Category Archives: Financial

Related to finances and/or budgeting

Please Don’t Put Glass in Recyling Bins, It Costs Us Money

Glass is not recycled in Santa Fe County. If you put it in your bin it taints the entire load, which then has to be taken to the landfill instead of being recycled. Additionally, we are fined $250 for each tainted load. So please, to avoid even higher recycling fees, please remember not to put glass in your recycling bin.

 

 

New County Recycling Ordinance Could Raise Homeowner Fees – Update: Increase Announced at Sep BOD Mtg

Posted for Jim Bailey:

I am attaching a copy of a county ordinance that was adopted in May, requiring trash haulers to also pick up curbside recycling. Initial information from our vendor is this may increase our solid waste fee by 50 percent, from $49.50 per quarter per home to $74.25.

Ordinance 2016-4

Map of Service Area

While serving as president of the board, I encouraged board members to become informed of and active in county affairs, however there was a bump in that road, and as a consequence the board and management are just now dealing with this ordinance that was enacted three months ago and is set to be in force November 1st. Community Manager Montoya is exploring all options.
Please be advised that the board, NOT the treasurer, NOT the Budget and Finance Committee, is responsible for setting the 2017 HOA dues.
Additional information is available on my website, JimBaileyForRVS.com
Thank you.
Jimmy Bailey
RVS Board work:
FACEBOOK:
TWITTER:
twitter.com/@jimmycbailey

Annual Meeting Recap

Despite having an agenda with 20 minutes allocated to resident questions and comments, for the second year in a row, no resident input at the end of the meeting was allowed. What did the Board consider more important?

The Board hired the facilitator of the irrigation meetings to conduct a silly group exercise. We were also treated to a 10-minute picture presentation of the Community Manager driving around the community. Yes, those two things were way more significant than answering resident questions or listening to their comments.

The firm of Swain and Grieco made a presentation of their recently completed audit. They stated there were no material findings. However, the audit contains the following language.

“An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association’s internal control.”

Also we now have a situation where the one individual fills both the Board president and the treasurer positions. That is not a good practice from the standpoint of checks and balances.

2016 President is Also Treasurer

This is a very tricky subject, so first let me say that I think Jim Bailey will make a good Treasurer.  Let me say further that I believe him to be a fairly ethical person despite some of the things he has said about me on public blogs.  He also has the kind of folksy friendliness to get along with the other directors and probably will make a good president.  He gave a committee report at the Annual Meeting that was witty, informative (especially in sharing delinquent account data), and could have been better if it had been a bit shorter.

Jim has my best wishes for success whether he needs them or not.  After being on the board for two years, I know that serving this community is no easy task.

I also know that all across the country, when HOA’s get into trouble with financial misdeeds (not saying we are), it is often the President who is found guilty, especially if granted access to HOA cash or funds.  Most boards of directors, HOA or otherwise, do not allow the fearless leader to also “handle the books” – at least, not without further checks and balances.  It is very puzzling that out of seven board members, no one else volunteered or was nominated to be president, so that Jim could concentrate on being Treasurer.  Since no one else obviously felt comfortable volunteering to be Treasurer, I hope the rest of the directors and HOAMCO are up to the task of providing helpful oversight, since they ALL have fiduciary responsibility for the Association (no matter what letters they have – or not – after their last names).

RVSCA Annual Financial Comparison

See below for a comparison of Income Statements from 2011 to Sep 2015 for our community.  Per HOAMCO, we received an “unqualified” audit this year and last, but that does not mean either audit was perfect.  In 2014, a former board member discovered errors in the audit and contacted the audit firm to schedule a meeting to discuss the errors.  The meeting was cancelled by the Board.  A new audit firm was hired after the former firm declined to audit our financials this year.  In the same time period, resignations, re-appointments, and a changing of the guard occurred.  In 2015, after a County investigation into unlicensed businesses, it was discovered that no Gross Receipts Taxes were paid on Advertising Revenue in the RoundUp newsletter since 2008, which could lead to fines and penalties.  A resident asked about this issue at a Board meeting this year, but did not receive a satisfactory answer.

