State Parkway’s Board of Directors To Discuss “A Possible Special Assessment” At the May 22, 2017, Board of Directors Meeting

UPDATE: MAY 18, 2017

Today my I received an email from the Association noting that the agenda for this Monday night’s board meeting will not be made available until the day of the meeting, instead of on Friday.

Since the agenda will be posted late, I’ve asked the Association to distribute it via an email blast, so unit owners can decide whether or not to attend. It would also reduce the need for paper copies.



This afternoon I received a Call and Notice of the May 22, 2017, Board of Directors meeting, via email blast from Lieberman Management Services, Inc., stating that “in addition to regular business, the board will be discussing a special assessment.”

Special assessments can be levied for the following purposes:

  • to cover operating deficits or to raise additional working capital;
  • for unanticipated expenses (that is for “contingency reserves”);
  • to fund a program for major repairs and replacements of the common property (rather than for specifically identified repairs); and
  • to cover any expenses that have already been incurred.

A recent blog post I wrote detailed the fact State Parkway has $507K of deferred assessment increases, including $152K to cover garage operations shortfalls.

State Parkway may have significant federal and state tax exposure due to underreporting gross income and claiming falsely inflated deductions via an impermissible accounting method, when it amends prior returns prior to being selected for an audit. To make matters worse, State Parkway is filing Form 1120-H even though it cannot pass the 90% expenditure test, which is defined as Qualifying Expenditures divided by Total Expenditures. Qualified Expenditures equals Total Expenditures minus Replacement Fund Capital Expenditures minus Expenditures Allocated to Non-Exempt Function. Hence, if State Parkway’s capital expenditures and allocated non-exempt expenses are at least 10% of State Parkway’s Total Expenditures, it cannot elect to file Form 1120-H instead of Form 1120.

State Parkway may need to add between $2MM to $9MM, if not more, to shore up its weak Replacement Reserve Fund. The good news, however, is if the special assessment is large enough, monthly unit owner assessments can return to an appropriate level sooner rather than later. In fact, last summer I wrote in a blog post that 2017 would be the second year of an unannounced 13-year special assessment.

Altogether, the total special assessment may be as much as $10 million.

Unit owners should not approve a special assessment until the following objectives are met:

  1. State Parkway submits to a complete forensic audit by an independent accountant with the results reviewed by a litigation committee;
  2. State Parkway provides all unit owners of annual capital contributions since November 5, 1992, and update it annually by April 1st;
  3. State Parkway’s annual and interim financials should disclose all sources of income, and all expenses (garage expenses and cable do not belong in “Repairs and Maintenance”);
  4. State Parkway changes its method of funding reserves to fully-funded from threshold funding;
  5. State Parkway funds all future Operating Fund shortfalls via a supplemental assessment over a six-month period, beginning no later than April 1st of the subsequent year;
  6. State Parkway to credit unit owner assessment for Operating Fund surpluses over a six-month period, beginning no later than April 1st of the subsequent year;
  7. State Parkway ends all interfund borrowing;
  8. State Parkway to use SP+’s budget proposed budget projection in the annual budget process;
  9. State Parkway takes tax planning very seriously in the annual budget process;
  10. State Parkway to update its Reserve Study Update every three years;
  11. State Parkway’s monthly financials posted on e-STAR to be prepared in accordance with Generally Accepted Accounting Principles (including reconciled with the independent accountant’s year-end adjustments and month-end payables);
  12. State Parkway discloses its Replacement Reserve percent funded in its annual financial statements;
  13. State Parkway to return to an expense authorization policy adopted by previous boards;
  14. State Parkway’s board of directors must be committed to the principle of ensuring intergenerational equity;
  15. State Parkway’s board of directors will retain a qualified engineering firm to perform feasibility studies with the focus on minimizing the present value of unit owner assessments;
  16. State Parkway makes all of its books and records, including tax returns and supporting tax worksheets, available for inspection; and
  17. State Parkway to resurrect its Finance Committee.

How To Criminally Evade Federal and State Income Taxes

This is a reminder for State Parkway’s Board of Directors and State Parkway’s tax preparer, Picker & Associates (“Picker”).

