Archive for the ‘Choosing a new BTH manager’ Category

How to bankrupt a corporation

Wednesday, July 31st, 2013

One of the most effective ways to bring a corporation to its financial knees is to put it into the hands of an arrogant, ignorant, and incompetent manager.

That’s exactly what the president of a Berkeley, California, corporation did late in 2012. Almalee Henderson, president of Berkeley Town House Cooperative Corporation (BTH), signed a contract with Bay Area Property Services (BAPS), making BAPS the manager of BTH. Thus began a financial slide into an even more precarious plight than BTH was already in.

At the time that BAPS began managing BTH, BTH had woefully inadequate internal financial controls. Its president and manager had essentially blank checks: They were spending money at their sole discretion. The board of directors, which by law was responsible for approving all expenditures, simply dozed while the corporate officials wrote checks. This regime had already resulted in the loss of an entire year’s corporate operating budget on payments to an unlicensed and uninsured contractor for work that failed so miserably that it will cost almost twice as much to correct it as BTH paid for it.

In stepped BAPS with the promise that it would cure the corporation’s financial ills. But there was no basis for such hope, because BAPS already had a poor reputation and Henderson’s secret contracting process did nothing to assure that only qualified management firms would be considered.

So, not surprisingly, BAPS in a mere nine months has brought BTH even closer to financial ruin than it already was.

Two months ago I sounded the alarm in a memorandum that I read out loud and delivered to the board of directors at a meeting of the board. I described seven financial requirements imposed by law on the corporation. For each of them, I pointed out that BAPS had failed to assure BTH’s compliance.

In the intervening two months:

  • The board of directors has not responded to my memorandum.
  • BAPS has not responded to my memorandum.
  • None of the violations reported in my memorandum has been corrected.

Thus, BAPS has further cemented its credentials as a corporate demolition specialist.

Berkeley co-op manager ratchets up attack on free speech

Monday, April 1st, 2013

Berkeley Town House (BTH), a senior housing cooperative, has been notified once again by its recently installed manager, Bay Area Property Services (BAPS), that spontaneous gatherings and discussions by its members in the kitchen, dining room, lounge, multipurpose room, halls, mailroom, elevators, stairwells, garage, laundry room, and outdoor patio will not be tolerated.

The latest warning was posted today. In standard BAPS style, the notice threatens members with punishment without citing any authority. It implies that “meetings held in the common area without reservation” violate some rule, but doesn’t cite the rule because there is no such rule at BTH. On the contrary, BTH has a set of governing documents that expressly grant to its members the right to use the common areas and don’t require that space be “reserved” before it is used. The only rule that requires a reservation requires it for “private” meetings, and then only when a member wants the space reserved for exclusive use. When confronted with this contradiction, BAPS manager Christopher Stanley didn’t respond.

The BAPS warning also threatens BTH members with fines, even though there is no rule at BTH permitting the imposition of fines.

All this is no surprise: BAPS and the directors that hired it have shown practically no interest in obeying the body of rules that they pretend to enforce. Their previous attempts to censor speech at BTH have included a prohibition on holding a discussion of affordable housing, a prohibition on videorecording, and a threat to arrest visitors if they tried to enter the building to discuss civil liberties. And, when reminded of the illegality of all this, they remain silent.

The BAPS threat is likely to prolong the chronic conflict with members insistent on protecting their freedom to assemble without prior restraint, and to intimidate other members into scurrying through the common areas with eyes to the ground, avoiding greetings and conversations in fear of being fined for the crime of “meeting”. As this photo illustrates, BTH’s common areas are already sterile, lifeless caverns. BAPS is intent on keeping them that way, and if it has to break the rules to do so it will.

BTH dining room

BTH dining room

Bay Area Property Services declares war on free speech

Wednesday, December 19th, 2012

Bay Area Property Services, in Walnut Creek, California, manages common interest developments (CIDs), including condominium associations and housing cooperatives. It appoints one member of its staff as the manager. He interacts with the CID board of directors, any staff, and the rank-and-file membership. He attends board meetings and advises the board on proper procedures. At least in theory.

Our cooperative (Berkeley Town House) hired BAPS in October this year, and it began work in November.

