October 6, 2008 by bobfrank.

Some nagging, unanswered questions about the Co-Generation Plant fiasco and related 3rd Recreation Center Construction delays and costs are listed below for you to ponder and consider asking during the board meeting on 1:30 PM on Tuesday, October 7 in Freedom Hall.  This will be a turning point in the history of Sun City Anthem.

1. Since Pulte collected over $25 million by selling SCA’s golf courses in 2002 and shared nothing with SCA, and since Pulte saved over $10 million in cash by not building the 3rd golf course, and since Pulte profited by over $100 million by building the homes in Shadow Canyon and Desert Sky on FAR smaller lots than elsewhere in SCA, and since the Master Plan forces Pulte to build RecCtr 3, why should the board agree to allowing Pulte to charge the members for the greening features? Why shouldn’t the current design costs, including “greening” features, be within Pulte’s $10 million budget, and Pulte pay SCA the $1.4 million plus interest?

2. Why are we doing this “greening”?  There is no guarantee the delivered prices will be same as quoted on such state-of-the-art technologies in a period when demand for the “green” components is likely to be much higher than expected.  And, there can be no guarantee that the return on investment will ever be achieved.  When considering the previous 2-year delays in construction, the extremely high risks of more schedule delays due to technology issues, and Pulte’s high benefits by not having to pay the co-gen money and interest for the past 3 years, why should Pulte be allowed to charge extra for the greening?  Is that not a double or even triple charging the Shadow Canyon and Desert Sky homeowners?  And, why should Pulte not be required to build and complete on schedule without extorting compliance to that unfair settlement agreement?

3. Why shouldn’t the relatively small additive costs of greening be absorbed by Pulte considering all that is has gained and its two year construction delays?  The higher unit prices, smaller lot sizes, and higher density of homes built in Shadow Canyon and Desert Sky have caused members in those villages to have already paid for RecCtr 3.  Why should they have to pay again by giving up the co-gen funds and releasing Pulte from all obligations–before the building is even finished?  Pulte failed miserably on the standards for RecCtr 2. Who believes that Pulte will complete RecCtr 3 on schedule in 2010, and finish it up to the promised standards? Particularly if they already have a release that blocks the board from having any real leverage over it.

4. Would it not be fraudulent for the board to agree to this “settlement” that lets Pulte off the hook forever for the above liabilities?  Even if one wanted to consider such a sweetheart deal, why would you consider it before the company has finished the building?  Is this not the worst example of “negotiation” you have ever seen?  See why the situation raises thoughts of extortion, bribery and corruption?  It simply does not make sense.

5. How could the 2005 board members Favil West, David Berman, Bob Berman, Bob Sansing, Lyndal Ruiz, and David Weil allow Dea McDonald and Pulte to get away with not paying the $1.4 million Co-Generation funds in 2005?  And, even when they struck such a bad deal, why did they not execute a written amendment for the changes?

6. Were there any SCA benefits received in return for the big cash savings to Pulte?  Was that deal a sign of stupidity or corruption?  Who among the board and CAM, if any, voiced any disagreement with the deal?  How could the previous verbal and otherwise informal deals be considered valid when the “contracts” did not include “consideration” for the SCA members?

7. Why would anyone consider allowing $1.4 million of cash to be used sometime in the future for “greening” a senior center facility when many users would never live to benefit from the hoped-for savings? Did the 2005 board even ask for an economic analysis when they offered their illegal handshake agreement to defer payment?  What possible explanation other than corruption could one formulate?

8. How much money has Pulte saved in the 3rd rec ctr building construction by using green materials instead of normal materials in the building?  Does anyone know the truth?  There are numbers floating around from Pulte, but we should not accept them without detailed validation.  We are talking about really expensive components for a one-of-a-kind, very high-risk facility that is a true research and development project. It will be the first of is kind in a HOA in Nevada and maybe the first in the Nation.

9. And, by the way, what is a senior community doing sponsoring a high technology, advanced research and development construction program?  Would that even be a good thing for something as esoteric as enhanced property values when it is clear that the cost-benefit ratio is uncertain and it is unlikely to produce significant value compared to the cash value of the $1.4 million in the reserves with the resulting dues reductions? How does a practical person make sense out of this whole deal?

10. Due to the above history of gross misconduct by Pulte and SCA boards and RMI that allowed such a series of fraudulent actions against the SCA homeowners, what risks of legal actions against the board and Pulte will there be that cause high risks to the construction schedule?  Could rushing into making a bad deal to appease Pulte result in causing much greater problems, litigation costs, and construction delays over the next two years? What is the smart path to follow on October 7, 2008?

Posted in Truth Squad, SCA Board, Community Affairs | Print | 3 Comments »

October 6, 2008 by admin.

