Monday, March 19, 2012: About 70 people attended the Co-op Annual Meeting this evening at the Clubhouse. Ron Covington, president, presided. A lot of subjects were covered including sewers, laundry and tree trimming, but the most eye-popping news had to do with finances.
It seems that the advisors who analyzed the deal which resulted in resident ownership had failed to figure out that taxes had to be paid on unsold shares. Suddenly an unexpected additional expense of about $270,000 per year threw a major monkey wrench into the budget.
The group barely rebounded from that revelation when the Co-op members learned that no mortgage principal was charged this year, but in 2013, principal payments of $50,000-$60,000 per month would have to be paid on top of interest. This means that an additional $600,000-$720,000 in principal would be needed in 2013 on top of current expenses.
When someone in the audience asked how these 2013 bills would be paid, the president said, “We’re not real sure where it’s coming from.” The treasurer said that surplus revenues, greater operating efficiencies, increased rental fees and sales of shares would be utilized, but to some in the audience, those items didn’t seem to add up to enough income. At that point, it became apparent that the situation was worrisome.
Surprisingly, only a couple of people in the audience expressed concern about these revelations, and no one on the dais betrayed any anxiety either.
The Co-op is OK this year, but it remains to be seen as to how these big bills might be paid starting in 2013. It looks like the motto of the Co-op should become, “Show me the money!”