To evade the payment of federal and state income taxes per State Parkway’s 2016 Financial Review as prepared by Picker, one must do any of the following:

  1. Underreport non-exempt income by failing to include parking income and/or laundry income and/or gross rents;
  2. Claim falsely inflated deductions by deducting 100% of garage expenses.


A review of State Parkway past tax returns (2004 through 2015)* shows the following:

  1. On the 2004 through 2013 federal and state tax returns prepared by CondoCPA, State Parkway claimed hundreds of thousands of dollars of falsely inflated deductions by improperly deducting 100% of State Parkway’s garage expenses.**
  2. On the 2014 and 2015 federal and state tax returns, Picker failed to report parking income, laundry income and gross rents (from the Engineer’s Unit).


*Does not include tax returns for years 2008 and 2009 because State Parkway secretly elected to file Form 1120 (corporation tax return) for these years instead of Form 1120-H (Homeowners Association tax return).

**Between 2004 and 2015, including 2008 and 2009, State Parkway claimed over $257K of rental unit (#906) expenses, exclusive of depreciation, which appears to be blatantly excessive.

Consequently, State Parkway and its tax preparers, CondoCPA and Picker, evaded taxes by filing false federal and state tax returns.

I will update the spreadsheet in this blog post once my wife and I inspect State Parkway’s 2016 federal and state tax returns. Meanwhile, each State Parkway board should remember that he/she has a duty to:

  1. ensure State Parkway qualifies for 1120-H election by meeting both the exempt function income test (at least 60%), and 90% of the HOA’s expenditures are for management, maintenance, acquisition and construction of Association property;
  2. ensure all gross income is reported on the tax returns;
  3. review all deductions taken on the tax returns;
  4. after board approval is obtained (and noted in the minutes), appoint an officer to sign the tax returns on behalf of the Association; and
  5. make both federal and state tax returns and tax worksheets available for unit owner inspection.

State Parkway Again Rejects Request to Inspect Year-End Trial Balance and Adjusting Journal Entries

UPDATE: MAY 8, 2017

On May 2, 2017, my wife and I received an anonymous email from the association through Lieberman Management Services, Inc., saying “Upon attorney review, these files will be turned over. They will require a few days to compile and redact.”

However, as of this today, my wife and I have yet to inspect the payroll records we initially requested on April 20, 2017.


UPDATE: APRIL 29, 2017

State Parkway confirmed that the 2016 Holiday Fund Bonus was paid in December 2016 and January 2017. A close examination of State Parkway’s books and records shows approximately 2/3rds of the $16K of the year-end bonus was booked in December 2016, with the remainder booked in January 2017. However, State Parkway rejected our request to inspect certain payroll records such as timesheets even though personal information will be redacted. This rejection led to my wife and I filing our 15th complaint with the City of Chicago. In any event, it’s clear that State Parkway’s auditor neglected to accrue the 2016 Holiday Fund charge in January 2017 as part of 2016’s accrued payroll. I was also able to confirm the $2K of accounting invoices for services rendered in 2016, were improperly charged to 2017 and not recorded as accounts payable as of December 31, 2016.

But the sad truth is that by improperly deferring tens of thousands of dollars of expenses into 2017, the 2017 budget cannot accommodate these budget overruns. In fact, it has gotten to the point whenever the board approves an unbudgeted expense, the board is, in essence, approving an assessment increase without unit owners receiving advance notice.


UPDATE: APRIL 20, 2017

After my wife and I filed our fourteenth complaint with the City of Chicago for State Parkway’s failure to make its books and records available for inspection, the other day my wife and I finally received a copy of State Parkway’s year-end trial balance and adjusting journal entries for the year 2016.

Because State Parkway’s year-end payroll accrual seems too low (just $7K of accrued payroll at the end of 2016 vs. $22K accrued at the end of 2015, but the final paychecks for 2016 and 2015 were through December 29, 2016, and December 31, 2015, respectively; and doorstaff’s December backpay wasn’t paid until January 2017 respectively), my wife and I recently submitted our request to inspect certain payroll records during the years 2015 and 2016. The names and other personal identifying information will, of course, be redacted.

Meanwhile, it appears the 2016 holiday bonus was booked in both December 2016, and January 2017. Further investigation is needed via the payroll records my wife and I wish to inspect. Perhaps this is why the property manager resigned shortly after the release of State Parkway’s January 2017, interim financial statements?