It is HOAMCO’s responsibility to track financials, produce reports, guide the Board, and ensure transparency – especially when we have had no Treasurer since July 2014.  Make sure you ask about the financials at the Annual Meeting – and make sure you get your proxies to the Community Manager before 5PM Monday or your votes may not be counted at the Annual Meeting.  Last year’s photo of the Community Manager altering proxy votes was pretty embarrassing for the Board – don’t expect more transparency this year.  Last year, they cheated to win.  Let’s hope we won’t have to endure another “rah-rah” speech from the Association Attorney and the HOAMCO CEO again this year.  What did Einstein say about the definition of insanity?  Keep voting for the same people, folks ….

Click HERE to download a copy

FC 2015 Pg 1

FC 2015 Pg 2

 

RVS Association Attorney Threatens Me Because of My Post on Financial Statements

The bullying has begun. This is what happens when somebody says something that the Board doesn’t like. Following is a letter from the Board’s attorney to an attorney that previously represented me when the Board and HOAMCO were harassing me, and my response to Ms. Krupnik.

Krupnik Letter 11-4-15 - redacted

Here is my response to Ms. Krupnik:

Response to LK - Pg 1

Response to LK - Pg 2

How Many Sets of Financial Statements Does the Board Keep? Part 2

The HOAMCO community manager responded to my initial post about two sets of financial records by sending an e-mail to all residents saying that there are two versions of the financial statements “because any delinquent resident accounts cannot be made available to the entire membership. There are times when some residents may have difficulty paying their dues and such information must remain sensitive and confidential out of respect to your neighbors and friends… Posting of these delinquent accounts would be a violation of these residents privacy and would lead to a certain lawsuit for the Association.”

That is utter nonsense. While records of delinquencies must be kept, only the total amount in arrears need be aggregated in a financial statement. Furthermore, the HOA files liens against residents who have large outstanding dues balances. Those liens are public records that anyone can view. The Board will have to come up with a different lame excuse as to why there are two versions of financial statements.

Despite my request, once again the Board has refused to provide year-to-date expenditures in the financial materials sent out with the Annual Meeting notice. Only the 2016 budget was included. Residents have a right to know if the Board is adhering to budgeted amounts.

The fact that the Board refuses to provide this information just makes me more suspicious about how our dues are being spent.

How Many Sets of Financial Statements Does the Board Keep?

More than one apparently. The financials that are posted on the HOAMCO/RVS website for RVS residents are labeled “public,” which means that there is another private version that probably presents a more honest version of income and expenditures.

Go to the RVS website: http://www.hoamcoweb.com/ranchoviejosouth/document_category_list.asp   and click on Community Documents to see the financial statements. You must log in.

If you download the financials you will see that starting in February of 2015 the statements are labeled “public version.”

January 2015                                                                                    75296775january_2015_-_website.pdf

February 2015                                                                                    752147876february_2015_-_public_version.pdf

Same for March through August.

The fact that there is a private version that contains data not in the public version is disturbing. There is no reason for there to be two different statements; residents are entitled to see all financial data.

Not a Unique Situation

Fraud and embezzlement are widespread in HOAs around the country because HOA boards do not answer to anyone but themselves. See these two examples from Florida and Arizona:

http://www.local10.com/news/community-president-buys-car-pays-self-salary-with-neighborhood-money/27853208

https://www.youtube.com/watch?v=3_EA231E_DA

Note that in neither case was a criminal case filed or money returned to the HOAs. Florida is one of the few states with an agency that regulates HOAs and even there the state did not deal with the embezzlement of funds, just the fact that the resident manager was not registered.

Currently there is an RVS audit being conducted by the accounting firm of Swain & Grieco. The accuracy of the audit will depend on which set of financial statements the Board provides the firm. My guess is that they got the “public” version. We can assume that  the accounting firm will most likely find that everything is running smoothly and correctly.

