Trouble - Marriott Grand Residence Tahoe [Management Agreement in Jeopardy?]

[timsi]

The BOD cannot micromanage staffing that is hired for the operations of the facility. That is why the HOA has a manager. The BOD doesn't assess the "appropriateness of the compensation" for housekeeping, etc.

If your perspective is correct, and this is indeed their stance, we can see what led the management into trouble at this resort. For example, is sufficient if they just assert a need for a 25% increase in payroll? I find it unreasonable to anticipate the BOD blindly approving these figures without a more thorough examination.

At this point, it's conceivable that not only do the owners lack a detailed understanding of the requested increases, but if your account holds true, it's also possible that board members are still unaware of important details. As a matter of fact, the way I understand the letter sent by the BOD is that all the increases they were made aware of do not add up to the total increase requested for the 2024 budget and this is the core of the problem. IMO this is not normal especially when pursuing significant increases.

 

[LeslieDet]

If your perspective is correct, and this is indeed their stance, we can see what led the management into trouble at this resort. For example, is sufficient if they just assert a need for a 25% increase in payroll? I find it unreasonable to anticipate the BOD blindly approving these figures without a more thorough examination.

At this point, it's conceivable that not only do the owners lack a detailed understanding of the requested increases, but if your account holds true, it's also possible that board members are still unaware of important details. As a matter of fact, the way I understand the letter sent by the BOD is that all the increases they were made aware of do not add up to the total increase requested for the 2024 budget and this is the core of the problem. IMO this is not normal especially when pursuing significant increases.

That is simply not how management agreements function. I suggest you read the management contract that someone posted in this lengthy feed. There is a reason the HOA hires a management company. You can speculate all you want, but operating costs are not mysterious. It is a pretty basic concept. And, don't forget that there was a significant deficit in the operating account at the end of 2023. That needs to be covered too; so the 2024 costs would include enough money to cover the operating loss from 2023, unless the BOD opted to pay it out of reserves (if allowed, depending upon what those expenses were) and not replenish the money pulled from reserves and placed into the operations account.

 

[timsi]

That is simply not how management agreements function. I suggest you read the management contract that someone posted in this lengthy feed. There is a reason the HOA hires a management company. You can speculate all you want, but operating costs are not mysterious. It is a pretty basic concept. And, don't forget that there was a significant deficit in the operating account at the end of 2023. That needs to be covered too; so the 2024 costs would include enough money to cover the operating loss from 2023, unless the BOD opted to pay it out of reserves (if allowed, depending upon what those expenses were) and not replenish the money pulled from reserves and placed into the operations account.

Does the management contract say they can spend funds that were not approved in the budget? Is the issue of the 2023 deficit settled? I thought it was still in dispute.
Sure, operating costs and increases should not be mysterious, but it seems they are, at least that is what the BOD asserted in their initial letter.

 

[LeslieDet]

Does the management contract say they can spend funds that were not approved in the budget? Is the issue of the 2023 deficit settled? I thought it was still in dispute.
Sure, operating costs and increases should not be mysterious, but it seems they are, at least that is what the BOD asserted in their initial letter.

Those types of questions were discussed long ago in this lengthy feed. No need to cover them again. The BOD cannot refuse to pay a bill simply because the bill exceeded the budgeted amount. That is not how the world works, especially when the bill isn't something that is discretionary (ie utilities, labor costs, insurance, etc are not discretionary). Indeed, if you review the management agreement, you'd see that the manager is obligated to maintain the insurance and keep the lights on. The way the manager does that is by paying the bill timely.

Think about it this way, if the BOD only authorized $100K to pay insurance premiums in a budget, but the cost of the insurance jumped to $250K, the BOD cannot complain that management paid the bill. Sure, if the dramatic increase was caused by an act of negligence or breach of contract of the management company, there may be a basis for the BOD to request that the management company cover the increase, but otherwise, the manager is required by the contract to pay that bill and pay it timely. If the manager failed to pay the insurance bill and the insurance was canceled, that would be a breach of the management contract. The BOD cannot hold the manager responsible for the increase in insurance premiums when the manager did not cause the increase.

