letter from the president
November 2017
We truly live in a wonderful place. Martin County has great schools, beautiful recreational areas, nice places to shop and dine, and the Atlantic Ocean is just minutes from our doorstep. At the end of a long day we drive through our gates and we are welcomed home by our beautiful neighborhood...The Oaks at Hobe Sound. During the past year, we have seen many positive changes around us, and we believe that the property looks better than it ever has. Our preserve areas are lush and healthy, our lakes hold pristine water and they attract much nature activity and wildlife. The addition of new mailboxes, beautiful street signs and some strategically placed park benches gives our neighborhood a fresh look and feel. And nothing says that with more evidence then our rising home prices. From 10/1/2016 to 9/30/2017 the 15 homes that were sold in The Oaks had an Average PRICE INCREASE OF $36,020 compared to home sales the year before. Quite an overall improvement in the value of our homes! Keeping our place looking neat and well kept reinforces the feel of The Oaks at Hobe Sound as being an upscale community. That perception is reflected in our rising home prices, but it also gives each of us a sense of pride in our community.
For nearly a decade, the Oaks was a victim of developer neglect. The real estate market collapsed, home prices plummeted and many homeowners were forced to sell their homes at very low short sale pricing. Many of our properties during that decade were foreclosed on and then they were sold at "bargain basement prices” by the lenders after foreclosure. The housing bust effected many real estate markets around the country, and The Oaks had to weather some significant financial hardships as well. Less than 3 years ago our association spent over $53,000 just on legal fees to help clean up the unpaid association assessments which were in excess of approximately $300,000.00 During that whole period of housing strife, we had 2 different developers that were controlling our community while struggling just to complete the project to build-out. They chose to neglect all of the necessary maintenance needed to avoid spending money. Their goal was to do virtually no maintenance; no repairs nor any improvements in order to have the assessments remain unchanged and not be forced to increase them. The developer's neglect, coupled with a lack of the necessary income needed to maintain our community has caused our association to be challenged with a financial hurdle that we must now address.
There are Three Primary Goals that any board must try to accomplish: (1) PRESERVE, PROTECT, AND ENHANCE THE VALUE OF THE COMMUNITY AND ITS ASSETS (2) ENHANCE THE LIFESTYLE OF THE RESIDENTS,(3) PROVIDE FOR A HARMONIOUS ATMOSPHERE WITHIN THE COMMUNITY.
For many years, the prior boards made every effort to avoid an increase in the quarterly assessments even though our fixed expenses were increasing each year. During 2017 your board made many dramatic and positive enhancements to our community. We updated all 240 community mailboxes, in every section of The Oaks; many of which were falling apart. We updated all the signage within the community, and added park benches to our serene lakefront areas. We replaced our old, outdated and unreliable gate entry system with a state of the art cellular system, that can be updated and enhanced in the future if needed...without the need for replacing it. All of our lakes were cleaned and heavy landscaping was done to remove aquatic plants that were invading and deteriorating our water quality. The entry areas of every section had new landscape plans put into place, which included new trees and plants. All of the community property oak trees were trimmed properly by "Only Trees", who are licensed arborists and did a good job of pruning them for optimum health and shape. Included in our own maintenance expenses, is a signed covenant with Martin County to maintain our preserve areas, which are quite extensive and must be maintained monthly. We are also responsible for the monthly maintenance of our 8 lakes. In addition to our own maintenance responsibilities, we are also contractually obligated to pay monthly maintenance costs for the Seabranch Corridor. That yearly expense is over $16,000 annually. Most of our pool equipment is now over 10 years old, and we had several unexpected repairs and replacements at our swimming pool this past year. Before the association took control of The Oaks from the developer just a few years ago, maintenance was hardly done by the developer on anything. At the pool this past year, our residents or their guests damaged many tables and chairs by burning them with cigarettes or just completely trashing them intentionally. All of the damaged furniture needed to be replaced...and that was an unnecessary and preventable expense. In Section 3 we had an excavation company come and restore one of our neglected and collapsed water areas...now it is a beautiful lake asset to the community. Hurricane Irma spared our homes, but heavily damaged our landscaping and caused a massive debris cleanup project. But thanks to Brightview's responsiveness we had one of the few neighborhoods in Martin County without mountains of debris linings our roadways for weeks. That debris cleanup effort cost us almost $8,000 ...and there are still some further storm cleanup issues and repairs that are not completed. We are pointing out just some of our specific expense items, in order to give you a sense of the vast scope and nature involved in the care of our community. Our site plan area of maintenance covers almost 130 acres that are spread over three distinct and separate locations, with four gates at their entrances. It is a huge residential maintenance challenge with miles of roadways, thousands of feet of irrigation lines, and many pumps, motors and electronics that function continually night and night 24/7 to control most of it. That heavy usage severely stresses all the systems and proactive maintenance is the key to reducing catastrophic future repair expenses.