At the September Board meeting I asked the Board if they would be providing year-to-date income and expenditure to residents at the annual meeting. Not one Board member would answer my question. They remained silent. A board that handles residents’ money ethically would provide the documentation. A board that is misusing funds would not.

Folks, this is your money and you have a right to know how if the Board is spending it. You also have a right to know why there are two sets of financial statements. What is the Board hiding?

Attend the annual meeting on November 17 and ask the Board members to provide an explanation.

September 22 Board of Directors Meeting — Disrespect for Homeowners Continues

When the Board meetings were moved to the large meeting room in the Firehouse several months ago, the tables were arranged in a horseshoe-shape. At the meeting held last Tuesday, the tables were positioned in a rectangle so that the backs of at least two members were facing the residents in attendance.  This is a perfect metaphor for how this Board treats residents. They have turned their backs on us.

At the beginning of the meeting ten minutes is allotted for resident comments on agenda items. That means that you have to be clairvoyant about what the Board discussion will address. Residents are not allowed to ask questions during the discussion of an item, even for purposes of clarification. At the end of the meeting five minutes is allocated for resident comments for non-agenda items. Each person is allocated two minutes which means no more than three people can speak. At the end of two minutes you are basically told to sit down and shut up. Our community manager stated that most HOAs are run this way. Residents are allowed only to listen, not speak. I beg to differ. I have belonged to other HOAs that allocated adequate time and welcomed input without rudeness.

Our Board members think that residents are a nuisance who have no right to have any input in decisions that affect our community and our pocketbooks. Several residents had written a letter to the Board a week prior to the meeting asking that it sponsor a candidate forum prior to the upcoming election so residents could get opinions from candidates on the expensive and complex issues that face us next year.  We got no response. At the Board meeting I asked if they would sponsor such a forum and they just stared at each other. Nobody responded. I asked another question. Last year I asked Carol Thompson to include the YTD HOA expenditures in the annual meeting packet and she said she would. That was a lie. The spreadsheet was not included. I asked that the expenditures be included this year. She refused to answer me. Really? Residents are not entitled to know how much of their money is spent and how?

WE DESERVE BETTER THAN THIS RUDE, OFFENSIVE BEHAVIOR.

Other Board Actions

The Budget

The budget, again put together without any resident input, was approved for 2016. There will be a $10 a month increase in assessments for the Master Association. This will help replenish our reserve fund. Townhome residents received a small decrease in assessments. The community manager who received a hefty 20 percent increase last year got a nine percent increase this year bringing his salary up to $78,500. I have a feeling he is the highest paid community manager in New Mexico.

Financials

Despite being required to have a Treasurer, the Board has not had one for over a year. It was revealed at the meeting that two members of the Finance Committee resigned. The third member is involved in a dispute with the Board and will likely not be in his position much longer. So there will be nobody overseeing this important component of the HOA.

HOAMCO Contract

The HOAMCO contract was approved automatically without going out to bid for the seventh year in a row. A contract of this dollar value should periodically go out for competitive bid.

Annual Election

The Board intends to pursue the same unethical voting procedures it employed last year. Mr. Montoya finally admitted that the women who did the vote counting last year were his family’s “acquaintances.”

The Board intends to allow him to:

  • electioneer via email for current Board members,
  • vote as a proxy,
  • to receive and open the proxy ballots,
  • hire and supervise his “acquaintances” to count the ballots.

Does any of this seem like a conflict of interest? Mr. Montoya is an employee of a company that is hired by the Board. He is not a resident yet he controls the entire election process. This is unacceptable.

This is a dysfunctional Board that is not representing the best interests of residents. We need a new Board.

Please folks, if you care about your community and your HOA expenses, consider running. There are five positions open this year. Most of the current Board members were handpicked by the President based on their willingness to never challenge her, no matter what she does. We need honest, fair Board members who will listen to residents and not treat us in the contemptuous way this Board does.

Notes from irrigation meeting — August 19, 2015

For those of you who did not attend the meeting, following are the highlights. About 50 people from all three HOAs attended.

