Angry townhouse members discuss group's financial situation

Board members Bonita Jones, Martin Pohll, Carolyn Kuhnz and Doug Knutsen listen to a speaker at the session.

[Updated Nov. 13] An overflow crowd of about 80 townhouse owners turned out for the Murieta Townhouse Association annual meeting at the Rancho Murieta Association Building Tuesday. The meeting capped weeks of dissension triggered by a $44 dues increase in the 2009 budget. The increase will bring monthly MTI dues to $283.

Townhouse owners also pay RMA dues, which go to $141 a month next year.

MTI board members said most of the increase is needed to shore up the association's reserves, which have been hard-hit by the cost of replacing failing roofs on older townhouses. Members received a 2008 report on reserves showing 14 units received new tile roofs and gutter systems, and five flat roofs were replaced. In 2007, eight tile roofs and six flat roofs were replaced.

MTI consists of 198 townhouse units.

MTI began the year with a reserve balance of $391,176, added $346,750 in contributions for 2008. The report projects a year-end balance of $38,713.

Vice President Doug Knutsen outlined a five-year reserve plan with single-digit dues increases projected after 2009. According to the study, by 2014, "we start to come out of the woods," he said.

"The members of this association did not pay into reserves for concrete tile roofs for many, many years," Knutsen said. "When they start to leak a lot of damage starts to happen ... Regardless of whether you pay things by area or you incorporate all 198 townhouses into one organization, the expenses are going to be the same, your dues are going to be the same. ... Over the long term every roof has to be replaced, every deck."

Speakers talked about dissolving MTI, postponing repair and maintenance work to cut costs, changing management companies, and instituting separate accounting procedures for the seven townhouse areas. A few speakers stressed unity, and urged townhouse owners to stick together.

The crowd of townhouse owners spilled out the door of the RMA Building's meeting room.

Bobbie Fite said she was like many who purchased a townhouse "because we were tired of doing maintenance ... We wanted to join an association that would take care of those responsibilities with a minimum effort from us. Twenty years ago the price for that was right. It isn't any more."

Fite suggested putting off all but emergency repairs for the next year and forming committees to examine the problems facing MTI. She offered to head a communications committee.

"When I bought my town home I expected it to be maintained along with 197 other town homes," said former board member Jim Moore. "I don't much like paying for somebody else's roof but I know that someday I'm going to get a roof. That's the way this works. ... Deferring expenses doesn't make those expenses go away. You're just kicking them down the road, and they're going to get worse."

Moore said he would "work vigorously" against dissolving MTI. "I think it's important to strengthen the town home association. Volunteer, get on the board. That's where change happens."

"You need a new management company," townhouse owner Dick Cox told the group. Cox, the president of RMA, said he'd discussed a suggestion made at a meeting of townhouse owners that RMA take over maintenance duties with RMA staff. "That's exploratory at this point," he said. RMA has performed that role in the past, he noted, and someone could be hired to handle the administrative work for the townhouses.

"I don't know how we would run this operation without a management company," Knutsen said. Director Carolyn Kuhnz said $16 of the monthly dues go to pay Kocal Management Group. "You could not hire a full-time employee to even do the administrative work for $3,200 a month including fringe benefits," she said.

In addition to maintenance services, Kocal provides certified community managers who are knowledgeable about HOA law and procedures, Director Evelyn Caudill said.

Kuhnz said Kocal secured an insurance policy for MTI this year that reduced costs by more than $20,000.

That savings could go away if Kocal terminates its relationship with MTI at the end of the year and MTI has to find an insurance provider that's not affiliated with Kocal.

Kocal gave a 60-day termination notice after the board passed the 2009 budget last month on a 3-2 vote with one abstention. Kocal's action was "based on the budget controversy and the lack of support from the board for the budget," Kuhnz said in an interview Wednesday. The company's concern was MTI would go bankrupt without the budget. Kuhnz said the board hopes Kocal will reconsider. A committee is interviewing other management companies.

At Tuesday's meeting, Knutsen announced that MTI President Ted Ryon had resigned "in a dispute over the budget." Ryon abstained from voting on the budget. On Thursday, Ryon said he didn't vote because he believed he was barred from voting as the president of the board. Ryon said he was acting on instructions he'd received from the management company. "Since then I've found out that is wrong," he said.  

There were a total of three resignations from the seven-member board in the past month. Bonita Jones filled one of vacancies and two remain. Jones ends a three-year term on the RMA board next month.

The board asked for volunteers for the other two seats at Tuesday's meeting, but there were no takers.

Director Martin Pohll was reelected to the board in an uncontested election that took place at the meeting.