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First Blog: Tell Us What Needs to be Done at Summit House
Setting Aside Our Savings for Reserves
Do We Need Higher Dues
Economics 101 of Your Summit House Unit
Our Treasurer Has Resigned
The Economics 101 of Summit House
Don't Vote for This

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What's your favorite thing about summer in Summit House. Ours are the songs of cardinals and the flying dances of hummingbirds.

A while back, I predicted that about this time we would see our Board wanting to increase the money they want to collect from us but there would not be a clear explanation of why. This is now happening. It follows an unfortunate pattern of implying the increases come from study and recommendations by independent arm's length committees and not from the personal views of some Board members. This is not the case. Some might call the pattern "smoke and mirrors."

The "independent sources" are two committees, Buildings and Grounds and Long-Term Planning. These two committees are actually dominated by Board members. The committees do not announce their meetings so owners cannot observe. There are no minutes.

The Board will soon ask us to vote for a $20,000 Special Assessment as part of the repair needed in the front of the building. At the Board meeting there was no clear reason given for this increase above the dues we now pay. The minutes also provided no explanation.

The $20,000 Special Assessment is a bad idea because it is not needed. Our current reserves are double what is needed for the project. There will be, of course, other projects in the future. History shows our current dues will provide plenty of funds for the coming years.

The mistake comes from confusion between two concepts in financial planning, stocks of money versus flows of money. Both are useful, but discernment is needed. Several Board members use only the stock concept. They compare the stock of money we have, our reserves, and compare it to a hypothetical stock needed many years in the future. This creates the illusion we are short of money. The field of finance mostly uses flows of money in financial planning. When the flow of dues covers the flow of future repairs our dues are at the correct level. Records show our dues provide the flow of money needed.

I am going to vote against funding the project with a $20,000 Special Assessment. What are the consequences if a majority votes against it like I am going to do? There are none. The Board will simply have to have another vote and present the project for approval without the unneeded $20,000 Special Assessment. The project can then proceed using funds now available and intended for such a use. Thanks for reading.

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Our Treasurer Has Resigned

24 Apr 2024 15:35

My first economics professor in grad school, a native of Austria with a beautiful accent, said, "Running a business is an art, not a science." He meant so much of running a business is about understanding people and the real-time circumstances. Other technical things, accounting and engineering for example, are less important. Today, all automobile companies have CPA's, MBA's and engineers. Yet some are prospering and others in trouble. The difference has to be in the art of business.