This past year the board put out for bid all of our service contracts to make certain we were getting our community the best service at the most reasonable prices. For the record our present landscaping company, Brightview was $40,000 lower than their next closest bidder. Some bids for landscaping came in over $100,000 more than theirs. We further chose to make Brightview responsible for our irrigation contract and our lawn chemical contract, which also saved us money. The appearance of grounds is improving and while nothing in life is perfect, we are continually working with them on doing a still better job. We also will hold them to a higher standard to be neater and more careful while working on your property, and their new supervisor Peter has done an outstanding job recently handling some complaints on a personal one on one basis. I think it is also important to mention that Brightview is contracted as a lawn service company. They are not gardeners who are able to spend lots of time on smaller detail items on our property. That does not excuse sloppy or careless work on their part, and a sincere effort is being made daily to have things improve. Things are indeed getting better, and we look forward to continual improvement in the future.
In a free trade society such as ours, prices are always going up. Very few things remain stable in cost, and our association as a consumer of services, faces those very same challenges that you do at home with your expenses. Several of our association contracts were negotiated years ago and they provided for annual price increases over the entire lifetime of the contract. The contract that will reach the closest termination or renewal point is our contract with ADT for alarm monitoring. That contract expires in 2019. Another contract of concern for us is a Comcast contract that expires in year 2021. In the meantime we are obligated to complete the agreed upon terms of those contracts and the price increases associated with the same. It is also very important to mention that we have an ongoing claim against the developer. Over the past several years we have spent thousands of dollars on that claim’s process and it is still not closed. We will need more funds this upcoming year to continue in our effort to collect the money we feel is due us. We are also endeavoring to create a strong legal position that if needed, would force the developers to remedy the incomplete or improperly done work that was left behind when they transferred the property to our association.
There are also deviations in some areas that were not built as specified in The Oaks at Hobe Sound Master Plan. We are addressing those issues as well.
This past year much money has been spent on improvements, enhancements, maintenance and repairs. We also realize that we had an assessment increase last year. Our 2017 budget included a previous unused surplus of $140,000 that was carried forward. It came from unspent money that was previously collected and not used. Part of that money paid for the new mailboxes, signs and some serious landscaping needs. The increase in last year’s HOA fees was partially due to our expenses being raised year after year and not collecting enough money from our HOA fees to pay our bills. We think it is important to note that The Oaks of Hobe Sound had not had an increase in fees for many YEARS prior to last year.
Relying upon some incorrect professional advice, the previous board was told that after year 2017, even with our mailboxes being replaced, new signs being added, major landscaping being completed, and new gate systems being installed, that our monthly assessments could actually go down. That board was given incorrect and inaccurate advice and information, which was subsequently passed on to some of the residents in our community. We are all sincerely troubled and sorry that happened.
Most recently in order to save additional money and to have a more thorough “hands on” approach in the handling of our finances, we have discharged our current CPA firm. Beginning in December of 2017 we have engaged the services of Signature Property Management. They were strongly vetted, and they are well thought of by the dozens of communities they provide financial services for. They will be handling all of our bookkeeping and accounting needs at a lower price, and we believe with much more efficient service. No third party will be involved in our community accounting services, except for the required yearly CPA Audit. It is a natural and perfect consolidation of services for our community.
