we agree!) and we should consider going back after the developer. The board has actually considered this several times over the past few months and
has not yet come away with this as our recommendation. There are many things to be considered here. We did file suit against the developer one previous time and settled out of court. It is likely that would prevent us from going back against them. If we did move forward on a suit, It would cost money to hire a lawyer to see if we have a case we can win. It would cost money to hire construction experts to provide expert testimony that what we consider bad construction, really is. We run the risk of EJCI saying OK, you win but instead of giving you any money we will come fix it for you. But they have shown on units they have previously attempted to repair that their repair work is no better than the original construction. The expense to pursue legal action against EJCI is significant and comes with no guarantee we would receive anything in return. The Board does not recommend pursuing legal action against EJCI for these reasons.

4. Extend the payments over a longer time. A fourth homeowner suggested we collect a smaller amount of money per month for a longer term doing some construction in 2009 and the rest in 2010. They recommend we leave the reserves low for this longer period and then assess what is needed to replace the reserves with collection of funds in 2011 and 2012. This would make it easier to pay but it would allow another year for rotten wood to worsen and would leave us at risk of not having the reserves if something should happen. Keep in mind that we have depleted the existing reserves and they would remain unfunded while we concentrated on repairs. Existing long term plans would have assumed we were funding reserves during this period.

5. Cut back in other areas. A fifth homeowner suggested we look at ways to cut back in other areas. For example, instead of weekly garbage pickup at each unit, change to less frequent pickup at a central dumpster.

6. Insurance. We spoke with one homeowner who has experience as an insurance adjuster as to the ways this might be considered under an insurance claim. We also spoke to our insurance agent and we found this would not be covered under insurance.

posted by vermontlife to work & money (15 comments total)

I think the more interesting question is, what financial reserves does your strata council possess? And who is running the ship here? Does anyone have professional management experience? Hasn't your strata council hired a manager to provide you with qualified answers to questions 1-6? How is consensus reached on your strata council? Who is the treasurer? Is there a voting bloc that essentially controls the goings on with your strata council, and the budget?
posted by KokuRyu at 1:20 PM on November 17, 2008 [1 favorite]

Two fairly obvious suggestions:

(1) Get second, third, and fourth estimates on the cost of the work, and on cheaper alternatives. You might even get a contractor out to look at your own home only, just to see if ~$4000 is the right ballpark.

(2) Figure out if you (and your neighbors) can do any part of the repairs yourself. For example, if there is rotting wood that needs replacing, you might be able to defray some of the costs by removing the wood yourself. [Note: I am not suggesting that you turn this into a DIY project, just that you may be able to do some basic labor yourselves. A previous homeowners association I was part of did this on a large project to help defray costs].

(3) Regarding option #3: hiring a lawyer to review the case shouldn't break the bank, and if they find that you have a very good chance of winning, its money well spent. Try to get some concrete figures on how much this would really cost.
posted by googly at 1:44 PM on November 17, 2008

I think you've laid out the options pretty well and it's up to the association here to decide the course of action. It probably is a must-do item, the only question is how to pay for it, so that means reserves, or borrowing, or cutting services -- pretty much what any city has to consider in its budget.
posted by dhartung at 1:46 PM on November 17, 2008

Random thoughts:

1) Make sure your bylaws stipulate that it actually takes a majority of owners to vote on something like this - our bylaws state that just the BOARD gets to decide this stuff, it doesn't have to go out to anyone else for votes. In that case, it's nice to get ideas, but...the owners don't really have much decision-making power. This is good and bad.

2) Push your insurance agent, or take it to their supervisor - it's in their best interest to tel you of course it can't be covered.

3) Ask your HOA counsel about suing the jerks who did the shitty work. Find out what they think and what you're looking at in terms of cost there - could be worth it to investigate, might be completely NOT worth it.

4) Don't make it an option to pay now or later - make the assessment to be paid in full. If an individual owner cannot do so, you can absolutely set up a plan with them. But don't make it an option right off the bat.

