In the first installment of “What Property Owners Need to Know”, property owners were given factual 1099 numbers for the years 2014, 2015 and 2016 for dollars paid to Spectrum Property Management. The board has since given you, the property owner, a response in our July newsletter which “moves” the numbers around into different categories they indicate make up the totals and explain why the numbers are not reflected properly on the HOA financial statements presented to property owners.
Those “movements of dollars” do not refute the fact that the property owners of Timberwood Park have been paying far more than what is outlined as our general fee for Spectrum Property Management to manage our development. Whether Spectrum’s fees were an accumulation of assessment fees paid by property owners, collection fees paid by property owners, fining fees paid by property owners, or some other combination of funds paid by property owners, the accumulated number which shows up on the 1099 is in fact the actual number that went to the IRS for processing of income paid to Spectrum Property Management by TPOA.
1099s are reflective of income received, not how the numbers get allocated which occur on the tax returns associated with those 1099s. No matter how you slice it, a 1099 is an accounting of all income paid to a contractor for services rendered. What that contractor does to offset income with expenses, etc. on their tax returns is irrelevant to what was paid by TPOA to that contractor. The HOA board has stated the additional money paid Spectrum comes from pass thru expenses for supplies and maintenance. However, the HOA board purchases supplies from other vendors. Who decides what supplies are purchased? How are they identified and why are supplies purchased as a direct expense and as a pass through?
The board has further stated that communication sanctioned solely by the board is the only accurate means of receiving information about the neighborhood and other means which exist in the neighborhood should not be trusted. I believe you each can determine whether you are receiving factual information from any and/or all the resources out there, including this one, and make your own determination about validity of that information in forming your own decisions about the HOA, our neighborhood and its management.
For this installment of information provided to property owners, additional factual support information is provided below showing examples of lack of fiduciary duty and oversight to our assessment dollars. The information below comes directly from the general ledger detail provided by the audit which was recently undertaken. Let’s look at a few more inconsistencies and confusing facts which came up during the audit. Selected from a long list of general ledger questions sent back for clarification are the items listed below:
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- A 2 – year pool-pass for sponsorship – MJ Septic. The HOA paid MJ Septic, a property owner in Timberwood Park, $46,000 +/- for a new septic system in the park plus gave them a 2-year family pass to our community pool in exchange for MJ sponsoring 2 Music in the Park events. This was part of a second proposal for the septic work and appears in writing on the proposal. Why? Is it common practice to award paid contractors’ extra benefits for work provided to the neighborhood for which they are already paid?
- Pool Supplies vs. Pool Maintenance Contract – why are they separated when they are from the same company and why do we also buy pool supplies from Amazon?
- Debit Cards. Who on the board, Spectrum, and/or the park property manager, has debit cards and to which accounts do they have access?
- Did you know the HOA has an Amazon Prime Account? There are many benefits to being a Prime Member. Who is receiving these benefits? The audit was unable to obtain login access to determine who is benefiting from this membership account; however, the implication during the meeting held with the board was the Prime account is managed by the caretakers.
- Write off settlements appear regularly on our financials. While we receive a cash on hand statement at the bi-monthly meetings as a point of reference for our operational strength and announced by our treasurer, we, the property owners, have not seen full financials for several meetings now. If you look at the April financials which are posted on Spectrum’s website, you will see that almost $14,000.00 was written off in bad debt. Uncollectible assessment accounts?
- Collection fees, fine income through April 2017 on the financials appears at $29,000.00 +/- for this year alone. Who receives these fees?
- Entries show beer being purchased for closed board meetings. Why is the HOA paying for alcoholic beverages to be purchased for closed board meetings (executive sessions)? While the overall amount may be a small percentage of total expenses, it is the perception that the HOA board can operate without recourse.
- Likewise, entries show beer and food is being purchased for band performers. The Music in the Park contracts specifically detail that sodas and water will be the only items provided to the performers per contract. The board’s justification was that providing the bands with food and alcohol built a better business relationship and in their opinion the HOA received lower costs from the performers. However, reviewing the contracts thru the audit years, the cost of performers remained the same. The concern here is liability. What happens if one of the performers has an accident under the influence and it is traced back to the HOA?
- Extensive, repetitive gas receipts on the same day for several vehicles or pieces of equipment. Gas which is not credited to GMC truck (the only truck which the HOA owns) should be identified as to equipment or other vehicle being provided fuel.
- Who was cash for parking attendants paid to on 10/31/32014? Financial records should identify this expenditure properly.
- ATM balance inquiries with fees attached…why was that necessary? Who on the board or otherwise can check bank balances?
- From the General Ledger – 8/17/15 $319.00 for Music in the Park T-shirts – There were only 18 shirts purchased. When asked at the meeting who received these t-shirts, the answer was not specific, some were given away to “staff” and some sold. The number sold and for what amount was not provided.
- Wells Fargo reimbursement for inadvertent Costco Cash withdrawal 8/28/15 $60.00. Who withdrew the cash and was this the only incident?
- Costco membership – who controls and has access to purchase under TPOA? Since we have this membership why isn’t the HOA purchasing our office supplies, cleaning supplies, drinks, bottled water, etc. in bulk through this membership rather than purchasing through Amazon, Shell, Big’s, CVS and many other general ledger entries which depict “supplies” purchases?
- Why is there a gap on the General Ledger provided between pages 23 and then continuing page 478? In other words, pages 24-477 are not included in the document provided as part of the audit. Explain why 400+ pages were not sent with the audit materials.
- Thompson Print Solutions for t-shirts $418.93 – 11/23/15– where are the t-shirts and who were they purchased for?
- Amazon prime tips? What are these for? Who received them?
- Where are the 1099s for the bands who were paid more than $600.00 in one calendar year? 1099s were requested for all vendors and contractors for the years 2014, 2015 and 2016.
- Write off requested by CM – who is CM?
- Why was a write off provided as a one-time courtesy? Who makes this decision? What relationship does the person making the decision have with the board?
- What are multiple error fees in the amount of $40.00 for?
- Request was made to provide detail on checks paid to any board member outlining the expense being reimbursed and a copy of the check was requested. None has been provided thus far. Examples: $260.00 appears several times on the ledger, $1,000+ and several others?
- Why does gate key income vary from $15-50? Is there not a standard fee? Do some individuals receive different rates?
- From the general ledger – What is Blanco Road Apt 2 which is listed on many entries for the SAWS bills?
- What are the welcome packets and who receives them?
- What are site management letter fees for?
As you may have surmised by reading these highlights, there are considerable questions which remain unanswered and while the board has met with the individual who asked for the original audit, there has been little or no movement to correct or explain much of what has been presented. The list submitted for clarification was much larger. To trim the size of the blog down to a more readable format, we selected some of the top issues we noted during the audit to publish to the neighborhood.
Again, does this show good stewardship of our funds and management of our development by our HOA Board?