January  2009 

We do not make jokes, we simply watch the LA Times, the Orange County Register and CID/HOA board of directors and report the facts!

CZ Master Association 2009 Budget Failure and Mismanagement

Posted by CotoBlozz, as written by former CZ master association director Joseph Morabito 

The CZ Board failed to adopt a proper 2009 budget for the CZ Master Association because they simply refuse to deal with the subsidies going to non-members  which is clearly necessary.   The $ 6.00 monthly dues increase does not cover the needs of the Association.   Naturally, the Yocham Board dared not go further because we have experienced two dues increases in the just the past few years without any meaningful benefit to the community.  Here are the facts: 

1. The budget report claims that we will be funded at 56% of Reserve requirements by the end of 2009.   That number should be 75% or higher; but the money is just not there to fund Reserves where they should be without a more sizeable dues increase, significant cuts or dealing with the subsidies.
2. The Sports Leagues primarily composed of non-CZ children are being charged $22,390 to use our fields when the actual fully loaded cost to maintain those fields must be $300,000 a year or more.  There is a $10,000 line item listed as Sports Park Maintenance which is just plain baloney.  We were spending $35,000 annually years ago just to get the lawn mowed and bushes trimmed.  That number is listed to deceive our members into believing that this is what it cost to maintain the Sports Park .   Does this CZ Board think we are bunch of idiots? 
3. It appears there is about $176,564 in this budget for Landscaping Renovation or just 1.8% of annual revenues.   We should be spending 5 – 8% of revenues a year ( about $500,000 - $800,000 ) just to keep up with landscaping renovation requirements.   This is a travesty.   However, without serious cuts in other lines items, a huge dues increase or dealing with the subsidies, it is impossible to properly fund landscaping renovation.  
4. We are spending $146,184 for the landscaping consultant (that has made a mess of Coto de Caza Drive ) and a part time staffer when we need a full time professional on staff.   This would save about $50,000 a year. 

The CZ Board has failed to properly fund landscaping renovation a key association responsibility at the same time that they have raised our dues three times in the past five years.   Reserves are under funded in a way that is reckless and dangerous.  The rubber has hit the road.   CZ cannot continue subsidizing non-members.  The 2009 CZ budget is irresponsible.  CZ needs to charge various higher user fees to both members and non members that impact the expenses of the Association.  Transponder fees should be annual for non-members to help cover road maintenance.   The Sports Leagues should be paying for 50% of the actual fully loaded cost to maintain the Sports Park since they monopolize its use.   (I am still waiting for my bocce court and walking trail)

In adopting the 2009 CZ budget as presented, the CZ Board has failed to properly represent the interests of our members.   We are asked to pay more and get little in return.  Coto de Caza Drive looks terrible and is getting worse with every “renovation”.  The face of the Woods and other areas need major renovation NOW and there is no plan or money to get it done.   There is something very wrong with this picture.   It is starting to feel like Sacramento or Washington DC in Coto and we know what a mess our elected representatives have made of things.   God help us all.  If we had real democracy in Coto instead of our corrupt electoral system, the current CZ Board should be voted out of office.   They just don’t get it.  JM 

	Comments Joe,  $6 may not seem like a lot of money to some people and on its own it isn't. The trouble is that every entity that can raise fees, taxes, fuel surcharges, etc. is doing so because "times are tough". I know of at least one board member who put in lots of time trying to avoid this dues increase, but unfortunately the board majority did not decide to put in the necessary time to prevent this increase. You favor cutting subsidies (and I agree), but lets go out to bid on services now. That is the best way to cut costs. Currently there is a rotating schedule for the bidding process because it does take a lot of time. So even though contracts cannot be awarded for more than one year the board only seriously goes to bid about every 3 years. I would never claim that we did everything right while serving the community, but we did put in the time to seriously review contracts and put them out to bid.

I have long advocated the creation of a standing Supplier Selection and Contract Management committee composed of members who have experience with Procurement Processes and Contracts.  Using competitive processes is the only way to get expenses under control.  It is a ton of work; but if managed on a rotational basis and three year bid cycle for each of the major services that we buy, it can and should be done.   This is particularly critical in view of three dues increases in just five years.   This cannot be done by the Property Management Company because they have cozy relationships with other suppliers in the industry.    We saw clearly when we served on the Board that Supplier Selection and Contract Management must be managed by the Board and the best way to get it done is to have a standing committee that has nothing to do with Board elections.   This Committee would develop institutional knowledge over time concerning the purchase of our major services which is critical.

This Committee is the best way to deal with expenses; but it will not solve the revenue problem.  As you know, a 56% Reserve level represents under funding of Reserves by a mile.   We should be at 75% or more.   This is a ticking time bomb.   And, the lack of money going into Landscaping Renovation is a real short and long term problem.   It is clear that the current CZ Board has no strategic plan to deal with Landscaping Renovation.  The face of the Woods where you live is a prime example.  It needs to be scrapped Now and there is no money to do it.   That project alone would probably cost $300,000 or more and there are also other areas that need the same work.  Unless dues are going to be raised to $300 or more and or the Board is going to make serious cuts, the CZ Board has to tackle the subsidy issues.  We simply can’t allow the free loaders in our midst to get the free ride they are getting.   This is just common sense.  Non-Members should be paying annual transponder fees to help cover some of the cost of our road maintenance.   There must be much higher user fees for both members and non-members who add expense to the Association.  And, finally the Sports Leagues primarily comprised of non-CZ kids must pay their fair share to maintain the Sports Park ; at least 50% of the actual, fully loaded cost.   We both know that the $10,000 listed in the budget for Sports Park maintenance is a joke designed to deceive our members.  If the leagues don’t want to come up with the money, let them go to the county to get some support which would be appropriate.  

Joe:

Your proposals have made sense in the past.  Much more so now.  Even Opera Pacific, after 23 years has prudently canceled the remainder of the 2008-2009 season. 

Others like the Silver Bronze Corporation are looking for ways to increase shareholder value either in "dividends" or services added, not by raising dues, but by leasing the Polo Arena.

The Equestrian Center advertises the CZ trails as if they owned them.

The Golf Club is no different.

Seems like the there is only one board who wants to spend the CZ money to benefit non-CZ members. Buzz

The CZ Board just does not get it.  There has been a lack of common sense and sound business management practices for the past five or more years.   Reserves at 56% by the end of 2009 (not even now) is where the rubber and mismanagement hits the road.  I have been sounding alarm bells for years; yet no changes are made.  What is wrong with this picture?  We need direct popular elections in Coto to stop the special interests from controlling our Board; that is for sure.   Joe Morabito