800 Two Forty Place, Oklahoma City, OK 73139 (405)-641-1772 Twofortyplacehoa@gmail
800 Two Forty Place, Oklahoma City, OK 73139 (405)-641-1772 Twofortyplacehoa@gmail
In 1979, a builder began the condominium project known today as Two Forty Place Townhomes which consisted of 52 units and a swimming pool. In November 1980, the construction was complete and the association was turned over to the homeowners who then formed the Two Forty Place Association. There is a community Declaration document consisting of Covenants, Conditions, and Restrictions (CC&R's) and By-Laws. At this time in 1980, the monthly homeowner's association (HOA) dues are $60 per month.
For the next 35 years, the HOA was run by a board of three members who lived in the community and the property manager was the Board president. The property manager collected the monthly dues from each homeowner, paid community bills (such as sewage, water, and trash) and paid themselves a salary.
In 2015, the monthly dues were $200 per month. That is a $140 increase in 35 years. At that time, the Board president and property manager was an investor who had never lived in the community and owned multiple units with tenants. The Board president and property manager did as all the others had before - collected the dues from the homeowners, paid the bills of the community, and paid them self.
In March 2016, at the annual homeowner meeting, a homeowner requested that sod be laid in the pool area that was just dirt from the pool being filled in ten years before. The Board agreed and a dog park was created which is the only amenity in the community today.
In July 2017, upon increasing questions about the maintenance of the community and where the $200 monthly dues were actually going since no financial documents or meeting minutes were being provided to homeowners, the investor Board president and property manager signed a contract with a management company who then handled the finances of the Association. This was the first time a third-party had been involved in the community in any capacity. The management company did no on-site management of any kind.
Also during this time, there were questions concerning how the Declaration was being followed when it was apparent there were never yearly elections being held. Until that point, it was loosely an appointed system of who was willing to serve. In August 2017, a homeowner created a petition to call for a special meeting of the homeowners to discuss why the current Board president and property manager was refusing to hold yearly elections. The special meeting was held in November 2017 and a nomination committee chairman was chosen to conduct the first actual yearly election of Board members to be held at the annual meeting the following May.
In May 2018, the first actual yearly election of Board members was held. The community By-Laws state no less than three and no more than five Board members shall serve one year terms. Five people ran for positions but the former Board president made sure only three positions would be filled so the homeowner who called for the special meeting in 2017 would not be an elected as a Board member. The three Board members elected were all investors with two who actually lived in the community at some point but didn't currently, and then one Board member who had never lived in the community but owned a unit that had a tenant.
During the 2018-2019 year of that Board, the mounting issues in the community were not being addressed because the Board members did not live in the community and the management company performed no on-site management. Things like the trash dumpster not being picked up on a regular basis, street lights not working, trash throughout the community, and crime were not being addressed. It became the homeowners responsibility to notify the management company who in turn would notify the Board of any issues. Any action that would be taken (if at all) would take weeks or months to occur. This chain of grapevine communication frustrated residents who wished for an on-site manager to take care of things immediately.
The Board president at this time then chose to single out specific homeowners for violations of the Declaration while multiple other "offenders" of the same rule were not addressed at all. In January 2019, the singled out homeowners hired an attorney to sue the HOA for not fulfilling its fiduciary duty. These homeowners decided to run for the Board election in May 2019. What began as a harassment case turned into election fraud when the Board president chose to only have three positions filled although seven people were running at this time. The new homeowners running sent a copy of their attorney letter to the community who then voted the old Board members off at the May meeting.
May 2019, five new Board members who are homeowners that live on the property were elected. Within five days of the new Board being in effect, 18 units reported leaks in the roof. After hosting 16 roofing companies and receiving bids, it was apparent the roof was faulty. Since the roof had been replaced in 2013, it should have a warranty. Upon much research, it was revealed the Board members at that time (in 2013) did an insurance claim and then chose a company that is not licensed, bonded, insured, or certified in the state of Oklahoma to put any roof on -- much less a commercial roof. Less than 2% of all roofing companies are certified to install commercials roofs in the state of Oklahoma. Because of that "verbal agreement" that took place from the Board members at that time, and the chosen roofing company, there was no recourse to correct the installation issues. Insurance doesn't cover installation issues.
