The Special Assessment budget items total $170,000. Let's review the presentation at the January 14 Board Meeting slide titled "Where did these numbers come from? " --- and how we can improve transparency in procurement processes going forward.
RECAP
The Special Assessment budget items total $170,000 for:
- HOA Attorney
- Engineering Study
- Reserve Study
- CPA
- Clubhouse purchase evaluation
HOMEOWNER CONCERNS
- These Special Assessment budget items do not seem to meet an "Emergency Special Assessment" criteria discussed in Section 720 and the HOA Board training (e.g. an urgent pool pump replacement or hurricane damage.) Instead, these items seem to meet criteria of a "Non-Emergency Special Assessment" discussed in the statute. This is relevant as the assessment is being rushed as an Emergency with the first attempt to pass it occurring in November less than one month after the board was seated in October.
- Multiple homeowners' written requests for substantiating documentation to support these amounts were unsatisfactory. Initial responses received from the management company merely reiterated the brief summaries provided by the board at the meeting. Then a later reply specifically stated "With regard to the special assessment, there are no receipts, bids or billing at this time."
If there were no bids submitted, how and by whom were the initial estimates determined ?
When/how/who made the decisions to increase the initial amounts by 30% - 60% since there are no meeting minutes covering those decisions?
BOARD MEETING PRESENTATION
Let's review what was presented at the open January 11 meeting slide:
August/September 2024 Budget meetings - Finance Cmte, ICON, Transition Steering Cmte.""Where did these numbers come from?"
(Note: quotes in yellow are shown in the presentation photo or other written documentation)
1. "HOA Attorney - Estimate from Attorney* $25K. Added $15K for unexpected. There is no fixed price item "HOA transitions."
- Were there multiple legal estimates presented to the board by the Legal or Transition committee? Did any of them provide likely statement of work tasks? Specifically which attorney's estimate was used as basis?
- If there are no detailed estimates of attorneys tasks and costs, how was it decided to increase the initial estimate by 60% from $25,000 to $40,000?.
- If the 60% increase was decided by a Transition committee, meeting minutes for such decisions are required per Section 720.
- Alternatively, if the amount was discussed and decided by the Board, that would need to be in a open meeting. (That should not occur in a Closed Meeting where there are no minutes).
- 2. "Engineering Study and Reserve Study (Roads, Gates, etc. ) - Quote from Falcon Group* ($50K Engineering, $10K Reserve Study) Standard Inspection only, added $15K (Engineering) for unexpected. "
- Were estimates presented to the board by the Transition committee?
- There was no quote from Falcon group provided to homeowners in response to written requests for information, nor was it posted on ICON's HOA website. (Castle Group still has not created their site as of April 26.)
- If there are no original detailed estimates, how was it decided to then increase the initial estimate by 30% from $50,000 to $65,000? This was not discussed in any of the Board's meeting minutes.
- After the $65,000 amount was initially approved by Board, one board member proposed reducing the amount of engineering assessment by 50% (because it overlapped with the study being performed by the engineering defect attorney that had been hired on contingency.) The motion was voted down by the other board members and justified, in writing, as "the homeowners in attendance, by a majority, booed loudly that they did not like the idea of reducing the amount of the special assessment..." Yet since no yay/nay vote was requested, those who opposed were not given a chance to voice an opinion.
- Also, it is customary for the builder to perform an Engineering Study prior to Turnover. If that was performed, it was not provided to residents and would have been a starting point for consideration.
- 3. Reserve Study - $10,000 - Appears to be based on unseen Falcon group estimate above.
- 4. CPA - $5,000 - No comments at this time.
- 5. Clubhouse purchase evaluation - $50,000 - [presentation notes obscured in photo]
- Again, there is no substantiation for the amount of $50,000 despite homeowner's written requests for information. Other estimates might be substantially lower.
SUMMARY
There are numerous items out of Florida Section 720.303 compliance.
- The Special Assessment which the board approved at the January 2024 board meeting does not appear to meet the criteria of an "Emergency" Special Assessment. This is particularly evident given that they appear to have sought some estimates and quotes months in advance (just not shared them with homeowners when requested.)
- Meeting minutes appear to indicate that some decisions were improperly made in closed board or undocumented committee meetings. This includes the lopsided 'boo' voice vote on reducing the engineering study special assessment.
- The management company and/or board or transition committee have failed to meet statutory open records requirements subject to FL statute 720.303 re Board Minutes and Official Records. (Update: At the April 8 meeting, the HOA attorney acknowledged that some updated Section 720 'procedural' statutes apply to Medley and specifically mentioned recordkeeping.)
** PROPOSED RESOLUTION **
Let's ensure transparent procurement and assessment procedures.
- Add agenda item to next HOA board meeting about adopting best practices for large bids and procurements. Or, 20% of homeowners can request a Special Meeting to a written policy for ensuring a competitive bid process for vendors as well as transparency for members).
- Consider deferring the Special Assessment billing from May 1 until such time as homeowners can be provided with basis for estimates and procurement process used to obtain them.
- Begin the decision process over again as necessary to ensure that all meetings and minutes meet statutory requirements. (Or, the alternative would be to forensically review all emails, phone records, electronic meeting data and/or private messaging app discussions between the board and all relevant parties to assemble the necessary minutes.)
- For any urgent Special expenses, such as the CPA Audit, consider using the approved $25,000 Contingency Fund in the interim.
- Identify a procedure and timeline for procurements going forward with full transparency. This should include written Requests For Proposals (RFPs) that are publicly available to vendors and members. The policy should also ensure no communication between bidding vendors and association decision makers except on official channels (e.g. dedicated HOA email addresses or phone numbers provided by the by the Association.) Note: This is standard practice for both government and non-profits. Since our HOA is a technically a non-profit corporation, we should adopt those best practices too.
We homeowners are understanding of the challenge of establishing a new board for the transition. However, now that the 2025 Annual Budget has been approved, we have a little time to ensure that all subsequent budget items, including decision about Clubhouse purchase, adhere to the correct processes and enable transparency.guest editorial -- no affiliation with Official Medley HOA website (see footer)Thanks for reading!
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