MVF 2011 Board Election Endorsements

Pamela Ward Bort

Background Statement: Senior Paralegal, Corporate and Public Finance, with an international law firm.

Campaign Statements: After three years on the Foundation Board, I have a much clearer sense of what the Village problems are than I did in 2008. Many of those problems have been substantially addressed and some remain to be addressed. Our financial situation has improved and improves more each year, but nevertheless requires continued Board oversight, especially in the context of the overall poor economy. The Village faces both old and new issues arising from the County Master Plan and transportation plans, while working to formulate its own Vision of the future.

Biggest Problem the Village is facing today: I prefer to think in terms of “challenges” to the Village. And, in my opinion, the biggest challenge facing the Village lies in making itself more attractive and enjoyable to both its current residents and its prospective residents, e.g., updating its amenities, retaining its “neighborly, small town” atmosphere, and working with its residents to improve the appearance and value of their property, in the context of sustainability and fiscal stability.

Endorsement: Since her election to the MVF Board in 2008 Ms. Bort has been effective as a Board and Executive Committee member. During her 3 years on the board, she successfully advocated for:

1. Financial reform emphasizing reporting transparency, clarity and accuracy and full funding of reserves;
2. Reform of the Architectural Review Board; and
3. Change in the MVF Board’s governing culture to a proactive policy role, directing and holding the professional staff accountable for implementation and results.

Ms. Bort has made substantial contributions to the Village’s progress over the past 3 years with her positive influence and visionary leadership. She receives the Montgomery Village Observer’s enthusiastic endorsement and should be re-elected.

Dennis J. Clark

Background Statement: Retired Research Engineer and Strategic Planner for the United States Navy. For 40 years I was a research engineer at the David Taylor Model basin developing advanced ships. In my last 15 years I was the Director of Strategic Planning.

Campaign Statements: While the Village is still an attractive place to live, it has fallen behind in the services and amenities it offers relative to other planned communities. As a member of the Board of Directors, I would like to be part of the effort to update the services the Village offers while keeping assessments as low as possible.

Biggest Problem the Village is facing today: In comparison to Columbia, Reston and Thomas Farm Village facilities are not keeping up. Columbia’s is always adding new facilities, new ideas, increasing the scope of activities. We should be thinking about aging in place, what we are doing to make sure people can age in place and taking care of the social and physical and emotional needs. The issue becomes can we afford it? How are other communities doing it? We should examine how we are financing our facilities.

Endorsement: Dennis’ background, work experience, long term leadership involvement with Village and community based organizations; along with his clear understanding of the Village’s past, present and future direction indicates he is a highly qualified candidate and should be elected.

Edna Miller

Background Statement: I bring a lifetime of volunteer work from non-profit community-based board of directors with experience of negotiating practical solutions for difficult problems, developed funding solutions with a limited budget, worked with staff to make difficult decisions in maintenance and restoration, researched and developed creative and practical ideas to challenging problems.

Campaign Statements: If elected, I will encourage more transparency and accountability by the Board and the Staff. I will support the Board’s effort to increasing security with better pedestrian and bike safety plans, calming the growing volume of traffic on our roads, affirming accountability in the budget process, monitoring Montgomery County’s Town Sector Zoning meetings to enable our Board to achieve a positive outcome, preserving historic structures such as the gazebos united by design, revise the 2030 vision by a review every three years to address relevant changes in law, economic times and other community developments. I will advocate for preservation of our historic elements, beautiful lakes, open landscapes, varied recreational facilities, and improving the quality of life surrounded by this natural setting as well as replace the practice of trinket capital improvements with insightful economic development.

Biggest Problem the Village is facing today: I feel that we need to work together to try and resolve our differences. There are certain things that we cannot control and I really hope that we can work together to achieve them.

Endorsement: Edna, while a relative newcomer to the Village, is an effective veteran and leader in community, non-profit and Common Interest Realty community governance. If elected, she would be the only Board member from a Village Condominium community and no doubt would be an effective addition to the Board. She deserves serious consideration.

Don O’Neill

Background Statement: I have a Bachelor of Science Degree in Mathematics from Dickinson College in Carlisle, Pa. Following a 27-year career with IBM’s Federal Systems Division, I spent three years with Carnegie Mellon’s Software Engineering Institute and I continue to serve as a visiting scientist with Carnegie Mellon.

Campaign Statements: Montgomery Village faces challenges from the County. As an experienced community activist, I have fought effectively for Montgomery Village in editorials to the Village News and Gazette and in the boardrooms of the County Council and in the successful opposition to WMMS 2 on Centerway Park. I will urge the MVF Board to commit to citizen-centric goals and adopt the means needed to achieve outcomes beneficial to all MV residents. I would like to play a leading role in representing Montgomery Village to the County and state on issues critical to the Village and its residents. I promise to work towards more effective oversight of the MVF Board of Directors.