Board members had no choice but to obtain a loan to correct as much of the roof issues as possible to stop the leaks. There was very little to no savings in reserves for the HOA to conduct maintenance on the buildings. Obtaining the loan was a three month process. An additional need for maintenance on eight units was the exterior balconies that were completely rotted and were an insurance and legal liability. The removal of those balconies were important and were included in the cost of the loan. Another issue the loan afforded the community to address, was the fact of mail being stolen regularly from the old mailboxes. A designed mailbox hut was built to ensure the security of each resident's mail and the building will also house the future community security system.
Other issues that were discovered in the Summer of 2019 included pest control, landscaping, and foundations. The termite pest control company Terminix had a contract with the HOA for over ten years. When Terminix came out to the community to show the new Board members what it was they were doing, it was apparent they had performed no work in may years. When six pest control companies came to examine the property and provide bids, each one of those companies stated the termite bait stations had not been properly maintained in over ten years. The way Terminix was able to be paid without doing any work is because there was no on-site manager verifying work was being done. The community had been run by investors who did not live in the community. Therefore, the community spent thousands of dollars over at least a ten year period (possibly longer) for absolutely no work being performed. The new pest control company, Massey Services, is extremely thorough, cost efficient, and check in with the on-site manager each time they arrive to the community. They also allow residents to have pest control in their units for $25.
Other discounts acquired for homeowners in the Two Forty Place community include a discount with a respected plumbing company, and a discount on the purchase of new windows.
The new Board members requested 13 landscaping companies to provide bids for the community. The existing landscaping company was careless and actually ruining some of the landscaping. Because the community was being run by investors who did not live in the community, they were not there to see the damage being performed. The new Board members started with the lowest bid and as their work was evaluated, settled on the third highest bidder, Signature Landscape, who was more cost effective than the previous ten years of landscapers and more professional in their work. The project manager checks in with the on-site manager and addresses any needs of the community.
In 1980, trees were planted right next to two buildings in the community. 40 years later, the trees were huge and causing several problems. After three foundation repair companies provided bids and evaluations, it was confirmed that two of the seven buildings had serious foundation damage and two other buildings have minor foundation damage. The cost of the repairs will be approximately $150,000 and this has become a major part of the financial plan going forward. Tree roots lifted the sidewalks in front of the buildings to now be a trip hazard and correcting the sidewalks is included in the foundation repair. Beyond the foundation company's repairs, the HOA will need to contact a roofing company to re-flash all of the chimneys of each repaired building as the chimneys will move back into place when the repair is done. In February 2020, the HOA removed all trees causing foundation damage, other trees in the community that were dead or almost dead, and trees that had been cut by OG&E into a form that was not pleasing.
In November 2019, OG&E installed brand new street lights the new Board members ordered in June. The existing street lights were the original 1979 lights that barely put out any light and several that did not work at all.
Another issue that was exposed included the vacant field to the south of the community that had become a homeless camp. Homeless people would wonder through the community for years and because the previous Board members did not live in the community, they did nothing to address the problem. Homeless people would dig through the community dumpsters, break into the community mailboxes and steal mail, and go into garages that were left open and steal items from there. By September 2019, the new Board members worked with the owner of the field and the City of Oklahoma City to completely evacuate the homeless camp which had plagued the community for years and years. The field has been purchased by a new owner and will have new business development soon.
Another change the new Board members made was to terminate the management company that did little to nothing for the community and hire a bookkeeper/accountant who specializes in HOA condominium communities to handle the HOA money. Having an unaffiliated third party to oversee the finances would ensure ethical behavior was taking place. The new Board members created a website and asked all homeowners to pay their dues electronically so no single person is handling money ever again. The Board also opened a new bank account for the HOA with a bank located a mile from the community.
The new Board members started enforcing rules in the 40 year old Declaration. One of the rules does not allow satellite dishes on any HOA owned surface. All satellite dishes were removed from the roof and flower beds in the community. An agreement with Cox Communications was signed where Cox performed a multi-dwelling unit upgrade. The original 1979 coax wiring was still being used and was the cause of many issues with internet, television, and phone services. At Cox Communication's expense (Approx. $50,000), each building was rewired. The community now has extremely high speed internet, crystal clear cable television, and dependable home phone.
The new Board agreed an on-site manager was needed and a dedicated phone line for homeowners was set up. Professional stationary was created and a monthly newsletter was started. The on-site manager provides accountability for all vendors. Before any vendor gets paid, the on-site manager verifies all work has been performed to the Board's expectations.
