2007 Elevator Modernization Special Assessment

In 2006, the Brooks Tower HOA Board of Directors approved a vote for a special one-time assessment to assess homeowners the $2 million cost of upgrading the elevators in 2007. The HOA suggested that homeowners needed to vote for this one-time assessment to pay for complete renovation of this long-term asset in cash over a one year period (2007).

The special assessment vote passed and all owners were given the option to make 12 monthly payments in 2007 or a single payment for the entire assessment.

Comments ...

We have probably all been irritated by the elevators at Brooks Tower and they are arguably the worst "feature" of this great downtown highrise.

However, for the Finance Committee to ask Homeowners to fund long-term capital improvements with short-term homeowner financing is inappropriate. Most survey finance courses address the issue that long-term assets are funded with long-term financing, yet our finance committee continually chooses to overlook this rule of thumb (in reference to the last special assessment proposal on Brooks Tower HOA Reserves).

The Board of Directors have known since 1996 that a major modernization of the elevators would be necessary by 2010. This significant asset improvement should have been planned for since 1996 and could still be addressed through a more appropriate financing solution. Asking homeowners to finance this major expense out of pocket in 2007 alone (12 months) is, again, inappropriate.

Hopefully I am not the only one who feels that elevator modernization is a necessity and that this is the WRONG way to finance it.

I'm just a renter here, but this one time assessment doesn't make much sense to me either.

The elevators certainly aren't great, and I'm sure an improvement is needed.

It would make more sense to me that these charges be wrapped up into the HOA fees over a few more additional years.

Can someone who attended the Town Hall meetings share some of the pros/cons of the special assessment that were discussed and/or summarize the general attitude toward the assessment by the home owners?

Thanks in advance!

Does anyone know what, if any, alternative funding structures for the modernization were proposed to/discussed by the board?

QUOTE:
"... We have probably all been irritated by the elevators at Brooks Tower and they are arguably the worst "feature" of this great downtown highrise.

However, for the Finance Committee to ask Homeowners to fund long-term capital improvements with short-term homeowner financing is inappropriate. Most survey finance courses address the issue that long-term assets are funded with long-term financing, yet our finance committee continually chooses to overlook this rule of thumb (in reference to the last special assessment proposal on Brooks Tower HOA Reserves).

The Board of Directors have known since 1996 that a major modernization of the elevators would be necessary by 2010. This significant asset improvement should have been planned for since 1996 and could still be addressed through a more appropriate financing solution. Asking homeowners to finance this major expense out of pocket in 2007 alone (12 months) is, again, inappropriate.

Hopefully I am not the only one who feels that elevator modernization is a necessity and that this is the WRONG way to finance it... "


I totaly agree with that statement.

Ah, someone else has taken a Finance class or studied some of the fundamental principles of Finance! 'Hughes', my answers to your questions are yes and yes. I'm not sure what our recourse is at this point but I am with you, I have contacted my lawyer for his advice and I'll be in touch soon.

Does anyone know what makes a quorum for the BTHA, Inc.? Its shocking that such a measure can pass with less than half of the ownership voting and just over a third passing it. My question is-how in the world did half the ownership not care about a $1,000-$2,000 assessment enough to vote?

My instinct tells me that there are a small number of individuals with a large ownership share that passed this ludicrous assessment (this may or may not include the Real Estate firm housed in the building and the ownership of the 4th, 5th, and 6th floors). That's just my instinct though, nothing more. Can we request that the results by unit be made public to all homeowners?

QUOTE:
"Does anyone know what, if any, alternative funding structures for the modernization were proposed to/discussed by the board?"


Other financing options would have been good to know about. However, I never saw any material on this issue that outlined alternatives.

However, the unconfirmed rumor is that it doesn't matter. Apparently, the wealthier of residents has decided that its okay to decide how all of us will spend a significant amount of our income next year by approving the Special Assessment. Again, this is unconfirmed, but if it proves true, unbelievable.

