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Volume 15, Issue 7
July 2017

NEWS HOME

Condo repair loan shakes Cedar Mill residents to their foundation
By Barbara Guardino, freelance writer and Westlake Village resident, with Osiris Parikh, student intern

Residents of Westlake Village Condominiums in Cedar Hills voted in June to take out a $6.4 million association loan for extensive exterior renovations, but many felt they had been railroaded into this decision.

Westlake Village entrance on Old Barnes Road near Saltzman
Westlake Village entrance on Old Barnes Road near Saltzman

The meeting, which lasted over three hours, addressed concerns that the unexpected project would force people out of their homes. Many of the residents are elderly and/or on fixed incomes, and testified that they cannot afford their estimated share of $25,000 to $39,000 per unit. These loans will be repaid monthly through the homeowners association, which is the driving force behind the renovation project. The Management Group, or TMG, is already collecting an average of $400 per month from each of Westlake Village’s 200 units. The loan, spread over 15 years, will increase monthly HOA fees to an average of $700.

The Board has signed a letter of intent with Charter Construction based on “price, experience, customer service, and warranty.” Repairs are scheduled to begin in September and to take 10 months to complete. It was unclear if the board got competitive bids for the work.

One of several buildings that were renovated under a previous board. Consultants said the repairs were inadequate.
One of several buildings that were renovated under a previous board. Consultants said the repairs were inadequate.

Board members and project principles insisted to a packed house of WLV residents that the remodeling must be done, regardless of the consequences. A panel consisting of HOA attorney Angie Bagby, Board President Tony DuVoix, and a consultant from Morrison Hershfield, a global engineering consulting firm, fielded questions from an impassioned crowd of homeowners and residents. They asked what would happen if the majority of owners refused to pay the additional HOA fees, or if they defaulted on their share of the loan. Bagby responded that the properties in default would be subject to foreclosure. If a significant number of residents refused to pay, the bank could take possession of the entire property.

According to the panel, there was no independent study for the project; instead, they cited a number of composite studies over the past eight years that resulted in the estimated cost of $6.4 million. Only one bank – yet to be revealed – has expressed interest in financing the project, at an interest rate above 6%.

Condo owners were only notified the week before about the project and the meeting. The board made most of its decisions about this project in private executive sessions, and were hard-pressed to explain when asked, “why the secrecy?”

The 300-unit complex surrounds a lake formed from  Cedar Mill Creek.
The 300-unit complex surrounds a lake formed from  Cedar Mill Creek.

The panel argued that piecemeal repair work that has been done over the past few years is not sufficient to stay ahead of the issues of mold and decay in the walls. The project will entail tearing down the outside single walls, and replacing them with an outside-inside “envelope” system. The existing system cannot be modified because it has outlived its life expectancy and has to be replaced in order to bring it the buildings up to code.

In addition, according to a 12-page letter sent to residents, all units will receive new windows and doors, and other repairs meant to make the structures comply with building codes. The letter continues, “If the loan is not approved, we still have to do the repair work. The board has the power to levy a special assessment without a vote of the owners.”

Water damage is evident on some exteriors, and many buildings need paint, but consultants said exterior walls need to be replaced.
Water damage is evident on some exteriors, and many buildings need paint, but consultants said exterior walls need to be replaced.

It was this statement that raised the hackles of many of the residents. The panel explained that, if the vote failed, homeowners would still be on the hook for lump sums of money—laid out in the letter by unit—by September. One elderly woman pleaded that she cannot come up with that kind of money, that this project is ruining her retirement and her life. She asked DuVoix to respond to her, and he said he did not have an answer for her dilemma, but that the job has to be done.

Homeowners are considering firing the board or taking legal action against the HOA. Ironically, the homeowners are already paying Bagby to represent them.

Firing the board would mean replacing it with a new set of volunteers who would then be faced with the same undeniable need for a repair plan. Somber homeowners lined up to vote, after the panel denied several requests to table the issue. Seventy owners voted, with 63.38% in favor of the loan and 23.71% against. Other owners present did not vote.

Former Board President Marilyn Rae said in an email interview, “When I was on the board we tried to make improvements that were manageable and affordable. Our plan was to do five buildings a year in a four-year period. Over time they have stopped maintaining the property and prices have only gone up. It appears that this board is taking on the entire community at once and at a very high-cost. With this new proposal they will be undoing what we did four years ago on five of the building at a cost of hundreds of thousands of dollars being wasted.

”If their proposal goes through the property will definitely look fantastic. Regardless of how they do it, it's going to cost money."

Some homeowners are wondering if this represents a plan to force owners out of their homes so an investor can acquire the property.

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