Introduction of presenters: Teri Buhl, (moderator), Marcia Kaplan, Bruno Keller

Purpose of meeting — Teri Buhl

  • Inform residents regarding water recycling system
  • Discuss Molzen Corbin Engineering Recommendations Report
  • Present Funding Options
  • Stress importance of participating in October Homework group

First Presentation: Irrigation system–Bruno Keller, RVN participant in committee to review community options

Map of entire Rancho Viejo community (slide) — What is critical to understand is that the use of recycled water is an Interdependent System that requires all communities to cooperate.

  • 10 years of Irrigation Issues–original contract for recycled water was w/SunCorp and then transferred to Univest
  • Over the past 10 years, coordination of volumes, cycling schedules between the North & South experienced many difficulties
  • Spending on improvement has been minimal
  • Different landscaping services contribute to complexity of the system
  • Cost of recycled water significantly higher than fees charged by Ranchland to homeowners; compare w/Santa Fe City fees charged ($1 per 1,000 gallons vs. $3.26)

Technical Information (slides)

Qs & Responses following presentation:

Waste Water Treatment Plant (WWTP) Statistics

Constraints:

  • 2 tandem pumps, high powered are installed but only go off/on, thus pumps can burn up quickly if run continuously,
  • designated days for irrigation – 3 days for South; 2 days for North, but no clocks to monitor schedule
  • limitation of 120,000 gal/day amount
  • La Entrada (LE)-150 house (current)
  • Windmill Ridge (North and South) – 755 home
  • Village 1 & 2 (North)- 330 home
  • Distance & Elevation

Village 1 & 2, North – pressure too much, so frequent breakage of pipes

Windmill Ridge (South) – not enough pressure

MolzenCorbin study:

Recommend 3 pumping stations w/3 holding tanks (one for each community); one 500,000 gal tank at the Waste Water Treatment Plant – constraint pump 120,000 gal/day

Advantage:

-possibly less smell and sediment

-ease of choosing any flow rate of convenience, but the same limitations of 120,000 gal/day

-elimination of cycling of tandem pumps

Could also use much smaller pumps that run all day instead of 2 powerful pumps

Q: What is the life cycle of the pumps, of tank…rehab costs, life cycle of pipes that feed the individual units and the feeders?

Depends on usage and pressure issues; North – the pressure is too high; they have installed pressure reduction pipes and now have much less problems.

Q/Comment: Previous Landscape committee chair suggested 2 solutions: 1-for the utility company…install a drive to control on/off feature of pumps; 2-dredge the pond at the end of each season to remove sediment, install high capacity filter as water enters the pond…

South: because of lower press–install booster pumps at WR4…& clean filters

If effluent cannot be deliver have individual homeowners water their landscape, and employ buffalo tank to water common area….cost $200 a year for each homeowner…

Response Cass Thompson: Pond is a lined pond so can’t be dredged; The direction given to MolzenCorbin was to solve the all the irrigation problems for the entire community

Q: Paul Keaton: We must all agree…who is not agreeing to work together?….

Response: Major interference came from South board members.

Q: Judy Reinhart: How much money has North spent to correct pressure problems? Response: $12-15,000 to install pressure reduction piping.

Qs … Are there any other consumers?

R:Amy Biel school has requested to be put on line.

Q…La Entrada will have more houses that are not currently being counted – 1250 total houses

R: They will be providing effluent that will add water to the system.

Q: John Crawly LE…What areas do the associations water? R: Common areas only, not individual houses. Estate and Conservation lots receive no recycled water. They are responsible for all their landscaping

Q/Comment: Jerry Wells, N…Water should go by acreage.

R: The acreage is basically the same, equal areas for all association common areas

Q: Susan Knight N…Any survey done to determine which of our landscape are xeric?

Deciduous trees take water and are in front of houses. Charlie Brown LE … In LE, tree in front of house is watered by the homeowner.

Q: Jim Johnson S…Is there a job order for maintenance of the filters?

