DRAFT
Annual Meeting Minutes DRAFT
January
17, 2023
Oakbrook
Townhouse, Inc.
c/o
Willow Properties, Inc.
9527
Bridgeport Way SW
Lakewood,
WA 96499
by Al Glamba
After many years of
dedicated and distinguished service, Ken Karch stepped down as President of
Oakbrook Townhouses, Inc., effective March 31, 2022. However, he agreed to
remain as a candidate for Vice President of the Association. Prior to stepping
down, Karch organized the election of new officers of the Board, resulting in
the election of me, Al Glamba, as President; Ken Karch as Vice President; and
Mike McDonald as Treasurer. There were no nominations for the Secretary
position, which position is still vacant.
After many months of not
having in person monthly meetings or meeting in open vented garages, while
practicing social distancing, I scheduled a meeting of the Board on May 9, 2022
in the conference room of Northwest Properties Agency, Inc., where we said
goodbye to Pat and Bill Price who had sold their business to Willow Properties,
LLC, the current property Manager of Oakbrook Townhouses, Inc.
Shortly after taking
over as President of Oakbrook Townhouses, Inc., a series of unexpected events
took place in succession. In June 2022, I learned that Oakbrook Townhouses,
Inc., was being sued by Heritage Restoration Inc., for alleged damages for
nonpayment by Liberty Mutual Insurance Co., our property and liability insurer,
for work performed as a result of a fire that occurred at 7617 Zircon Drive SW,
prior to termination of that contract for breach of contract. That litigation
is still ongoing.
Next, I learned that the
registration of Oakbrook Townhouses, Inc., with the Secretary of State's Office
in the State of Washington had expired. Fortunately, that situation has been
resolved since then.
That was soon followed
by learning that Liberty Mutual Insurance Co., provided notice that it was
going to terminate our property and liability insurance policy for overdue
insurance premiums. Fortunately, that situation too has been resolved, and the
Association has paid off the remaining balance on our current insurance policy
with Liberty Mutual Insurance Co.
Subsequently, I learned
that many of our unit owners were not paying their monthly dues, which
situation has not been resolved. The delinquency rate on our monthly dues has
ballooned to 22 as of December 31, 2022. That is approximately one-third of our
65 units, and according to Willow Properties, LLC the arrearages total
$28,656.00. That is over $28,000 that the Association does not have in its
operating account to expend on the needed expenses of the Association.
Remember, only the Federal Government is authorized to operate at a deficit!
This event was soon
followed by learning that deposits to our capital improvements and reserve
accounts were not being made as originally assumed. In addition, we are still
waiting for the results of an audit for calendar year 2021, which audit had
been requested long ago.
However, with the funds
that the Association did have the Association paid off the remaining balance of
its insurance policy with Liberty Mutual Insurance Co., as previously stated,
paid all of the insurance premiums for the Association's earthquake insurance
policy, and paid the legal expenses of of McFerran Law to defend Oakbrook
Townhouses, Inc., in its litigation with Heritage Restoration, Inc., regarding
the fire damage claim.
In addition, the Board
beat back an attempt to appropriate our unused cluster boxes by the U.S. Postal
Service for the use of the new property owners of the Oakbrook Planned
Development community across the way on Zircon Drive SW, or in the alternative,
to install cluster mailboxes on our side of the right of way of Zircon Drive SW
for the use of the new property owners across the street.
Further, the Board
resolved a dispute with neighbors regarding debris left out on the driveway,
sidewalk, and common property of the Association; approved a Fines policy,
which had received a legal review; removed a large fir tree, which was partly
rotted, and posed an immediate safety hazard to the unit that was closest to
the tree had the tree fallen unto that unit or to an adjoining unit; replaced a
backflow prevention valve; replaced a rear deck; entered into an agency
agreement with the Lakewood Police Department for the removal of trespassers
and unauthorized vehicles from the premises; however, the Board is still
waiting for clearance to erect the No Trespassing signs in front of the two end
units; deadwooded a honey locust tree that had been characterized as a “widow
maker”; replaced a number of sprinkler heads that had been run over by careless
drivers; took a trek through a significant portion of Chambers Creek Canyon and
located two encampments on the south side of that canyon, and then risked life
and limb to climb the 300-foot bluff out of the canyon as darkness was
approaching; repaired a sewage line that was causing a sewage backup in one of
the units and could have impacted other adjoining units; and repaired several
water leaks.
There is still an electrical
failure of the outside lamp posts of several units for which the Board is
awaiting bids to jackhammer through a concrete driveway and to dig a trench
underneath that driveway to obtain access to the electrical line that needs to
be replaced.
TREASURER’S
REPORT
Due to
difficulties hearing our Treasurer, Glamba presented the Treasurer’s Report.
BUDGET
The Board has determined that a monthly charge increase is not needed for the period 2023 through 2024, and has adopted a 2023 budget which maintains the monthly charges at $375. It believes that we will be able to maintain the monthly charge at $375 per month per unit through 2024. The increase of $30 per month approved by the Board and ratified by the membership in 2022 is due to contractor and utility rate increases, fuel and raw material price increases, delays associated with supply chain issues, the need to replenish our reserve and special projects accounts, and the increase in the general inflation rate.
New Washington State Legislation provides that the Board-approved budget is ratified, unless a majority of members reject it. In the case of rejection, the most recently approved previous monthly charge (i.e., $375 per month) remains in effect.
Glamba reported the 2023 Oakbrook Townhouses budget is ratified.