I don't own there; I don't have any special info to know what the discussions have been other than what was shared here. I would simply suggest you rely upon the official minutes and financials, not necessarily one board member's comments.

 

[Wanderlustgrl]

We are Ocean Pointe owners for years. In the middle of a mess. I just stumbled across this group and it seems much better information here than the Facebook groups. Don’t quote me, my husband is the numbers guy. We were told that because of the Surfside community collapse we are in for 35% or 45% - I’ll have to see my notes - increases over the next 10 years to go into a reserve fund. $47 million total needs to be created. Ron DeSantis passed the legislation. So we asked the sales rep - we wrote down the numbers, so in 10 years, our MF will be $92,000 per week? That can’t be right? They said yes. They said MVC sent certified letters to all of us about a year and a half ago, with a timeline for when we could get out of our deeds and into the Trust. They said less than 100 people are still deeded. We thought we were going to be sick. Is this true? And they told us because of our level of ownership, Bonvoy credit card, points can be converted and then those convert to credit on our credit card and that can be used to pay MF. I’ve called Owners, Bonvoy and they are not able to give clear explanation. More numbers to call. We have a deal in place that gave up our weeks, 10,000 MVC points, and we have $100,000 to pay off in 10 years. 65% of those 10,000 points convert, then convert again to “credit” - math was about $12,500 in credit- and we use that to pay the $7800 in points MF. Does anyone know about this? Is it true? We can still rescind.

Rescind! And report this to customer advocacy…if the maintenance gets out of control for you just deed them back and walk away. It will never be that high and most owners we meet while there for 6 weeks own multiple weeks. Never give up a week

 

[timsi]

Those types of questions were discussed long ago in this lengthy feed. No need to cover them again. The BOD cannot refuse to pay a bill simply because the bill exceeded the budgeted amount. That is not how the world works, especially when the bill isn't something that is discretionary (ie utilities, labor costs, insurance, etc are not discretionary). Indeed, if you review the management agreement, you'd see that the manager is obligated to maintain the insurance and keep the lights on. The way the manager does that is by paying the bill timely.

Think about it this way, if the BOD only authorized $100K to pay insurance premiums in a budget, but the cost of the insurance jumped to $250K, the BOD cannot complain that management paid the bill. Sure, if the dramatic increase was caused by an act of negligence or breach of contract of the management company, there may be a basis for the BOD to request that the management company cover the increase, but otherwise, the manager is required by the contract to pay that bill and pay it timely. If the manager failed to pay the insurance bill and the insurance was canceled, that would be a breach of the management contract. The BOD cannot hold the manager responsible for the increase in insurance premiums when the manager did not cause the increase.

I don't own there; I don't have any special info to know what the discussions have been other than what was shared here. I would simply suggest you rely upon the official minutes and financials, not necessarily one board member's comments.

We will have to wait and see. If management agrees that they can operate the resort in 2024 with $758,000 less, it will completely jeopardize the claim that all of the 2023 overspending was non-discretionary or that they couldn't keep the lights on in 2024 without $2 million more.

 

[LeslieDet]

We will have to wait and see. If management agrees that they can operate the resort in 2024 with $758,000 less, it will completely jeopardize the claim that all of the 2023 overspending was non-discretionary or that they couldn't keep the lights on in 2024 without $2 million more.

I don't know where you live, but there are some types of expenses that fluctuate with the market. Utility rates are one of those. You seem to believe that every cost is fixed and guaranteed if it is in a budget. That is not reality. If there is 17' of snow in one week one year and only 2' the next year, I guarantee you the cost to manage that snow will vary. Take a look back at the 2023 financials. It is all in black and white. Numbers are numbers and that is the great thing about them, they don't lie. You really would help yourself if you stopped believing the resort operates in a controlled environment and vacuum. It doesn't.

