Thursday, May 24, 2012

Laguna Woods Village's WWTW


The World Wide Tangled Web of Laguna Woods Village

Dear Friends, 

This is an email exchange I felt you should see in its entirety. Nowhere was it identified as CONFIDENTIAL therefore I am comfortable in sharing it, word for word. 
Most importantly, it introduces the subject of an optional form of governance many feel we should look at, and if you start reading the messages from the bottom up, it will also shed some light on the behavior of  Mike Straziuso to a fellow board member.     

Just scroll down to the line  OKAY THIS IS WHERE YOU START READING ...Then work your way up through the interchange.  This is one way we can shed some light on what the minority members of  THIRD BOARD have to deal with when the TV cameras are not operational as well as some of the discussions that have been going on among various other Board members in the community who are deeply concerned over the direction into which we have been led. 

Carol S  

From: " carol moore" <>
To: "Mike Straziuso" <>
Cc: "Lloyd Foster" <>,
         "Lynne Dvorak" <>,
        "Don Tibbetts" <>,
         "maxine mc intosh" <>,
         "patrick murphy" <>,
         "Bevan Strom" <>,
        "Ray Gros" <>,
        "Ken Hammer" <>,
        "pat feeney" <>,
        "Marv Rosenhaft" <>,
        "ron beldner" <>,
        "Jack Bassler" <>,
         "Barbara Howard" <>,
         "Barbara Copley" <>,
        "Mary Stone" <>,
        "Paul Vogel" <>,
         "Charles Hammer" <>,
        "Won Ho Chang" <>,
         "Denise Welch" <>,
         "isabel muennichow" <>,
         "Rae  Tso" <>,
        "dick palmer" <>,
        "Lucy Shimon" <>,
         "Sy  Wellikson" <>,
         "Kathryn freshley" <>,
        "John Paulus" <>,
         "Erwin Levy" <>,
         "Douglas Rook" <>,
         "Carol Skydell" <>,
         "Connie" <>,
         "Weiming Tao" <>,
        "Ted Shapiro" <>,
         "LeLeng Isaacs" <>,
         "Jerard Werner" <>,
        "Jim Matson" <>,
        "Kay Livingston" <>
Subject: Re: Self Governance
Date: Wed, 23 May 2012 10:30:01 -0700
X-Mailer: Microsoft Outlook Express 6.00.2900.5931
X-PCToolsMIME: Updated by PC Tools Mime Parser
X-SmarterMail-TotalSpamWeight: 0 (Authenticated)


