SCA SELF MANAGEMENT VS. MANAGEMENT COMPANY!

With all the complaints about management companies RMI and FSR it was no wonder that board members wanted to explore self management. So they went through the process and concluded that self management would cost less and provide better control in overseeing everything. At least that was the theory. But as always the devil is in the details. As self management took shape in SCA the Chief Operating Officer position was created to run all day to day operations and the board was only to set policy. That is now well documented in the Board Policy Manual as revised July 2023.

Two very significant financial things have taken place. Payroll & Fringe Benefits have skyrocketed to a 2024 Budgeted $5.4 million and Main Reserves have been depleted from nearly 90% to projected mid 60% at end of 2024 and beyond. Both should be unacceptable.

Here’s some payroll data for perspective:

ACTUALS

2015 $2,865,732

2019 $3,670,530

COVID

2021 $3,967,155

2022 $4,540,304

BUDGETED

2023 $5,091,800 Actual not yet available.

2024 $5,373,972

If the current board supports continued self management it needs to have administrative and financial leadership from a COO that knows what she is doing. It’s a big job and currently is paying a compensation package in excess of $300,000. Have we received good value? I say no. That evidence is everywhere. Remember EVERYTHING is under her control to manage day to day operations. Here is why I think her contract should not be renewed ( effective May 1, 2025) and that a new board majority ought to plan to seek a replacement.

  1. Her track record for overseeing timing of maintenance and capital projects reflects poor performance. A large majority of her project oversight has created cost overruns and delays. SCA is an aging community and in need of and at risk for some major infrastructure expenditures in coming years. Prudent planning is essential. For example the air conditioner units serving the main building are probably at the end of their useful life. Do we wait till they breakdown? Besides being a major expense the timing of replacement is critical. No one wants downtime during the summer. I, personally based on her track record, do not have confidence in her oversight skill sets. And you shouldn’t either. How many times have you noticed that some key maintenance on pools has been done during peak usage periods? Air Conditioning repairs and replacement during the summer heat is avoidable.
  2. In my view the payroll is not only bloated by her having created a fiefdom, but she has had a number of repeated personnel hiring failures (e.g. CFO/Accounting ).And the current board majority will not approve possible outsourcing of accounting which many believe will save money and provide a better product eliminating the need to mop up hiring failure after failure while paying expensive recruiter fees. The flow of current monthly restaurant financial reporting has stopped. Outsourcing if done properly will save a ton and produce a better work product. But with this current COO and a very weak board majority supporting the status quo homeowners are at continued risk for more financial irresponsibility. Some current fiefdom jobs ought to be consolidated or eliminated.
  3. In addition legal counsel has been overused and weaponized against some homeowners. Management functions of dealing with homeowners issues have been poorly administered while in some cases intentionally violating the governing documents and homeowners’ due process rights. We need to restore integrity and fairness to the process.
  4. One tactic used by the current COO is through upward delegation to the board members of operational matters that are clearly COO’s responsibility. She cleverly avoids any accountability as the weak board gets sucked into accepting tasks allowing her to avoid/hedge her contractual responsibilities. The board is currently being asked to weigh in on CFO candidates because the COO has made so many bad hires. Nothing wrong with multiple interviewing opinions but this is ploy so that COO can duck accountability should this hire be another failure.

The only way things will get better under self management is if a new 2024 board majority recognizes the real problem and puts SCA on a path to hiring a competent COO. There will be written notice and severance contractual obligations as the past board in my view gave too rich of a contract. Nominations close February 5. Ballots go out late March. New term begins May 1. Elections matter.

The pocketbook you save could be your own.

Until next time…..Robert

1 Comments

  1. Marilyn Means on January 23, 2024 at 4:55 pm

    How can we inform SCA owners of this crazy Self Management performance? It has been a nightmare since the transition and the BOD keeps renewing COO contract. Unbelievable.

    • Phone Number - 7022811829

Leave a Comment




Please enter your name.
Please enter a valid email address.
Something went wrong. Please check your entries and try again.

Recent Posts

Categories