 

[timsi]

I don't know where you live, but there are some types of expenses that fluctuate with the market. Utility rates are one of those. You seem to believe that every cost is fixed and guaranteed if it is in a budget. That is not reality. If there is 17' of snow in one week one year and only 2' the next year, I guarantee you the cost to manage that snow will vary. Take a look back at the 2023 financials. It is all in black and white. Numbers are numbers and that is the great thing about them, they don't lie. You really would help yourself if you stopped believing the resort operates in a controlled environment and vacuum. It doesn't.

It's pretty simple. Your view is that the manager could not lower the 2023 deficit by one penny and that they need the amount initially requested for 2024 and nothing less. In my view this is not how things work; this is a management issue, not an accounting matter limited to adding few lines in a budget.

By the way, snow removal contracts typically adhere to predetermined pricing rather than being contingent on the actual amount of snowfall in a given year.

 

[igopogo]

When you say you think that inquiry was asking whether owners have the right to review the original receipts for all expenditures, as referenced by applicable CA law, the owners have a right to see all of the financials.

My question was a little different, I think.

My understanding from the “discussions” back and forth between the manager and the HOA is that the manager pays most of the bills, including things like utilities, and then seeks reimbursement from the HOA.

Is the manager considered a contractor, in which case we may only have full legal transparency at the top line item…ie the fee charged by the manager…and anything else we get we should be thankful for? Or is the manager an extension of the board, in which case we have the right to see the details of each expense category.

I certainly understand that things like payroll to individuals may be considered confidential and protected. Although it would be nice to know how labor is split between on-site, direct corporate support, and allocated corporate overhead. If the board is asking the manager to reduce the amount they charge for labor from allocated overhead, that’s very different from axing a front desk or housekeeper position.

 

[LeslieDet]

My question was a little different, I think.

My understanding from the “discussions” back and forth between the manager and the HOA is that the manager pays most of the bills, including things like utilities, and then seeks reimbursement from the HOA.

Is the manager considered a contractor, in which case we may only have full legal transparency at the top line item…ie the fee charged by the manager…and anything else we get we should be thankful for? Or is the manager an extension of the board, in which case we have the right to see the details of each expense category.

I certainly understand that things like payroll to individuals may be considered confidential and protected. Although it would be nice to know how labor is split between on-site, direct corporate support, and allocated corporate overhead. If the board is asking the manager to reduce the amount they charge for labor from allocated overhead, that’s very different from axing a front desk or housekeeper position.

Your understanding is not accurate. That isn't how management of an association works. Read the management contract. The manager controls the HOA bank account. It is the HOA's money in that account. The MFs are ultimately transferred to the HOA's owned accounts as that is HOA money. When a utility bill is paid, the money comes from the HOA bank account. Look at the financials you were provided. See those accounts? Those are HOA accounts. The manager doesn't pay the utility bill out of the manager's pocket and then submit an expense reimbursement request form. Again, read the management contract. It may help you understand the structure. And, request and read the audited financial statements. Those reflect the expenditures made by the HOA.

BTW - the manager is an agent of the HOA. That is different than being a "contractor" in the sense you seem to be asking about. For example, a contractor may come on site to repair a plumbing leak. When that happens, the plumber isn't an employee of the HOA nor the management company. Whether it is ABC Plumbing, Inc. or John Doe, Plumber, that business is an independent contractor who is paid directly on behalf of the HOA by management using HOA money to fix whatever needed to be fixed. It would be the management company's obligation to engage the services of ABC Plumbing or John Doe Plumber to do the repairs, but that engagement is done by the manager in its capacity as agent for the HOA. The HOA is responsible to pay the bill. Don't confuse the management contract with contracts that are entered into every day with non-employees to do repairs, or whatever it is being done. If the person doing the work is on the HOA payroll, they are an employee. If the management company engages their services via a contract, they are independent contractors. (Yes, I am oversimplifying the legal aspects for this discussion.) You are entitled to see the contract for the independent contractor, you are not entitled to see the payroll details for the employee.

 

[LeslieDet]

It's pretty simple. Your view is that the manager could not lower the 2023 deficit by one penny and that they need the amount initially requested for 2024 and nothing less. In my view this is not how things work; this is a management issue, not an accounting matter limited to adding few lines in a budget.

