HomeMy WebLinkAboutITEM DISTRIBUTED AT MEETING DURING PUBLIC INPUTMay 7, 2019
Charles E. "Chuck" Puckett, Mayor
Dr. Allan Bernstein, Mayor Pro Tem
Letitia Clark, Council Member
Austin Lumbard, Council Member
Barry W. Cooper, Council Member
RECEIVED
AT THE TUSTIN
CITY COUNCIL MEETING
MAY 0 7 2M
CITY CLERK'S OFFICE
Dear Mayor Puckett, Mayor Pro Tem Dr. Bernstein, and Council Members Clark, Lumbard, and Cooper:
My name is Dave Hanna, and I chair the Tustin Place HOA's Management Review & Development Committee.
As such, I am closely involved with our City -mandated garage retrofits project. I am here to request your
understanding and support, as Tustin Place resumes construction of the project.
Tustin Place needs and wants to finish the project as quickly as possible. But we are recovering from grievous
harm at the hands of our foriner Board of Directors, former association management company, and former
construction contractor. Our current HOA Board was installed in late -June 2018, and soon unearthed problems
with past management of the project and the HOA's finances. Among other things:
• Much of the approximately $1.1 -million Emergency Special Assessment imposed by the prior Board
had been collected and spent for the construction contractor's work on another Tustin Place project
having nothing to do with the City -mandated garage retrofits.
• Several other accounts were in arrears, including other construction contractors and basic services, but
the HOA Treasury was severely stressed, with Reserves depleted.
• The construction contractor was demanding payment on dubious billings, including advanced billings
for future work, and appeared to have been overpaid.
The construction contractor walked off the job on September 24, 2018 — leaving 24 of 38 garage buildings
accepted, 2 buildings finished but awaiting final inspection, 2 buildings partly finished and open to the elements,
and 10 garage buildings not started. The contractor refused meaningful discussion with the HOA, and recorded
mechanics liens against the HOA and individual homeowners. The contractor did not withdraw from the
project and retained the building permits and construction cards until end -January 2019 -- preventing
the HOA from getting a new contractor. At the end of a difficult process, the HOA Board selected a new
contractor in April 2019, and executed a Letter of Intent with that firm. The HOA is now nearing contract
execution with the new finn.
The Current Situation and What Can Be Done
The City has not yet issued permits, has levied citations with fines, and is suggesting schedule expectations that
we cannot meet. These actions would guarantee that the project can never be completed, and they could
bankrupt Tustin Place.
So, what can be done?
1. Please rescind the 12 fines already levied, and the threat of heavier fines starting May 20. Fines would
further deplete our scarce resources, thereby reducing funds for completing the project. Also, the HOA
does not deserve punishment for situations that were not our fault, and which we have been doing
everything possible to resolve.
2. Please issue the 12 building permits to our new contractor, with work to begin near the end of May 2019
and extensions allowed as needed. If the City prefers to do this on a building -by -building basis, then
please allow our construction manager and an HOA representative to set and revise the schedule as
determined by realistic considerations of the work involved and the HOA treasury's ability to pay. This
would require a willingness to accept possible "gaps" between successive garage buildings, depending
on HOA finances, and periodic updates to the City on progress and schedule.
3. Please provide your full support for completing the project in phases tied to the HOA Treasury's
ability to pay. We have no way to raise money, beyond what is still coming in from the Emergency
Special Assessment and from savings on our operating expenses. City refusal on this point would ensure
failure to complete the project and disaster for the HOA.
I emphasize the HOA's need to flexibly phase construction according to our Treasury's ability to pay.
This flexible phasing is necessary, because:
1. The HOA's depleted Treasury remains small and is only slowly recovering.
2. Much of the $1.1 -million Emergency Special Assessment has been collected, with the balance being
paid as installments through end -2019. Most of this money was spent by the prior HOA Board and past
association management Finn, often for work unrelated to the City -mandated garage retrofits.
3. The HOA has filed a substantial civil complaint, but a final judgement will likely occur too late to fund
completion of the City -mandated garage retrofits.
You might ask, "Why doesn't the HOA just raise more money, or get a loan?"
The answer to both questions is the same — it requires approval by at least 51 % of the homeowners.
• Per state law, levying a Special Assessment requires approval by 51 % of HOA homeowners.
• Lenders to HOAs require collateral in the form of either ample Reserves (which we lack) or a Special
Assessment (requiring 51% voter approval).
The election process for a Special Assessment is costly and lengthy. It entails mailed notifications, community
workshops, and a bonded election services firm. Since the HOA members already have had a $6,000 Special
Assessment, getting 51% of them to vote (let alone vote "yes") would take an historic miracle.
Moreover, even if the HOA membership did approve a special assessment, the money would come in too
slowly. Those HOA members who will be paying $6,000 Emergency Special Assessment installments (on top of
the regular $300 monthly assessment) through end -2019 would have to be allowed small monthly installments
for another Special Assessment.
since the HOA cannot rely upon a loan or new
from total monthly revenues less expenses. This means that the
constructed in phases controlled by the HOA Treasury's ability to pay.
Please help the Tustin Place HOA can get on with the job.
Thank you.
Dave Hanna, Chairperson
Management Review and Development Committee
Tustin Place Homeowners Association
,ssessment, we can only fiend the project
City -mandated garage retrofits must be