In 2018, the board of directors requested an increase to help alleviate the mounting operating costs the complex faced. HPD agreed to the increase, however, due to pushback by shareholders and the Oversight Group, we were not allowed to implement it for two years. This caused us to continue drowning in debt. During that two year delay, seniors and disabled shareholders who qualified and were approved for SCRIE (Senior Citizens Rent Increase Exemption), DRIE (Disability Rent Increase Exemption) and Section 8 were unable to take advantage of the discounts that these protections offered. Consequently, they had to pay their full maintenance payments until the increase was implemented.
By 2020, EG was operating at a $250k per month deficit, which amounted to $3 million a year. We went years without an increase, and that’s how the deficit was created. When I served on the board with Moiré Davis, we saw the urgency to have the first increase. We were to have a 30% increase over three years beginning November 2020. The shareholders had a tantrum but we, the board, saw the necessity, which was further exacerbated by the expenses the much needed capital improvement project would add to our future operations. After years of erroneously reporting that we were financially healthy by Neil Sonnenberg and PMI, we saw this as the only way to get out of the red and get to a place of financial health. At that time, we had over $8 million in reserves, but we were getting further and further into trouble. THEN COVID-19 HIT US AND LIFE CHANGED DRASTICALLY!
As the treasurer at that time, I sent a letter to the shareholders advising them that we are not renters so as property owners the moratorium put into place due to the pandemic DID NOT apply to us. Sadly, the disease had such an unprecedented effect on our physical health and on our financial health. We lost so many people and units became vacant in record numbers. Courts were closed, successions were put on hold and vacancies grew from an average of 30 each month to over 100 as we are today. All of this while the capital improvement project was in full swing and with push back from the Oversight Group.
I shudder to remember where we were at that time and how we survived that. Unfortunately, our By-laws mandate annual elections and with the board changes and subsequent property management changes, we have been drowning ever since. We got too comfortable with years of too little maintenance payments and operating under our projected budget. Our account receivables didn’t match with our accounts payables. Additionally, our financial advisors had us believing we were financially sound until the stark reality hit us in the face when Metro came, along with the astute financial wizardry of Moiré Davis and her leadership. We said then that we should have annual increases until we can catch up. The hardship falls on the paying shareholders.
I don’t like the increases, but I know the origins of how they became necessary and I understand why they are needed. I’m just angry that our monies are so poorly managed and we are spiraling downward. I pray for EG every day and am so thankful for those keeping their eyes open and trying to keep us afloat.
I close with many emotions.
EG is scheduled for a 3.5% increase in January 2025 – the last of the approved 30% increase.
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