By the way, snow removal contracts typically adhere to predetermined pricing rather than being contingent on the actual amount of snowfall in a given year.

For goodness sake, there you go again, claiming to know what my views are. Stop saying you know my views, you don't.

Why is it so difficult to grasp that I don't have a view as to what the manager could or could not do; rather, I understand accounting and how it all works. You dwell on irrational aspects that have no rational relation to the issues. Who cares if snow removal contracts have predetermined pricing. You need to look at the big picture. See the forest for the trees is the saying. In that hypothetical, the quantity of snow is what is the variable. Guess what, if there is no snow, there is no need for any snow removal that year. Now, IDK if there is a fixed contract or not. Who assumes the risk is the question. If there is 100' of snow, or zero snow, if there is a contract of engagement where the contractor gets paid a fixed price regardless, then that contract is the price. If the contract says the contractor gets paid an hourly rate for snow removal, then I guarantee you it is going to cost more to remove more snow.

Do you actually live someplace where you have to pay your own utility bill? It sounds like you do not grasp how operational expenses in the real world are handled. If the cost of natural gas used to be $1K/mo and it is now $10K/mo, then if the resort wants any natural gas, it needs to pay $10K to keep the flow of gas coming. If only $1K were remitted on a $10K bill, then the natural gas supplier cuts off the account. That is how it works in the real world. You may not view that as being real world, but absent a contract specifically requiring the natural gas provider only receives a fixed contract price, then your view of the real world is incorrect. Go ahead, try not paying your utility bills and see how long your utilities remain on.

 

[timsi]

For goodness sake, there you go again, claiming to know what my views are. Stop saying you know my views, you don't.

Why is it so difficult to grasp that I don't have a view as to what the manager could or could not do; rather, I understand accounting and how it all works. You dwell on irrational aspects that have no rational relation to the issues. Who cares if snow removal contracts have predetermined pricing. You need to look at the big picture. See the forest for the trees is the saying. In that hypothetical, the quantity of snow is what is the variable. Guess what, if there is no snow, there is no need for any snow removal that year. Now, IDK if there is a fixed contract or not. Who assumes the risk is the question. If there is 100' of snow, or zero snow, if there is a contract of engagement where the contractor gets paid a fixed price regardless, then that contract is the price. If the contract says the contractor gets paid an hourly rate for snow removal, then I guarantee you it is going to cost more to remove more snow.

Do you actually live someplace where you have to pay your own utility bill? It sounds like you do not grasp how operational expenses in the real world are handled. If the cost of natural gas used to be $1K/mo and it is now $10K/mo, then if the resort wants any natural gas, it needs to pay $10K to keep the flow of gas coming. If only $1K were remitted on a $10K bill, then the natural gas supplier cuts off the account. That is how it works in the real world. You may not view that as being real world, but absent a contract specifically requiring the natural gas provider only receives a fixed contract price, then your view of the real world is incorrect. Go ahead, try not paying your utility bills and see how long your utilities remain on.

In the communications from both the board and the manager, I didn't see any mention of snow removal. However, you've brought it up multiple times, maybe you have information the rest of us are unaware of. Theoretically, in 2023 they might have paid an exorbitant amount for snow removal, or if they had a fixed contract, it could have been more or less the same as the previous year. I'm not sure why we need to speculate.

Your remarks led me to believe that you perceived all the increases in 2023 and 2024 as non-discretionary, implying that no other costs could be adjusted. Nevertheless, I might have misunderstood your comments.

 

[igopogo]

Your understanding is not accurate. That isn't how management of an association works. Read the management contract. The manager controls the HOA bank account. It is the HOA's money in that account. The MFs are ultimately transferred to the HOA's owned accounts as that is HOA money. When a utility bill is paid, the money comes from the HOA bank account. Look at the financials you were provided. See those accounts? Those are HOA accounts. The manager doesn't pay the utility bill out of the manager's pocket and then submit an expense reimbursement request form. Again, read the management contract. It may help you understand the structure. And, request and read the audited financial statements. Those reflect the expenditures made by the HOA.

