Legal fees help drive up assessments

7-Sep-11 – Unit owners at Marina City have learned exactly how much a sour economy will cost them. The condo board is proposing a three percent increase in assessments next year. Although income is up slightly, many expenses – particularly legal expenses – are up as well.

Total income in 2012 is projected to be $4,605,798, up about three percent from estimated income for this year. Investment income is down and costs are going up of payroll, utilities, and contracted services such as security. A big drop is expected in laundry room income. Marina Towers Condominium Association was counting on $200,000 in laundry income in 2011 but is now only looking for $150,000 this year and next.

The biggest increase was in legal expenses related to litigation against unit owners in foreclosure and behind on assessments. The budget was for $35,000 in 2011 but it is estimated that $47,272 will actually be spent.

The attorney for the condo association explained the increase in a letter to unit owners that accompanied the budget. Daniel Meyer says a “marked increase in legal expenses” is due in part to an increase in litigation resulting from foreclosures. As of August 11, Meyer says there are 19 mortgage foreclosure cases against unit owners at Marina City, a number he says has been as high as 24 in the past two years. He estimates each case costs the association about $2,960.

Meyer (left) is a partner at O’Hagan Spencer, a law firm located across the river from Marina City at One East Wacker Drive.

One forcible entry case in particular, involving four units, in which the association got an order of possession for the purpose of renting out the units, cost the association $40,000 in legal fees.

In March, evicting a tenant “who posed a serious threat to the lives and safety of residents and guests” cost the association nearly $25,000. “The eviction required the intervention of the court system as well as the Chicago Police Department,” explained Meyer, “and while the eviction proceedings were pending the association engaged additional security to ensure the safety of residents and guests.”

Nearly $105,000 was spent, according to Meyer, defending three complaints and five counterclaims filed by two unit owners involved in foreclosure and forcible entry cases.

Advice of budget committee not taken

A former MTCA treasurer is critical of the proposed budget. Mark Ulaszek says at a meeting on August 18 of the condo board’s budget committee, board members voted unanimously to not raise assessments at all.

He believes the association’s financial health has been hurt by going over-budget and spending about $270,000 on new laundry and fitness rooms, spending $125,000 on a “model floor” in the east tower, and spending $60,398 to replace carpeting on the concourse level where several commercial tenants are located. He says it is “an area that the condo association neither owns or controls.”

In addition to an increase in assessments, unit owners at Marina City would pay eight percent more for satellite television service. (Left) Ulaszek as MTCA treasurer in 2003.

Total operating income for 2012 is projected to be $821,106, up from $768,187 estimated for 2011. The budget, sent to unit owners on August 22, will be adopted at a special meeting on September 22.