Dear Mike, 
I agree with your request that I should provide a platform for discussion regarding self-governance. This email is an attempt to provide an introduction to that concept. Self-Governance has been talked about for several years. It involves simply keeping our current staff but having the general manager report only to this community instead of the current arrangement that requires him to report to us as well as to PCM-CA and also to Associa.  You likely know, the community is facing many challenges and a considerable number of those challenges are due to our aging structures. Costs are increasing dramatically as we address maintenance issues such as wide spread dry-rot. We're just beginning the budgeting process and already can see that Third Mutual may well face a $30 a month increase in our assessments. To avoid that, we mustlook for ways to reduce Third Mutual costs and in order to not diminish our maintenance program, we must look elsewhere for savings. One obvious area is administrative costs. The community can save about $400,000 per year by changing to a self-governance program. That would mean that money now paid to PCM-CA/Associa could instead be used to "beef-up" our engineering staff. All other positions would remain. That would mean very little change in the current governance. 
Let's look at some of the FAQ's for such a change: 
1. What happens if we become employers, aren't we better off letting PCM/Associa handle the employment issue?WE ALREADY ARE EMPLOYERS.. We have letters stating our current obligations and that includes any pension benefit shortfalls.We already have a Human Resources Department. That issue was long-ago decided. 
2. What if the boards don't have the expertise to manage this community?THE BOARDS HAVE BEEN MAKING THE DECISIONS from the start. Ultimate decisions have always been made by boards; votes are taken for all major expenditures.  Instead of the current three which are the (1) community, (2)PCM-CA, and (3) Associa, a general manager and his employees who are in the employ of this community would have only one master. 
What about the employees, we love the employees? That doesn't have to change. Only PCM-CA and Associa would be eliminated. All employees who choose to remain would continue to be employed in their current positions and would maintain their current status. 
4. Wouldn't employees lose their retirements or their benefits?No, we are currently obligated and make contributions to the employee retirement programs which include 401-Ks as well as Union contractual commitments. We already provide all benefits and pay for them as well as workman's compensation. 
5. What about the Shared Cost Concept
The Shared Cost Concept would not be affected by this change. 
6. Isn't this too big a change to make without outside study and advice?
This seems like a big change, and we need to move forward with the advice of GRF counsel, but we have the history and experience of the other Leisure Worlds to use as our guide; e.g. Walnut Creek, Maryland, and Leisure World Arizona. Two of those we have already visited ourselves.
7. Won't we lose important support by not being attached to PCM-CA and Associa?No, we already operate independently and our community is entirely different than most of their clients. Few communities, other than the other Leisure Worlds such as those located in Walnut Creek, Maryland, etc.  have employees and are of this size. In addition, participation in industry associations such as CAI would continue. Furthermore, most, if not all of our legal firms offer legislative-change information as a part of their service. 
Kathryn Freshley, Lucy Shimon and I traveled to Walnut Creek to see firsthand how the former Leisure World Walnut Creek functions (on our own dime, I must add) We spent several days in meetings with their staff and various board members and toured their facility.  While we did not agree with some of their programs, such as the transfer fee, we did observe that self-governance works quite well. We still believe strong reserves are a more sound policy rather than the reliance on transfer fees for the number of sales can affect the amount of money available. Because we have reserves, our community was able to build the Village Greens at a much lower cost than previous other facilities; we did not have to take out a loan and we were able to take advantage of much lower construction costs due to economic conditions. All of this was done with the reserves which are created by our contribution to them in our monthly assessment. 
Lloyd Foster and Bevan Strom also made the same junket and came away with their own observations which I believe are similar to ours. 
Since it's inception, the community has undergone many changes. Just a few of those many changes which have occurred in recent years include the following: 
First, thanks  to the former Third Mutual board that had the foresight to establish the reserve study and initiate the 30-year plan, we have a reserve program in place. This program is critical for sustaining our community. 
When I first joined the board, the reserves were barely $5 million, now they are approaching $20 million. One of the changes that also helped make the reserve increase possible was elimination of the wasteful earthquake insurance policy. The policy was costing us more than $50,000 per month ($600,000 per year) while providing very little coverage. Instead of paying the premium to the insurance company we voted to put the money into our own bank account and are self-funding earthquake protection. At the time, there was quite an outcry from our former general manager as well as some board members. In fact, the day we voted to make the change, an attorney was present at the order of the then general manager and we were advised we could have possible bank problems as loans could be called in if we were to vote to eliminate the policy (Third Mutual had no loans then or now).  There were other threats, but by then the other directors realized that we could pay ourselves that money and ultimately those directors voted with us. Now, even PCM acknowledges the change was sensible and proper; and of course not one of those threats materialized. We know how important reserves are as we face the increasing costs of aging structures. We now have money available to help defray catastrophic losses as well as to help insure appropriate maintenance of our buildings. 
A few years ago Stan Feldstein urged us to use the Small Claims Court to recoup some of our debt. There was resistance, but the board voted to test the program. The program has grown and plays a significant part today in our debt recovery program and it's all managed in-house by our employees while being overseen by the Third board. 
Three years ago, when we learned we needed to reduce our water consumption the board realized we could "kill two birds with one stone" and we moved to accelerate a front-load washer change out.  At the recent M&C budget meeting we were told not only did we save water, we reduced maintenance. That change is now paying off as we are in the last year of that program and as a result of removing the old machines, maintenance costs are down considerably. Even though our water costs have increased, they are considerably lower than they would have been had we not reduced water consumption by changing the old machines. 
Thanks to the persistence of Jim Matson, we have our new Village Greens. This action was not only opposed by the former general manager, but also some GRF and mutual directors. That general manager prevented staff from working with Jim to help initiate the process. Fortunately, with Jim's leadership and support the community prevailed, construction occurred, and we have a building the community is proud of. It's a top draw for the Docent Tours. 
Due to the observation of Margaret Klein, we changed our investment policy. We now reinvest the interest in our Black Rock account at a substantially higher earnings rate.  
Thanks to boards in the past that had the foresight, the community has adjusted to change. When we spend money properly i.e that is when boards vote for long-term change, we're investing and we plan for the future. 
I would be happy to discuss this issue more fully with any individual or group that is interested in learning more about the subject.  
Just as businesses that don't change are no longer in business, we too must change to successfully meet the challenges or face the consequences. 
Carol Moore


----- Original Message -----
Sent: Tuesday, May 22, 2012 8:12 PM
Subject: secret meeting
Never argue with a fool, it's like arguing with a pig; it frustrates you and it annoys the pig.


As the President of the Third Mutual Board, a position you yourself held last year, I am making a formal request for any information you may have regarding the so-called “secret meeting” and your participation in this event. I am doing this to protect the board against any potential claims of “interference with contractual relations” or a violation of fiduciary duties; namely the duty of loyalty.

I am extremely sorry that you chose to enter the discussion (see above) that was initiated by Lucy Shimon about my communication with Lloyd. You just don’t understand that it is not all about you and your agenda. It appears that you cannot state your case without innuendo, snarky comments and allegedly manufactured legal opinions of dubious veracity and value.

If you have evidence that PCM has violated the law, our trust and their fiduciary duties, present it in the proper forum.

If you have a plan for self-management, place it on the table where it can be examined in a businesslike manner.

If you have a problem with another person, state your case, back it with evidence and discuss it like an adult.

Might I suggest that you keep your snarky comments to yourself, lest you embarrass yourself further and further insult the intelligence of those who are forced to read your diatribes.

Might I further suggest that you do not openly insult invited guests to our Board Meetings using subtle digs or showing complete disinterest in the proceedings by filing your nails, reading emails on your ipad or engaging in other unbecoming behaviors unworthy of a board member.

If you have a position, please state it clearly; separating the points so that each can be fully considered and debated.

Leave the playground behavior where it belongs ...


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