Biggest Problem the Village is facing today: The biggest problem is the future status the Village’s signature amenity, the Montgomery Village golf course. Fortunately we’re going to be hearing a lot about it in February.

Endorsement: Don has an effective record of advocating his views and would be a presentable spokesperson for the Village to outside organizations or as a consultant. However, these qualities are normally counterproductive to the deliberations of a volunteer board of directors. The MVF board does not need a member “to work towards more effective oversight of the MVF Board of Directors.” It needs more effective oversight of the staff operations, programs and finances. Mr. O’Neill’s presence on the Foundation’s Board of Directors would most likely create more conflict than cooperation and collaboration and therefore, he is not endorsed for election to the MVF Board of Directors.

Linc Perley

Background Statement: Graduate with a degree in Electrical Engineering from the University of Buffalo. Retired: Senior Manager-Information Technology. MVF Board Member since 2008, 1992-1999, President Whetstone Homes Corporation 2004 to present, previously served on Whetstone board in 1980’s and Patton Ridge Board in 1970’s.

Campaign Statements: I will work to maintain tight cost controls, and seek alternate sources of income to offset increasing costs. We must minimize, if not eliminate, future assessment increases. We need to modernize to compete with newer communities. I will work to enhance the perception of the “Village.” We have a wonderful community and we need to get the word out. These are important issues in improving our property values. I oppose intrusions on our
community and our environment by state and local governments such as M-83, road widening and re-zoning that negatively impacts Montgomery Village and our residents.

Biggest Problem the Village is facing today: One of the biggest problems we have is cost. Rising cost is everywhere. Each year Whetstone Homes Corporation tries to make sure reserve funds are adequate for future use and it is a real challenge. Cost and reducing the cost in the Foundation are very important.

Endorsement: Seeking alternate funding has not been successful in the past and is not a viable funding option now. Minimizing and eliminating assessment increases instead of investing in renewal, restoration and repair of our aging infrastructure is a formula for disaster. The poor perception of the “Village” is based on the failures of past boards to maintain, enhance and preserve properly the Village’s common property, facilities and amenities. The Village’s present condition is not a public relations problem that can be addressed by “getting the word out.” Mr. Perley represents the failures of the past and not the solutions of the future and should not be returned to the MVF Board of Directors.

Pete Young

Background Statement: I am currently Chief Information Officer for Rosetta Stone and previously was CIO for MedImmune. I have many years experience with strategic planning, budgeting and forecasting, capital investments, facilities planning and management of large programs and projects.

Campaign Statements: The primary reason I am seeking election to the MVF Board is to be address the strategic challenges that we face as we define the vision and needs for the Village over the next 40 to 50 years. We are currently at a point where the original vision for the Village has been realized, our 50 - year Town Sector Zoning is expiring, and our role in the County Master Plan update will be defined. I want to ensure that the Village stays relevant to both current residents and potential residents, the greater county over time, and ensure that we are able to thrive as the area changes.

Biggest Problem the Village is facing today: The biggest problem we face is relevance. Montgomery Village developed in a very different era and our competitive position within every adjacent community around us is very different than it use to be and we have a lot more competition. We are falling behind because of the obsolescence of our amenity base, the aging of our infrastructure and the lack of redevelopment. It’s important to have a vision of what we want to be and then work towards that. Upgrading our amenities, encouraging development in the Village and readdressing our zoning configuration, all of this needs to be on the table. Our position has changed dramatically in relation to all the neighboring developments around us and that’s really the biggest issue we confront.

Endorsement: Pete Young’s candidacy has introduced to the Montgomery Village community a person of exceptional background, experience and leadership qualities. Willing, able and motivated to serve, he has succinctly diagnosed the community’s chronic illnesses, has outlined a blueprint for the future, and articulated the critical urgency for visionary change and the
opportunity for action in this moment in time. Pete Young receives the Montgomery Village Observer’s highest and unconditional endorsement. He should be elected to the MVF Board.

Elections - MVF Ballot Change for 2011 Board Election a Bad Idea

Consolidated ballot option for multi-family apartments In his January 20th memo to the MVF Board of Directors Dave Humpton proposed that each of the 5 owners of Apartment Communities submit 1715 individual ballots equal to ½ a vote each for the upcoming MVF 2011 board election instead of using one consolidated ballot for all units in each apartment community worth one vote per unit. Dave explained by “removing the consolidated ballot option and make individual option available the ‘secrecy” of the multi family vote would be preserved and the ‘blame’ could not be attributed to any individual”.