Yes, in the N, in the S … not certain of what is in the contract w/landscaping company

Q: Jessica S…Why does Ranchland want to get out of the business of delivering gray water? Response: Warren Thompson: Ranchland is in the business of processing effluent, not providing gray water. We have done it in the past, and continue to date, but there have been too many problems working with 3 different associations.

Q: Laura Trujuillo—Why would the associations want to be in the recycle business?

Second Presentation: Financial Aspects–Marcia Kaplan

What’s not in the MozenlCorbin Report:

  • Operating cost estimates
  • Maintenance costs estimates
  • Reserve funding estimates
  • Future growth estimates
  • Management structure for all 3 HOAs

Proposal suggested that there be a master HOA to handle irrigation, a superstructure. Questions that occur are: Who would run this superstructure? and what would the developer participation be? What would a joint management agreement look like and much would it cost per year? Who would actually manage the Wastewater treatment plant.

Options:

  • Use no irrigation for common areas.
  • $1.9 million purchase price of proposed system.

How to pay for it? Special assessment? Loan from Ranchland & pay over time? Bank loan? Bond? (County extends its bonding capacity on community financing projects, so bonds are tax free, but they are not backed by county. Bonds are paid through property taxes levied, based on property assessed value. Bonds have additional fixed cost, usually 20% over and above the money needed plus interest, and because attached to property taxes, it means homeowners with higher property value pay more. This is particulary inequitable because Estate lots which have no street scape, would pay the most. Have heard rumors that this is the preferred way to finance, but very costly

  • It might be prudent to hired a financial expert to advise on best way to finance.
  • Explore other options.

Qs & Responses following presentation:

Q: Chris …This is the physical cost going in. What about the cost for deferred maintenances? and it is not an attractive purchase, so there may be additional cost.

Response: Cass Thompson: We don’t know what’s the best way to go. That’s why we would recommend participating in the Homework group.

Comment: Jerry … N The associations are putting away reserve funds for replacements In the N we are putting away $33,000 a year but it is being used for current repairs.

Carl Moore Homework Group facilitator

How the Homework group works:

All residents are invited to participate; dates scheduled for the end of October management will participate along w/residents; through learning, planning, choosing, can make decisions through consensus.

Meetings schedule for last 2 weeks of Oct…1st mtg Sat, the 17th, all are invited. Then those who want to participate in 4-5 small group meetings following

Comment...Homework group can’t decide on this type of issue for the entire community. It is an educational process, not a decision making group.

Q: Marty from LE: What’s the timeline, before the Utility company needs an answer?

Comment: Dick W… S…I thought the Board has the power to take out a loan on our behalf.

Q: Kathy…would this system have any warranty?

Comment:Risks of Not Resolving Irrigation Issues

Systems are aging and failing

Main irrigation pump failure could drive Ranchland to ask for money to replace

Ranchland could stop providing irrigation water

Ranchland already uses irrigation pond water for construction use.

Comment: Bill..Previous developer was using the pond for construction, and we asked that they not continue, and they obliged.

Comment: Larry Peppers N…what would be the problem of converting to potable water,

Bruno slide…

Cost for N $25,000 for irrigation water and repair; .divide by 50 trees equals … (see slide) county code, requires that you put the water into the system…will be much more costly

Comment: Judy…V1&2. We paid for the boulevard, and getting into the bond business, is quite expensive

Q: Chrystal … I’m confused. How does homework group help us get to decision?

Q: Paul…Does this technical solution solve the political problem? 

Response: Warren Thompson: no, must be equitable for all.

Comment: Chris S…There is an undercurrent. But get some other alternatives out. There is a lack of knowledge. The homework group may be able to provide that knowledge to assist the boards make a decision. Once we finance any system, we are married to it.

Comment: RVS Landscape Committee needs to work w/landscape contractor on improved scheduling of irrigation timers, and continue educating residents regarding xeriscaping which is still an issue.

Comment: Charlie B… LE. I am astonished at how quickly these pipes have failed. We don’t have the expertise.

