UPDATE: I have welcomed the board and our Management Company to make any comments or corrections to this post. I will promptly honor and make any corrections they suggest.
Westwind collections processes involve returning money to the Association from members who have fallen behind on dues and incurred late fees, unpaid violations or interest. The collections process has been managed by the owner of our Management Company with the oversight and approval of our board. For any organization, the collections process is a challenge because if it costs more to collect then not having collected at all, certainly the process must be changed. Then again, it isn't much of a challenge if you simply don't care, and that unfortunately is the state of our association.
See the graphs below for evidence that year after year, our Management Company and the Travis Lawfirm have exploited revenue returned from collections for their own profit. Since 2009, our association has a net loss of $62,468 by engaging in our Management Company's predatory collections process.
CLICK THE IMAGE FOR A LARGER VIEW:
You may check these figures yourself using the financials on the right hand pane of this blog. Collection Expenses are those fees paid to our Management Company and it's lawyers: (In House Collection Fees + Legal/Collection Fees). Collection Income is tallied by: (Collection Income + Late Fees (2009 only) + Legal Income + Interest Collection Income).
Many HOA management firms avoid an "upside-down" collections process by charging the entirety of the collection fees to the payee vs. the association. Other management companies partner with legal firms who tack on a collections fee to the payee. Processes like these guarantee that 100% of the collections are returned to the Association, and that the management firm and it's lawyers are compensated for performance. Under the current Management Company's process, mass fines results in mass collections, results in mass profit for the management firm, and a huge loss for the members.
How does our Management Company cloak this "upside-down" collections process? Redirection! In each monthly financial report, they begin the INCOME section with a statement regarding how much revenue is driven by the inspection and fining process (a bulk of the collections are initiated by an inspection/fine). In our Management Company's December 2011 report for example, "Total income for the year was $379,253.04. This included $37,388.42 from collections and violations...". But a comparison of the loss our association incurs under our Management Company's collection process with the income we receive from inspections and fines is nothing to write home to mother about. See the graph below:
CLICK THE IMAGE FOR A LARGER VIEW:
How has our board responded to all of this? Have they sought alternatives and guidance from other Management firms? Absolutely not. Year after year, our board has allowed the contract with our Management Company to renew automatically and without consideration of any other firm. Yet our CC&Rs Section 11.12 specifies that a management agreement cannot automatically renew, that instead, "may be renewable only by affirmative agreement of the parties for successive periods of one year or less". And that, "any property manager for the Project or the Association will be deemed to have accepted these limitations, and no contrary provision of any management agreement will be enforceable." The author of section 11.12 felt that the board should be compelled to reflect and consider any renewal of a management agreement, but for a board that is arrogant, ignorant, and complacent, no such consideration will occur.
We can only hope that our new board members will bring about positive change.
