Below is my response to Al Glickman on Ron Johnson’s blog concerning dues/assessments :

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Al Glickman said:

“I give up.

I guess it’s true that Roz Berman, Jack Troia and everyone else except Bob Frank who have had anything to do with running SCA or handling our finances over the past three years are just bad people. I’ll just forget the facts, such as that our dues are still rediculously low for everything that we have here in SCA and that despite the lousy economy and the puny investment return rates out there, SCA is still presently in excellent financial condition with substantial cash on hand and more than adequate reserves. It is far more important to concentrate on purging the board of those who have created such financial mismanagement.

Yes, SCA may have been shorted somewhat by the developer, but surely, given our current financial situation, this is making a mountain out of a molehill. The idea that everyone here has been screwed, blued and tattooed to a point where we have all been irrevocably hurt is just a bunch of hogwash.

I hope that Ron Johnson is correct when he states that the Attorney General’s office is completing an investigation on what happened during the transition period and that the results will be forthcoming soon. My question is that if such an investigation concludes that things were not quite as bad as some seem to think they are, will the crusade end at that time?”

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For Al:  Thank you for finally making your position clear. Your latest post can be of great service to the readers of this blog. I recommend that everyone read and analyze it carefully.

For readers: Please note that the law and income tax rates require that our assessments be set to cover our annual operating expenses and reserve requirements. Good financial management dictates that we collect what we NEED from members–not less and not more.

The Board is not legally allowed to arbitrarily set assessments based on the “prevailing rates” of other HOAs. If our community property management needs are actually less than other HOAs, so be it! There are good reasons for such lower operating costs, but that is a topic for another article. Meanwhile, the frequently heard argument that “SCA dues are low, so why worry?”, is both deceptive and legally indefensible.

In the 2007 budget, the Finance Committee and Board reported the association had accumulated over $3.7 million in “Surplus Assessments” since 2005. Those funds were designated as “surplus” because the cash was left over after all bills had been paid and SCA reserves had been funded to over 90%.

Surpluses continued to significantly increase in 2008–even though SCA expenditures significantly exceeded receipts. But, in the opinion of many members, if I and a few other members had not put so much public pressure on the unjustified assessment rates and the income tax discrepancies, you would not have seen a dues reduction in 2009 from $1,100 annually to $960. Facts indicate we could have another dues reduction in 2010–regardless of what you may have heard about the projected very high costs of opening and operating the 3rd recreation center.

So, when anyone says that SCA is in “excellent financial condition” it is primarily due to cash surpluses. It is not a result of “brilliant” financial management. Members have been significantly overcharged by the Boards for many years, and the multi-year surpluses have not been returned, not credited against future obligations and income taxes have not been paid on the “profits”.

Not only is over-charging and arbitrarily rolling over the profits without member approval against statutes and against tax law, it is just plain dishonest to claim that good financial management has created the surplus cash position that the association enjoys. We deserve much better board leadership, and much better financial management policies for the future.

In the meantime, I still remain hopeful that some of the financial management participants in the past will come forward and confirm most of the above. I know how difficult it is to openly oppose the powers that be; but, we all need to preserve and protect our self-respect and rights to make choices without fear of retaliations.

Bob Frank
SCA Director and candidate for re-election