Welcome Co-OwnersWelcome Co-OwnersOur Agenda for This EveningOur Agenda for This Evening

• General Review of 2004 & 2005 to dateGeneral Review of 2004 & 2005 to date• What “Your Board” has accomplished… plus & What “Your Board” has accomplished… plus &

minusminus• Infrastructure Review Current & Future Infrastructure Review Current & Future

(2005/2006) Upgrades (2005/2006) Upgrades • FinancialFinancial Review Review• Financial Needs Going ForwardFinancial Needs Going Forward• Normal Board BusinessNormal Board Business

St. Clair Board of DirectorsSt. Clair Board of DirectorsStewardship 2004-2005Stewardship 2004-2005

“The Good, The Bad & The Ugly“The Good, The Bad & The Ugly

• “Issues & Disappointments” Low owner participation & interest at Board meetings Discontent of co-owners & vandalism Efforts to improve communications did not work out Decorations- widely varying preferences not resolved Prime Site Inc. failures required a change that was disruptive HVAC system replacements ’99-’2000 incorrectly designed ‘2000 Water proofing project incorrectly designed & executed Tractebel electric supplier would not renew contract

Piping floods caused extensive damage Aging of PVC piping generating expensive remediation

St. Clair Board of DirectorsStewardship 2004-2005

“The Good, The Bad & The Ugly

• The Good– “Significant” tax refunds, reduction in delinquencies,

new mechanical contractor, and improved insurance coverage

– New garage doors & controls

– “New Mgt. Co” Association Management Inc. (AMI)

– Sewer Repairs completed well under early estimates

– Building water proofing project started

– Reserve Study completed; posted on Web site & at desk

St. Clair Board of DirectorsStewardship 2004-2005

“The Good, The Bad & The Ugly

– New control systems for potable hot water– Security system upgraded– Telephone system cost savings implemented – New auditor – More accurate/efficient at lower cost– Professional project approval process implemented – Web site for dissemination of information both

internal & external use– Wi-Fi system on 1st floor

St. Clair Board of DirectorsStewardship 2004-2005

“The Good, The Bad & The Ugly

– Owner surveys for information & feedback– Job descriptions now written for employees– Qualification process for all vendors/contractors – Elevator maintenance contract negotiated at lower cost– Grounds maintenance contract negotiated at lower cost – Draft of Rules & Regulation update ready for review by

owners– Created systems for retaining records that are user

friendly

Infrastructure What You Don’t Want to Know &

Hear…But Have To !!

“ “Our Building is 25 Years Old” and has Our Building is 25 Years Old” and has been poorly maintained !!! been poorly maintained !!!

“ “We” control the future & that’s all that We” control the future & that’s all that matters !!! matters !!!

““Get involved in Your investment” Get involved in Your investment”

Infrastructure What You Don’t Want to Know & Hear…

But Have To !!• Building Envelope : water proofing, glass, roof

current & future• HVAC systems: building & individual units of owners• Integrated Digital control systems• PVC piping is near end of it’s projected life • Domestic hot water systems were not controlled

properly• Security system upgrades• NO more “Shade Tree” contractors allowed• You “Must” read the Reserve Study

Financial Review and “Needs”including Investment Implications

May 23, 2005

St. Clair Income & Expense

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Income Expense Long/Short

Income 637,591 691,794 678,696 745,389

Expense 682,565 688,958 695,960 760,389

Long/Short (44974) 2836 (17264) (15000)

2002 2003 2,004 2005 Budget

Sources of 2005 Operating Budget IncreaseActual Budget Change2004, $ 2005, $ $ Comment

676,694$ 745,389$ 68,695 From 14.2% Mo. Maint. Increase

General / Administative 117,061 121,744$ 4,683

Payroll 246,207 272,903$ 26,696 Inflationary increases + FTM

Contracts 61,722 64,050$ 2,328

Com. Elem. Maint. 113,501 91,000$ (22,501) Lower Plumbing/Leak repairs

Utilities 157,469 210,692$ 53,223 Electricity and gas rates

Total Expense 695,960$ 760,389$ 64,429 83% from utility rates17% from other categories above