State Parkway’s March 2017 financial statements have yet to be posted on e-Star.



This afternoon I learned from a unit owner that, unlike my wife and I, she has yet to receive her copy of State Parkway’s 2016 Financial Review. State Parkway’s By-Laws make it clear unit owners should receive their annual accounting of the previous calendar year by April 1st. So if you haven’t received your copy of the 2016 Financial Review, you can request it from the property manager.

Earlier today, my wife and I informed the Association’s independent accountant, Picker & Associates of the many other errors in the 2016 Financial Review.

Finally, my wife and I are still waiting to inspect State Parkway’s 2016 federal and state tax returns and related tax worksheets.



In my blog, I had confidently projected that State Parkway’s Operating Fund would lose about $70K during the year 2016. The 2016 Financial Review my wife and I received late Friday, March 31, 2017, shows State Parkway’s Operating Fund only lost $31K. What happened to my $70K projection? Even though State Parkway refused mine and my wife’s request to inspect the independent accountant’s year-end trial balance and adjusting journal entries for the year 2016, I was able to figure out how the books were cooked.

Including the $7-plus million gross understatement of future reserve expenditures, State Parkway’s independent accountant also made the following errors in the 2016 Financial Review:

  1. Understated Garage Operations Losses by $14K via “errors” in the adjusting journal entries;
  2. Understated Payroll Expenses by $16K by failing to accrue the 2016 Holiday Bonus in 2016;
  3. Understated write-offs by $8K by failing to write-off the lost scavenger rebates per Alderman Smith’s office; and
  4. Understated Fees from State Parkway’s independent accountants (CondoCPA and Picker and Associates) by failing to accrue $2K of invoices that were sent in December 2016.


Altogether, correction of the aforementioned four errors would put the actual Operating Fund loss to about $71K instead of $31K. Meanwhile, State Parkway’s handling of painting and wallpapering work done in the 4th quarter of 2016 need to be investigated as it appears they were not accounted for correctly.

“Errors” by State Parkway’s independent accountants and other professional consultants have been going on for a very long time. In fact, twelve years ago this week, I, in my capacity as director, found that State Parkway’s independent accountant overstated State Parkway’s year-end Replacement Reserve Fund balance in the 2004 Audited Financial Statements by some $128K ($673K as reported vs. instead of $545K actual). It took Brad Schneider of CondoCPA seven weeks to admit I was correct (even though it took me just minutes to find and report the error).

The bottom line is State Parkway still has about $475K (28.4%) to $500K (30%) of deferred assessment increases looming.



On March 3, 2017, my wife and I received an email from LMS, rejecting our February 22, 2017, request to inspect the year-end trial balance and adjusting journal entries for the 2016 Financial Review. Despite the Association producing the year end workpapers for previous years in December 2016 as a result of our complaints to the City of Chicago, the Association said on March 2, 2017, that “[t]he audit workpapers and federal and state tax worksheets are not records of the Association because they are not delivered as part of either the draft or final audit and taxes. That being said, Picker’s office is extending the same offer that was extended last year to view these documents; at their offices for a price. That is $600 prepaid, for requested documents to be reviewed, under observation of one of their employees. Should additional documents be required, those can be attained at an additional price of $250 per hour, inclusive of time to produce these documents. For your information, neither is the 2016 [financial review] or taxes is complete at this time.”

My wife and I immediately responded, asking if the Association was reversing policy? Notwithstanding, we reminded the Association that State Parkway’s board of directors has a fiduciary duty to review all accounting and tax transactions and adjustments, prior to not only their approval but also prior to the board appointing an officer to sign the tax return on behalf of the Association.

LMS immediately responded, saying “If Picker does any adjustments as part of the 2016 engaged Review (not audit) these items should not be included in the final review documents. To restate; NEITHER the 2016 taxes or Financial Review has been completed so there are no documents to be delivered at this time. [no emphasis added]”

Yesterday my wife and I received a copy of State Parkway’s 2016 Financial Review from State Parkway’s property manager, Bill Southall. The end of Note 2 in the 2016 Financial Review (on page 7) states: “In preparing the [2016] financial statements, the Association has evaluated events and transactions for potential recognition or disclosure through, February 13, 2017, the date that the financial statements were available to be issued.”

