The POHOA Board has not allowed a vote at the Annual Homeowner’s Meeting since at least 2021, when a huge expense for legal fees was proposed (after over over $11k had already been spent, well beyond that year’s budget). While it is the Board itself that “approves” the budget, homeowners have a right to veto the budget per CCIOA (Colorado Laws governing HOAs).
The process is called “budget ratification”, and is found in CRS Section 38-33.3-303(4)(II):
“Unless the declaration requires otherwise, the budget proposed by the executive board does not require approval from the unit owners and it will be deemed approved by the unit owners in the absence of a veto at the noticed meeting by a majority of all unit owners, or if permitted in the declaration, a majority of a class of unit owners, or any larger percentage specified in the declaration, whether or not a quorum is present. If the proposed budget is vetoed, the periodic budget last proposed by the executive board and not vetoed by the unit owners must be continued until a subsequent budget proposed by the executive board is not vetoed by the unit owners“
In the past 2 years, we’ve had Treasurer Clay Jones give a long presentation as though he is some sort of financial advisor (unlicensed), advocating, among other things, that we put our reserves into gold coins presumed to be sold to the HOA from the shop where he works, and presumably kept at his house. But, the Board never explains to homeowners that they COULD request a vote to ratify the budget.
Behind the scenes, when I’ve asked why we are no longer voting to ratify the budget as we had every year from 2009 through 2021, the answer is coy: Because no one has asked for a vote. The meeting is rushed at the end to transition to the PID meeting. If you listen to the recording at the 2022 meeting, you can hear me ask why we aren’t voting, but they simply tried to say the meeting had already been adjourned.
This Board is AFRAID that we might actually use our power to excercise control over how our money is spent. And, given that we are operating with a loss this year (as per what was stated at the November meeting, when the budget was approved), or at least we are no longer adding to reserves due to all of the discretionary spending in several key areas – Accounting, Legal Expenses, and Landscaping (Water).
Because the community has NOT been participating in meetings, slowly our expenses have creeped upwards without any oversight. Treasurer Jones blames “inflation”, but as we can see from the low CPI of 1.9%, such inflation is no longer a factor in 2024. We are, however, experiencing vendors who are taking advantage of the belief that there is inflation to simply raise their prices – and we aren’t doing a great job of negotiating them back down.
At the 11/6/24 meeting, Treasurer Jones projected that we would have to take $2500 out of reserves (negative income on the P/L) to cover the extra expenses, even though we saved money on only one mowing of the outlots and had a healthy income from interest in our various accounts. The budget mailed out changed that somehow, and there’s no explanation given.
I believe the following areas of the budget should be reviewed and revised:
ACCOUNTING
We never had a monthly accounting expense until 2023 when the Board unilaterally decided to give Jen Hutchinson an unwritten contract – even though other homeowners are willing and able to volunteer to do the work. In fact, we have a history of several homeowners doing so, and they still live here. My concern is that the underlying issue is transparency, particularly when we are moving expenses around to avoid being politically ousted for having let expenses go way beyond the budget.
This isn’t speculative, and is documented here:
COOKED BOOKS: How to Hide HOA Legal Expenses With Cash Accounting
IMAGINARY NUMBERS: POHOA Hides 2024 Budget, Quietly Releases Hidden Legal Expenses
CONFLICT OF INTEREST: POHOA Elects Paid Contractor to Board of Directors
At the very least, if we absolutely must pay one of our homeowners to enter transactions into Quickbooks (which does NOT require the person to be a CPA, by the way), could we perhaps negotiate with Ms. Hutchinson since we are coming up short for other expenses that are actually necessary?
LEGAL
For the years 2006-2020, we got by just fine with a legal budget of $500. But, then in 2021, all of a sudden, the Board decided to take every question they could dream and send it to an attorney who ran up a huge legal bill that was NOT about “document revision”. The Board hid the expenses from the ratification meeting in 2021, and booked half of them on the last day of that year (after the meeting), and pushed the other half in 2022.
When document revision collapsed, they pretended that everything spent was about that project, but it really really wasn’t.
Having a large budget in any organization leads to a Board that thinks that because the money is there to be spent that it must be spent – to justify its existence in the budget. We have a competent attorney now (Moeller Graf), and unless we are looking to target homeowners (a charge the Board has never actually addressed squarely, or responded to specific allegations) or create disputes by creating policies that create conflict, there’s no real reason for an HOA of this size to have this amount spent annually on legal expenses. We have seen little to no benefit from the thousands we have spent, and its time to return to a normalized budget, perhaps in the range of $1000 to $1500.
