Private Loan From Sinking Fund - Part 1

This issue involving $26,525 of Squatters Run Association sinking funds is, in my belief, such a big issue that I have had to spread it over 2 articles. This being the first part.

At the October 2012 Squatters Run AGM, due to general dissatisfaction, an unanimous decision was made to not renew the Squatters Run Association Austar satellite TV service contract. Notice of this decision was written up in the AGM minutes and posted to all owners.

In May 2013 the Austar contract expired. Up to this point (more than 6 months after the AGM) there had not been a single complaint. After the service terminated one owner complained.

At the June 2013 open body corporate council meeting** suggestions were put forward for individual cabling from the body corporate satellite dish to individual apartments as two owners wished to connect to Foxtel. The only decisions made were stated in the minutes:
"Ray Temperley proposed that any applications to connect to Austar are put on hold for now. It was requested that Alpine Strata contact an installer to provide a quote for complete cabling into Squatters common areas so that individual owners can access from that point."

On July 16th 2013, I was disturbed by loud banging below my apartment. I found a tradesman hammering a chisel into the metal guttering below #24 balcony making a deafening racket that was shaking the building.

When I asked the tradesman who he was working for, he said the Adams in apartment #30.

When I asked him if he had body corporate permission for altering the common area, the owner of #23, Jackie Dunstone who was standing below him, chipped in saying "Ray and Lynne gave me permission" (referring to Ray Temperley who was on the body corporate council and his wife).

I immediately emailed Ray asking for a simple "Yes or No" as to whether he had authorised anyone to "... route wires around the outside of the building and alter the guttering and disturb my tenants and everyone else in stage 3 in PEAK SEASON..."

Ray's response was simply "No". I also rang the strata manager and was told they would investigate immediately and later told me Alpine Strata had issued an immediate halt to all work on the common area.

Despite the order from the strata manager to cease work, the following photos were taken 10 days later on July 26 showing completed work on the common area with multiple cables running through guttering and into the Dunstone's apartment #23.

It was only a matter of weeks later that I heard through a council member that the majority of the body corporate council were considering purchasing a device (called BluBox) that would potentially allow any apartment to receive signals from the satellite dish via the existing TV aerial cables. (Note that a BluBox does not provide a Foxtel service, just a means of getting the satellite signal to your apartment. A separate contract still had to be taken with Foxtel in order to view anything from a Foxtel box.)

No alternate technologies were seriously considered or investigated, including the alternate technologies that the Dunstones and Adams had provided at the June council meeting**.

There were no second or third quotes presented for the purchase and installation of the BluBox.

There was no consultation with the rest of the owners before any money was spent.

One of the 6 body corporate councillors resigned due to concern with the ethics of how the council were planning to use a very large sum of money from the Sinking Fund. This left a body corporate council of just 5 members who drew up a "loan" (yes, a loan from the sinking fund) for a BluBox with a repayment scheme that may end up never being repaid.

Then, without any consultation with any other owners, other than Jackie Dunstone, the body corporate went off and paid a 25% deposit on a BluBox. They had come up with a scheme to borrow $26,525 from the Sinking Fund to pay for the BluBox without consulting any of the other owners.

My understanding was, that at the time the decision was made, there were only 3 owners with a total of 5 apartments between them that were actually wanting this service. There are 32 apartments in Squatters Run.

The following chart shows how long it might take to repay the "loan" and how much may remain unpaid in the event that another technology usurped the BluBox:

Amounts will be higher if anyone pulls out before BluBox is repaid.
None of these costs take into account the loss of interest on association funds.

What sort of gamble were they taking with our entrusted monies? What was the chance of paying off all of the loan?

What's even more galling is that before all this started the body corporate decided at the June open council meeting** that there must be a huge increase in levies to build up the Sinking Fund. From the minutes of that meeting: "... Council decided that levies should be increased by 12% to allow for future sinking fund expenditure ...".

This huge impost on all owners was despite massive savings attained by switching all common area 50w halogen down-lights to 6w LEDs, by disconnecting an owner's property from the Squatters Run Association's house power and with further massive savings about to be attained with a drop of $16,744 in the cost of insurance and a saving of almost $12,000 in the discontinuation of the unwanted Austar service.

Finally on September 14th, more than 3 weeks after having paid the deposit for the BluBox and only a couple of weeks before the AGM, the body corporate council sent an email to all owners telling them what they had done.

At the October 2013 AGM I asked council why they had not canvassed all owners. Councillor Joanne Pastega replied that no one would respond to canvassing. In my opinion, this just reinforces the fact that the council knew in advance that a majority of owners would not approve of this spending.

If the majority of apartments had wanted the BluBox option, I would have gratefully accepted that as part of the democratic process. The BluBox could then have been purchased as would any item for the Squatters Run Association, without a "loan" and that would have been the end of it, but no...

This is not the end of it - not by a long way - it gets worse - now read part 2.