Humpton’s recommendation has little to do with “secrecy”, “privacy”, and “anonymity of-the-voter” but a deliberate attempt to discourage prevent and make it difficult for Apartment Community owners to exercise their voting rights in MVF board elections.

Secrecy To protect the privacy of individual voters in Common Ownership Communities Section 10B-17 (c) Absentee ballots, of the County Code requires voting unsigned ballots to be received in a signed sealed envelope, bearing the identification of the dwelling unit and any proportional voting on the outside of the envelope. When this is done, as it is in all Annual Board of Directors elections in the Village including the MVF annual board election, those designated to tabulate the election results are unaware of the who voted and for whom. Their responsibility is to validate the number of votes each candidate received, which candidates where elected and the term of each winning candidate.

The privacy of the 2010 MVF election results was not compromised by the use of consolidated ballots but as a result the March 10 2010 “Election Results and Statistical Summary Report” included in the March 2010 Executive Committee report stating “Cider Mill was the only Multi-Family that opted to vote, and they choose to vote with a block vote. The other Multi-Family dwellings declined ”.

Consolidated Ballots Section 10B-17(a) Election date and procedure, of the County Code states “The governing body of the association must notify all members of the association procedures and the date of the election not less than 10 nor more than 90 days before an election of the governing body. Article SIXTH of the Articles of Incorporation states members shall be entitled to (a) Two (2) votes for each Private Dwelling Unit, and One (1) for each Multifamily Rental Unit in which they hold the interests. The County Code requires that all property owners be notified and provide absentee ballots with election notifications that includes the number of votes on the outside of the ballot envelope and on the ballot. The MVF Articles of Incorporation Homes Corporation and Condominium private property owners’ ballots would have 2 votes and the Apartment owners votes equal to “One vote for each Multi family Rental unit in which they hold interests”.

The County Code and MVF Articles of Incorporation requires that all property owners be notified and provided with absentee ballots with election notification that includes the number of votes on the outside of the ballot envelope and on the ballot. Homes Corporation and Condominium owners’ ballots are tabulated as 2 votes each and Apartment owners’ ballot should be equal to “One vote for each Multi-Family rental unit”.

This precludes multi one-half (½) vote ballots for apartment owners, one-vote ballots for private property owners, Apartment owners “opting out” of voting, or specifically requested consolidated ballot as an alternate ballot. Absentee ballots indicating the total number allowed votes must be sent to all property owners with the annual election notification, whether for private property or apartment owners.

Action The MVF Board of Directors should reject the proposed MVF staff resolution Consolidate ballot option for multi-family apartment owners dated January 20, 2011. The staff should be instructed to redraft the MVF Board of Directors voting procedures to confirm to Section 10B-17 of the Montgomery County Code and Article SIXTH of the Montgomery Village Foundation Articles of Incorporation including a standard Absentee voting ballot and mailing envelope for Homes Corporation, Condominium and Apartment property owners voting which indicates the authorized number of votes for each ballot for use for the 2011 Board of Directors election.

Recent MVF Board Elections In past elections these Apartment communities seldom participated in the MVF Board elections. Only twice have apartment community owners voted in an MVF Board election, in 2008 when Cider Mill and one other Apartment owner cast a consolidated ballot and in 2010 when Cider Mill voted.

2008 Election Ten candidates filed for 3 positions and engaged in a spirited campaign that divided first time reform candidates against long time board incumbents and community leaders. This was the first election where candidates actively solicited Apartment owners’ votes and formed slates of candidates. Five (5) candidates, including the 3 incumbents had previous MVF board experience.

First time candidates Jim Deye, Pamela Bort and Mark Firley campaigned on a reform ticket that called for restoring MVF financial health, fully funding of reserves, a more transparent and routine review of the monthly financial statements; a reinvigorated and expanded communications with Village residents; streamlining MVF website and electronic communications, enhancing the Foundation’s imagine as well as addressing safety concerns.

Whetstone’s Homes Corporation President and former MVF board member joined with incumbents Toni Negro and Scott Frohman formed an alliance that supported continuing traditional approach to MVF governance and finances.