Some other information the new Board discovered included paying for unused meters, HOA insurance policy and a reserve study. Now that the HOA bills are being reviewed by an on-site property manager and competent Board members, it was revealed the HOA had been paying meter fees on a natural gas meter and an electric meter that were turned off ten years ago. Because the accounts had not been closed, a meter fee was still charged. Approximately $8,000 has been spent on absolutely nothing. This is further proof of the mismanagement of the community in the past 40 years.
The HOA insurance policy had not been reviewed at all in the past 40 years - even though it clearly states in the Declaration that the Board will review the policy yearly. There were multiple issues with the policy and how the community Declaration was written concerning insurance that the insurance company gave an ultimatum: the HOA votes to change the by-laws or the insurance company will do one of two things. 1) double the premium which would have been $80,000 per year or 2) drop the HOA. The policy was written in 1979 as a single owner (the builder) and covered all exterior buildings, interior of all buildings, all residents, visitors, and anyone else which could have been hundreds of people. This is why the premium would have been doubled to cover that many physical items and number of people. The new Board members called a special meeting in December 2019 to vote to change the insurance articles so the HOA could continue with the existing insurance company.
The next few things about the insurance policy were rather alarming as well. The HOA had been paying for coverage on a surcharge that should have been removed after construction was complete in 1980. The HOA had been paying for the surcharge for 40 years. Another additional charge was for the swimming pool that was filled in ten years ago. The additional coverage was never removed from the policy. Another alarming item is the fact the HOA was dramatically under insured for rebuild coverage. The policy provided seven million dollars for rebuild coverage. With the increase in cost of living expense in 40 years, the policy should have been at a ten million dollar coverage. As of January 1, 2020 the policy now reflects a ten million dollar rebuild coverage and the premium increased $8,000 per year. This is the number one expense for the community that 25% of the monthly dues goes to. Because of severe mismanagement for the past 40 years, thousands of dollars were spent on nothing and if a catastrophe struck, the community would have been in a severe financial bind.
Other issues that have been addressed include flooding issues which were quickly corrected by digging a ditch to direct water flow. The flooding had been occurring for at least 20 years. Also, another issues was intentional water being directed on the community property from a retail neighbor on the north side of the community. After calls to the City of Oklahoma City, two state agencies, and three federal agencies, the retailer paid for their water to be directed away from Two Forty Place property. The water had been directed on the community property for 20 years and caused significant street damage which the HOA paid to fix.
The wood stockade fence around the property is 30 years old. It is crumbling apart and homeless people kick in the pickets to cross the community. As of now, the HOA pays to replace pickets as needed. No financial plan is in place for total replacement because serious issues with the buildings are the primary focus for repair first. The community took a survey and the results were most homeowners would like a permanent fence/wall (stone, brick, etc.) of some sort so the constant money to repair it will stop.
The new Board also introduced several amendments for homeowners to vote on to update and change the 40 year old Declaration. The governing documents states that the Declaration must be updated through the years. There has never been an amendments of any kind until the December 2019 meeting which was mainly focused on updating insurance articles.
The new Board members joined with the South Oklahoma City Chamber of Commerce to have a place to hold meetings and held two special meetings for all homeowners in 2019 to alert homeowners of the massive maintenance issues plaguing the community. The new Board members also held and still hold monthly Board meetings and provided and continue to provide meeting minutes to homeowners via this website. Before 2019, the only meetings held for homeowners was the annual homeowner meeting in May which ten people or less would attend. There were never monthly Board meetings held and no meeting minutes were provided for the entire 40 years. For the last 40 years, there was no transparency of finances or other decisions and now there is almost too much information being provided to homeowners and the general public about the community. A homeowner survey was provided by the Board members in May 2020 to gather the opinion of homeowners on issues in the community.
One contingency of obtaining an HOA loan is the bank requires a reserve study to be performed. A reserve study is a long-term capital budget planning tool which identifies the current status of the reserve fund (savings account) and a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major common area expenditures actually occur. The amount of money in the HOA reserve account is $25,000 after 40 years of existence. The reserve study provided an evaluation showing the community should have $1.5 million in reserve at all times. The recommendation from the reserve study experts was to increase the monthly dues to $875 per month. The result of the study showed the building siding and foundations needed to be replaced/corrected immediately. This amount would allow $475 per month going directly into reserves and provide enough money to implement the maintenance within a year to a year in a half since these issues are at an emergency level. The experts that performed the study said they have never seen a HOA condo community needing this much maintenance with no money in reserves.
