Wasting of assets is an important issue because State Parkway’s assessments, according to CondoCPA Inc.‘s Community Assessments Report, are very, very high as compared to other high rises in Chicago’s Gold Coast with an onsite property manager. This page focuses on both recurring waste and cumulative waste.
There’s still a substantial amount of recurring waste continuing at State Parkway. They include the following:
- losses from the Association’s unrelated business activities ($160K/year);*
- purported additional management fee for Lieberman Management Services ($33K/year);
- failing to rent out the vacant Association-owned unit ($25.4K/year);
- failing to maintain the Replacement Reserve Fund’s purchasing power ($20K/year);
- doorstaff expense overrun due to poor workforce management ($17K/year);
- paying purported accounting and auditing expense overruns ($11K/year); and
- paying a 62.5% surcharge on doormen pension contributions ($3.6K/year).
*Includes $30K/year for in-unit maintenance service losses due to undercharging residents the actual cost for materials and labor. Sources: State Parkway’s Federal Tax Returns.
Altogether the recurring waste shown in the above list equals $270K/year, or greater than the $235.5K, or 11.94454%, increase in 2019 assessments. Notwithstanding, the vast majority of the aforementioned waste (numbers 1, 2, and 3 above) are improperly passed along to unit owners via assessments because they are not common area maintenance expenses.
If the board of directors continue to sit on their hands, below is how much has been wasted so far in 2019:
Regarding cumulative waste, State Parkway spent and/or committed $3MM for legal fees and/or frivolous litigation expenses. It includes the $1.2MM reservation of rights the Association’s unit owners are on the hook for. In addition, cumulatively State Parkway incurred well over $2MM in losses from unrelated business activities; and lost at least $20K of scavenger rebates from the City of Chicago because Lieberman Management Services, Inc., neglected to apply for them. The lost scavenger rebates were written off in 2006 and 2017.
The cumulative losses from the Lieberman Management Services, Inc.‘s contract addendum will total $75K through the end of March 2020. Meanwhile, cumulative losses from not renting out the Association-owned unit since July 2015 is quietly approaching $100K, which more than offsets the appreciation of the unit since it was purchased for $99K shortly after the conversion.
The cumulative loss of purchasing power on the Association’s Replacement Reserve Fund is already in excess of $600K.
The foregoing cumulative losses total about $6 million. What a waste!
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