The Results Jim Deye (1,436-18.1%) and Pam Bort (1,478-14.8%) lead the field as Linc Perley (1208-11.9%) edged out Mark Firley (1120-11.0%). for the final position. The results signaled for the second year in a row homeowners’ dissatisfaction with the board leadership as incumbents Jerry Donegan (766-7.6%) and Scott Frohman (742-7.3%) ran 8th and 9th.
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Cider Mill with its 864 votes to cast for three (3) candidates and one other unidentified Apartment community voted. However, However, Cider Mill’s ballot was one of four (4) eligible voters declared invalid for having a delinquency of over $25 whose ballot was not counted. Cider Mill’s delinquency was disputed late charges from 1990 that was never resolved. If Cider Mill’s votes were counted it would determined the outcome of the election except for Jim Deye who would have won with or without Cider Mill’s support. One other Apartment community that cast a ballot, (Breckenridge Apartments (178), Sunrise (147) or Walker House (211)), and voted for Jim Deye, Pam Bort and Linc Perley providing Perley his 72 vote margin over Firley.

2010 Election There were only 4 candidates for the 3 vacancies for the 2010 board election new comer Scott Dyer, a member of the East Village Homes Corporation employed by JP Morgan and 3 incumbents Mark Firley, Scott Johnson and Jim King.

The Foundation mailed 10,642 ballots to Home Corporations and Condominium private dwelling units plus a consolidated ballot from Cider Mill. There were 1,716 ballots or 16.1 percent returned representing 12,834 potential votes, 40 ballots were declared invalid. There were 11,778 actual votes tabulated with Mark Firley, Scott Dyer and Scott Johnson elected to 3-year terms. Interesting enough Cider Mills’ 2538 votes (864 x 3) representing 21.5% total tabulated votes (11,778) cast for the 3 incumbents, did not affect the outcome of the election.

Future relationship with Apartment owners The Apartment owners pay close to $400,000 a year in MVF assessments, are self contained and sufficient communities and impose a minimum financial or service burden on the Foundation. Village apartment resident are citizens of Montgomery Village support the Village economy. The Apartment owners have major investments in the Village and should be recognized as equal stakeholders, with on going relationships and collaboration with the MVF staff and board rather than be marginalized or feared because their votes could influence an election.

Elections - Deye, Bort and Perley Winners!

The Results

Reform candidates Jim Deye and Pam Bort lead a field of ten (10) as Whetstone Homes Corporation President Linc Perley edged out Mark Firley for the final position for a three (3) year term on the Montgomery Village Foundation’s Board of Directors.

The results signaled for the second year in a row homeowners’ dissatisfaction with the board leadership as incumbents Jerry Donegan and Scott Frohman ran 8^th and 9^th only besting first time candidate Steward Merritt who was not a factor in the campaign.

Candidates		Votes	% of Vote
Deye, Jim	1	1,836	18.1%
Bort, Pamela	2	1,478	14.6%
Perley, Linc	3	1,208	11.9%
Firley, Mark	4	1,120	11.0%
Musante, Marie T	5	938	9.3%
Negro, Toni	6	864	8.5%
Greenspan, Steven	7	840	8.3%
Donegan, Jerry*	8	766	7.6%
Frohman, Scott*	9	742	7.3%
Merritts, Stewart	10	346	3.4%
Total		10,138	100.0%
Bort – Deye – Firley		4,434	43.7%
Perley-Negro-Frohman		2,814	27.8%
Donegan – Frohman*		1,508	14.9%
Traditionees		5,358	52.9%
Reformits		4,780	47.1%
Unaffiliated		2,890	28.5%
Previous board experience		4518	44.6%
*incumbents

The final outcome and margin of victory may well have been determined by which of the 1700 block vote ballots from the four (4) Apartment communities were voted or counted. - Breckenridge Apartments (178), Cider Mill (864), Sunrise (147) and Walker House (211)

In past elections these communities seldom participated in the MVF Board elections. The year Cider Mill with its 864 votes to cast for three (3) candidates and one other unidentified Apartment community voted. However, the ballot of any eligible voter delinquent $25 or more is disqualified. According the MVF records Cider Mill’s was one of four (4) eligible voters in arrear of more than $25 whose ballots were not opened or counted.

If Cider Mill’s votes were counted it would determined the outcome of the election except for Jim Deye who would have won with or without Cider Mill’s support and last place candidate Stewart Merritts. It is the Observer’s speculation that the other Apartment community that voted, probably Walker House which voted for Deye, Bort and Perley electing Linc Perley instead of Mark Firley.

The Winners

James Deye is a 32 year Village resident, PhD hospital administrator, and a member of the MVF Audit Committee. He campaigned for full examination of MVF’s fiscal infrastructure, a reinvigorated and expanded communications with Village residents, a more transparent and routine review of the monthly finances, creating a MVF budget and finance committee to monitor and advise the board on financial matters, streamlining and MVF website and electronic communications.