So those that can't afford to donate $1,000 or $2,000 next year to the HOA, start cutting down on your entertainment budgets and buying all generic at the grocery store. This is an Elitest action by the Board, the Finance Committee and all those who voted yes. To all those who voted yes on this, thanks for helping me decide how I should spend my tuition money for next year because you wanted nicer elevators now rather than later.

Are you tired of short term assessments, for long term capital improvements? Do you want to challenge this latest elevator assessment as not representative of the Brooks Tower Community? Lets take a stand now and challenge this assessment. What happened to the notion of depreciating capital improvements over the life of the asset. Respond if you are interested in change.

The Board of Directors could ammend the implementation of the assessment as planned and include an array of options to afford the Brooks Tower Community greater choice. This along with some meaningful reductions in labor and other operating cost, while saving HOA fees, could avoid a long costly legal battle. Next step, if necessary, will be to establish a legal fund.

"My instinct tells me that there are a small number of individuals with a large ownership share that passed this ludicris assessment (this may or may not include the Real Estate firm housed in the building and the ownership of the 4th, 5th, and 6th floors."

Bryan -- Your instinct tells you correctly!

There are 32 people/organizations that own 2 units and the majority of these also own 2 parking spaces, some own 3;
14 that own 3 units, the majority of which own 2 parking spaces;
4 that own 4, 1 owns 2 parking spaces, the other owns 3 and 2 own no parking;
1 that owns 5 and 14 parking spaces 1 that owns 7 and 3 parking spaces;
1 that owns 8 and 2 parking spaces;
and 1 that owns 49 units(!!!!) but no parking.

This means that 54 people/organizations own 177 units -- nearly 40%. I would bet my bottom dollar that these owners were the the majority that got the assessment passed through on their votes alone.

I know the building needs new elevators, and I personally voted for it myself, but I am going to be hard pressed to come up with over $2000 this next year. I wish they could have stretched the payments out over 2 years at least. I know this is a real concern for many people who live on strict budgets.

I don't know if there is anything that can be done after the fact. I'm just surprised that not more homeowners voted.

I have to agree with everyone. I think I am going to sell my place because I do not want to pay over $450 per month on HOA fees(with elevator expense) with no other option for a payment plan. I am a little confused as to why we have reserves if we are barely using them. Why am I paying over $300 per month now if we cannot use it on something we need? Rediculous.

I thought about selling last summer and moving to Glass House but decided not to. In retrospect, what a mistake. Try on HOA fees of $602/mo. for 2007, that's what mine will be next year (one unit and one parking space).

The problem with selling now is that you're going to pay the elevator assessment either way. If you don't sell, you'll pay it in cash to the HOA, and if you do sell, you'll pay it in your reduced sale price. Not to mention, if I was a buyer and I saw what this HOA Board of Directors was doing, I would be very hesitant to buy here at any price.

I've also learned some additional information about the way the HOA operates. It seems that there are 7 board members (Don Brown, Tim Briscoe, Lester Rear, Tim Kelly, Leroy Hardy, Mark Schaefer, and Sandi Trenka) and 4 of them are on the Finance Committee.

Tim Kelly, who does not live here and does not pay for any of the 49 units he represents out of his personal budget, is on Board of Directors, the Finance Committee, and represents 10% of the ownership vote with his one ballot. I would guess that Tim must have voted in favor of the special assessment and this is extremely surprising considering the financial struggles Dan Ritchie is having at the DPAC. Mr. Ritchie, whom I have tremendous respect for, is trying to negotiate with the City and County on the seat tax at DPAC while Tim Kelly voted to spend somewhere between $40,000 and $100,000 of the 2007 DPAC budget on new elevators for Brooks Tower.

I guess I could be happy that DPAC is paying such a large portion of our new elevator expense but I don't think its a good financial decision for DPAC or the individual owners of Brooks Tower.

Unfortunately, there are 2 nominees for the Board of Directors in November and both nominees are currently on the Board. I was hoping we would get an opportunity to vote in someone to the Board who has not been involved in the decisions up to this point but it looks like nothing will be changing soon. Maybe selling, even while absorbing the elevator special assessment, is the right decision.