Cities Management Helps Relieve Community of Financial Distress Caused by Previous Mismanagement

Introduction

Cities Management began managing this community in 2024.

Challenge

Upon onboarding with Cities Management, the association faced several significant challenges. The previous management had withheld crucial financial documents, leaving the board without a clear understanding of their fiduciary responsibilities or financial transparency. The association was struggling with overdue bills, delayed maintenance, and compliance issues, including fire and life safety equipment that had not been inspected since 2012.

Additionally, the board lacked experience in effectively managing the HOA, and trust in management was low. There were serious concerns about potential misconduct, and the association was financially strained, with a total special assessment of $26,000 for the entire association in effect.

Resolution

Cities Management took immediate steps to address these issues. It restored trust with the board by fostering open and transparent communication, allowing them full access to financial records and guiding them through educational resources to improve their HOA management skills. Past-due vendor payments were brought current, and a delinquency policy was implemented to manage homeowner arrears. Compliance was re-established, with fire extinguishers and alarms tested for the first time since 2012, and the boiler passed inspection.

Maintenance was a top priority. While carpet cleaning was deferred due to the worn condition of the flooring, Cities Management established plans for replacement in the coming years. Tuckpointing and roof replacement bids were initiated, and smaller roof repairs successfully halted ongoing water damage, allowing the management team to address past neglect. Security was improved by replacing the front door with a steel security door, enhancing safety and pest resistance. Additionally, the management team worked with the Minnesota Utility Commission to prevent a gas shutoff from Xcel in January 2024 and resolved outstanding utility bills within two months.

Moving Forward

Looking forward, the association is on a clear path to recovery and improvement. The board, now more knowledgeable and confident, has approved a 2025 budget that not only covers operational costs but is also working to adequately fund reserves according to the reserve study. Major upcoming projects include a new roof, tuckpointing, new carpeting, interior wall repairs and repainting, a new security camera system, and new windows, all made possible by improved funding.

With continued collaboration, the next five years will focus on restoring the association to its desired state, addressing deferred maintenance, and ensuring long-term financial stability.