State Parkway’s 2017 Budget Calls for a 12.2% Assessment Increase!

UPDATE: MAY 5, 2017

It is clear that between just two of State Parkway’s budget line items: Reserve Contribution, and Garage Operations, there are at least $507,131 of deferred assessment increases that will need to be phased in over the next five years as shown on the spreadsheet Deferred Assessment Increase 2018.xlsx.

The spreadsheet in the above link also shows, unless State Parkway continues to engage in budget fraud, unit owners can expect to see increases of at least 15% in 2018 and 7.5% in 2019 through 2022. I made it clear last year in my blog post that 2017 would be just the second year of an unannounced thirteen-year special assessment. Altogether, the $507,131 of deferred assessment increases represent an additional 30.340% increase in assessments.



If you thought this year’s 12.2% assessment increase was bad, especially since it followed last year’s 7.7% increase, just wait until you hear about the DEFERRED assessment increases. They are as follows:

  • The 2016 Reserve Study Update calls for an additional $355K assessment increase to be phased in over the next five years.
  • The 2016 financial results show State Parkway’s Operating Fund incurred massive losses. Yesterday I received the interim financials from LMS and it shows the Association lost $56,821 during the year. However, this amount does not include some $63K of invoices the Association did not accrue in December 2016. Nor does it include adjusting entries made by the Association’s auditor. So lets liberally assume the Operating Fund, which is currently insolvent, only loses $70K during the year 2016.
  • The 2017 Budget is at least $50K too light for Garage Operations Losses because SP+ recently budgeted a $330K loss for the year 2017 but the board of directors, for at least the second straight year, adopted a Garage Operations Losses budget that was at least $50K understated. I should note that had the board budgeted the correct amount, the proposed 2017 assessment increase would have easily exceeded 15%, which would have allowed two-thirds of State Parkway’s unit owners the opportunity to reject the 2017 Budget the board of directors had adopted. (Garage Operations lost at least $291.3K in 2016 as compared to $285.6K budgeted by SP+ but only $239K budgeted by the board of directors.)


Altogether that’s $475K ($355K + $70K + $50K) of deferred assessment increases, or 28.42%. In other words, had the 2017 Budget been done “correctly,” the 2017 Budget increase, subject to a vote by the unit owners, would have been 40.58%, meaning 28.42% of the assessment increase has been deferred. With expected increases for utilities, wages and garage operations losses, State Parkway’s unit owners can expect to see substantial (high single digits or low double digits) assessment increases for the foreseeable future.



In addition to overstating State Parkway’s projected reserves as of December 31, 2016, by at least $320K, there are some other odd assumptions in State Parkway’s 2017 Budget. They are as follows:

  • The 2017 Budget includes an additional $225.7K more toward the annual reserve contribution over and above unit owners’ current wear and tear on the Association’s reserve component inventory.
  • The 2017 Budget also includes $11.6K for real estate taxes on the Engineer’s Unit, which represents at least a 230% increase, 0r $8.1K more, over 2016 actual property taxes, even though the board of directors assumed the sale will actually occur in 2016.
  • The 2017 Budget also includes $3.6K for repairs to Engineer Unit, even though the board of directors assumed the sale will actually occur in 2016.
  • The 2017 Budget also has $3.2K cable expense shortfall improperly passed along to unit owners. Unit owners that have a higher than average ownership percentage will effectively pay more for cable tv services than through their cable tv fees which is equally split among the Association’s 160 unit owners.


Altogether, the foregoing shows the Association is improperly collecting an additional $240.6K in assessments from unit owners in 2017 than necessary.



On December 8, 2016, my wife and I finally received the 24-page 2017 Budget Details that were due for our inspection long before State Parkway’s Board of Directors formally adopted the 2017 Budget at its November 7, 2016, board meeting. The 2017 Budget is both a farce and a sham. First of all, the projected 2016 year-end reserve balance is at least a whopping $320K too high.* Secondly, the Association took the unprecedented step of not completing the Reserve Study 10-Year Projection section. Last, but not least, the Association budgeted $50K less than SP+ did for garage operations losses during 2017. In fact, had the association budgeted the proper amount for garage losses, not to mention the massive projected operating fund loss expected in 2016, the proposed 2017 assessment increase would have easily exceeded the 15% threshold, where unit owners can reject it if they obtain two-thirds approval. The bottom line is 2017 will be THE SECOND YEAR OF AN UNANNOUNCED THIRTEEN-YEAR SPECIAL ASSESSMENT. In other words, expect further assessment increase shocks and/or special assessment(s) for the foreseeable future.