The initial impression made by BAPS and by the manager that it appointed for us, Christopher Stanley, was generally good. Stanley seemed to understand the complexity of managing a diverse urban residential community. He initially reached out and offered to provide records to me on request; when I asked for one document, he sent it to me promptly.

But things went sour later. First, Christopher Stanley failed for a month to respond to complaints by at least 3 residents about a defective ventilation system and did nothing (as far as we could tell) to get it repaired. Second, he also failed to provide access to a contract for a couple of shareholders who had requested it, violating the law on open records.

Third, he disregarded the CID’s rules about use of the common areas and fabricated rules of his own fantasy, demanding compliance. Where the actual rules said that we all have free and shared use of the common areas, and we have limited privileges to reserve them for our private use, Stanley alleged, with no basis in fact, that the rules require us to request permission to use the common areas for “a meeting of any kind”. Thus, if, for example, three of us want to meet in one corner of the lounge to discuss current events, Stanley alleges that one of us must submit an application form at least 2 weeks in advance and pay a $25 deposit, then wait to find out whether the corporation will approve our request. If we’re lucky and it does, then, after our meeting ends, we must summon a member of the board of directors to inspect the spot where we met, perhaps to verify that we didn’t drool on the floor. Only then does the applicant get the deposit back. No residential community in its right mind would adopt such draconian restrictions on the ordinary social interactions of its members, but Christopher Stanley considers such a virtual lock-down perfectly normal. He told me, “the Board has obligation to know what is happening in the common areas”. In other words, Big Board is Watching You. I expect him to recommend the purchase of interior spy drones any month now.

Fourth, Stanley announced that he had singlehandedly repealed the corporation’s policy of distributing the draft minutes of each board meeting to the shareholders in time for their comments before the board’s vote to accept the minutes. From now on, he said, draft minutes will not be available to shareholders at all, and final minutes will be available only on request, and only after they have become final by means of a board vote. Some directors expressed doubt about the wisdom of this action, but no director questioned its legality. In fact, Stanley has no power to repeal any corporate policy. Moreover, his decree violates section 1363.05(d) of the California Civil Code, which requires that minutes be made available to CID members within 30 days after each meeting. Since the board meets once a month, the next meeting is often more than 30 days after the previous one, and therefore compliance requires making draft minutes available.

As a last straw, convincing me that I owe it to prospective BAPS customers to warn them about this firm, Stanley at today’s meeting of the board of directors actually shouted down two of the shareholders as they were just beginning to address the board. The moment he thought he understood what they wanted to talk about, he used his microphone to drown each of them out, repeatedly saying he would not allow them to speak. This is despite the CID Open Meeting Act, which guarantees every member and resident of a CID the right to address the board at each meeting.

At the end of the meeting, the president, with Stanley’s approval, announced that the board would go into executive session immediately. This, too, was probably illegal, though the Civil Code on that is a bit confusing. As I read it, this is legal only if the meeting’s agenda includes the executive session and its topic. But today’s agenda didn’t mention an executive session at all.

Whether BAPS has any competent and civil managers I don’t know. But, if it does, Christopher Stanley isn’t one of them, and any CID that he manages, including Berkeley Town House, will suffer from his tyrannical style.

RealManage: My Verdict

Friday, February 25th, 2011

RealManage (a property management company that specializes in common-interest developments, a.k.a. homeowner associations or HOAs) became the manager of Berkeley Town House, a senior housing cooperative in Berkeley, California, in July 2010. I live there. In my opinion, RealManage has shown itself to be a bundle of strengths and weaknesses.

Good things about RealManage:

(1) When a resident reports something out of order, RealManage sometimes dispatches a contractor to examine the problem as soon as the next day, then within a couple of weeks gets the repair made competently.

(2) RealManage has a Resident Portal, a website where we can see records, such as minutes of board meetings. RealManage digitizes records and posts them there. This is much more efficient than responding to individual record requests.

(3) RealManage permits payment of monthly assessments via ACH.

(4) Some RealManage personnel (particularly Aletha) show genuine concern about doing a good job for customers.

(5) RealManage has a round-the-clock emergency response service.