BTW - the manager is an agent of the HOA. That is different than being a "contractor" in the sense you seem to be asking about. For example, a contractor may come on site to repair a plumbing leak. When that happens, the plumber isn't an employee of the HOA nor the management company. Whether it is ABC Plumbing, Inc. or John Doe, Plumber, that business is an independent contractor who is paid directly on behalf of the HOA by management using HOA money to fix whatever needed to be fixed. It would be the management company's obligation to engage the services of ABC Plumbing or John Doe Plumber to do the repairs, but that engagement is done by the manager in its capacity as agent for the HOA. The HOA is responsible to pay the bill. Don't confuse the management contract with contracts that are entered into every day with non-employees to do repairs, or whatever it is being done. If the person doing the work is on the HOA payroll, they are an employee. If the management company engages their services via a contract, they are independent contractors. (Yes, I am oversimplifying the legal aspects for this discussion.) You are entitled to see the contract for the independent contractor, you are not entitled to see the payroll details for the employee.

Yes, when I was asking whether the manager is an extension of the board, I was referring to an agency relationship.

The most recent minutes show that the HOA owes the management company $124.928. Other meetings show requests by the management company to wire funds from specifically from the operating fund to the management company, and specifically to cover expenses. I’m trying to square this with the idea that the management company is simply writing checks from the HOA account.

 

[dioxide45]

Yes, when I was asking whether the manager is an extension of the board, I was referring to an agency relationship.

The most recent minutes show that the HOA owes the management company $124.928. Other meetings show requests by the management company to wire funds from specifically from the operating fund to the management company, and specifically to cover expenses. I’m trying to square this with the idea that the management company is simply writing checks from the HOA account.

Is that because the HOA ran a deficit in 2023? In that case, the management company is covering those expenses and expecting reimbursement, with interest.

 

[LeslieDet]

Yes, when I was asking whether the manager is an extension of the board, I was referring to an agency relationship.

The most recent minutes show that the HOA owes the management company $124.928. Other meetings show requests by the management company to wire funds from specifically from the operating fund to the management company, and specifically to cover expenses. I’m trying to square this with the idea that the management company is simply writing checks from the HOA account.

Remember the part of the minutes where the financials report, for example:
"As of June 30, 2023, the 2023 Operating Fund year-end forecast reflects a deficit of ($402,390) with overages expected in Utilities, Insurance, Rental Allocations and Miscellaneous."

That means the operating fund bank account for the HOA is overdrawn or projected to be overdrawn, and to keep things working, the manager has advanced money to the HOA to pay the bills. This is addressed in the management contract. When the manager does that, a specific section of the management contract applies:

"4.7 Advances and Reimbursements. Manager shall not be required to perform any act or duty hereunder involving an expenditure of money unless there shall be sufficient funds therefor in the bank accounts of the Association; if at any time the funds in the bank accounts of the Association are not sufficient to pay the charges incident to this Agreement, Manager, atthough
not obligated to do so, may advance such sums as it deems necessary, and in such event, Manager shall be entitled to reimburse itself from Association funds for the amount of such advances, together with interest at the rate of ten percent (10%) per annum commencing from and after twenty (20) days from the date of the advance by Manager."

Thus, if the checking account has no money, and the bills still need to be paid, the manager pays them and then it MAY advance the money needed. When that happens, the manager requests that the HOA reimburse it those amounts. Think of it like those "paycheck" loans. The HOA needs to borrow short term money, and the manager agrees to loan the money short term. Except this one isn't at 25% interest like those check cashing/paycheck loan shops.

The deficiency -- meaning basically how overdrawn the HOA checking account is because the bills were more than the MFs collected -- is one reason the MFs need to go up. And, if your expenses remain the same, then if you end the year 1 with a $500K overdrawn balance, in year 2, if your expenses don't increase, you need to pay the increased cost PLUS you need to cover the deficiency. So, in year 2, that means $1MM more needs to come in. $500K covers the deficit from the last year and $500K covers the higher expenses from the current year. Of course, that is oversimplifying things, as there is a cost to borrow money, and as reflected in the management contract, the HOA now owes the management not only the amount it advanced on behalf of the HOA, but interest on that loan at 10% per annum. So, a $500K deficit will cost the HOA interest of $50K per year if it doesn't reimburse the manager as per the contract.