Q: Kathy…Who will operate the WWTP? Q..Who will operate the irrigation system?

Comment: Warren Thompson: It is critical to come up w/an email list for all the HOAs so that information can be sent out in a more cost effective manner than mailings.

Next Steps

  • Develop other operating and equipment options
  • Continue refining cost figures to build an accurate water treatment budget; include operating costs and facility management costs; include long term maintenance budget figure; include detailed reserve funding needs;
  • Develop funding options other than a public bond

INFORMATION MEETING NOTICE: IRRIGATION – BIG CHANGES ON THE WAY?

ALL RESIDENTS OF RVS, RVN, AND LA ENTRADA INVITED

WEDNESDAY, AUGUST 19TH 6:45 P.M.

FIRE STATION ON RANCHO VIEJO BOULEVARD

 Ranchland Utilities, which provides recycled sewage water for our common area irrigation, intends to get out of the recycled water business. The three HOAs are in discussions to buy the infrastructure and water for the irrigation.

Molzen Corbin, an engineering firm, has performed an evaluation of the current effluent reuse system. Molzen Corbin has made recommendations for improvements and provided cost estimates.

 Estimated costs just for infrastructure are $1.9 million for the Molzen Corbin suggested improvements. This does not include operating costs.

Rancho Viejo residents would have to pay for infrastructure improvements and ongoing operations if we buy the system. How we would pay has not yet been determined.

Residents who have been involved in the process will provide an assessment of where we stand and some technical information. Alternatives for funding will also be discussed.  

If you care about our neighborhood trees, plants, and green areas, please attend.

The final Molzen Corbin report is available for RVS residents on the community website under Community Documents: A(E)ffluent System Recommendation Report

http://www.hoamcoweb.com/ranchoviejosouth/document_view.asp?id=224

You must be logged in to access it.

Take a CLOSER LOOK at the Audit

Residents received another message from the Campaign/Community Manager that everything about the 2013 financial audit is “very good news”.  Too bad it’s not true.  Let’s take a closer look.  An “unqualified” audit means that no problems were found in terms of financial practices following GAAP.  That’s good.

The auditor also stated on page 1 that: “An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.  The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the Association’s preparation and fair presentation of  the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association’s internal controlAccordingly, we express no such opinion . . . . We do not express an opinion or provide any assurance on the information [in the reserve study] because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.”    That’s NOT good.

So what does all this accounting legalese mean?  It means the Auditor couldn’t publish an opinion about whether the Association is being effectively managed by the Board of Directors or not – or whether or not the reserves are properly funded Look at the date on the reserve study: June 2010!  And guess what else?  It was never approved by the previous board, because they had questions about the accuracy of infrastructure estimates and thought they were too low.  We don’t have a current reserve study and the engineering study by Ranchland Utilities won’t be finished until December.  If we have to complete major road repairs in 2015 all at once, it could wipe out our $1M+ reserve in one fell swoop.  (Even if the study were accurate, how can the campaign/community manager say reserves are adequately funded when the numbers add up to $8M plus?)

The audit also lumps a lot of categories together, so even though total expenses might look OK, you can’t see individual line item overruns, and there are several, especially in legal expenditures (over $30,000 in less than 3 years).  Previously, the Auditor presented their report to the whole board so they could review it, ask questions, and take corrective action – that didn’t happen this year and a flawed audit was sent to residents.

The HOAMCO CEO made a fine speech about how dissension in our neighborhood will reduce property values.  News flash, Justin – not taking care of roads, trails, and irrigation systems is what actually reduces property values!  Maybe the new directors will succeed where the previous “malcontents” did not, and convince the ostriches and president to pull their heads out of the … sand.  We need the new reserve study completed, so we know how to properly fund future infrastructure and irrigation maintenance.  We need the board to focus on community solutions instead of spending money on legal opinions and trying to force directors to resign when they ask inconvenient questions!  GO TO BOARD MEETINGS AND ASK QUESTIONS ABOUT SPENDING!  IT’S YOUR MONEY!