When the board prepares a budget many things need to be considered. Known operating costs, anticipated changes, a contingency for unexpected expenses, the prior year’s cumulative shortfall or overage and money for necessary reserve transfer. If this is done properly, HOA fees may stay the same, increase, decrease slightly or occasionally increase substantially. There are traps that also need to be avoided when considering the budget. Some boards do not raise fees enough because some owners are on fixed incomes, board members don’t like to look like bad guys, if the fees are higher than comparable properties, the marketability of their homes could be affected, and a board member convinces the board to keep fees artificially low. For any of the above reasons, a board might set the HOA fees without regard to actual expenses. However, operating costs are still as high as they would have been if the budget were formulated correctly. When this reality hits, the owners have to pay more to make it up—sometimes much more. Each year that the HOA fees are kept at an artificially low level compounds on the prior year, making the associations cash position exponentially worse over time. The resulting cash shortfall is often caused by underfunding the reserves, deferring maintenance, and/or aging accounts payable. When there is not enough money to pay for some big ticket repair item, the fallback position is a SPECIAL ASSESSMENT. What about cutting costs? Most association expenses are not discretionary. Insurance and utility costs have increased substantially over the past five years. An association may be able to increase insurance deductibles, or turn down landscape watering, but associations should not defer maintenance due to budgetary considerations, as this magnifies the costs in the long run.
We often hear the question “What are other associations paying for HOA fees?” It really doesn't matter because even similar complexes have different financial requirements at any period in time. Some have higher insurance premiums due to prior claims. Some have funded their reserves appropriately, some like us have started late and are catching up; and some haven’t started yet. Some take care of repairs on a proactive basis, and some have deferred maintenance that may not be readily noticeable. Some have special needs insurance, cable TV, landscape maintenance, alarm monitoring, gated entries, pools....and some don’t. In other words the “HOA Fee” doesn’t include the same costs in all complexes. The HOA fees should be based on our specific needs and not our neighbor’s needs.
So with all that being said, our sworn fiduciary duty is to you the membership. We are obligated to set the HOA fees at a level that are adequate to cover operating expenses and reserve transfers. We simply not wanting to raise the fees is no defense for not properly funding the expense requirements of The Oaks at Hobe Sound. We have included our proposed budget for the year 2018. We have reviewed the expenses line by line, we have engaged professional help to assist us in being realistic in our formulations, and we take our responsibility in spending your hard earned money with a sincere measure of respect. A monthly increase of $11.33 will be required to fund the 2018 expenses of The Oaks at Hobe Sound. Your present board members, Carol Fuchs, Mitch Eiseman, Steve Kroninberg, Phil Rosseau, and Tony Yannucci were honored to have served our community this year. We are all volunteers that have devoted much of our personal time and effort to our wonderful home. Our service has truly been, “a labor of love”, and we thank each and every one of you for the opportunity that you gave to us.
Mitch Eiseman, President
We truly live in a wonderful place. Martin County has great schools, beautiful recreational areas, nice places to shop and dine, and the Atlantic Ocean is just minutes from our doorstep. At the end of a long day we drive through our gates and we are welcomed home by our beautiful neighborhood...The Oaks at Hobe Sound. During the past year, we have seen many positive changes around us, and we believe that the property looks better than it ever has. Our preserve areas are lush and healthy, our lakes hold pristine water and they attract much nature activity and wildlife. The addition of new mailboxes, beautiful street signs and some strategically placed park benches gives our neighborhood a fresh look and feel. And nothing says that with more evidence then our rising home prices. From 10/1/2016 to 9/30/2017 the 15 homes that were sold in The Oaks had an Average PRICE INCREASE OF $36,020 compared to home sales the year before. Quite an overall improvement in the value of our homes! Keeping our place looking neat and well kept reinforces the feel of The Oaks at Hobe Sound as being an upscale community. That perception is reflected in our rising home prices, but it also gives each of us a sense of pride in our community.