CondoCPA was State Parkway’s independent accountant until shortly after Director Howard Robinson, State Parkway’s President since January 2017, was elected to the board of directors in September 2014. Picker & Associates had done accounting work for Director Robinson’s development company.

While my wife and I await to inspect the 2016 Financial Review year-end trial balance and accounting adjustments, I’ve notice a number of material “errors” in the 2016 Financial Review, including the following: 1) no write off for $9K of Scavenger Rebates lost per Alderman Smith; 2) some $15K-to-$16K of 2016 Holiday Fund expenses and related liabilities were improperly deferred to 2017; 3) painting and wallpaper expenses were also improperly deferred to 2017; and 4) the reported garage operating deficit ($271K) during 2016 is suspiciously too low, especially as compared to SP+’s accounting ($291.3K). [LMS reported the garage lost $305K during 2016 but LMS’ financial statements, as I have demonstrated, are bogus.] Consequently, State Parkway’s reported $31,302 Operating Fund loss during the year 2016 has been grossly understated.

My wife and I will soon file another complaint with the City of Chicago on the very same issue we had thought was resolved. It will be out 14th complaint since late last May.


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.

Board Fails to Transfer 2015 Operating Fund Surplus to Reserves

At the July 25, 2016, board of directors meeting, I asked the board why the board did not transfer the $5K 2015 Operating Fund Surplus to the Replacement Reserve Fund in the same manner the Association had transferred the $46.3K 2014 Operating Fund Surplus the year before?

On September 14, 2016, my wife and I finally received an email response to our July 25, 2016, question about the 2015 transfer. The association responded saying, “In response to your question to the Board at the last meeting: Reviewing the December 2015 Financial shows the ending 2015 income as $1,672,990 and expenses $1,679,037 leaving a net deficit of $6,047.00. No transfer was completed.”

The problem is the 2014 transfer

Cook County Board of Review Reduces Market Value of State Parkway for 2016 By Another 6 Percent

Cook County Board of Review’s 2016 Decision opined that the total market value of State Parkway’s 160 units and 110 deeded parking spaces is $41,181,760, which is 6.06% lower than the 2015 Decision. This translates to roughly another 5.69% reduction in property tax bills for 2016 and 2017 taxes payable in 2017 and 2018, respectively.

With respect to parking spaces at State Parkway, the Board of Review’s 2016 Decision has opined that the market value of a parking space that is not on the main level of the garage is approximately $17,990.

The Board of Review’s 2015 and 2016 Decisions altogether are 12.7% lower than the $46,439,318 assessed by the Cook County Assessor in 2015. State Parkway’s next triennial assessment is not until 2018.


2017 Garage Operating Expenses on Target for a $50K Budget Shortfall

According to State Parkway’s financial statements, as prepared by garage management company SP+, State Parkway’s net loss for the Garage Operations line during the first quarter of 2017 is $91,052 as compared to $90,934 loss budgeted by SP+. or just $118 over “budget.” This means SP+’s budgeted loss for 2017 of $329,925 is right on target. The problem is State Parkway’s board of directors only budgeted $280K instead of $330K for 2017. This means the projected $50K budget shortfall for garage operations will have to be funded by unit owners.

This $50K is part of the $475K deferred assessment increase shortfall I detailed in another blog post. But if the 2018 budget line item for Garage Operations is just as bad as 2017, unit owners will be asked to pay at least an additional $50K increase for this line item in the 2018 Proposed Budget

Going forward, State Parkway’s board of directors should “demand” to see the projected budget prior to distributing the proposed budget to unit owners for their review prior to board adoption. It’s the least garage management company should do.

Unrecorded March 2017 Invoices Total Over $75K

Each month in addition to the monthly financial statements, my wife and I also receive PDF files containing invoices that were received by the Association by the end of the previous month that were excluded from State Parkway’s monthly financial statements.

This month the unrecorded March 2017 invoices, which my wife and I received from the Association today and totaled over $75K, are over 40 pages long and represents at least 20 vendors. At least one invoice, the one for the elevator maintenance contract, appears to be missing. In any event, some of these invoices are for Replacement Reserve Fund expenditures, some and for Operating Fund expenses, and some are for prepaid expenses.