Pamela Bort for the past 28 years has been a senior paralegal with experience in corporate law, banking and public finance and is a member of the South Village Board of Directors. Her campaign focused on restoring MVF financial health, improving communications and relations between the MVF Board and residents, enhancing the Foundation’s imagine, addressing safety concerns, balanced budgeting and adequate fully funded reserves.

Lincoln Perley is a retired Information Technology executive and returns to the Foundation’s Board after eight when he served as MVF President and Vice President. He campaigned on expending the current President’s Council influence, organizing the Village against M-83’s negative impact, safeguarding MVF finances and lobby elected officials in the Village’s behalf.

The New Alignments

With the election of two (2) reform candidates and the defeat of four (4) candidates who have served on the MVF board in the recent past, the control of the board has shifted to a 6 to 3 voting majority that favors fundamental reform and change.

Current members Bob Hydorn, Jim King, Katherine Gray and Scott Johnson will join new members Pam Bort and Jim Deye as the new voting majority. Keith Silliman and Dick Wright will team up with Linc Perley to oppose any change.

A word of caution to the new voting majority

The March 2007 MVF board election the 3 Reformits candidates received 81% of the votes cast and supported Bob Hydorn for President winning with a temporary and fragile 5 to 4 voting majority.

Despite the good intentions and valiant efforts by Bob Hydorn and last year new members over the last year the little was accomplished because Reformits action plan and program was not well planned or articulated. The Traditionees still controlled the finances, the staff and the agenda while opposing and derailing those few initiatives that came before the board for vote.

As Nancy Pelosi and Harry Reed have learned a voting majority is not sufficient unless you can control the decision making, governing and communication processes; have the loyalty, support and compliance of the staffing organization and are synchronized and in concert with the committee organizations.

The new committed voting majority has only a total of five (5) years experience on the MVF Board of Directors while the minority has close to forty (40) years.

And let us not forget 2008 is the year the sleeping giant Apartment owners especially Cider Mill with their 1700 votes can determine the outcome of any election if the MVF leadership doesn’t behave and not take them for granted.

But what do I know. I’m only the 800 pound gorilla in the Village.

Budget - It's the 2008 Budget Stupid!

The 2008 annual fiscal year $9,000,000 free spending budget is a flawed document and should have been rejected and re-examine before accepting it as the Foundation’s operational and financial plan for this year.

MVF’s tradition of arbitrarily setting unsubstantiated multi year future spending entitlements and then bully and beg Homes Corporation and Condominium representatives to bestow their blind faith-based blessing and approval defies any reasonable or commonly accepted budgeting principles or practices.

When establishing the annual assessments for Common Interest Real Estate Associations (CIRA) such as the Montgomery Village Foundation, Boards of Directors:

1. First, determine the expenses necessary to meet the obligations and requirements to preserve, enhance and maintain the association’s assets, facilities and property; deliver required services and set aside reserve funds for current and future use to maintain all assets in a like-new condition.
2. Next, make realistic estimates of non-assessment income for the budget year.
3. Then, subtract the non-assessment income estimates from the expense requirements to arrive at the amounts necessary to be funded by assessments.
4. Finally, they mail the proposed budget to the membership and at a public meeting discuss the merits of the proposed budget and funding proposals.

The MVF power structure has rejected such a silly concept and believes that:

1. First, arbitrarily set unsubstantiated future spending entitlements known as “assessment ceilings limits” for a 5 year period;
2. Next, without discussing or presenting the details of non-assessment income, expenses or reserve funding line item categories, engage in a six month public relations campaign in The Village News to convince Homes Corporations and Condominium elected representatives to bestow the future “ceiling limits,” a blind faith-based blessing and approval.

The campaign rationale resembles a desperate consumer pleading with his or her various credit card holders for a substantial credit limit increase or Congress’s annual vote to raise our nation’s debt limit ceiling.

3. At public budget information meetings and meetings of MVF representatives to discuss the proposed assessment ceiling limits, treat those who express an opposing opinion rudely and ignore all questions, suggestions and comments.

Questions and concerns raised by those in attendance at the September 25, 2007 budget information meeting and the October 18, 2007 meeting of MVF representatives were dismissed as not germane to the vote to raise the assessment ceiling. The case to reject and re-examine the 2008 budget as presented was made by North Village Homes Corporation in its North Village View column in the November 2, 2007 edition of The Village News.

The 2008 budget information provided was very limited, whereby no expenditures data was provided for fiscal years 2006 and 2007 in order to generate a more accurate comparison with the requested fiscal year 2008 budget increase. In addition, there was no breakdown of capital projects provided, including no strategic plan for future year guidance on capital projects.

Unfortunately, the North Village’s View on page 15 of The Village News, the dismissal of its comments and the concerns addressed at public budget meetings and in the letters printed in The Gazette and The Village News were answered with two front page articles by staff writer, Jaime Ridgley, in the same November 2, 2007 edition.

