Performance Review of the Board and Management Co. 2017-2018

• No baseline property evaluation and inspection was conducted at the beginning of the transition (January 2017). There have been no regular, independent, quality property inspections of the common and limited common elements.  This would have given us a baseline of property conditions to work from in negotiations with TOA.  This baseline of data would have helped to prove that conditions existed at the time of turnover and whether those conditions changed over time.  
  • The board may have ignored its fiduciary duty by procrastinating necessary work. As part of the board’s fiduciary duty to maintain, repair, and replace common property, the board should have arranged for a professional, independent inspection of the property.  A professional inspection report would have brought to light any construction defects. (Jan-May 2017)  
• The board did not hire “experts” to assess property condition and issues until the last quarter of 2017.
  • Example: As with any maintenance-related problem, drainage deficiencies only worsen with the passage of time.
• Deficient, inconsistent and unprofessional “property reports” from the management company are accepted and approved by the board. 
• There is no evidence that a community-wide comprehensive preventive and proactive maintenance plan has been developed.  Only reactive maintenance is being performed. 
• The board allowed the clubhouse warranty to expire in June, 2017 before repair issues were resolved and, as of March 2018, the board hasn't even reviewed the warranty documents. (Transition Accountability Committee meeting, March 3, 2018)

When a board and community manager fail to maintain the common areas, property values drop. Deferral of necessary inspections, maintenance and repair only serves to prolong the inevitable - - at a cost (in dollars as well as property value) that is far greater than sacrificing to do what is right and necessary in a timely fashion. Property values will decrease and monthly assessments will increase.

• Refusal to have an independent financial audit of the HOA.
  • UPDATE  (7/20/2018):  The Board has finally decided to have an audit of 2017 financial statements.
  • ** UPDATE from Finance, Budget and Insurance Committee Notes (April, 2018): "Will get three bids from an independent CPA for the purpose of performing an outside review/audit of the 2017 HOA financials. There are mixed feeling (sic) on the need for an annual audit given its cost but there is also a feeling that one would help all reach a level of comfort with the current process."
  • Hopefully the Board will accept the recommendation from the Finance, Budget and Insurance Committee.  We hope the Finance, Budget and Insurance Committee will follow-through and recommend an independent, complete financial audit (not simply a review or compilation).
  • Only an audit will provide the HOA with reasonable assurance that their financial statements are reasonably stated.
• Contracts signed without proper examination of contents.
  • Example: Two-year extension of landscaping services signed without reading the contract. (Special Meeting of the HOA Executive Board, February 10, 2018) 
• Inadequate supervision and oversight of the management company’s contractual obligations and accounting processes. 
• Errors and misstatements in financial statements are not resolved in a timely fashion.  
• Poor board review of financial statements and management company’s accounting procedures. 
• Questionable presentation and formatting of financial statements.
• The board and management company are not effectively monitoring contracts for proper execution and compliance by vendors.
• Contracts are poorly negotiated. Vendors are not properly vetted.
  • Example: $83,000 contract with snow removal company that has a D+ rating with the Better Business Bureau.
• The board should have immediately addressed any construction or financial issues with the developer during the turnover process or immediately thereafter because the longer the association waits to remedy any such issues, the easier it is for the developer to allege that such problems are the result of the association’s failure to adequately maintain the common areas, natural deterioration and wear and tear or the association’s failure to maintain proper financial records and practices. (Jan 2017 - March, 2018)
• The board (and its committees) displayed little knowledge of the TOA performance bond Ohio Township was holding.  (Board Meeting, November 21, 2017) 
  • The board took no action to utilize the bond as a negotiation tool. The bond was reduced to maintenance status.
  • The board missed the opportunity to use it as leverage in negotiations with TOA. 
• Inadequate knowledge of our community's governing documents. (Board Meeting, November 21, 2017) 
• Ineffective and unproductive negotiation attempts with TOA throughout 2017 and first quarter, 2018
• The board has not adequately addressed concerns regarding what appropriate credentials (licensing, certifications) the community management personnel hold as evidence of their competence to manage the community, finances and investments.
  • Example:  "Per the HOA board, (the management company) will handle investing the initial $250,000 of reserve funds in laddered CD’s..." (Finance, Budget & Insurance Committee Notes, January 2, 2018)
  • **UPDATE from Finance, Budget & Insurance Committee (April 2018): " Investment policy to be adjusted to reflect that all Reserve Fund investments will be handled by Janney."

  The Board’s decision to not have an independent 2017 audit of the HOA combined with their poor supervision of the management company's accounting and record-keeping procedures indicates a lack of financial oversight.

  
  

  UPDATE (7/20/2018):  The Board has finally decided to have an independent audit of 2017 financial statements.

• Spending homeowners’ money without their knowledge or input. 
  • Example:  "Action without a Meeting" resolution to commit the HOA to $1,441.35 contract to purchase aerobic room flooring.  (February 6, 2018)
  • Example: “Action without a Meeting” resolution to commit residents to contracts totaling over $100,000.  (October 19, 2017)
• Selective and arbitrary enforcement of the Declaration and Rules & Regulations.
  • Homeowners made requests to review variances in an effort to assess how equitable and fair the Architectural Review Committee is in its decision-making. The requests were denied by the board.  (November, 2017)
  • Other homeowners were told that "some of the variances are lost.” 
    • Yet, in November 2017, the HOA was charged $450 by the management company as a "fee for copying two complete variance files for legal reasons."
• Lack of action, evasiveness, neglect and delay in response to pool contamination. (July, 2017)
  • Several residents attempted to have the board and management company hear their concerns about the pool and the delay in correcting the chlorination and subsequent contamination problems—the board refused to listen claiming  the board meeting was “closed” to homeowners. (August 9, 2017)
• The board was ignorant of the landscaping contract contents – the incorrect contents had to be brought to the attention of the community by an individual homeowner. (March 3, 2018)
• Communicated incorrect information to homeowners about the storm water system. (Special Meeting of the HOA Executive Board , February 10, 2018)  

The board and management company need a reminder that the HOA exists to protect the integrity of the community and do what is in the best interest of its members. Being open and honest about decisions, funding, contracts, services, maintenance, and more is essential to keep homeowners involved and informed.

"Real estate signs and frames must be purchased from [---] sign company in Bridgeville, PA. The cost of the for sale sign is the responsibility of the owner or sales agent."  

Source:  Resolution Amending the Rules and Regulations of the Sewickley Ridge Homeowners Association  Section G. Signs - Real Estate Signage

(Highlights added by Web Administrator)

"Subject- For sale sign in front, finally but it has to be bought from a company in Bridgeville for around $135, ridiculous. What is next, Real Estate firms supply signs at no cost. I assume this comes from the Board or [the management company], does Liberty [Hills] the other over 55 community charge for signs,* whose pocket is being lined. Thanks,"

Resident, Victory Lane

Let's see if we've got this straight:

• Landscaping is a mess.
• In over two years, we have had no proper inspections or preventive maintenance planned or performed.
• Nearly 30% of the unit roofs have already had leaks and repairs.
• There is questionable and wasteful spending of HOA money.

So, the board decides to focus on "For Sale" signs!  They pass a resolution  to force homeowners to comply with a rule amendment restricting "For Sale" signs?!?   Really?  This was a priority with everything else that is happening in the community?

WE'RE BEGGING THE BOARD--PLEASE START USING COMMON SENSE, SET RATIONAL PRIORITIES, AND ESTABLISH REASONABLE AND FAIR RULES.