Highview Condominium II
Board of Directors - Meeting Minutes
December 9, 2009, 7:30 p.m.

The second meeting of the 2009-2010 Highview Condominium II, Inc. Board of Directors was called to order at approximately 7:40 p.m. by Marjorie Cannon, Vice President.  

Board members in attendance:  Robert Boynton, Joseph Cann, Marjorie Cannon, Angelo Morelli, and Joseph Skonieczny.  Nora Colford was in the building and available for discussion and her vote on this evening’s single discussion point was represented by proxy.  Board members Stacey Cohen, Michael D’Angelo, and Natalie Hendrix were absent.  Per Minutes of the regular November meeting, according to the single topic of this special meeting Linda Romolo of Wentworth Property Management agreed that she would not need to attend the December 9^th meeting.  

Discussion:  

1)   Background for the single purpose of this special meeting was reviewed.  According to discussion at the annual General Membership Meeting of October 28, 2009, unit owners had expressed their support for a FY2010 Special Assessment in order to increase Capital Reserve Fund to a balance of approximately $250,000.  There was general agreement that the need for a substantially increased Capital Reserve fund was urgent and increasing the Capital Reserve balance through any small long-term increase in the common charge increase would not be sufficient.  No dissenting opinions were expressed by any of the unit owners present in person or by proxy at the General Membership meeting.  

2)   At the Board’s regular meeting on November 16, 2009, there was follow-up discussion from the General Membership meeting and terms of a special assessment for FY2010 were discussed.  On account of the Board’s lengthy agenda at the November meeting, the board decided to table the final decision for amount and term of a FY2010 Special Assessment to increase Capital Reserve until a special meeting could be held on December 8, 2009 for this single purpose.  

3)   For Highview’s annual audits guidelines, CPA’s have recommended that we follow the requirement of a general Operating Reserve of 25% of budget – a threshhold sought by banks in the process of granting mortgages for new unit owners.  For FY2009, Highview II’s operating budget amounted to $369,559.  By that budget, the building’s Operating Reserve requirement (25%) was $92,000; leaving an available Capital Reserve Fund of approximately $37,568.  

4)   Capital Reserve Engineering Report:  There was review of the last Capital Reserve Study completed in 2003, which identified a potential $750,000 in capital replacements over the next 15 years based on current age and typical life-span of various system components.  The 2003 Study recommended an immediate assessment over six months of $100,000 to increase Capital Reserve and continued additions to the reserve fund of approximately $37,000 each year.  At that time, the cost of energy (heat, electricity), insurance, and taxes dramatically increased and it was agreed by the board to delay implementation of the Study’s recommendations.  

With only $37,000 in Capital Reserve funds at this time, it was noted that only about $150,000 in capital replacements have been completed (of the $750,000 anticipated over the 2003-2018 term by the most recent Engineering Study of the building)  For many unit owners who were unable to immediately fund their entire share of the repairs, a bank loan was set up by Highview II with the costs shared only by those participating unit owners.  

However another $600,000 in Capital replacements, including the cost of the building’s 50-year old boiler and 50-year old elevator is to be anticipated in the years ahead.  The cost of either a new boiler or a new elevator would exceed $100,000.  Both systems have exceeded their anticipated life-span according to the 2003 report; and in either case a failure might make the building uninhabitable, with either no heat/hot water or no elevator for a lengthy period of time while waiting for the last of the 67 unit owners to pay their share of the funds necessary for a system purchase.  In light of the current banking/loan climate and a condominium having no real property to offer as collateral to secure a loan, the possibility of Highview obtaining a new unsecured loan for the benefit of some unit owners to pay their share over an extended term would probably be unlikely.  

Board Resolutions:  

At this December 9, 2010 meeting, the board agreed to a FY2010 Special Assessment to increase the Capital Reserve with the following conditions:  

1)   The assessment will commence on March 1, 2010 and continues for 10 months (March-December).  In order to provide a month's advance notice to unit owners, 30-day notice should be provided by Wentworth in late January.  It is anticipated that the board will approve a FY2010 budget before the new fiscal year begins and if any common charge increase is needed that can be included in the same memo, but if for any reason the FY2010 budget has not been approved in time for inclusion, the Assessment notice and implementation will need to remain on schedule.  Concern was expressed for overseeing Wentworth’s timely and accurate execution in the matter and the Board needs to stay on top of this.  

2)   The total of this FY2010 Special Assessment is $67,000.  This sum represents an average of $1,000 per unit (average monthly charge per unit will be $100/mo.).  Since assessments are based on unit-points, a 2-bedroom apartment unit will be paying more than the average while a studio apartment will be paying less.  

3)   Continued funding of Capital Reserve:  Although the mandate from the unit owners at the General Membership Meeting of October 2009 was to rapidly increase the Capital Reserve Fund to approximately $250,000, this Special Assessment will only bring us to a Capital Reserve Fund of approximately $104,000 by the end of FY2010.  Although several board members wished to make this Assessment for 2-3 years in order to raise the balance to $250,000 as recommended by the General Membership, the Board did not wish to lock-in the Assessment for a term longer than the current fiscal year.  It was agreed that this FY2010 Assessment will be subject to an automatic “renewal” for FY2011 and FY2012 unless the board determines in November 2010 and November 2011 that modifications are required.  The board may consider modifications for FY2011 and FY2012 according to the fiscal needs of the building, while continuing as rapidly as possible towards the $250,000 total to assure the building’s fiscal health.  

The meeting was adjourned at approximately 8:30 p.m.  

Minutes submitted by Robert Boynton, Secretary.