Headlined “MVF Board Passes 2008 Budget,” Ridgley writes “Board President Robert Hydorn commented that he was not completely comfortable with the budget, but he would vote for it. Board members Kathy (Katherine) Gray and Scott Johnson voted against the adoption of the budget, but it passed with five Board members in favor. Board members Jim King and Neville Levi were absent from the meeting.”

The outcome could have been different if King and Levi, whose previous vote had supported financial reform, weren’t missing and comforted Hydorn enough to vote against the budget.

The lead front page “In the News” feature broadcasted “Reps Vote on $3.14 Assessment Ceiling Increase to Cover 2008” and announced “Newly appointed EVP Dave Humpton is pleased that the representatives voted to cover the 2008 budget with the assessment ceiling increase.

“He and the MVF Board will focus on the 2009 budget in December and January to map out the potential budget increases and define the assessment ceiling needs for the next 5 years. Then, from January to March, residents will receive more information about the need to raise the assessment ceiling further, with a vote on another increase tentatively scheduled for the end of March.

“The Foundation must have the ceiling increase decided before 2009 guidelines are set in May. Two information sessions will take place for residents before the next assessment ceiling vote.”

Was this an accurate account by Ridgley of what happened at the October 18, 2007 Board meeting? Did Dave Humpton and the Board endorse at that meeting a plan to embark on another ill-advised assessment ceiling campaign, ignore the expressed concerns of so many about the inadequacy of the 2008 budget before “mapping out potential budget increases and assessment ceiling needs for the next 5 years?”

Or was this just MVF Consultant Lois Campbell in her capacity as MFV Communications Czar still very much in control?

Elections - Campaign 2008 - 7 Questions to Ask the Candidates!

Campaign 2008- 7 Unanswered Questions for the MVF Board Candidates

For two (2) hours on Wednesday evening, January 23, 2008, nine (9) of the eleven (11) announced candidates for the 3 open positions to the Montgomery Village Foundation Board of Directors made their statements of candidacy and answered questions from the 20 or so Village residents and homeowners who braved the cold weather to attend the Candidates’ Forum at the Whetstone Community Center.

The candidates’ written statements as published in the January 18, 2008 edition of The Village News and the responses given by those candidates in attendance at the Forum were extremely informative. However, up to this point there are still a number of core issues facing the Foundation Board that haven’t been adequately and completely addressed by each candidate.

The Observer invites each candidate to log onto http://www.s24c.com/mvo13.htm and give their answers to the following 7 unanswered questions.

1-Financial Reporting. The MVF monthly financial statements lack detail and only display total income and expenses. Missing are detailed comparative reports of expenses and income categories, individual line items or fund types.

There is no factual basis for the MVF narrative analysis and conclusions that are printed in The Village News and accompany the financial statements provided MVF board members in advance of monthly MVF board meetings.

This results in a distorted and misleading presentation of revenue, expenses, assets, liabilities and equity accounts.

Limited selected financial information is only communicated to create an illusion of favorable financial conditions and excellent staff performance as well as to justify past and current board decisions and actions

Question 1: Do you believe there is transparency in the MVF financial reporting? Do the monthly financial reports reflect the true financial condition of the Foundation? What is your assessment of the financial health of the Foundation? If you are elected to the Board, what would you change and what would you maintain about the Foundation’s finances and financial reporting?

2-The Audit. From 1999 to 2005, there were over 30 acts of theft and embezzlement of funds entrusted to the Foundation. There were nine (9) annual fiscal year audits (1999 to 2007) and several special examinations of the records incidental to the embezzlement conducted by the auditing firm of Regardie, Brooks & Lewis costing $385,000 including $65,300 paid in 2007. RB&L was only able to uncover one (1) of these acts.

The Village News has continually quoted the annual fiscal year audit report as evidence of the Foundation’s alleged favorable financial condition and as validation of its corrupted accounting and financial reporting practices.

Question 2: Do you believe the money paid RB&L was well spent? Are they best qualified firm to perform the 2007 fiscal year audit? If the MVF Board was to vote on a motion to hire a qualified auditing firm other than Regardie, Brooks and Lewis to conduct the 2007 fiscal year audit, would you support such a motion? If not, why not?

3-Lake Whetstone. For decades there has been general deterioration of the Village’s parks, streams, and lakes. Lake Whetstone Park and surrounding parkland, turf, ground cover, landscaping and shore line maintained by the Foundation has fallen into disrepair causing a migration of eroded materials into the lake and connected streams, lakes and ponds.

