LWVSeptember 08, 2009

Residents Voice

Conrad Grundke

09/08/2009 1Residents Voice

Residents Voice 209/08/2009

PCM/GRF

Owners

LWV OUTHOUSE

Topics for Tonight

• Home Owner Association

– Employee Compensation

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“Home Owner Association”

Overview!09/08/2009 Residents Voice 4

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Structure of HOA

• Owners– Those with the legal responsibility for the

property.

• Boards of Directors– Officials elected to manage the property of the

owners.

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Purpose of Boards of Directors

• Maintain our homes and common areas.– Provide building and grounds upkeep

• Comply with Government regulations– Provide necessary administrative needs

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Method Used by the Boards

• Hire a Management Company to provide the necessary services (PCM).

• Boards provide management Oversight.– Also known as; “FIDUCIARY RESPONSIBILITY”– They define; “SERVICE LEVELS”

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“Costs!”

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Boards Responsibility

• Boards Hire a Managing Agent to provide maintenance.

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Managing Agent

• Hires the necessary services to comply with the “Service Levels” defined by the Boards.

– Third Party Contracts• Cost agreed to between LWV and Contractor

– Managing Agent Contract• Cost agreed to via budget

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Third Party Contracts

• Managing Agent not a bidder

– Bids normally sent out by PCM– Bids normally opened by PCM– Boards can be involved in selection

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Potential Third Party Contracts

• Managing Agent involved as one of the bidders

– Bids normally sent out by PCM– Bids normally opened by PCM– Boards can be involved in selection

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Costs• For work done by Managing Agent;

– Equipment & Supplies

– Labor

• Number of Man hours

• Labor Rate

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How have other companies reacted to the current

environment• Eliminate unnecessary services• Research lower costs for Equipment &

Supplies– Rent/Lease vs own– Alternative suppliers

• Reduce number of man hours– Increased Efficiency– Reduce Labor Rate

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

23% More Than Nec-essary

BAU NEW

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Consequences

• $95,000,000 Total Budget per Year– 60% is Labor• $57,000,000 per Year

– 23% more labor cost than necessary• $13,111,111 per Year

• Equals;–$1029 per manor per year–$85.7 per manor per month

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Conclusion

• Due to the potential cummulative lack of control by PCM over the past 20 years, we are now potentially paying;

– United Mutual $521.58 instead of $436.58

– Third Mutual $552.41 instead of $ 467.41

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United Third0

100

200

300

400

500

600

521 552436 467

Current vs Potential

The End

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