Ug, I'm sorry for this, I just got out of a 2 year lawsuit for a very similar situation and it was hel and costs us tens and tens of thousands.

Contact your counsel POST HASTE.
posted by tristeza at 2:13 PM on November 17, 2008

How many units/homeowners are we talking about here? $4000 EACH on 10 units would be $40,000 in TRIM REPAIRS? Just 25 would be $100,000.

That doesn't sound right for "trim repairs". What exactly are the "trim repairs" that are being called for?

Personal anecdote: A friend of mine lives in a condo and a few years back the association said that because of "new codes" the streetlights in the development had to be replaced to the tune of 60k. One quick call to the township revealed there were no new codes and another call revealed that contractor selected to do the work (and only one asked to give an estimate) was the HOA president's brother in law. They still have the same lights in the development.

SO... Who's doing the work and what exactly are they doing?
posted by sandra_s at 2:19 PM on November 17, 2008

1) Make sure your bylaws stipulate that it actually takes a majority of owners to vote on something like this - our bylaws state that just the BOARD gets to decide this stuff, it doesn't have to go out to anyone else for votes. In that case, it's nice to get ideas, but...the owners don't really have much decision-making power. This is good and bad.

i'm sorry, i hope what i wrote above didn't offend you, like, "yeah, duh, thanks, i know our own bylaws, idiot."

i was just surprised that an assessment would have to go out to vote to the entire HOA, not just the board. forgive me if it sounded dunderheaded.
posted by tristeza at 2:50 PM on November 17, 2008

absolutely no offense taken. We are voting on the special assessment. why did it cost your for your lawsuit? Did you lose or win?

The townhouses are only approx 10 years old.

We had 45K in reserves but spent it repairing the water damage on the trim, and on some of the units below the trim because the water seeped into the siding. The assessment is to replace the reserves and add another 60K for the rest of the repairs (only half have been completed). The total for the repairs is $105K.

I am going to suggest that they get more than one estimate. I'm going to suggest that they call the insurance company and get a supervisor to review the case. I'm going to suggest that it wouldn't hurt to get a lawyer. What the hell it's winter here in Vermont, so things can wait a couple of months.

THANKS for the suggestions, keep 'em coming!
posted by vermontlife at 3:07 PM on November 17, 2008

Get AT LEAST 3 estimates. (In fact, I'd be incredibly surprised [again] if your bylaws didn't mandate this).

You NEED a lawyer, in fact you should just have one as your standard HOA counsel. It will cost a little here and there for their advice, but it's worth it.

Long story on my condo problem but - we assessed one unit for a huge amount of damage we thought their negligence caused, they turned around and sued US for relief of the assessment, we spent 2 years battling it out, spent about $40K in lawyer's bills and ended up with them paying us 3% of what we initially wanted. So, essentially, we got nothing and didn't get anything back for our efforts.

(And had a $200K repair bill because we waited too long to fix the building. Don't fuck with this kind of stuff!)
posted by tristeza at 3:15 PM on November 17, 2008

Years ago I served as the Treasurer for the Co-op apartments where I lived in DC. We were an small self-manged 1920s-era building with many essential systems (furnace, plumbing, etc) aging. Our reserves also were not in the greatest shape.

We dealt with this by prioritizing needs and making a long-term plan. The most important items needed to ensure our health and comfort were taken care of. Things that were cosmetic or which were "nice to haves" instead of "have to haves" were either deferred or were handled by groups of co-op members pitching in. For example, we didn't hire someone to redo the landscaping; we drew up a plan ourselves and then pitched in. We did hire someone to patch up the furnace to get through a couple winters, and we raised assessments by a couple hundred a month to beef up the reserves for a planned replacement. We did not hit anyone with a big "special assessment" bill. And then a major plumbing line broke on Christmas Day...