If the most recent minutes reflect that the HOA owes the manager $125K, then that suggests to me a couple of possibilities: for example, the HOA BOD could have authorized the transfer of money held in reserve to the operating account to bring down the difference between what was projected as being the deficit as of June 30, 2023 ($402,390); the rest of the year's operating expenses were lower and thus the projected deficit was smaller; or income was higher, and the amount of the projected deficit was reduced because higher than projected income was received. I do not know. What do the October financials reflects? The financials and the minutes of the October 2023 and January 2024 HOA meetings should have reported on the status.

Remember, if there is no money in a checking account, you can't pay any bills. And, remember, the financials will always reflect the bank account balances, as well as any outstanding deposits or withdrawals that are on the books of the business but not yet cleared the bank. Every owner is entitled to the financial statements of their HOA. Those statements are audited. The audited financial statements you are also entitled to request and review. You might want to do so. BTW - if you want the details, request the BOD share info with you. The minutes you provided from June 2023 state: "A motion was made by Sharon McKarns to recognize the GRCLT Condominium, Inc., Board of Directors review of the April 2023, May 2023 and June 2023 Operating Accounts, Reserve Accounts, actual Operating revenues, and expenses compared to budget, account statements, income, and expense statements, check ledger, monthly general ledger, and delinquent assessment receivable report." That IS the detail you asked about in #534. Your BOD has everything.


And, I really suggest you read the management contract. It is all there.

 

[dioxide45]

And, I really suggest you read the management contract. It is all there.

TLTR

 

[LeslieDet]

In the communications from both the board and the manager, I didn't see any mention of snow removal. However, you've brought it up multiple times, maybe you have information the rest of us are unaware of. Theoretically, in 2023 they might have paid an exorbitant amount for snow removal, or if they had a fixed contract, it could have been more or less the same as the previous year. I'm not sure why we need to speculate.

Your remarks led me to believe that you perceived all the increases in 2023 and 2024 as non-discretionary, implying that no other costs could be adjusted. Nevertheless, I might have misunderstood your comments.

Seriously? LOLOL Geez, do you understand the concept of a hypothetical of events that may happen at resorts located in an area where large quantities of snow can happen? I don't give a rat's ass about snow removal, I'm using that as a neutral act that isn't performed by the owners themselves and isn't performed by management. Ok, you don't like that hypothetical, then change it. Make it termites. Make it unicorns. Make it widgets. Make it wild fires. Make it sand dune removal caused by a hurricane. I don't care. Whatever type of event that you can use as a hypothetical without believing that there is some weird conspiracy happening because that hypothetical wasn't mentioned in any of the communications. I was trying to help you understand how the real world works. It is as though you have never experienced the real world and do not understand how utility bills are generated or how buildings are maintained. Or frankly, how any business, even a simple one, operates.

You continue to dwell on some weird obsession with "discretionary" verses what you term "non-discretionary". Do you view shelter and utilities as discretionary or non-discretionary? If you budget $100/mo for your shelter and utilities, and all of the sudden it would cost $500/mo, do you believe that expense is "discretionary". That you can simply choose to not pay the bill and if you don't you believe that you can still use that shelter and utilities because that increase was outside of what you budgeted? That isn't how the real world functions. Perhaps you've never had to pay for shelter or utilities. But read the minutes. Read the words that say "overages in utilities and insurance" and ask yourself why you summarily classify that as "discretionary" - that is not how the real world functions.

 

[Eric B]

Ok, you don't like that hypothetical, then change it. Make it termites. Make it unicorns. Make it widgets. Make it wild fires. Make it sand dune removal caused by a hurricane. I don't care.

How about troll removal?

 

[timsi]

Remember the part of the minutes where the financials report, for example:
"As of June 30, 2023, the 2023 Operating Fund year-end forecast reflects a deficit of ($402,390) with overages expected in Utilities, Insurance, Rental Allocations and Misceilaneous."

