WHERE IS THE CAPITAL BUDGET Edit page

Submitted by a resident

Part 1-WHERE IS THE CAPITAL BUDGET?

I have been an Estates ll resident for years. I have a finance and budgeting background and I am speaking up because things are blatantly askew with our community.

After studying the budget and reading the monthly newsletters, it is apparent that our board is lacking in financial skills. It is my hope that we do not have a deceptive board and that the board just needs help with budgeting and finance. 

As you read my thoughts below, please ask yourselves:

Should we accept this conduct from the Board who we have entrusted with our finances and the management and well-being of our Community?

As several residents pointed out at last year’s budget meeting, the 2026 budget again does not contain a Capital Budget.  The Operating Budget presented only includes the revenues from common charges and operating expenses for the year. A capital budget would show major capital expenditures (the clubhouse renovation,  major roof repairs, road and driveway replacements) to be spent over the coming year.

Consider that it took the board two years to renovate only one floor of the clubhouse that wound up  costing more than $600,000 and double the amount the board told the community what it would cost.  (The board still hasn’t told the community the final number of how much they have spent on the clubhouse.-appox three quarters of one million dollars)

For a least a  year, the board has known they will be spending hundreds of thousands of dollars on the clubhouse basement in 2026, yet the board has failed to prepare a capital budget, nor conducted a capital project study.

 Are residents to believe the board hasn’t looked into or obtained architectural, designer  or construction estimates when they know they will be spending roughly one million dollars on the clubhouse lower level?

The President, the Vice-president, the Clubhouse Renovation Chairwoman, who have been on the board for at least 3-4 years, are well aware that the Village of North Hills is requiring the basement gets renovated and brought up  to modern code standards. In addition to the basement renovation, the board is aware that our aging homes and infrastructure will require hundreds of thousands of dollars in capital expenditures, yet, no our board has failed to prepare a capital budget or capital project study.

The board’s recent cover letter (12/9/25) to the 2026 Operating Budget states:

“Capital Project Budgets will be determined by the scope of each project and will be funded by Capital Contribution Fees and Assessments. Estates II is now over 40 years old, has benefitted from several recent projects. As our community approaches its  fifth decade, other replacements will be necessary.”  

 Their own statement proves:

1- Without a Capital Budget the board has a blank check to spend any amount of money on any capital project and can assess residents at any time and for any amount of money. 

2- The board’s planning for capital expenditures is irresponsible by planning to pay for major projects “on-the-fly” and void of any budget guidelines or based on a capital projects study.

3- The board is admitting that there will be major capital expenditures during the year with no mention to residents how much we will be assessed in 2026.

4- The board is not budgeting for the capital contribution revenues from home sales. (This number can easily be obtained by multiplying the capital contribution fee by the average number of home sales per year).  

5- In a well-managed condominium, the board presents a capital budget by providing a detailed financial plan to all unit owners and holds open meetings for discussion and community input. The capital budget presentations are meant to show board transparency, using plain language, and supported by a Capital Project Study.  Unfortunately, our board does not follow generally accepted budgeting procedures and fails to properly analyze and plan for capital expenditures while failing to be truthful and transparent to residents.

6- In the end, the board’s poor financial skills and failure to properly plan for capital projects, costs the residents, tens if not hundreds of thousands of dollars in money ill spent. 

Part II- The 2026 Operating Budget

Community meetings before an operating budget is passed are crucial for transparency, engagement, and alignment, allowing residents to understand financial plans, voice priorities for services, build trust, and ensure the final budget truly reflects the community's values and expectations before funds are committed or common charges are increased. Unfortunately, the Estates II board passed the 2026 Operating Budget in secrecy and will not openly have any dialog with residents for 6 months.

Last week the board sent out the 2026 Operating Budget with a cover letter dated Dec. 9, 2025. 

For those not familiar with the term, an Operating Budget is a financial guideline that normally holds management accountable for the daily operating expenses they pay during the year to keep the condo running.  Examples include, paying the landscaper, the repair crew, electricity at the clubhouse, repairs such as painting the sign posts, insurance, and a host of other ordinary expenses.  

These expenses are paid from the monthly common charges that the board collects from the 178 residents of Estates II.  Roughly speaking, the board collects well over $2 million from residents during the year.

Based on the 2026 Operating Budget and the bullet points below… 

Should we accept this conduct from the Board who we have entrusted with our finances and the management and well-being of our Community?

-The 2026 budget includes a $100 per month increase in common charges for each resident. The board claims “inflation” as a major factor for the increase.   

Why are our common charges going up by 10.5% when the current rate of inflation is 2.75% and estimates for 2026 are expected to remain below 3%?

-The board states that operating expenses are going up by $55 per month per household. So, why is our monthly common charges going up by $100 per unit? 

-The board states that the extra $45 per month residents are being charged will result in a cash surplus that will increase our cash reserves. Cash reserves are normally allocated for on a Capital Budget and are not an Operating Budget.  The board has not prepared or presented a Capital Budget where such reserves would be allocated.  

-The 2026 Operating Budget covers the yearly period of 

Nov. 1, 2025-Oct. 31, 2026. 

Any questions regarding the Operating Budget must be addressed to Daniella, the TCM Property Manager.  

The board is scheduling a meeting with the community on April 16, 2016-nearly 6 months after this Operating Budget has been presented to the community.   

Having a community meeting 6 months after the board secretly passed their Operating Budget falls way short of any board transparency and does not give residents any opportunity to question or scrutinize any expenses presented by the board. 

Therefore, again,  I ask my fellow residents:

Should we accept this conduct from the Board who we have entrusted with our finances and the management and well-being of our Community?

Over-Inflated Budget and Mystery Expense Categories Drive Maintenance Costs Up: Dubious Line Items, Like Clubhouse Repairs During Closure For Renovation Raise Questions. Complete Lack of Cost-Cutting Efforts.  Where Does the Unspent Budgeted Money Go? Is Anyone Surprised the New Treasure Lives in California For 9 Months?

The board presents an artificially inflated budget in December, then delays residents the opportunity to discuss it face-to-face until the April community meeting. This tactic appears to be a deliberate attempt to conceal the true financial situation and limit residents' input. 

It is illogical to allocate the same budgeted amounts in 2026 for line items that were lower than their 2025 budgets. In condominium financial statements, when the actual expenses for a line item are less than the budgeted amount, it indicates a favorable variance. Tracking these variances is essential for monitoring actual spending against budgets. This information should help the board identify overspending, but this is not happening at Estates II. Instead, Estates II SEEMS to be overspending because the board over budgets. 

It appears that the condo is not spending the full budgeted amounts, yet the board uses inflated budgets to justify maintenance increases.

The budget should serve as a planning tool, while the financial statements should accurately reflect what truly occurred. If actual expenses are less than the budgeted amounts, the following year's budget should be adjusted downward accordingly. Unfortunately, this is not happening. There are no notes explaining variances or clarifying where unspent funds are allocated, which is critical information for residents. Many line items show expenses significantly lower than the budgeted amounts—so where is the money going?  Why can't the board meet with Residents in January to discuss the budget? 

Directing residents to contact Daniella with questions about the budget, so she can pass them along to the board, is exactly what it appears to be. The board is hiding behind Daniella, leaving residents without answers until April. Using Daniella as a shield constitutes gross mismanagement and a failure to fulfill their fiduciary responsibilities.