Last, but not least, State Parkway’s monthly financial statements, as prepared by LMS, have yet to be reconciled with the 2016 Financial Review and include automatic 2017 reversing entries.

Anonymous Email Threat Received

UPDATE: APRIL 11, 2017

The IP Address for the anonymous email is, which is owned and registered by Sidley Austin in Chicago, Illinois. Why is “one of the largest and most respected law offices in Chicago” sending me an anonymous email?


ORIGINAL POST: Earlier today I received the following email:

From: Anon Ymous <>

Subject: [Bullied By The State Parkway Condominium Association Board] Contact

Date: April 7, 2017 at 2:30:03 PM CDT


Reply-To: Anon Ymous <>

Name: Anon Ymous



Comment: Mr. Novak,

I live in the building but I don’t believe we’ve ever met. So I have done nothing to you. Yet you are going to cost me thousands in a special assessment along with the other 159 owners? That is not fair, neighborly or decent. I have done nothing to you. Why are you doing this to me? If this building is as bad as you say it is, then why not take the $400k they offered you and run? Go get a condo in a better building where you can focus on happiness! Why stay here just to be miserable and make everyone else miserable? I can’t afford a special assessment- it’s going to break me. You are going to cause me to lose my home. And again, I have done nothing to you. Maybe you need to think about someone other than yourself and realize the impact your actions are having directly on the rest of us. Let all of this go, or know that the day we get the special assessment, I will be suing you for that money and I’m sure the rest of the bldg will follow. Stop being so selfish or you’ll force me to do the same.

Time: April 7, 2017 at 7:30 pm


Contact Form URL:

Sent by an unverified visitor to your site.

Dear Mr. or Mrs. Ymous:

It’s obvious you haven’t read all of the blog posts. Otherwise you wouldn’t be threatening ME with litigation. Meanwhile, please be advised that State Parkway’s Declaration and By-Laws contains an exculpatory provision that does not relieve board officers and directors of liability if a court finds they engaged in fraud and/or acted in a grossly negligent manner.

You made one mistake today. Your threat included your IP Address, which I was able to trace.


Michael Novak

State Parkway’s Interim Property Manager Named Interim President of State Parkway’s Board of Directors


In the off chance you haven’t figured it out, the original post below is an April Fool’s Day Joke!



Today State Parkway’s Interim Property Manager has been promoted to Interim President of State Parkway’s Board of Directors, after all five officers and directors resigned their posts.

The new interim’s board president’s first order of business “will be to find qualified residents to serve on State Parkway’s Board of Directors.” In the meantime, all of State Parkway’s professional consultants, including Lieberman Management Services, Inc., Picker & Associates, Levenfeld Pearstein, LLC, and Reserve Advisors, Inc., have been given notice of State Parkway’s intent to terminate their services, effective immediately.

More to come later today. Stay tuned to this blog post for the latest developments!

Is the June 13, 2017, “Town Hall” Meeting a Prelude to a Massive 2018 Proposed Budget Increase And/Or Special Assessment?

UPDATE: APRIL 24, 2017

Today my wife and I received in the mail a a 3-page letter from the State Parkway’s board, post-dated May 1, 2017, inviting unit owners to the June 13, 2017, Town Hall meeting to discuss the 2016 Reserve Study Update at Hotel Indigo.

I was disappointed to see the letter claim the $1.2MM projected December 31, 2017, reserve balance as a “positive foundation.” This amount appears to be at least $58K too high, especially since it conflicts with the detailed reserve expenditure assumptions as disclosed in the 22.1 disclosure letter the board approved late last month.

To make matters worse, State Parkway does not possess the capacity to make accurate projections. In fact, State Parkway’s actual reserves as of December 31, 2016, fell $328K short of the incredulous $1.35MM projection that was made just a few months earlier as part of the 2017 Budget process. In other words, the $1.35MM year-end projection was 32.16% too high.

