Finance & Legal minutes: 2009-10-12

Minutes:

F&L Committee Minutes
11/12/09

Present: Elph, Aaron, Cher, Rod, Amy


1. Late Association Fee policy

We reviewed the suggestions received at the 10/7/09 Comty mtg -- these will be inserted into the final policy:

- Allow 30 days for households currently behind on fees before we apply the new fee structure
- Insert sentence indicating that F&L representatives will be flexible about the amount of the monthly late fee when working with households who have a plan to catch up on their overdue association fees and are making progress toward paying this off. We don't want the late fee to be an impediment to getting the balance paid off.

Cher made a number of suggestions for changes to the proposal. We agreed to accept her suggestions for rephrasing the "Issues" section. Amy hadn't had time to read over Cher's suggestions, but wanted to.

MONKEY: Elph will make the two changes above plus the intro part that Cher wrote and will send it out for a final reveiw, giving Amy time to read Cher's ideas.

We had a wide-ranging discussion for Cher's benefit about the previous policy and what is different about the new one. Late fees in the past were essentially a token fee of $14-15/month no matter how much was owed. We're changing that to be a fee that calculates as regular interest rates do, based on the amount owed, so as to provide more pressure when people are balancing their priorities. We want the association's late fees to be commensurate with the payments people are making on other debt. We realized that some folks hadn't considering their past due association fees as debt, as a loan from the community. We wanted to make it a real financial obligation.

Another significant change is that the new policy defines when a lien goes into effect. We learned this from Sunward's situation with a foreclosure. We have never yet placed a lien.

All this being said, Elph's experience in working with households who are beind is that what is most effective is to help people figure out a payment plan. And once this is figured out, to fill out a payment plan form that already exists.

A lien is only a legal record that a household owes us money. It doesn't force them to pay. The choice of four months as the point in time at which we place a lien is somewhat random -- it seemed like a long enough time to be of concern.

The policy is intended to give households a sense of empowerment by encouraging them to come to F&L to initiate a conversation.

F&L is the guardian of the financial health of the organization. Other people, such as the Affordability and Caring Committees, have done work to help households in need of financial information and support. F&L can't do this--it's a conflict of interest. Amy reported that she brought this issue to the last Steering Committee meeting. Steering will invite members of Caring and Affordability to its next meeting, to talk about whether financial information and support could be continue to be offered to households in need of it.

Ted had requested more information about the Annual Percentage Rate (APR) of the 4% late fee. Elph had a conversation with Ted and they came to the conclusion that APR is not really useful in this context. Here's why. The timeline of late association fees rarely stretches to a full year. APR is intended to reflect interest over periods of years. The general curve of late association fee payments is around 5 months. The majority are just a couple of months. A few households wait for their tax refund and then pay off their association fee debt. The focus needs to be on a monthly basis. So to communicate an annual aggregate of a monthly fee doesn't make sense in this context.

Next step: Amy will read over Cher's suggestions and at the next meeting we'll discuss and hopefully finalize the policy document.

2. Fire Suppression

Rod came from Buildings to talk with F&L about Buildings' concerns about the Fire Suppression system. With the number of leaks and repairs we have had, it appears we have a fairly significant problem that is beyond our expertise to figure out. Legal steps seem like a huge step to take and we don't know the consequences. Certainly there would be legal costs, and they might be substantial. A worker from the Orzell company who worked on the Graham's system said that in his opinion the whole system had been installed wrong, with pressure valves in the wrong places. We've had the system inspected by a third party -- why didn't they identify the same problem? Don't know. Coincidentally, Mac & Amy have a leak now, so we're going to have him come out to fix that and we'll talk with him while he's here. Q: Didn't Orzell split off from Ann Arbor Fire Protection, which installed our system? There might be sour grapes at play here. Something to look into. More research and clarity is needed. Concern about just fixing and fixing, instead of figuring out an overall plan for getting the whole system fixed.

Previous plan was to install pressure tanks in all buildings. A couple may have been done. Go one building at a time until it's done. Do we need a different plan?

Can the Scio Township system help with inspecting? No, we hired a contractor who's licensed by the state to do inspections. We don't know if there is anyone in Scio who is qualified to inspect. Maybe there is. Let's check.

If Orzell has an opinion about the system, it needs to be documented. And we should have them look at TriStar's inspection documents and tell us where they got it wrong. Get that documented, too. Then have TriStar come back and respond to the Orzell comments. Leave Ann Arbor Fire Protection (which installed our system) out of it. We'll get information out of this.

MONKEY: Elph will ask Bill Kinley what he knows about the various vendors for fire suppression systems. Who does Phoenix use for inspections?

It's cheaper to put in the pressure release tanks when the system is already being drained to fix a leak.

We think that seven buildings have fire suppression systems; of these 3 or 4 have had problems.

3. Reserve study

Buildings would like to be able to talk with Paul Conahan about the reserve study, and Common House would, too. Becky already sent a couple of "we want to make sure he notes this" type of things. Paul started on the work, then we told him to stop because we are waiting for the final numbers on painting, so this can be incorporated. Will have one meeting to start him off, then do the rest by e-mail. Trying to gather ideas about what people want to be considered. Has been difficult to get this from people. We really want this.

MONKEY: Elph will send another reminder to the community for input, questions, etc. for Paul to consider.

4. Next meeting:

Monday, October 26 at 8 pm. Aaron will not be here.