(6) RealManage often replies to emails fast and informatively.

(7) RealManage sometimes fixes bugs in its information system reported by users.

Bad things about RealManage:

(1) RealManage has a buggy information system that it has sometimes failed to fix even months after being told about its bugs.

(2) RealManage has no issue-tracking system visible to customers. If you report a problem, you get a blank issue ID number (see example below). There’s no place to look up the status of an issue. If you’ve noticed something that needs repair, you can’t see whether others have reported it yet.

RealManage website bug

(3) RealManage emptied our office of its files, taking them to its offices. Months later RealManage reported that several of our association’s most important documents, such as major improvement contracts, had vanished. When asked for details, RealManage did not respond.

(4) RealManage has left some problems unattanded for half a year or longer. In July a dozen residents complained that the elevator emergency signal and telephone were inoperative and there were no instructions on how to use them. For half a year RealManage didn’t attend to this, and people got trapped in the elevators more than once, unable to summon help.

(5) RealManage has skimped on the records it makes available to residents. The board president asked RealManage to post everything possible on the Resident Portal, but for months thereafter there was no documentation on income and expenses. Finally, some recently appeared (for the last two months), but it discloses only gross categories of expenses, such as $6006 for maintenance and repairs. How can we owners be expected to evaluate the quality of our board and manager with that level of (non-)information about how they’re spending our money?

(6) RealManage’s standard contract states that the management fee does not include the service of giving shareholders access to corporate records. The law requires the corporation to let shareholders see records, but if they ask for that right then RealManage turns on the clock and charges the corporation $75 per hour for whatever time it takes to extract the records from its files. In summary: You pay RealManage a monthly fee so that you can pay RealManage an hourly fee to let you see your own records.

(7) RealManage allocates inadequate time and attention to its job. Its personnel are well-meaning, but they don’t have the time, and possibly don’t sufficiently care, to learn the basics of the customer’s bylaws, rules, building, regulatory environment, etc. The main manager of our community also manages 8 other communities, so how could he have time to manage any of them thoroughly?

(8) RealManage’s contracting for “maintenance” is quite dysfunctional. It offers to perform a range of services that existing janitorial and other contractors are already performing. Its personnel assigned to the building then (according to a recent report by one of our members) denies that RealManage is responsible for the tasks listed in the contract, and spends some of his time on-site in recreational activities instead of work.

(9) RealManage began running board meetings with minimal shareholder participation, limited to a pre-meeting “Homeowner Forum”, with any comments prohibited after the official board meeting was called to order. Later RealManage claimed this was merely a recommendation to the board. Even if so, it reflects a goal of restricting shareholder participation, when a much healthier orientation would be to encourage more shareholder participation.

(10) RealManage has made serious accounting errors, resulting in overcharges, refunded after they were discovered by us, but they weren’t discovered by RealManage’s own quality-control system.

(11) RealManage helps the board of directors comply with its legal obligations, but unfortunately also helps the board break the law and infringe on shareholder rights. It participates in secret board meetings, which violate the Open Meetings Act. It has refused requests for some records, violating the bylaws. It has insisted on conducting board meetings without the required 4-day notice of the topics to be discussed. When a shareholder objected, RealManage said “The law wasn’t intended to regulate unimportant matters like appointing a new member to the board of directors, and, even if it’s illegal, there’s no punishment, so go ahead and sue us if you want.” RealManage has also assented to the hiring of an unlicensed contractor to do major maintenance work, and has recommended an uncertified contractor to remove asbestos-containing material from the building, which would be illegal.

Verdict

RealManage could be great. Its idea of an automated Web platform to track information about a housing community and make it instantly available is superb. But that concept is part-real, part-vaporware. And RealManage’s view of the rights of shareholders ranges from grudging acceptance to outright denial. RealManage’s potential is far from fully realized.

Are there great alternatives to RealManage? Our community didn’t find any when it conducted its management search. If you peruse the information published by the Center for California Homeowner Association Law, you’ll get the impression that the industry is basically pro-board, anti-shareholder. Caveat emptor.

PostScript, July 2011

I was elected as a director in May 2011, and entitled to training as a new director under the RealManage contract. RealManage failed to provide (or to offer) any training to me.