For nearly a decade, the Oaks was a victim of developer neglect. The real estate market collapsed, home prices plummeted and many homeowners were forced to sell their homes at very low short sale pricing. Many of our properties during that decade were foreclosed on and then they were sold at "bargain basement prices” by the lenders after foreclosure. The housing bust effected many real estate markets around the country, and The Oaks had to weather some significant financial hardships as well. Less than 3 years ago our association spent over $53,000 just on legal fees to help clean up the unpaid association assessments which were in excess of approximately $300,000.00 During that whole period of housing strife, we had 2 different developers that were controlling our community while struggling just to complete the project to build-out. They chose to neglect all of the necessary maintenance needed to avoid spending money. Their goal was to do virtually no maintenance; no repairs nor any improvements in order to have the assessments remain unchanged and not be forced to increase them. The developer's neglect, coupled with a lack of the necessary income needed to maintain our community has caused our association to be challenged with a financial hurdle that we must now address.
There are Three Primary Goals that any board must try to accomplish: (1) PRESERVE, PROTECT, AND ENHANCE THE VALUE OF THE COMMUNITY AND ITS ASSETS (2) ENHANCE THE LIFESTYLE OF THE RESIDENTS,(3) PROVIDE FOR A HARMONIOUS ATMOSPHERE WITHIN THE COMMUNITY.
For many years, the prior boards made every effort to avoid an increase in the quarterly assessments even though our fixed expenses were increasing each year. During 2017 your board made many dramatic and positive enhancements to our community. We updated all 240 community mailboxes, in every section of The Oaks; many of which were falling apart. We updated all the signage within the community, and added park benches to our serene lakefront areas. We replaced our old, outdated and unreliable gate entry system with a state of the art cellular system, that can be updated and enhanced in the future if needed...without the need for replacing it. All of our lakes were cleaned and heavy landscaping was done to remove aquatic plants that were invading and deteriorating our water quality. The entry areas of every section had new landscape plans put into place, which included new trees and plants. All of the community property oak trees were trimmed properly by "Only Trees", who are licensed arborists and did a good job of pruning them for optimum health and shape. Included in our own maintenance expenses, is a signed covenant with Martin County to maintain our preserve areas, which are quite extensive and must be maintained monthly. We are also responsible for the monthly maintenance of our 8 lakes. In addition to our own maintenance responsibilities, we are also contractually obligated to pay monthly maintenance costs for the Seabranch Corridor. That yearly expense is over $16,000 annually. Most of our pool equipment is now over 10 years old, and we had several unexpected repairs and replacements at our swimming pool this past year. Before the association took control of The Oaks from the developer just a few years ago, maintenance was hardly done by the developer on anything. At the pool this past year, our residents or their guests damaged many tables and chairs by burning them with cigarettes or just completely trashing them intentionally. All of the damaged furniture needed to be replaced...and that was an unnecessary and preventable expense. In Section 3 we had an excavation company come and restore one of our neglected and collapsed water areas...now it is a beautiful lake asset to the community. Hurricane Irma spared our homes, but heavily damaged our landscaping and caused a massive debris cleanup project. But thanks to Brightview's responsiveness we had one of the few neighborhoods in Martin County without mountains of debris linings our roadways for weeks. That debris cleanup effort cost us almost $8,000 ...and there are still some further storm cleanup issues and repairs that are not completed. We are pointing out just some of our specific expense items, in order to give you a sense of the vast scope and nature involved in the care of our community. Our site plan area of maintenance covers almost 130 acres that are spread over three distinct and separate locations, with four gates at their entrances. It is a huge residential maintenance challenge with miles of roadways, thousands of feet of irrigation lines, and many pumps, motors and electronics that function continually night and night 24/7 to control most of it. That heavy usage severely stresses all the systems and proactive maintenance is the key to reducing catastrophic future repair expenses.