Thanks to the perseverance and tenacity by some of our fellow homeowners (and lately, one particularly persistent individual) the facts of more board shenanigans has come to light for all to see.

In 2006 there was a desire to install industrial quality steel shelving in one of our buildings for storage purposes.  The price was estimated at something over $10,000.  A quote was obtained from a local vendor:

Total price of shelving         $10,552.32
Sales Tax                               817.80
Installation Labor                     960.00

Total Price                        $12,330.12

An idea emerged. Over $800 could be saved by not paying the sales tax.  Having the Minuteman Foundation (MMF) buy the shelving could do this since they are not taxable.  They could in turn sell the shelving back to us tax-free because they are a charitable organization.  For their cooperation in this scheme the Minuteman Foundation would be allowed to use some of the shelving space at no charge.  Such a deal, everybody wins
The Minuteman Foundation purchased the shelving and had it installed as follows:

Total price of shelving        $10,552.32
Sales Tax                                 0.00
Installation Labor                     960.00

Total Price                       $11,512.32

Apparently the Minuteman Foundation Officers felt they deserved more consideration for their participation in this scheme than simply free use of SCA property.  The same people (West and Berman while wearing two different hats for the two different corporations) would charge SCA more than the shelving actually cost to realize a profit for the Minuteman Foundation.

How much did they charge you might ask?  On behalf of MMF, Favil West and Bob Berman charged SCA $16,700.  That is a huge 45% markup for acting as a middleman - plus those same officers still insist on the free use of the shelves now belonging to SCA.

So, the SCA officers, two of whom were also Officers and Trustees of the Minutemen Foundation, thought this was just fine, and “donated” $16,700 to the Minuteman Foundation!  But, imagine this, the SCA Officers (West, Berman, Dwyer and Berg) did not even bother to get the transaction on the agenda and approved by a board vote–as required by the law!  Why were they hiding such a large amount?  Perhaps they knew that the amount and purpose (donation) and the self-dealing was not legal?

Let us review this action by the board:

1. We could have purchased the shelves for $12,330.12.

2. Instead, the 2006 SCA Officers (with the same individuals serving as President and Vice President of both corporations) decided to pay Minuteman Foundation $16,700 for the shelves.

The 2006 board officers paid almost $4,400 more for the shelves than was necessary and  almost $4,400 more than they are worth.  That was our dues money they wasted. All the while claiming to be saving the sales tax of over $800.  Can you believe that kind of judgment?

Now, consider this case while you evaluate the competence, honesty and integrity of most of our past and present SCA directors.  Mull this over when you think about the honesty and integrity of the Minuteman Foundation officers.  We each have to act as we see fit, but many will remember this case the next time the Minuteman Foundation leadership comes with its hand out.

It is very difficult to uncover facts in matters like this. There has been an uncooperative attitude by the Board and the Community Manager that has taken our fellow homeowners over a year to finally get to the facts.

But, we also have to wonder how much more money has been wasted or is missing?  Some say millions appear to have been lost or wasted.  How could those of us who pay the bills find out the truth?

In the meantime, the board majority is refusing to allow all the financial facts of past years to come out.  Last year the board raised the dues by $160, and a few months later cut it by $100.  Do they really know what they are doing?  Imagine the wasted thousands of dollars of just changing the collection procedures and by having to reconcile the 7,000+ accounts!

Months before that, we found out the board had improperly retained over $3.7 million in surplus dues for the past few years–in spite of fact that all bills had been paid, and all reserves had been funded to over 90%.  We are talking about truly excessive dues collections!  And, then they even raised the 2007 dues above the previously excessive levels.  How could that be justified?

The excuses given?  They said it is not easy to know exactly how much is needed each year, so it is better to ask for too much than to run short.  While it can make sense to have an operating fund of a hundred thousand or two to support the year end carry over supporting an annual budget of $8 Million, but accumulating $3.7 million in surplus to all known needs–outrageous!

Such surpluses are required by law to be credited to the homeowners against future assessments or to pay federal income tax on the retained surplus.  But, they refuse to do either one.  Instead, they are hoping to not be audited by the IRS while they are struggling to find ways to spend all of that surplus and ignoring the requirement to spend the money wisely.   Amazing attitudes. Whose money do they think they are handling?  Do they remind you of the members of Congress?

It should be clear that SCA members must demand there be a forensic audit by a truly independent source to find out the whole truth, and to make our membership comfortable with our financial foundation for the future.  We want to pay the dues needed to maintain our community property at a high level of excellence, but no more.  We want to avoid nasty surprises like we are seeing on the national levels.

Posted in Truth Squad, SCA Board, Community Affairs | Print | 5 Comments »