The CotoBuzz Journal, Community Journalism

Board accountability in Coto de Caza is no different than accountability in Laguna Woods Village:

In part, due to the CotoBuzz coverage of the Laguna Woods questionable expenses, the OCR has assigned experienced reporters to the case - For example, refer to the Monday, July 2, 2007 issue of the OC Register and the article titled "Retirees bristle at paying for perks - Controversy over management company's spending at Laguna Woods Village broadens"

Below is the reaction to the OCR article, by author, arbitrator, LA Times columnist and frequent contributor to the CotoBuzz Journal, D. Vanitzian:

Boards are responsible to supervise all third party vendors, yes, including vendor attorneys and vendor management companies. That IS the "board's" duty to oversee the operations and supervise its employees and vendors. That cannot be delegated -- so too, do "open books" in the plain meaning of the law and in plain English, means just that o-p-e-n.

When "Owners" "pay" for that home, they have a vested interest in their "property" and they have a RIGHT to look at the books, records, and accountings of the entity vested with protecting and managing their "Vested interest." When they ask to see, they want ALL the books and

they want them now, not tomorrow, not next week, not next year, and not after they are made to file a lawsuit. They do not want to be forced to sue in order to invoke "accountability" and "truth in accounting procedures." Until California's Legislature truly understands the unequal bargaining situation they have created--against titleholders and their asset protection--the situation written about in this article, will become commonplace, if it has not already. Presently, savvy buyers are bypassing common interest developments, associations, and "anything" with a board of directors, regardless of the so-called "affordability" advertising, which is no longer believable.

Given the Zipperman/Yocham’s stated “commitment” to transparency, this might be a good time to open up the CZ books, specifically associated with the Sports Park and Keystone management as well as any other diversion of funds.

I have requested access to “the books” including supporting invoices etc. I am waiting for a letter telling me when all the materials will be together. I want to see what we are paying landscaping consultants since I feel certain it would be less expensive just to have a full time Landscaping Supervisor on payroll as had always been the case before Varo/Mezger. And, we have to finally determine the fully loaded cost to maintain the Sports Park . My guess is about $300,000 a year. My understanding is that the new Board is working on getting that number. Varo/Mezger never seemed to care what it actually cost when they buried it in an overall landscaping contract. That was a mistake. Joe Morabito (former member, CZ board of directors.

Opening the CZ books would go a long way to restoring trust in the board. Residents and the board are fortunate to have a board member with expertise in this area. In addition to opening up of the books, it is necessary a review of the CZ chart of accounts, auditing of Keystone, and audit of “money transformation” – that is, the board needs to establish a baseline so that the need to use forensic accounting to view the post-Varo/Mezger board activity is negated.

Simple example: How much do you think service providers spend on “supplies” and where are these supplies purchased? The local grocery store, or….? What about usage of supplies – is it reasonable? - Buzz

Supplies are not the issue. The property management company earns property transfer fees, currently about $200, that should be factored into their mix of revenues/profit. And, we might want them to earn more like $400 to bring down the fees that they charge the Association; but it must be part of the mix. Remember, I am the guy who favors user fees to help lower overall dues. This is another place to look for money. And, the number of the staff members needed to support our account is another place to look for money. At one point, Varo/Mezger expanded Keystone duties beyond what our governing documents call for to support CotoCAN activities. I think that is now gone; but we need to make sure. Joe Morabito

Agreed – the issue is not supplies, but supplier management.

When there is no management, suppliers will simply do what is more convenient for them, regardless of the cost!- Buzz

Ah, that is a different story. As you know, I have been suggesting for years that the CZ Board appoint a Supplier Selection and Contract Management Committee headed by one Board Member. I have even offered to help if this Committee is ever put in place. I am sorry this was not one of Mr. Zipperman’s initiatives because it is the means to make sure that future dues increases will be limited. In meeting just twice each month, the Board simply cannot properly select and manage suppliers. There just isn’t time in the normal course of Open and Executive Session meetings. This needs to be an on-going process and the focus of a dedicated Committee that reports to the Board on supplier management metrics, RFP processes to allow for proper competitive bidding, contract management etc. We experienced two Varo/Mezger dues increases in just two years primarily because the Board was not focused on expense management and because of all the subsidies going to outsiders. It is what it is. There will be more dues increases in the near future if the Board does not get expenses under control using standard purchasing department processes and if the Board does not seek out new sources of user fee revenues. It really is pretty simple. JM