This past year the board put out for bid all of our service contracts to make certain we were getting our community the best service at the most reasonable prices. For the record our present landscaping company, Brightview was $40,000 lower than their next closest bidder. Some bids for landscaping came in over $100,000 more than theirs. We further chose to make Brightview responsible for our irrigation contract and our lawn chemical contract, which also saved us money. The appearance of grounds is improving and while nothing in life is perfect, we are continually working with them on doing a still better job. We also will hold them to a higher standard to be neater and more careful while working on your property, and their new supervisor Peter has done an outstanding job recently handling some complaints on a personal one on one basis. I think it is also important to mention that Brightview is contracted as a lawn service company. They are not gardeners who are able to spend lots of time on smaller detail items on our property. That does not excuse sloppy or careless work on their part, and a sincere effort is being made daily to have things improve. Things are indeed getting better, and we look forward to continual improvement in the future.
In a free trade society such as ours, prices are always going up. Very few things remain stable in cost, and our association as a consumer of services, faces those very same challenges that you do at home with your expenses. Several of our association contracts were negotiated years ago and they provided for annual price increases over the entire lifetime of the contract. The contract that will reach the closest termination or renewal point is our contract with ADT for alarm monitoring. That contract expires in 2019. Another contract of concern for us is a Comcast contract that expires in year 2021. In the meantime we are obligated to complete the agreed upon terms of those contracts and the price increases associated with the same. It is also very important to mention that we have an ongoing claim against the developer. Over the past several years we have spent thousands of dollars on that claim’s process and it is still not closed. We will need more funds this upcoming year to continue in our effort to collect the money we feel is due us. We are also endeavoring to create a strong legal position that if needed, would force the developers to remedy the incomplete or improperly done work that was left behind when they transferred the property to our association.
There are also deviations in some areas that were not built as specified in The Oaks at Hobe Sound Master Plan. We are addressing those issues as well.
This past year much money has been spent on improvements, enhancements, maintenance and repairs. We also realize that we had an assessment increase last year. Our 2017 budget included a previous unused surplus of $140,000 that was carried forward. It came from unspent money that was previously collected and not used. Part of that money paid for the new mailboxes, signs and some serious landscaping needs. The increase in last year’s HOA fees was partially due to our expenses being raised year after year and not collecting enough money from our HOA fees to pay our bills. We think it is important to note that The Oaks of Hobe Sound had not had an increase in fees for many YEARS prior to last year.
Relying upon some incorrect professional advice, the previous board was told that after year 2017, even with our mailboxes being replaced, new signs being added, major landscaping being completed, and new gate systems being installed, that our monthly assessments could actually go down. That board was given incorrect and inaccurate advice and information, which was subsequently passed on to some of the residents in our community. We are all sincerely troubled and sorry that happened.
Most recently in order to save additional money and to have a more thorough “hands on” approach in the handling of our finances, we have discharged our current CPA firm. Beginning in December of 2017 we have engaged the services of Signature Property Management. They were strongly vetted, and they are well thought of by the dozens of communities they provide financial services for. They will be handling all of our bookkeeping and accounting needs at a lower price, and we believe with much more efficient service. No third party will be involved in our community accounting services, except for the required yearly CPA Audit. It is a natural and perfect consolidation of services for our community.
When the board prepares a budget many things need to be considered. Known operating costs, anticipated changes, a contingency for unexpected expenses, the prior year’s cumulative shortfall or overage and money for necessary reserve transfer. If this is done properly, HOA fees may stay the same, increase, decrease slightly or occasionally increase substantially. There are traps that also need to be avoided when considering the budget. Some boards do not raise fees enough because some owners are on fixed incomes, board members don’t like to look like bad guys, if the fees are higher than comparable properties, the marketability of their homes could be affected, and a board member convinces the board to keep fees artificially low. For any of the above reasons, a board might set the HOA fees without regard to actual expenses. However, operating costs are still as high as they would have been if the budget were formulated correctly. When this reality hits, the owners have to pay more to make it up—sometimes much more. Each year that the HOA fees are kept at an artificially low level compounds on the prior year, making the associations cash position exponentially worse over time. The resulting cash shortfall is often caused by underfunding the reserves, deferring maintenance, and/or aging accounts payable. When there is not enough money to pay for some big ticket repair item, the fallback position is a SPECIAL ASSESSMENT. What about cutting costs? Most association expenses are not discretionary. Insurance and utility costs have increased substantially over the past five years. An association may be able to increase insurance deductibles, or turn down landscape watering, but associations should not defer maintenance due to budgetary considerations, as this magnifies the costs in the long run.
