BRATTLEBORO >> A local condominium association approved the payment of an additional assessment to pull itself from what one board member called "the brink of disaster" after a 63-46 vote.
"Our bylaws mandate all-in insurance coverage, which does cover some non-common areas such as kitchen cabinets, appliances, etc.," Morningside Commons Association board member Jamie Eckley stated in a letter, referring to sections of a the condo complex that belong to each owner. "The insurance has done what it has supposed to and has paid for all the damages including cabinets and appliances when necessary."
A lawyer is working on getting insurance money from damage that was not completely covered by Vermont Mutual. The association could be on the hook for the repairs.
Two other incidents involved water damage in units. If those claims were made, affected areas of the complex owned by either the association or individual residents would be covered by the insurance. But the insurance rates likely would increase.
"Board after board, year after year" failed to maintain a reserve, according to Eckley. The association's bylaws state the fund should cover "the total of all deductible amounts under all insurance policies maintained by the association" and there should be an appropriate amount of money to replace elements owned by the entire condo complex "with a limited useful life, determined with reference to the estimated useful life and replacement cost of each item" as determined by the board.
Owners now will be paying the price.
"Our dues started out at $48/$52 and stayed there for a few years. That enabled the developer to sell units that appeared more affordable than they would have if the dues were a more realistic $150 at that time," Eckley wrote. "If early on, boards paid attention to this bylaw, they would have looked at roofs with a life expectancy of 20 years and put one-twentieth of the roof replacement cost every year into reserves so that when the roofs needed replacing the cash would be sitting in a fat reserve account earning interest."
He said the same example could be applied to paving, sidewalks, common plumbing, siding, electrical, the pool, tennis courts and tree maintenance.
The board of directors recommended the extra $1,235 assessment and a plan to submit no more claims for the time being. A $205,000 figure will be split between 166 unit owners. The fee can be paid over three monthly payments or in one lump sum.
"We've gotten hundreds of e-mails from you," Sandy Pagniucci, president of the board, told attendees gathered at the American Legion on Monday night. "Without your input, we don't get anywhere. We don't want this to feel like an adversarial relationship. We are all owners on the board. We have the same investment that you do, to one degree or another. We do not want to see things go down. We want to see what's best for everybody."
Treasurer Dick DeGray, who is also a member of the Brattleboro Select Board, said the situation was "very stressful," while speaking in defense of changing the bylaw regarding Monday's vote. Members of the association were allowed to participate if they paid their dues as of the meeting. Normally, they have to be current on payments for 10 days.
Resident Cam Goodwin wondered if the board was "asking for Peter to pay Paul." She said she could not afford to pay the additional assessment while making repairs to her own unit.
"The insurance companies just don't want to deal with it," she said. "And as far as I'm considered, anyone who doesn't have their own homeowner's insurance, that's just sheer folly."
Lewis Barnes, agent at Kapiloff Insurance, spoke to the issue.
"You folks are in a terrible position. I can't make this pretty," he said, noting that the association has been entering claims from time to time. "Some of them have come in and they're very significant, something in the range of $200,000 plus for one of them."
His group goes to brokers who represent up to 50 or 60 insurance companies. He said those companies are for-profit organizations. When bringing a potential risk to them, they look at previous claims.
"Frequency breeds severity" is a saying in the insurance industry. Barnes said actuaries "believe this heart and soul."
"Small items matter a great deal, disproportionately in my experience," he said, suggesting in general, people pay for smaller damage. "If the insurance company, whatever insurance company you're with, has claim after claim and it creates a claim record, which you folks already have unfortunately and it's a very considerable record, the number of companies that would be interested in even talking with us is very tiny."
To avoid having the insurance premium continue to jump, Barnes recommended the association submit little to no claims for two or three years. He worried the association could end up becoming uninsurable.
Looking at renewing the insurance policy, Barnes did not believe the premium would be higher than last year.
"If we start tossing claims into that," he said, "it will change for the worse."
Changing association bylaws so that unit owners pay for claims through their own insurance "would be enormously helpful," said Barnes.
A motion was approved from the floor to create a committee to "investigate and study a legal approach" for handling damage claims via the bylaws. That vote was non-binding.
Call Chris Mays at 802-254-2311, ext. 273.