It’s RealManage!

Wednesday, June 16th, 2010

Yesterday the Board of Directors of Berkeley Town House Cooperative Corporation announced that it had entered into a contract with RealManage for the management of this senior housing cooperative (informally, HOA). RealManage is expected to assume the management on 1 July 2010.

Over time I hope we’ll become an enthusiastic reference for RealManage. There should be increasing amounts of information on this blog and at the unofficial Berkeley Town House website.

For some impressions of RealManage gathered during the competitive search process, see my earlier posting.

RealManage

Tuesday, April 20th, 2010

A candidate for Berkeley Town House manager visited BTH on 20 April 2010 at 6 p.m. The company is RealManage. Here is some information about it before the meeting, mostly discovered and compiled by Susie. After that are some notes from the meeting itself.

The firm emphasizes its use of information technology, and it says it offers an environmental paperless management program.

RealManage has a mix of supporters and detractors, like almost any other company. It might be informative to try to talk to the customers mentioned below before signing a contract.

An item of possible concern is the lawsuits filed by two HOAs in Texas, which alleged that RM neglected its duties and wasted money. Responding to the lawsuits, RM emailed: “We are confident that the truth will be found out on this matter and that it will be resolved quickly.” RealManage also threatened a countersuit, saying “we intend to aggressively pursue any third party who may have tortuously interfered with any of our business relationships or knowingly made false accusations to achieve other objectives”. A suit was also reportedly filed against RealManage by Northwest Austin Municipal District No. 1. We don’t know how any of these cases was resolved; it would be good to ask about lawsuits, but a California employee may not know much about Texas legal actions.

Rancho Paraiso in Walnut Creek switched to RM in spring 2008 and seemed to be having no issues with the company by fall 2009. However, it’s curious that RealManage’s Walnut Creek office doesn’t manage it; instead, the San Rafael office does. We could ask why.

Speaking of the San Rafael office, we have found three reviews of it, all negative. There are two Yelp reviews; one includes this statement: “Our HOA just switched management companies leaving RealManage behind and not a moment too soon.” One HOA that switched is Peacock Gap in San Rafael, which last year went from RM to Eugene Burger Management Corporation. The third review comes from the membership rating service Consumers’ Checkbook and is dated July 2009; this member says “It is impossible to get anyone to handle your problems. The phone often answers in Texas and they don’t want to let you speak with the manager in San Rafael. They promised to fix something for 7 months before doing so. It was broken steps leading up to the third floor! It took more than a dozen calls to get the work done. And they tell you something is going to be done that will inconvenience you (by posting signs on your door) and then don’t do it or tell you why.”

RM has seven offices in Texas and only three in California, so most of the info we have found is from Texas. A review on Yelp from April of this year stated: “Working with their Austin office is a nighmare. … Since we made the switch to a new company I am amazed at all the mistakes we continue to uncover from Real Manage’s time with us. Banking errors, misapplied assessments, budget errors. …” This review is apparently from the secretary of Block House Creek HOA.

member in Texas blogged about “poor billing practices”, slow communications, and unresponsiveness from RealManage and got comments from others reporting their own experiences. This member concluded that RealManage unsuccessfully tries to tailor its system to each customer rather than perfecting a single system and sticking with it.

One Texas community’s newsletter from last July reported that RM was better than their previous company, especially after assigning them a new manager. But another continued to have problems with RM even after a manager change, so it eventually dropped the company. This association also claimed that RealManage refused to allow the community to terminate the contract in mid-year because of nonperformance by RealManage. Another Texas community switched from RM to another company for unspecified reasons.

A scathing anonymous review of a Texas RM office, from the employee’s point of view, says “All your hard work & effort will make the current owners’ millions grow even more….stress level for workers is very high.”

A positive review in an HOA newsletter says “RealManage has been a success…” and cites improvements compared with previous management companies. However, the newsletter’s editor is an RM employee, so it might be wise to confirm the judgment by talking to community members.

Some of the discussion about RealManage’s accounting has dealt with statement-based versus coupon-based billing for assessments. It may be useful to ask RealManage about this.