The duty to maintain and fund the lake and surrounding property elements including shore line maintenance and restoration is divided between the Foundation and Whetstone Homes Corporation. The maintenance of the lake (shoreline to shoreline) will be maintained and funded by the Montgomery County’s storm water management program.

According to published reports in The Gazette, “The Foundation received a $25,000 state grant to refurbish the boathouse and south dock at Lake Whetstone. They money was for early steps only and to study the scope of what is possible and how much it would cost”.

The Reserve Analysis report of July 7, 2007 by Advanced Reserve Solutions identified 4 critical Lake Whetstone capital items:

#	Description	Remaining Life	Current Cost
1	Check dams	0	$24,280
2	Dock Restoration	0	$268,050
3	Lake Dredging	3	$134,730
4	Lake Bank Stabilization	0	$29,000
Total			$457,010

Question 3: What is your assessment of the condition of the park, lake and stream property elements encompassed by Lake Whetstone? What remedies if any do you support? Do you support or oppose the restoration of the dock? Should the Foundation request an additional state grant to pay for the restoration? If not, should the $25,000 be returned to the state?

4-The 2008 Budget. North Village Homes Corporation stated in its North Village View column in the November 2, 2007 edition of The Village News. “The 2008 budget information provided was very limited, whereby no expenditures data was provided for fiscal years 2006 and 2007 in order to generate a more accurate comparison with the requested fiscal year 2008 budget increase. In addition, there was no breakdown of capital projects provided, including no strategic plan for future year guidance on capital projects. “

The lead front page story in the November 2, 2007 edition of The Village News headlined “Reps Vote on $3.14 Assessment Ceiling Increase to Cover 2008” announced “Newly appointed EVP Dave Humpton is pleased that the representatives voted to cover the 2008 budget with the assessment ceiling increase.

“He and the MVF Board will focus on the 2009 budget in December and January to map out the potential budget increases and define the assessment ceiling needs for the next 5 years. Then, from January to March, residents will receive more information about the need to raise the assessment ceiling further, with a vote on another increase tentatively scheduled for the end of March.

“The Foundation must have the ceiling increase decided before 2009 guidelines are set in May. Two information sessions will take place for residents before the next assessment ceiling vote.”

Question 4: Do you believe the 2008 budget was adequately and properly prepared or should it be re-examined and restructured to include a strategic plan for future guidance on capital projects? Or do you believe we should focus on the 2009 budget to map out the potential budget increases and define the assessment ceiling for the next 5 years?

5-Community Management Fund and Maintenance Activity Fund Deficits. Fixed Price Contract Income for both management and maintenance has been in decline for the last decade. The Foundation has not been able to compete on price and service which has created accumulated deficits in the Community Management and Maintenance Activity Funds.

There has been a history of losses and deficits over the years in the Community Management (CMF) and the Maintenance Activity (MAF) funds. These deficits were funded using money designated for capital reserves while neglecting maintenance and landscaping services to the public areas.

Question 5: What is your plan for ensuring the Community Management and Maintenance Activity funds do not generate deficits in 2008? What is your proposal to make up for the accumulated deficits in these funds? What fundamental changes should be made to the Community Management and Public Works and Landscaping departments so they can cost-effectively compete on price and service in the market place? Considering its high cost and the growing deficits in the Maintenance Activity fund, do you favor eliminating the landscaping and grounds service fixed price contracts as a service?

6-Capital Reserve Funding. The Foundation’s initial reserve funding policy mandates that the annual contribution to the reserve fund be from two sources: One, “Reserve Contributions from Assessments” (equal to the annual depreciation cost) and two, “Reserve Interest” (Interest on reserve investments) However, through a series of policy decisions and accounting - financial reporting practices, recommended by the Audit Committee, understood by members of the Board and validated by the auditors, only a small fraction of assessment and interest income budget for capital reserves has been credited as income to the Reserve Fund.

Assessments and interest income designated for capital reserve have funded deficits in other fund types.

Question 6: Do you approve of the present Foundation policies and accounting-bookkeeping –audit practices that divert assessment income designated for reserve funds to hidden Fixed Assets accounts? In your opinion what are the critical capital infrastructure needs of the Foundation and what would be your plan to address these needs?

7-The Village News. The Village News is not trusted by many as a source of accurate, fair, useful and critical information about the Village including the Foundation, the various community groups, Homes Corporations, Condominiums, rental and business communities.

There is a feeling that The Village News’s editorial, reporting and communication policies are geared to self promotion over effective communication. Its news and features, more than likely, attempt to create an illusion of favorable property conditions, superior service performance by the Foundation’s staff and contractors or to justify past and current board decisions and actions.