LANDSCAPING
At the 11/6/24 Board Meeting, the Landscaping Committee chaired by Gloria Jones gave the Board a report on the quotes they had received:
$23,560 – Foothills Landscaping
$17,830 – All Terrain Landscaping
$14,700 – Green Earth (our current contractor)
The discussion was fairly simple – there was a question about whether the proposal locked Green Earth into this amount for the next 3 years, which was to be clarified. But, there was no question that there was general satisfaction with our current contractor and that their quote was below $15k.
The high bid was considered way too high, and wasn’t considered. But, All Terrain’s quote also had an automatic 4% increase annually. So, when compared with Green Earth, it was kind of a no-brainer. And, given all the positive comments about that contractor, even I spoke up and said we should probably continue with them because they had the best price.
So, why are they now proposing a budget of $18,000 for Landscaping Contract AND another increase to $4000 for trees/shrubs?
Astute homeowners should ask questions about why this area of the budget is being padded.
IRRIGATION/WATER
One fact we cannot get around is that the cost of water is ever-increasing in Colorado, and in Fort Collins specifically. In 2018, we turned of the irrigation on approximately 0.8 acres when faced with a budget crises.
At the February Landscaping Meeting, even Gloria Jones admitted that we may need to consider the other approximately 2 acres at the center of the neighborhood. While it’s a nice luxury to have a manicured area of green grass, do we really need that large of an area to be irrigated?
What was discussed at that time was turning off the irrigation for perhaps 1/3 to 1/2 of the area closest to the North Fence – which would save us at least 1/4 to 1/3 of the water budget. There has not been an agenda item at Board Meetings or the Annual Meeting for the community at large to discuss this option, and the discussion is overdue.
FENCING
Leaving aside the question of whether or not having a mile of cedar fencing is the only acceptable way to have a divider between adjacent neighborhoods (when the East End has no such fence at all), we are clearly seeing a pattern: The wind blows down these fences every single year for nearly a decade.
And, Treasurer Jones claimed that the contractor we are choosing applied a 31% increase to our expenses based solely on “inflation”. But, this is contradicted by the fact that fuel prices are at a 3-year low, and that even the CPI indicates that inflationary pressures due to the Pandemic is basically a thing of the past.
I suggested at the 11/6/24 meeting that there are ways to reinforce the fencing used by neighbors on Bingham Hill Rd, the Board has not followed up with my suggestion, or taken the time to look at such examples. They just pretend that it’s just a fact of life, and we are married to expenses we cannot control or predict.
The budget for 2025 has been substantially increased from $4000 to $6800, but seeing as we had an expense of $15,860 in 2024, there’s no reason to believe that this budget will be adequate. And, if it is not, then we dip into our reserves – as we did in 2021.
SUMMARY
I asked Treasurer Jones whether there was any other option than to have a supplemental assessment pushed onto homeowners if fence repairs continued to drain the budget. He nodded in agreement.
I have to admit, it was kind of a trick question. What I was testing to see is whether there was ANY CONSIDERATION of reducing other areas of discretionary spending – such as accounting, legal, or other landscaping expenses. He didn’t even imagine the option, which is telling.
While it is fair to say that the Board is sometimes faced with unexpected expenses, it is no longer reasonable to assume that the wind won’t blow, and that our aging fences (we still have about 3/4 of a mile that has never been repaired or replaced) won’t blow up our budget in any given year. We have to PLAN for it, and if it doesn’t happen, then we have extra to put into reserves for years when it does.
But, we are suddenly treating accounting and legal budgets that were dramatically increased since 2020 to be some form of required spending, when they just are not. While maybe the current Board WANTS to spend our money that way, by no means is outside the boundaries of discretionary spending. We need to live within our means, and we just don’t have the money for those areas.
And, as far as landscaping expenses go, which is the majority of our budget every year since this HOA’s inception, we have yet another discretionary option – to turn off areas that aren’t used by the vast majority of homeowners. It just happens to be that several of the Board Members serving since 2018 happen to have a view of this luscious green lawn from their back windows – and perhaps it is perceived that their home values are tied to it.
For the rest of us, however, cutting that water expense would be wise, particularly if we aren’t willing to look into long-term solutions to cedar fences that not only fail after 10 years, but are also cited by the Boulder Fire report as contributing to elevated fire risks. We are adjacent to a field of grass that could burn in minutes and jump overland and set them ablaze. Yet, we treat them as required when, once again, the East End has no such fencing at all (and there’s no problem considered back there).
For these reasons, the Budget should be vetoed, and a new budget that includes widespread inclusion of homeowners should be ratified at a later date.