RealManage, unlike some competitors, doesn’t disclose a list of its clients to the public. We wanted to find urban clients, high-rise clients, and clients with pre-1970s buildings, similar to BTH, but we could find none. One could ask for a list of such clients so comparable references can be checked.


At the meeting, Duane McPherson presented RealManage’s services and answered questions. He said RM manages about 65 associations in the Bay Area, but won’t disclose the list of them to us or anybody else, for fear of poaching by competitors. The most similar association now managed by RM nearby is Bayview in Albany. The Walnut Creek office is mainly a place to hold meetings, not a real office, so we would be managed out of San Rafael.

RM would charge BTH $2400 per month for basic management (plus about $900 for the extra services at the start of the contract). It would also offer extra services. They include semiskilled physical-plant maintenance work in-house, for $37.50 to $55 per hour, and four-page color newsletter production, for $160 per issue.

Contrary to what we had read, RM offers a contract that is terminatable by either party on 60 days’ notice.

McPherson acknowledged that RM has been sued and criticized. He gave RM’s side of this story, without seeming unduly defensive or aggressive.

McPherson is considered RM’s CGO (Chief Green Officer). He is the RM expert on resource conservation and environmental impacts. He would help BTH evaluate energy and water conservation measures, and he is confident that solar energy generation will become cheap enough to warrant its investment in the future.

RM’s main distinction from its competitors, and McPherson’s main passion, is the use of information technology to make all activities more efficient and accountable. RM digitizes all recent records and make them available via board and member Web portals. It abstracts the governing documents, so the relevant sections can be shown where relevant. Financial transactions and maintenance management are largely automated.

RM generally does not provide or maintain ordinary Web sites for the communities that it manages, because the member portal sites fulfill many of the functions of Web sites, including internal communications.

In the beginning, RM would likely bring a computer and scanner to BTH to perform the bulk retrospective digitization. It could even do the entire collection of some 140,000 pages, at a cost to be determined. It would use the already digitized construction drawings.

Digitization at RM includes OCR conversion, so documents are searchable. However, as of now the documents are not stored in a way that permits keyword searches on whole collections. BTH or people at BTH could, however, download copies of documents into local repositories and make those searchable.

Another technological innovation proposed by RM is the replacement of the coin acceptors in the laundry room with ID readers.

McPherson expressed a realistic understanding of members’ rights to access records. His summary was that members, as co-owners, are entitled to see almost all corporate records, with confidentiality exceptions. This appears to me to be a much more correct opinion than ACI’s McCormick’s apparent opinion that nothing is available to members unless legal justification is provided.

McPherson said that he has a couple of employees in mind who he believes would fit BTH well as manager and associate manager.

In general, I found McPherson’s legal and technical knowledge more impressive than McCormick’s, and I had a much easier time exchanging information and ideas with McPherson.

Management Contractor Candidates

Thursday, April 8th, 2010

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Eugene Burger Management Corporation

Tuesday, April 6th, 2010

On 6 April 2010 Susie asked me to talk with Eugene Burger Management Corporation, which she was gathering information about to help one of the Berkeley Town House directors in the search for a new manager.

Mary Jacobs (maryjacobs@ebmc.com, 415-561-0800) called back. She is the District Manager for the San Francisco Bay Area, though she has been working for EBMC for only 2 months.

She said that EBMC is expanding its portfolio and has an interest in managing more senior housing communities, so it would like to consider managing BTH.

Jacobs lives in the East Bay, and she would like to see BTH and talk with some people here (including, she hopes, at least one Director). She said she would be able to visit us tomorrow (Wednesday) afternoon about 3 or 4 p.m., Friday morning, or a morning, afternoon, or evening next week.

What Jacobs told me is similar to what ACI’s McCormick has said, with the following exceptions:

EBMC is much bigger than ACI. EBMC has about 400 employees (including several Burgers).

EBMC managers commute to San Francisco from around the area, so when it manages a community it usually tries to assign to it a manager who lives nearby.

Often a community that EBMC manages has particular domains (such as landscaping) that it wants to manage itself. In those cases, the management agreement assigns to the community the responsibility for those domains.