How did this situation happen and who is to blame? The homeowners of the past 40 years (1979-2019) never questioned where their monthly dues were going. They never questioned why no maintenance was being performed. When the swimming pool was filled in no homeowner was contacted, no vote was taken. The manager at that time decided that on their own and no homeowner did anything about it. Basically, homeowners were complaint with the severe mismanagement occurring. The dues were rarely increased ($140 in 40 years) and there were no financials, meetings, meeting minutes, Board member elections, or any rules and regulations in the community governing document being followed.
In December 2019, the Board held a four hour meeting with homeowners showing over 300 slides (mostly pictures) via PowerPoint about the massive issues and the money it is going to take to correct them. The entire Board voted to raise the monthly dues $100 to start in January 2020 at $300 per month based on the reserve study and the dire state of the finances. The financial plan was presented at the meeting and the homeowners were told the dues will continue to increase until the savings account is full enough ($1.5 million) to address immediate and urgent maintenance needs in the community. By July 2020, an evaluation of the $300 amount has proven to be enough to operate the community with a small amount left over. It is quite apparent any increase in dues beyond $300 will be going to a savings account for the massive maintenance issues.
The financial plan is to have $300,000 saved by January 2025 for siding on all buildings and foundation repair. The HOA loan will be paid half way and can then re-finance for additional money needed beyond the $300,000 saved from monthly dues. After the foundation and siding are complete, the process of saving will begin again with the goal of a permanent fence/wall, gates at the entrance, and security cameras. After that project is complete, the process of saving will begin again for street repair and brick repair on the buildings. All of these things need to be repaired today (2020) so putting them off even longer than is planned is not an option. After all the buildings are safe and the community has security, the process to have an amenity again like a pool can be the final goal to save for. The HOA loan will continue to offset the enormous financial burden on the homeowners.
In December 2020, the Board members held the yearly financial meeting. It was reveled that new and additional maintenance issues are plaguing the community. All 52 chimneys are in need of repair. After a thorough exterior inspection, it is apparent no maintenance has been performed on the chimney structure of each unit in 40 years. It will cost approximately $75,000 to correct issues such as: damaged chase cover, flue pipe, spark arrestor, and storm collar. There are water leaks inside some unit's fireplace because of these issues as well as brick and mortar erosion. Immediately, eleven chimneys are in dire need of repair with active leaks. This will cost $11,500 and another much needed maintenance issue is two sewer line repairs that will cost approximately $10,000. With $22,000 in emergency repairs needing to be done and little savings, the Board voted to raise the monthly dues $50 each month. This amount is to go directly into reserves to save for the primary maintenance project in 2025. The emergency repairs will come out of the excess funds left over from the $300 per month per unit revenue.
Some owners in the community are very upset about the increase in monthly dues. It is notable that the bulk of these owners have lived in the community during the years of severe mismanagement and never questioned anything. They think voting for Board members who refuse to raise the dues, and refuse to perform maintenance on the property is the right thing to do to stop all progress. These owners do not want the dues raised, they want the buildings to crumble down, and they want the community to become the ghetto. They are opposed to any improvement in the community including voting to update the Declaration to bring the community into the new millennium. These homeowners are blaming the Board member who has exposed all of this mismanagement and is finding solutions.
What they are not realizing is that the Board members - no matter who they are - have a legal responsibility called a fiduciary duty to take care of the community. Some homeowners are wanting exactly what has been done for 40 years which is how this situation was created. The HOA has publicized the situation and acknowledged the failings of the HOA from previous Board members and now has a legal obligation to enforce the financial plan to avoid future lawsuits for not fulfilling its fiduciary duty. Stretching the repairs out for five years when they need to be performed immediately is bad enough but financially, it is the most feasible thing to do. With $300 per month covering operating costs, $400 per month should be the highest the monthly dues will go. That is $100 per month per unit going directing into savings. This will help achieve the $300,000 goal by 2025. Every new home buyer from this point forward will be made aware of all the maintenance issues and financial situation of the HOA. New home buyers will be signing documents at closing to ensure they are aware of the financial goal of the community.
The dues evaluation is performed each December by the Board members. Each year going forward, the Board will be joined by a bank representative that provided the HOA loan and a reserve study expert to help in setting the HOA monthly dues cost and financial plan for the community.
Copyright © 2021 Two Forty Place Association - All Rights Reserved.