Thanks to former board president Michael Cleavenger, and former directors Howard Robinson, Mary Marta, current directors Kevin Phelan and Pauline Oberland, tonight’s de-conversion meeting was really an unmitigated disaster! In fact, most unit owners that attended tonight’s meeting did not know about the unsolicited $45 million dollar offer from John Buck for State Parkway Condominium that was tendered to the board of directors last March.
Thanks also to board president Thomas Battista for not making it a priority to attend tonight’s de-conversion meeting. His inexplicable absence helped make this meeting a huge waste of everyone’s time.
Michael Cleavenger didn’t attend tonight’s meeting, nor did Howard Robinson or Kevin Phelan attend. Mary Marta and Pauline Oberland did attend, but, as always, Marta’s lips were sealed.
John Buck’s purported $45MM offer does not equal $276/s.f. plus $25K for each parking space. It also does not include the Association’s $1.3MM in Reserves and the Association-owned unit (#906).
So most of the 60-minute meeting was spent explaining the details of the offer and answering unit owners’ purported questions regarding litigation, and scores of unit owners applauding each question that mentioned the word ‘litigation.’ Funny thing is that prior to Buck’s offer, many unit owners had argued that State Parkway would not even receive an offer for de-conversion due to litigation.
At the meeting, Buck representatives admitted Buck has yet to do any de-conversions after I asked them how many de-conversions it had completed.
What unit owners don’t realize is the simple fact this is an opportunity for them to make a very important decision involving their homes. For example, assume a unit owner owns a 750 s.f. unit and parking space that is worth approximately $172K on the market. Buck’s de-conversion offer of $276/s.f. plus $25K for parking means this unit and parking space is worth $232K. The alternative to selling is staying in your unit and continue to pay high assessments for the foreseeable future (status quo), unrelated to litigation, but pay at least $60K in capital improvements and/or deferred assessment increases. So now the options can be summarized as follows:
- Reject Buck’s unsolicited offer (status quo) and pay $60K for special assessments and/or deferred assessments;
- Accept Buck’s unsolicited offer and sell your unit for $232K; or
- Sell your unit and parking space on the open market for $172K.
As you can see from the aforementioned options, compared to selling the unit on the open market for $172K, you can make $60K by accepting Buck’s initial low-ball offer, or you can spend an additional $60K to stay at State Parkway. Unit owners also have the option to negotiate a higher price per s.f. from Buck or another developer. Our neighbors at 1440 N. LSD, which had converted to condominiums not too long ago, recently received approximately $400/s.f. for their units.
Disgraced former director Terry Leja, who abruptly resigned less than a year ago immediately following the proxy fraud debacle, remarked at tonight’s meeting that the market value of her unit is less than what it was assessed by Cook County. If that is true, the board, including Leja, breached its fiduciary duty to lower unit owners’ property tax assessments accordingly. Meanwhile, please be advised that Leja’s successors, however, did not put any money in the 2019 budget for the forthcoming triennial property tax appeal, which is expected to cost the Association at least $10K in legal fees.
At tonight’s board meeting, a petition was circulated, seeking signatures and email addresses to amend the declaration’s sale threshold of 100% to 75%. My understanding is that once at least 2/3rds of the ownership signs the petition, a special meeting will be called to vote on the this proposed amendment.
The board and management needs to start doing its due diligence, namely:
- Disclose the extent of future assessment increases and special assessments due to deferred assessment increases and the Association’s very weak reserve fund strength, respectively, to all unit owners so they can make an informed decision. If it turns out this number is about $10MM, or an average of $62,500 per unit, then the board of directors also needs to find and retain a good broker that has experience doing de-conversions.
- Retain an independent CPA, instead of corrupt CondoCPA, to audit State Parkway’s 2018 Financial Statements, and distribute them to unit owners before the April 1, 2019, deadline. And because the Association received a qualified opinion in the 2017 Audited Financial Statements due to garage operations, the board must direct the new independent auditor to also audit garage operations for the first time in the Association’s 26-year history.