EBMC normally manages third-party vendors, but EBMC also has a handyperson employee that it sometimes sends to buildings when this will cost less than hiring a contractor, or when the need is urgent.

Board training is intermittent and casual, taking the form of occasional communications advising boards of new statutes, new informative Web sites, etc.

The accounting system used by EBMC is Yardi.

When EBMC takes over the management of an association, it begins doing the books with its system as of the assumption date and does not convert prior records to the new system.

When a homeowner fails to pay assessments, EBMC usually sends one reminder letter and thereafter refers the delinquency to the Board of Directors for a decision on how to proceed, e.g. whether to refer the matter to a collection agency.

The usual recordkeeping practice of EBMC is as follows. EBMC takes the last 2 years of paper records from the community and files them in the San Francisco office. As time passes, it purges the obsolete records, i.e. records older than 2 years except longer-term-valuable records such as construction plans and warranties. It returns the purged records to the community. Whenever a Director or a committee or an ordinary community member wants to inspect or copy a record, the requester asks for it in writing (e.g., by email) and EBMC informs the Board of Directors of the request. Upon approval of the request by the Board of Directors, the requester goes to EBMC’s office and performs the inspection and/or copying there.

In addition to the usual practice, there are variations. A client may choose to give EBMC copies of records rather than originals and keep originals at the client’s location. A client may choose to digitize its records. A client may choose to use a commercial disclosure service, such as CondoCerts and deposit digitized records there for access by members and prospective members.

EBMC has a Web site that houses Web sites for many or all of the communities and other properties that it manages. To see examples, go to the EBMC home page and click on “PROPERTY WEBSITES”. On the new page, under “search properties” choose “Owners Association” and “California”, then “Search”. You then get a page with a list of 68 properties, keyed to a map. You will see that the properties have related but distinct Web sites. In various cases the sites offer such features as on-line maintenance reporting, records access, assessment payment, access to the member’s own payment history, floorplans, neighborhood information, and slideshows of the property for prospective members.

Observations: Yardi is one of the best-established high-end property-management software systems. It is curious that EBMC has no properties now in the East Bay. We should ask why not. But we could also hope that EBMC would have several managers living in the East Bay wanting to take us on for their own convenience. EBMC’s usual record-management system would be hard for some at BTH to swallow, so some thoughtful discussion of variations would be wise. On balance, allowing for Jacobs’s brief tenure at EBMC so far, I think EBMC deserves to be considered as an alternative to ACI.

Susie also found a few quite disparaging reviews of this company on Yelp. They all apply to the Rohnert Park office. To get a more representative sample of customer opinion, one could easily contact customers comparable to BTH, since EBMC makes its list of clients available to the public.

Supplement, 1 May 2010: An anonymous reader using vituperative language but no hard evidence has called my attention, three days in a row, to accusations of criminal behavior against EBMC and to a history of litigation against EBMC in Marin County. Looking for confirmation of the criminal charges, I found a group of complaints, all apparently by the same (unidentified) person. The complaints likewise provided no evidence, except for an excerpt from a court opinion, but that opinion rejected the charge against EBMC. The complainer in 2006 asked other victims to file complaints in the same forum, but apparently no others did. All this suggests to me that the complaints are dubious. However, EBMC apparently has not chosen to submit any rebuttals in that forum, nor has any satisfied customer of EBMC done so. As for the litigation in Marin County, there is indeed a list of 79 cases from the 1980s until 2009. The most recently decided case was brought by Margaret A. Seltzer, acting as her own attorney, against EBMC and others, and it ran from 2003 until 2009. (Seltzer is an attorney and owns a condo in The Headlands View Homes in Sausalito, which EBMC manages.) The court ruled against Seltzer many times during the case, charged her for defendants’ expenses, and ultimately ruled in favor of EBMC, awarding it attorneys’ fees at Seltzer’s expense. Seltzer filed a related complaint in 2008 claiming “fraud and intentional infliction of emotional distress”, and in a February 2010 court opinion Seltzer’s complaint was dismissed under the state’s “anti-SLAPP” statute, which prohibits abusive lawsuits. There are many more cases that one might study, but these are the first I have seen, and they portray EBMC as a victim of litigiousness, not a malefactor.