We often hear the question “What are other associations paying for HOA fees?” It really doesn't matter because even similar complexes have different financial requirements at any period in time. Some have higher insurance premiums due to prior claims. Some have funded their reserves appropriately, some like us have started late and are catching up; and some haven’t started yet. Some take care of repairs on a proactive basis, and some have deferred maintenance that may not be readily noticeable. Some have special needs insurance, cable TV, landscape maintenance, alarm monitoring, gated entries, pools....and some don’t. In other words the “HOA Fee” doesn’t include the same costs in all complexes. The HOA fees should be based on our specific needs and not our neighbor’s needs.
So with all that being said, our sworn fiduciary duty is to you the membership. We are obligated to set the HOA fees at a level that are adequate to cover operating expenses and reserve transfers. We simply not wanting to raise the fees is no defense for not properly funding the expense requirements of The Oaks at Hobe Sound. We have included our proposed budget for the year 2018. We have reviewed the expenses line by line, we have engaged professional help to assist us in being realistic in our formulations, and we take our responsibility in spending your hard earned money with a sincere measure of respect. A monthly increase of $11.33 will be required to fund the 2018 expenses of The Oaks at Hobe Sound. Your present board members, Carol Fuchs, Mitch Eiseman, Steve Kroninberg, Phil Rosseau, and Tony Yannucci were honored to have served our community this year. We are all volunteers that have devoted much of our personal time and effort to our wonderful home. Our service has truly been, “a labor of love”, and we thank each and every one of you for the opportunity that you gave to us.
Mitch Eiseman, President
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February 28, 2017
Subject Line: Monthly HOA Meeting Letter to the Residents
The Board of Director’s held their monthly meeting on February 23, 2017. The agenda items discussed and or voted on were:
The Board is committed to improving the community and making The Oaks a great place to live and raise our families, but we can’t do it alone. The community belongs to all of us, so we ask everyone to be a good neighbor by making sure your property is well taken care of, things are put away and vehicles are off the street and parked in the driveway at all times. This not only makes the community safer, it also looks better and improves everyone’s quality of life.
Subject Line: Monthly HOA Meeting Letter to the Residents
The Board of Director’s held their monthly meeting on February 23, 2017. The agenda items discussed and or voted on were:
- New Mailbox Installation Update: The mailbox installation will begin on Monday March 6th and will take approximately one week to complete.
- Mulching of Common Areas: The board voted to approve the installation of mulch around all common area landscaping and trees. This work will be done by Brightview and will be completed this week.
- Entrance Gate Security System and Call Boxes: The board has received and reviewed estimates for the upgrade of our entrance security system and expects to make a decision at the March meeting. The system includes High Definition cameras at all entrances and call boxes that are compatible with cell phones.
- Pool Area Security System: The board is in the process of reviewing estimates for a new security system at the pool which will include a new gate access system and cameras.
- Park Benches at the Lakes: The board is obtaining estimates for park benches to be placed at certain areas around the lakes and expects to make a decision at the March meeting.
- Section Three Lake Repairs: The board voted to approve the regrading of the main lake in section three. The work will be done be Selective Land Clearing and will be completed in March.
The Board is committed to improving the community and making The Oaks a great place to live and raise our families, but we can’t do it alone. The community belongs to all of us, so we ask everyone to be a good neighbor by making sure your property is well taken care of, things are put away and vehicles are off the street and parked in the driveway at all times. This not only makes the community safer, it also looks better and improves everyone’s quality of life.
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Phil Rossow President/Board of Directors - Pastelle/The Oaks at Hobe Sound |