That means the operating fund bank account for the HOA is overdrawn or projected to be overdrawn, and to keep things working, the manager has advanced money to the HOA to pay the bills. This is addressed in the management contract. When the manager does that, a specific section of the management contract applies:

"4.7 Advances and Reimbursements. Manager shall not be required to perform any act or duty hereunder involving an expenditure of money unless there shall be sufficient funds therefor in the barik accounts of the Association; if at any time the funds in the bank accounts of the Association are not sufficient to pay the charges incident to this Agreement, Manager, atthough
not obligated to do so, may advance such sums as it deems necessary, and in such event, Manager shall be entitled to reimburse itself from Association funds for the amount of such advances, together with interest at the rate of ten percent (10%) per annum commencing from and after twenty (20) days from the date of the advance by Manager."

Thus, if the checking account has no money, and the bills still need to be paid, the manager pays them and then it MAY advance the money needed. When that happens, the manager requests that the HOA reimburse it those amounts. Think of it like those "paycheck" loans. The HOA needs to borrow short term money, and the manager agrees to loan the money short term. Except this one isn't at 25% interest like those check cashing/paycheck loan shops.

The deficiency -- meaning basically how overdrawn the HOA checking account is because the bills were more than the MFs collected -- is one reason the MFs need to go up. And, if your expenses remain the same, then if you end the year 1 with a $500K overdrawn balance, in year 2, if your expenses don't increase, you need to pay the increased cost PLUS you need to cover the deficiency. So, in year 2, that means $1MM more needs to come in. $500K covers the deficit from the last year and $500K covers the higher expenses from the current year. Of course, that is oversimplifying things, as there is a cost to borrow money, and as reflected in the management contract, the HOA now owes the management not only the amount it advanced on behalf of the HOA, but interest on that loan at 10% per annum. So, a $500K deficit will cost the HOA interest of $50K per year if it doesn't reimburse the manager as per the contract.

If the most recent minutes reflect that the HOA owes the manager $125K, then that suggests to me a couple of possibilities: for example, the HOA BOD could have authorized the transfer of money held in reserve to the operating account to bring down the difference between what was projected as being the deficit as of June 30, 2023 ($402,390); the rest of the year's operating expenses were lower and thus the projected deficit was smaller; or income was higher, and the amount of the projected deficit was reduced because higher than projected income was received. I do not know. What do the October financials reflects? The financials and the minutes of the October 2023 and January 2024 HOA meetings should have reported on the status.

Remember, if there is no money in a checking account, you can't pay any bills. And, remember, the financials will always reflect the bank account balances, as well as any outstanding deposits or withdrawals that are on the books of the business but not yet cleared the bank. Every owner is entitled to the financial statements of their HOA. Those statements are audited. The audited financial statements you are also entitled to request and review. You might want to do so.

And, I really suggest you read the management contract. It is all there.

The described scenario seems absurd, as it would create an incentive for the manager to spend above the budget. Not only would they receive higher management fees, but they could also charge interest on top of that!
A key word missing in the letter from the management is "interest," leading me to believe that interest does not apply to money spent over budget without the approval of the board. Instead, it appears to be applicable in cases where expenses are within the budget. For instance, if there is high delinquency in a particular year, the association may need funds. In such situations, the manager can advance the funds and charge interest until the amount is reimbursed.

 

[timsi]

Seriously? LOLOL Geez, do you understand the concept of a hypothetical of events that may happen at resorts located in an area where large quantities of snow can happen? I don't give a rat's ass about snow removal, I'm using that as a neutral act that isn't performed by the owners themselves and isn't performed by management. Ok, you don't like that hypothetical, then change it. Make it termites. Make it unicorns. Make it widgets. Make it wild fires. Make it sand dune removal caused by a hurricane. I don't care. Whatever type of event that you can use as a hypothetical without believing that there is some weird conspiracy happening because that hypothetical wasn't mentioned in any of the communications. I was trying to help you understand how the real world works. It is as though you have never experienced the real world and do not understand how utility bills are generated or how buildings are maintained. Or frankly, how any business, even a simple one, operates.

