Post by Poor Richard on Jan 22, 2023 15:36:08 GMT -7
GLA Finance Committee Votes To Approve an 8.1% Assessment Increase
GLA Total Assets Are In the Millions of Dollars
GLA Total Assets Are In the Millions of Dollars
2022 Was A Record Financial Year - Why Raise Assessments Now?
As the Forum has previously reported the Glastonbury Landowners Association (GLA) had a record-setting financial year in 2022. Diligent work by President and Treasurer John McAlister and his assistant Claudette Dirkers led to a substantial decrease in past due assessments and a refining of the current assessment list. Before Dirkers intervened many landowners were refusing to pay past-due assessments. Many landowners paid in full as soon as a lien was filed against their property. Some landowners were not being charged the correct assessment amount either. Director Dirkers cleaned up the landowner list to accurately reflect current owners and the number of dwellings for each parcel.
The 2022 GLA Board vigorously went after scofflaws and collected tens of thousands of dollars in attorney's fees alone. Even more, was collected in past-due assessments. Money was managed prudently and assessments were not increased. The 2022 GLA board also discovered that they owned 250 acres of prime real estate in High South that was estimated by the Forum to be worth 17 million dollars. An investment group offered to purchase the land for 2 million dollars during the summer. The board did not respond to the offer and it was withdrawn.
The 2022 GLA Board vigorously went after scofflaws and collected tens of thousands of dollars in attorney's fees alone. Even more, was collected in past-due assessments. Money was managed prudently and assessments were not increased. The 2022 GLA board also discovered that they owned 250 acres of prime real estate in High South that was estimated by the Forum to be worth 17 million dollars. An investment group offered to purchase the land for 2 million dollars during the summer. The board did not respond to the offer and it was withdrawn.
The incoming 2023 GLA Board was presented with over one-quarter of a million dollars in cash deposited at the Bank of The Rockies. At the GLA Finance Committee meeting it was estimated that the cash in the bank still hovered around $250,000.00.
At the recent Finance Committee meeting it was explained that due to inflation the GLA had to raise assessments so the 2023 budget could be balanced. State law requires a balanced budget and GLA governing documents only allow for a maximum 10% yearly increase in assessments. The price of fuel, labor, and materials have all increased. It was reasoned that an 8.1% assessment increase would eventually bring in an extra $12,841.00.
Many landowners had difficulty attending the Finance Committee Zoom meeting. The password was changed after the meeting was announced. Some landowners gave up. Persistent Joe Bezotsky was able to call in after trying for 45 minutes. He wondered why the Finance Committee was not looking to past due assessments for the extra money needed to balance the budget. Joe spoke about the top ten past-due landowners who owe the GLA over $70.000.00. He reasoned that collecting from them would be better than raising assessments. Should law-abiding and dues-paying landowners be forced to subsidize scofflaws?
A vote came quickly and the motion was passed with just one no from Director Morgan Squires. Later we asked Director Squires why she cast her no vote. She explained:
The Forum reached out to all GLA directors for their thoughts. Only Squires replied and she noted "The opinions I listed above are mine alone and not meant to represent the opinions of the Board."
Many landowners had difficulty attending the Finance Committee Zoom meeting. The password was changed after the meeting was announced. Some landowners gave up. Persistent Joe Bezotsky was able to call in after trying for 45 minutes. He wondered why the Finance Committee was not looking to past due assessments for the extra money needed to balance the budget. Joe spoke about the top ten past-due landowners who owe the GLA over $70.000.00. He reasoned that collecting from them would be better than raising assessments. Should law-abiding and dues-paying landowners be forced to subsidize scofflaws?
A vote came quickly and the motion was passed with just one no from Director Morgan Squires. Later we asked Director Squires why she cast her no vote. She explained:
- I worry many landowners have not received an increase in wages to match inflation. I felt that assessment increases may place an additional burden on landowners who are already struggling financially.
- I didn't thoroughly review previous fiscal year expenditures and cross-compare with the budgeted FY23 project expenses. Without having more detail, I couldn't gauge how closely the FY23 budget projections might align with actual expenses.
- I voted no because I didn't feel confident that raising assessments was the only path forward. And I wonder if there are areas where the Board can trim spending and increase revenues without increasing assessments.
The Forum reached out to all GLA directors for their thoughts. Only Squires replied and she noted "The opinions I listed above are mine alone and not meant to represent the opinions of the Board."
Is there a way that the GLA can increase the 2023 budget without raising assessments? The Forum emailed former GLA Treasurer Regina Wunsch. We also spoke with an accountant who specializes in HOAs and a former GLA Board member who understood the intricacies of financial statements. Regina Wunsch responded first with a detailed email. She explained that she needed a complete end of year financial report and more data to fully address our question. The last complete GLA financial report was issued by the outgoing 2022 board in early September, 2022. Wunsch was worried about an optimistic current assessment collection rate and strapped landowners, Wunsch stated "I am more concerned about the impact of inflation affecting food, heating, services and gas on landowners , especially those on fixed incomes and their ability to pay even the current assessments, let alone an increase."
Our accountant advisor and board member wished to remain anonymous but explained the following to us. We have included a copy of the Balance Sheet from September 8, 2022, which details the cash handed over to the 2023 GLA Board.
As of September 8, 2022 the GLA had $289.451.51 in their combined checking and savings accounts.
Most of the cash in the GLA bank accounts is "set aside" in sub-accounts which are sometimes called "funds". These are titled for specific usage like North Glastonbury Road Reserve, Legal Reserve, Snow Removal Reserve, etc. The money is specifically reserved for various usages if the current budget is overspent. For example; if we get a bad winter and use up all the snow plowing funds in the budget then the GLA can dip into the Snow Removal Reserve Cash of $35,000.00.
The reserve sub-accounts are funded by money left in the previous year's budget, past due assessment collection, and reimbursement of attorney's fees as ordered by the court when the GLA wins or settles a case. The $70,000.00 that is owed by ten long-term debtors will go to these sub-accounts once it is collected.
In most years the GLA used money from the Road Reserve sub-accounts to pay for non-routine road maintenance like cleaning culverts, adding gravel to a road that does not normally receive it, etc. However, cash from sub-accounts cannot directly fund the budget. Only anticipated income such as assessments can be used to fund the budget. But sub-accounts may be used to pay for some irregular road maintenance, culvert cleaning, guardrail installation, etc.
Wunsch elaborated by stating "from the Fund Report presented, it appears that the funds are flush. One would need a Balance Sheet to corroborate the report. But one should not use the Fund money for regular road maintenance costs. But, if the current road costs shown in the P&L include “one off” costs, such as bringing substandard roads up to a higher standard, installing new guardrails, ditches and culverts etc, that should be paid out of the funds and a revised P&L should be presented to give a more accurate idea of regular road maintenance costs."
Our experts advised that the solution to balancing the 2023 budget just requires a simple accounting maneuver. The amount needed to balance the 2023 budget, $12,800.00, should be removed from the 2023 Road maintenance line item. That would bring the 2023 budget in balance. Assessments would not need to be raised. Then when spring grading comes around $12,800.00 can be transferred from the Road Reserve sub-accounts to pay for ditching, culverts, guardrail work, etc. The budgeted money would be used just for grading and gravel which is done every year. The budget would remain in balance, reserve funds would be spent and the roads would be properly maintained. Financially strapped landowners would not have to struggle to make ends meet and their roads would receive normal and fully funded maintenance.
Unfortunately the GLA Board quickly ratified the 2023 assessment increase. Landowners were not given a chance to present their thoughts and partake in a debate via an open GLA Board meeting. Higher assessment bills are being printed and will soon be sent to all landowners.