Surplus/ (Deficit) ($19,266) ($15,000)

Income

St. Clair 2005 Budget Comparison with 10 AMI Hi-Rises

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St. Clair 10 High Rises

St. Clair 16.01% 35.89% 8.42% 11.97% 27.71%

10 High Rises 21.25% 41.45% 7.50% 9.55% 21.09%

G&A Payroll Contracts Maintenance Utilities

Owner Votes on Cost Saving Options

Percent Favorable (Yes)

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AdjustTemp.Target

HVACUpgrade

New Owner3 Mo. Fee

Add Interestto Delinq.

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Houston High Rise Maintenance Fees -2004

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Houston High Rises

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Sales Value Comparison

Galleria Area High Rises

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2004 Assessment2004 Assessment

Invested In $KNorth and South Tower Waterproofing 115Sewer Replacement and Repair 100Elevator Life Safety Upgrade 45Replace garage gates 21Security Camera Upgrade 10Potable water system rework 10Total 301

Owner Votes on Capital Improvements

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Our Capital Needs for 2005/6Our Capital Needs for 2005/6

Financing Option ProposalFinancing Option Proposal

• $300,000 Capital assessment$300,000 Capital assessment paid in two paid in two installments (August 1, 2005 + Nov.1, 2005)installments (August 1, 2005 + Nov.1, 2005)• Amounts to $2.38/square foot Amounts to $2.38/square foot

• $200,000 bank loan$200,000 bank loan with a 5 year payback with a 5 year payback “Directed”“Directed” to upgrading floor halls 2-13 to upgrading floor halls 2-13• Annual payments of about $47,500 funded from Annual payments of about $47,500 funded from

existing Monthly maintenance fees. existing Monthly maintenance fees. • Allows us to send $24,500 to our Reserve FundAllows us to send $24,500 to our Reserve Fund

ConsiderationsConsiderations

• Other Maintenance Needs should be met from the Other Maintenance Needs should be met from the allocation from current Maintenance feesallocation from current Maintenance fees

• Better Insurance will help avoid major costs from Better Insurance will help avoid major costs from flooding failuresflooding failures

• Reserve Study gives us a sound base to build onReserve Study gives us a sound base to build on• But….Reserve Study based on sound equipment But….Reserve Study based on sound equipment

design and maintenance design and maintenance • Always some risk of major failures in the future Always some risk of major failures in the future

requiring emergency fundingrequiring emergency funding

A Look Forward -A Look Forward -Reserve Fund GrowthReserve Fund Growth

YearPortion from

Maint. Fees, $Special

Assessment, $

Recommended Total

Assessments, $Expenditu

resReserve Balance

2004 33,750 300,000 333,750 31,000 391,5002005 48,000 500,000 548,000 520,000 419,5002006 24,500 0 24,500 340,950 103,0492007 24,500 0 24,500 50,150 77,3992008 24,500 0 24,500 23,203 78,6962009 24,500 0 24,500 31,875 71,3212010 60,000 0 60,000 184,481 -53,1602011 72,000 350,400 422,400 221,992 147,2482012 72,000 0 72,000 42,563 176,685

And On 72,000 0 72,000 +

Projected ReservesProjected Reserves

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2004 2005 2006 2007 2008 2009 2010 2011 2012

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Total to Reserves Expended Reserve Balance

So…..So…..• Building infrastructure knowledge has improved Building infrastructure knowledge has improved

and better maintenance will be a significant step and better maintenance will be a significant step forward but…..forward but…..

• We need added funds to put us on a sound We need added funds to put us on a sound infrastructure & financial footing and …..infrastructure & financial footing and …..

• We have the opportunity “NOW” to significantly We have the opportunity “NOW” to significantly upgrade the hallways by taking a loanupgrade the hallways by taking a loan

That’s the PictureThat’s the Picture

It is up to all of us to make it happen It is up to all of us to make it happen for “OUR” home and our investment!!for “OUR” home and our investment!!

WE urge you to vote FOR the funds WE urge you to vote FOR the funds the Board is recommending the Board is recommending