There has been some discussion among homeowners regarding the handout which was placed on the doorsteps near the front doors of all the units. There have been many questions regarding the last few pages of the handout. This was the part that included a letter to the Attorney for the Association and his reply regarding the proposal to revise the governing documents of the Kenthill Townhomes Homeowners Association. Some homeowners have asked for clarification regarding the initial high cost of this investment and its long term benefits.
In the past few years, the cost to pursue homeowners who either pay their homeowners dues late or do not pay their dues at all has increased greatly. This has had a significant impact on the amount of our Annual Budget, and therefore everyone’s monthly homeowners dues. This cost has taken the form not only of time (letters sent out, together with letters + fines), but also greater than before attorney fees due to the increased amount of filing fees for collection charges (the filing of a lien), foreclosure charges, sheriff's sale charges, and the attending correspondence and paperwork involved.
In 2005, the budgeted amount for this problem reached a historic high of $5,000. An additional $2,500 was added to this line item in the budget for the investigation of the possibility of separating certain shared expenses with Easthill Apartments. During the summer, a Board member was able to investigate this topic as well as other issues related to shared expenses, thus saving the Association this latter cost. However, the number of homeowners who either paid their dues late or not at all increased dramatically throughout 2005. The result is that we will almost certainly deplete this line item of $7,500 by the end of the year 2005.
As has been said numerous times, we have a significant amount of delinquent units which affects the operating cash flow here at Kenthill Townhomes. Beginning in the Summer, and continuing throughout the Fall, and now into the Winter, the number of delinquencies over 30 days have averaged over 20 per month. Since the number of homeowners who get behind in their homeowners dues always increases during the holiday season, this number is likely to go higher [and now more likely, because of the decrease in the fine from $20 to $10, one can essentially postpone paying homeowners dues for two months for only $20.00 (before a lien is formally applied after 90 days)]. Of these 20, most are in the hundred dollar range. But as the Attorney for the Association (who has been the attorney for this Association since the mid-1980’s) has stated, Kenthill Townhomes usually averages about two or three units who owe several thousand dollars by the end of the year, and for whom foreclosure and sheriffs sale becomes necessary. The above scenario is typical for this problem, and 2005 is not exception.
It might be good to review the process at this time. First, a homeowner receives a letter. Then, a letter with a fine is sent (now $10.00). Only after 90 days has passed, is the account turned over to the Attorney for the Association for collection. At this time, a lien is placed on the property. From this point on until the account reaches $1000.00, it really isn’t cost effective for the Attorney to track the issue (although the Association has the option of pursuing the homeowner in Small Claims Court). After the amount goes over $1000.00, the foreclosure process begins. Eventually, if no resolution is obtained, a sheriffs sale is the last resort [and the homeowner (who is usually having mortgage problems as well) is evicted].
As was mentioned above, Kenthill Townhomes is averaging over 20 units whose accounts are delinquent over 90 days. The result of this is that our Budget has continually run a monthly deficit of approximately $9,000.00. Only one month ago, for example, the figure was $9,644.00. Continuing the examples, according to the October Management Account, our Operating Account was at $408.34, and according to the November Management Report, our Operating Account was at $659.26. [Remember, according to our Declarations we must maintain 30% of our annual income in the Reserve Account. This is correct at approximately $66,000.00. Our Capital Reserve Account, at approximately $24,000.00, will be nearly depleted when the invoice for the two roofs installed in 2005 is received [then we will begin again to build this account back up (for the next two roofs to be installed, later in 2006)].
There is a better way to approach these problems. We live in a community. All of us must take part in it and share in the financial responsibilities of the upkeep and long-term maintenance of our commonly held property. That said, there are definite actions we can take to protect our investments. One of those actions we can take is to revise our Declarations in order to take advantage of certain provisions in the Washington State Condominium Act of 1990. I distributed a handout to all 82 homeowners, both on-site and off-site, during the Summer. In that handout was a letter from myself to the Attorney for the Association, and his subsequent reply. I hope everyone had a chance to read the handout, and especially the letters, because not only do they list 10 advantages of revising our governing documents, they furthermore demonstrate how we can possibly save an additional $4500.00 every year.
A careful reading of these letters will outline only a few of the major advantages available to us. One problem of many that a Declaration rewrite could address is the problem of easements which we share with Easthill Apts. As mentioned above, the sharing of expenses, especially those related to the recreational facilities (the swimming pool, cabana, tennis court, etc.), has been an ongoing problem for Kenthill Townhomes throughout its 30 year history. Although this is a complex issue, it should be explained that the Association is somewhat limited in what it can do to resolve the issues with Easthill Apts. without first revising our governing documents.
Many homeowners have expressed their concern about rising homeowners dues. In 2005, the Annual Budget for Kenthill Townhomes was $218,834. In 2006, an approximate 5% increase was enacted for a new 2006 Annual Budget of $228,834. $228,834 - $218,834 = $10,000. As was stated above, Kenthill Townhomes (in the time that the Attorney for the Association has been with us, approximately 20 years) has averaged 2 to 3 homeowners who are in default every year (and this has likely been true for all of the 30 years Kenthill Townhomes has been in existence). Using 3 as an average, we can do some calculations. Assuming a $250.00 average monthly homeowner dues amount, $250.00 X 12 months = $3000.00. $3000.00 times three (homeowners) equals $9000.00. For purposes of discussion, let’s round that figure up to $10,000. [Now we must pause and also remember the approximately $5000.00 to $7500.00 mentioned above which Kenthill Townhomes now spends annually in attorney fees]. Kenthill Townhomes is an Association that is governed by a Board of Directors elected at an Annual Meeting from among the homeowners living at this condominium complex. We could merely raise the homeowners dues another 5%, effectively another $10,000, and continue to cover the ongoing yearly expense of these costs.
But this is what we have been doing for the past twenty or thirty years. At some point in time, I think it would be in everyone’s best long-term interest to step up and vote yes to revise the Declarations and move on. Doing nothing will not save Kenthill Townhomes any money. The fact of the matter is, all these aforementioned costs are only going to increase, not decrease.
Thomas Flynn
President
Kenthill Townhomes Homeowners Association
Kenthill Townhomes Homeowners Association monthly meetings are held on the 4th Monday of every month in the Cabana (homeowners time is from 6:00-6:30PM). Useful information may be obtained by going to the webblog at http://kenthillwebblog.blogspot.com/ and also clicking on the link, http://talkkenthill.proboards31.com/