Notwithstanding, this purported $1.2MM number is not compared to an appropriate benchmark, such as percent fully funded. As one of my recent blog post shows, State Parkway’s percent funded as of December 31, 2016, is just 10.5%, or in the lower end of WEAK range (< 30%). In fact, Reserve Advisors recently recommended a $355K increase in State Parkway’s assessments to be phased in between the years 2018 and 2022. This means continued assessment increase shocks via more assessment increases and/or special assessments are forthcoming. A condo association with only $1K in reserves but 130% (> than 100%) fully funded, has exceptionally strong reserves. Bottom line, pay attention to the percent fully funded calculation rather than the dollar amount of the reserves!

The letter, however, conveniently ignores the fact that current unit owners are already paying more than their fair share of wear and tear because State Parkway’s board failed to maintain intergenerational equity. The question unit owners should ask at the upcoming Town Hall is when will their monthly assessment payments return to normal?

The good news is the board finally admits that replacing State Parkway’s tower windows via a loan and/or special assessment is the more expensive option. However, the board’s claim it “maybe (sic) more expensive but would spread the cost of this project to owners over a longer period” is without merit because funding for the subsequent round of windows replacement will also need to be funded in advance of the replacement. Otherwise, subsequent replacement of tower windows will have be be replaced via a loan and/or special assessment.

I don’t know what good this Town Hall will do for State Parkway’s board of directors, especially since the board, unlike unit owners, have a fiduciary duty to the Association. Meanwhile, the I should point out the board’s special assessment discussion first began at its September 2015, Board of Directors’ meeting, or 19 months ago.



At the board meeting the other night, the board announced a “Town Hall” meeting about the 2016 Reserve Study Update the board approved in January 2017, will be held at Hotel Indigo sometime in mid-June (date uncertain — check with property manager Bill Southall).

“Town halls” have been held only when State Parkway’s Board of Directors knows it does not have at least two-thirds of the proxies prior to a vote. The Special Meetings of the Unit Owners that were called for in June 2009 and April 2015, were improperly hijacked into “Town Hall” meetings by then-Board President Mary Marta. President Marta did this both times because each time she knew the Association failed to obtain at least two-thirds of the proxies in advance of the meeting.

Later in 2009, once the board obtained at least two-thirds of the proxies, the board passed the resolution to sell the Engineer’s Unit at a board meeting without this issue ever being voted, let alone discussed, at a special meeting of the unit owners.

Later in April 2015, once the board obtained at least two-thirds of the proxies, the board passed a change to the Declaration and By-Laws at a purported special meeting of the unit owners but President Marta refused to let unit owners discuss the issues prior to the controversial vote.

I disclosed the aforementioned voting irregularities in my 197-page Verified Memorandum of Law in Support for an Appointment of Custodian to Manage State Parkway’s Affairs I filed in state court in late January 2016. This forced President Marta to stop hijacking special meetings of the unit owners and converting them into “Town Halls.” In fact, last November, the board called a special meeting of the unit owners but, because the board couldn’t commit vote fraud, the board’s initiative to lower the sales price of the Engineer’s Unit by some $44K fell well short of the required two-thirds majority.

The board made it clear the other night that they will try to lower the price of the Engineer’s Unit later this year, perhaps at the annual meeting of the unit owners.

The massive price reduction ($44K) suggests the board has plans to sell the one-bedroom unit (#906), which it couldn’t sell at $229K, to a unit owner so he/she can flip it and make a small profit. The board desperately needs funds to shore up State Parkway’s insolvent Operating Fund and the very weak Replacement Reserve Fund.

The “Town Hall” being held this summer will be unprecedented. Who will get invited? If all unit owners, why not make it a special meeting of the unit owners? Moreover, the board is taking the extraordinary step of having a professional reserve study consultant from Reserve Advisors speak — after the board approved State Parkway’s 2016 Reserve Study Update, which recommended yet another assessment increase shock ($355K) for the reserve contribution line to be phased in over the next five years. I wouldn’t be surprised if Reserve Advisors now thinks the tower windows should be replaced in year 2066, instead of 2026, or an extra 40 years beyond its initial estimated life.

To deflect attention from the major issues (weak funds, massive deferred assessment increases, non-feasibility of selling Engineer’s Unit, etc., look for the board to put a host of other issues (no smoke policy, no pets) before unit owners for a vote so whatever vote attains at least two-thirds majority looks legitimate.