RESERVE STUDY
By Al
Glamba
After the materials for this year's Annual
Meeting were mailed out, the Board received the results of the long overdue
on-site Reserve Study. After reviewing the Reserve Study, I want to focus on
one portion of that Reserve Study that particularly jumps out at the reader,
namely, the replacement of the exterior siding. It appears that the author of
the Reserve Study assumed that because the exterior siding of all the buildings
was over 50 years old, ipso facto, by virtue of the same fact, extensive
portions of the exterior siding needed to be replaced at the same time and then
repainted, regardless of whether the siding had failed or needed to be
replaced. The author of the Reserve Study did not conduct any water penetration
tests, nor did he conduct any intrusive observations to determine whether the
exterior siding had any water barrier beneath the siding. He just assumed that
it did not, solely from visual observation. In fact, he recommended that the
Board contract for a building envelope study of the buildings at Oakbrook
Townhouses, Inc., thus verifying the merits of his assumptions. The problem is
that the Reserve Study estimated the cost to replace the siding at almost
$2,000,000, actually $1.99 million, and then to paint all the buildings at an
additional cost of $231,000, which would require a special assessment to cover
those costs, and then the Reserve Study front-loaded those costs rather than
spread them out.
In the past, when it came to replacing the
exterior siding that had dry rot or otherwise needed replacement and
subsequently to paint all the buildings, the Board through careful planning and
management was able to accomplish those tasks for less than one-third of the
estimated amount in the Reserve Study. For example, the 2009 Reserve Study estimated
the cost of the exterior building repair/replacement at over $930,000 in
calendar year 2015 and an additional $110,000 for painting in calendar year
2016, for a total amount of over one million dollars for calendar years 2015
and 2016. Instead, the Board decided to get a head start on the assessment of
the exterior siding by conducting a moisture study of the building exteriors in
2014 to guide the contractor where repair/replacement needed to be performed,
and then to carry out the painting project over a three-year period. The
moisture study focused on the sides of all of the buildings, which comprised
about 75% of the exposed external painted surfaces of all the units and was
based upon the wind rose for this geographical area. As a result, the total
costs of the exterior siding repair and replacement totaled $297,288, which was
28.6% of the projected Reserve Study costs for those two projects, and as they
say past performance is no guarantee of future results, but there appears to be
a tendency of the Reserve Study to overstate the estimated costs, and in some
cases, as here, to greatly overstate those estimated costs. Perhaps it is
because there is no downside to overestimating costs, while there is a downside
to underestimating those costs to the Associations. Nevertheless, the new
Reserve Study brought to the attention of the Board that repair/replacement of
the exterior siding and then painting the buildings is an anticipated cost that
the Board will have to plan for and to deal with in the near future.
In addition, the Reserve Study recommended
a building envelope study, to include the glass windows and glass sliding
doors, even though glass windows and glass sliding doors are a responsibility
of the individual unit owners under Article X of the Declaration of Covenants,
Conditions, and Restrictions of Oakbrook Townhouses, Inc., which clearly
states, “Such exterior maintenance shall not include glass surfaces,” as well
as Article VI, Section 3, of the By-Laws, which also states, “Such exterior maintenance
shall not include glass surfaces.” Thus, while a Reserve Study is a valuable
tool to use for planning purposes by the Board and is required by Section
64.38.065 of the Revised Code of Washington, reasoned careful judgment also
needs to be applied in planning for the required maintenance, repair, and
replacement of the components identified in the Reserve Study for which the
Board has oversight.
There are a limited number of copies of the
Reserve Study on the table near the entrance to the doorway. For the rest of
those who want a copy of the Reserve Study, you can obtain a copy of the
Reserve Study from Willow Properties, LLC, by providing your e-mail addresses,
or by picking up a hard copy of the Reserve Study from Willow Properties, LLC
at 9527 Bridgeport Way SW, in Lakewood, Washington, at its usual charge of $.15
per page.
RESERVE STUDY ANALYSIS
At Glamba’s request, Karch described the large spreadsheet he developed, containing all the individual numbers from the three past contracted Reserve Studies (2009, 2012, and 2016-17). He also included the internal assessments we did in 2011 and 2020. He also added the data from the 2023 contracted study. Although the spreadsheet is daunting, you may pay attention only to the yellow (highlighted) data if you are only interested in the 2023 data. It covers the period from 2023 through 2052. Copies are available on request.
Karch reported the contracted studies modified the project numbering system in 2012 and again in 2023, so he lumped the original and modified data (for the same projects) together for the whole spreadsheet. The like items are contained in white and grey bands across the spreadsheet.
In 2020, recognizing the time value of money and the highly variable contractor costs we have experienced in the past three years, he calculated, for the first time, a net present value of all future from all (now 6 studies) costs. All four contracted studies assumed a 3% inflation rate, and he have used this in the NPV analysis.
The NPV analysis shows the following NPV of all future costs:
2009 Study $3,182,592
2011 Update
2,352,908
2012 Study
2,933,073
2017 Study 4,008,108
2020 Update
2,298,073
2023 Study
5,630,050
Note that the updates are considerable lower than the studies. This is primarily because the Board chose to take advantage of favorable contractor rates, defer less needed work, spread work over 3 or 4 years rather than the single year contemplated in the studies, carry out some of the work with other portions of the budget (post lights, irrigation, tuck pointing), eliminate short term costs (cluster mailboxes), and make use of analyses (such as the moisture study on our siding) to prioritize work that needed to be done. All of these eliminated or deferred costs contemplated in the contracted studies.
Karch said his own view is that another moisture study needs to be conducted before engaging in a wholesale replacement of all siding at a very large cost. He recalled that at least one side on one building was replaced by fiber cement siding (7813) and that several others were partially replaced. The Board had agreed that future siding would be such fiber cement siding.
Al
Glamba, President
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