* As of November 30, 2016, the Association has $1MM in reserves. Add approximately $30K for the December 2016 reserve contribution and assume no reserve spending (not a realistic assumption with all the replacement work going on) in December 2016 gives you a maximum balance of $1.030MM, or $320K less than what the Association recently projected in the 2017 budget. Consequently, it’s obvious the Association is skewing the long-term reserve study projection in order to hide the fact substantial assessment increases and/or special assessment(s) are imminent. Moreover, the few projected reserve study expenditures indicate numerous replacement projects will be deferred. However, this decision is not disclosed in State Parkway’s minutes, annual financial statements or the 22.1 disclosure letter.


Today, my wife and I received the 2017 Budget Summary in the mail. There are more questions than answers. For example, there’s no mention of the Garage Operations Losses in either 2016 (projected) or 2017 (budgeted). Nor is there any explanation how the Replacement Reserve Fund grows to $1.35M by the end of 2016 with a balance of less than $1MM as of August 31, 2016. I do see the board budgeted $498,700 for the 2017 Annual Reserve Contribution, which is the minimum recommendation State Parkway’s professional reserve study consultant recommended in the January 2012 Reserve Study Update. More to come when we receive the 2017 Budget Details.

At tonight’s double-header (Annual Membership Meeting and ensuing Board of Directors’ Meeting), the board at the latter meeting approved for distribution to the unit owners the 2017 Budget, which calls for a 12.2% assessment increase. This follows last year’s 7.7% assessment increase.

At last year’s double-header, the board approved a 2016 Garage Operations Budget, prepared by SP+, calling for a $285.6K deficit. However, minutes later the board approved for distribution to the unit owners the 2016 Budget (7.7% Assessment Increase), but the Garage Operations Losses Budget only had $239K. The board abruptly adjourned the meeting to avoid explaining the $46.6K reduction in Garage Operations Losses line item.

Tonight, the board refused to disclose how much is in the 2017 Budget for Garage Operations Losses, saying I’ll find out when the other unit owners find out. The problem is this highly dysfunctional board forgot they buried Garage Operations Losses under “Maintenance and Repair” category so it will remain hidden from unit owners unless the board takes the unprecedented step of disclosing it in either the budget and/or cover letter. Notwithstanding, I already made a request to inspect the complete 2017 Budget details.

The board also refused to say whether or not the 2017 Garage Operations Losses Budget was prepared by SP+. So I also made a request to inspect the 2017 annual budget prepared by SP+.

Meanwhile, Garage Operations Losses line item is a very serious budgeting issue. (See Blog Post “Garage Operations Losses Soaring To Infinity… And Beyond!”) Year-to-date Garage Operations Losses through August 31, 2016, is already $181,246 (Source: SP+ August 2016, Financial Statements). Given recent trends (declining revenue and soaring expenses), this means the Garage Operations Losses during 2016 (with just four more months remaining but nine more pay periods) is likely to end up somewhere between $289K and $303.5K, as compared to just $239K budgeted. Treasurer Cleavenger, however, angrily disputed the $181,246 number I reported. I think Treasurer Cleavenger thought it was $202,595 as reported in LMS’ financial statements, but I reminded him that LMS’ financial statements are bogus because tens and tens of thousands of dollars of invoices are not being recorded on LMS’ financial statements in a timely manner. (That is, the property manager had been leaving them in her drawer for too long. And Treasurer had been skipping the giving/filing of Treasurer’s Reports. See Blog Post “Treasurer’s Reports are Not Being Filed.”)

Board Secretary Terry Leja incredulously bragged at tonight’s board meeting on how transparent the Association’s board of directors has been during this budget cycle! Secretary Leja most likely received a copy of State Parkway’s 2006 Budget, which was the last detailed budget unit owners received, around the time she moved in at State Parkway in April 2006. Late in 2006, State Parkway switched to a more condensed budget format that conceals scores of budget line items like Garage Operations Losses, and legal fees, from unit owners.

The bottom line is the last twelve months have produced a 20.8% increase in assessments, when the Consumer Price Index (“CPI”) increased only 1.1%! To put this in perspective, between October 2005 and August 2016 (the latest CPI information available), indicates 20.91% inflation since October 2005 (or a period of 10 years and 10 months)!

When my wife and I receive a copy of the 2017 Budget, we will be anxious to see the projected 2016 year-end surplus/(shortfall), and the amount budgeted for Garage Operations Losses in 2017. However, for the second straight year, State Parkway’s Board of Directors won’t be able to answer unit owners’ questions regarding the Association’s 2017 Budget prior to its formal adoption on November 7, 2016.

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