Anyhow, my point is that some of the things your community has to deal with are essential. Others are not. Your trim and the appearance of your property is important for the happiness of your residents and to satisfy those who wish to sell and who see their property as more of an investment instead of a home. However, it's probably not essential unless you have stair and walkway railings rotting out or something like that.

The $4000 per resident extra assessment is probably too much to ask of anyone unless it's for something essential for health and safety. It would be a lot more reasonable to pay it over time. I hope your community has a plan to identify and deal with all its needs, over time, and do so in a way that is open with information and responsive to residents.

On preview, I see you've already had water damage and seepage into some units. I hope you've had an inspection.
posted by Robert Angelo at 3:35 PM on November 17, 2008 [2 favorites]

Hello Robert, You mean inspection by the contractor? What are inspections for? Thx
posted by vermontlife at 4:38 PM on November 17, 2008

Not an inspection by the contractor who fucked up, by an independent 3rd party licensed inspector.

Please, please also look into getting at least 3 bids for the work.
posted by tristeza at 5:19 PM on November 17, 2008

I understand three bids... will do.
posted by vermontlife at 5:56 PM on November 17, 2008

I, ahem, deal with general contractors and what I say is not gold, but here is what I have to offer:

(1) Going after the contractor / architect / developer 10 yrs after the fact will be very hard, if not impossible. Obviously your lawyer will know more, but 10 yrs is a lot of time for work to show up unless it was completely negligent and wasn't possible at all with 10 yrs worth of weather, wear and tear, etc. All the cases I've seen (and it has not been a lot) have been IMMEDIATE after being built. Don't know what to say about what happened with the developer, but just because the HOA won a suit doesn't mean the individual homeowners can't sue. I'm going to go out on a limb though, and by no means am I suggesting you not to speak to a laywer yourself, and I'm going to say that $105k worth of work 10 yrs after the work is done is nothing. These things move very, very slowly and I've seen "best case" suits that happen as the condo owners move in take 2 years to finish. It takes a long time (and money) to collect, so even if you settle out of court, it will take a long, long time.

(2) 3 bids, definitely. Be smart, don't accept the low, low bid. This may seem obvious but when I see things go through many people, somehow low bids win out even if *everyone* seems to know it is too low to do the work. No, they aren't working magic, they're underbidding and will find things and be more expensive than the reasonable bids.

(3) $100k for trim repair seems high without knowing anything about your situation, but it could be reasonable. Just ask for the proposal and see what work is involved. These will be detailed enough to give you an idea if they are painting trim or doing major work that is the cause of the trim going bad. I'm guessing that something was installed wrong and there's water or something getting in and majorish work is required for "trim repair."

(4) Consult a lawyer. Consult a lawyer. Consult a lawyer. At the very least they should tell you if this is under insurance, if you should be going after something and if you're getting screwed on your proposal. They are expensive but worth it.
posted by geoff. at 6:23 PM on November 17, 2008 [1 favorite]

One small suggestion - instead of replacing wood trim with wood trim, you can sometimes use one of the composites (Trex type stuff). The builder of my condo development not only did shoddy work (roofing tiles put on with staple guns!) there is quite a bit of wood trim all the buildings - all of which requires upkeep & maintenance. Over the last year or so, the work crew (who are unit owners) have started using a composite material and they've been really pleased. It holds up under the power washer & doesn't need painting.

Another thought is to assess what wood trim needs repair/replacement, rank it by urgency & safety and have the work done in chunks. Our HOA saved 1000s by contracting out all the roof replacements (8 buildings) to one contractor but on a 6 year schedule. The contractor gets paid as work is finish & he does each roof on his schedule (usually when his schedule has a 2-4 day opening w/o other work). Win/win for both sides.
posted by jaimystery at 10:57 AM on November 18, 2008

Thanks everyone for your contributions. I will check this occasionally if there are any more ideas!
posted by vermontlife at 1:16 PM on November 20, 2008