You continue to dwell on some weird obsession with "discretionary" verses what you term "non-discretionary". Do you view shelter and utilities as discretionary or non-discretionary? If you budget $100/mo for your shelter and utilities, and all of the sudden it would cost $500/mo, do you believe that expense is "discretionary". That you can simply choose to not pay the bill and if you don't you believe that you can still use that shelter and utilities because that increase was outside of what you budgeted? That isn't how the real world functions. Perhaps you've never had to pay for shelter or utilities. But read the minutes. Read the words that say "overages in utilities and insurance" and ask yourself why you summarily classify that as "discretionary" - that is not how the real world functions.

Thank you for clarifying that you have no knowledge of the cost of snow removal. Somehow you think that these purely theoretical examples justify your position. A few weeks ago, you referred to me and @davidvel as “pals” and “co-conspirators” LOL, simply because he pointed out how far fetched some of your comments were. You appear to be the person who engages in the most speculation on these threads and, ironically, pretend that your comments are based on "facts." Frankly, you didn't need to write so extensively about expenses you have no detailed knowledge about. Yes, they MAY increase. They can also go down.

 

[LeslieDet]

Thank you for clarifying that you have no knowledge of the cost of the snow removal. Somehow you think that these purely theoretical examples justify your position. I do not understand your frustration, as it should be mine. A few weeks ago, you referred to me and @davidvel as “pals” and “co-conspirators” LOL, simply because he pointed out how far fetched were some of your comments. IMO you appear to be the person who engages in the most speculation on these threads and, ironically, pretend that your comments are based on "facts." Frankly, you didn't need to write so extensively about expenses you have no detailed knowledge about. Yes, they MAY increase. They can also go down.

Thank you for reminding me that I should not try and explain how the real world works to trolls; now I will go back to ignoring your comments. Please do not respond to mine. If I could block you I would.

 

[timsi]

Thank you for reminding me that I should not try and explain how the real world works to trolls; now I will go back to ignoring your comments. Please do not respond to mine. If I could block you I would.

It seems that those who disagree with you don't understanding the "real" world and dismissed as trolls. The discussion becomes a bit too personal at times, so I would also appreciate it if you could overlook my comments if they don't align with your views.

 

[wuv pooh]

Wow. Supposed to be 10 feet of snow at Tahoe this weekend: https://www.npr.org/2024/03/01/1235118336/sierra-nevada-snow-powerful-storm-blizzard

Too bad that Marriott already spent the snow removal budget for this year and has no means of exceeding it. Next we will hear the complaints about why Marriott is incompetent and cancelled check-ins while waiting for all the snow to melt./s

 

[VacationForever]

Wow. Supposed to be 10 feet of snow at Tahoe this weekend: https://www.npr.org/2024/03/01/1235118336/sierra-nevada-snow-powerful-storm-blizzard

Too bad that Marriott already spent the snow removal budget for this year and has no means of exceeding it. Next we will hear the complaints about why Marriott is incompetent and cancelled check-ins while waiting for all the snow to melt./s

Is this a tongue in cheek comment or is it truly that Marriott has no money for snow removal for the year and as a result, snow won't be removed?

 

[SueDonJ]

So an update from the BOD dated Jan 29 was posted to this thread in Post #495 and since then there's been no information directly from the Management Company as to its positions during that meeting or after, yes? Did we learn nothing in the first twenty or so pages of this thread about the folly of taking this particular BOD's words at face value?!

And I'll say again for anyone who thinks the question of Marriott possibly severing its Management Agreement with this resort is no longer on the table, at the several resorts where this type of negotiating happened (regardless of the outcome) the history shows that it's a long process with extensive posturing and communication. Specifically, in none of the instances would it have been said after all was said and done that Marriott was simply "bluffing." I don't think anybody can come away at this point with a definitive expectation of it happening or not at this resort, especially with only the one-sided limited perspective we're currently enjoying.

I appreciate that GR Tahoe owners are willing to share here whatever info they've been given - thank you!