Standard features and summary information of Homes Corporations such as annual meeting and approved annual budgets only report on or include Homes Corporations which are managed by the Foundation.

Major Village-wide news events and happenings, especially bad news, are reported first and much more accurately by The Gazette.

The Village News’s advertising revenue is declining and does not cover printing, staff and overhead costs.

Question 7: What is your opinion of The Village News? What editorial, reporting and communication policies and practices, if any, would you change if you are elected to the Board? Would you be in favor of converting to an improved Village News version published monthly plus occasional special editions such as an election or summer activity edition?

The Observer invites each candidate to log onto http://www.s24c.com/mvo13.htm and give your answers to the following 7 unanswered questions.

Financial Report - The truth about The August 3, 2007 MVF Financial Reports - It's not good news!

The Village News Has Arrived!

Lois Campbell in the Village News “Money Matters” feature (October 12^th edition) reports in her signature euphemistic “Lois speak” the latest MVF financial good news. Rivaling Alan Greenspan’s secret language of opaque and convoluted dialect Lois writes that “Through eight months, the performance is essentially on track; …Expenses are over budget by $247,000…however, the expenses profile for the remaining months of the year has some uncertainties”.

Follow is the Observer’s restatement of MVF financial statements through August 31, 2007. Although both reports used the exact same income-expense general ledger accounts and cumulative line item amounts, the Observer’s rendition leads to a much different conclusion about the state of MVF’s financial health.

The following are the differences in the 2 versions.

Overhead Expense Allocation The overhead expenses allocated the various accounting funds equals between 20 to 23 % of the total expenses. For this year the budgeted allocation cost is $1,508,605 and $1,804,561 proposed for 2008. These overhead costs are not allocated prior to the preparation of the monthly financial statements.

Consequently, the MVF financial statements do not include detailed comparative reports of expenses and income categories, individual line items or fund types. The Observer has made the cost allocation and has reported by operational groups within each fund type.

Unrecognized Income “Assessment Collection Fees” and “Fixed Price & ala Carte for Administrative Facility” are income accounts which are offsetting income and expenses transactions not recognized as revenue in the annual audits.

When these budget transactions are included as income in any budget draft or financial statements, the total income is inflated and misrepresented. The Observer has excluded “Assessment Collection Fees” and “Fixed Price & ala Carte for Administrative Facility” from its version explaining the $498,787 variation in income between the 2 versions.

Summary Reporting The “Income/Expense Summary” and “Balance Sheet as of August 31 2007” as reported on page 12 of the current Village News only displays total income ($5,345,936) and expenses ($5,300,098).

The Observer’s Income - Expenses comparison report presents a detailed comparative of expenses and income categories and fund types and comparison of the MVF balance sheet information with the December 31, 2006 audit balance sheet.

Financial Analysis Narrative There is no factual basis for the MVF narrative analysis and conclusions that are printed in the Village News and the financial statements provided MVF board members in advance of monthly MVF board meetings.

The “Money Matters” columns only publish a total summary “Income/ Expense” and “Balance Sheet” and does not include a detail of sub categories, fund types and income-expenses categories for the periods being compared and analyzed. However, the oral and published narrative and explanations refers to and compares unrevealed financial data.

Consequently, you either accept the staff’s analysis and conclusions on blind faith or assume what is being presented is fiction, fantasy or fraud.

Income and Expenses

Expenses exceed revenue by $495,271. The Community Management (CMF) ($74,117) and Maintenance Activity Fund (MAF) ($306,377) deficits account for 76.8% of the operating deficit through August 2007. The 2007 year end projections indicate a possible MVF 2007 fiscal year deficit of $1,224,637, CMF a $76,306 deficit and the MAF a $1, 3281,175 deficit.

Revenue

Projected income for 2007 fiscal year is $960,222 lower than the approved 2007 budget. “Assessment Collection Fees” ($132,000), “Disclosure Income” ($64,500), “Class and Courses” ($25,200) and “Fixed Maintenance MVF Maintenance Contract Income” ($724,500) account for this revenue variance.

Expenses

Projected expenses for 2007 fiscal year are $239,418 higher than the approved 2007 budget. Payroll expenses ($246,622), Utilities ($39,974), and “Audit” ($35,268) account for this expense variance.

There are many confusing aspects of the MVF financial budgeting, accounting and reporting system. The most confusing and difficult to explain or understand is the treatment of direct expenses incidental maintenance, landscaping and snow removal services on common property provided by the Maintenance Facility and Public Works department.

The individual line item direct expenses budget amounts for current, year to date and 2007 budget displayed for directed expenses are substantially different than the approved budget. Each month $50,572 is charged as a direct expense to account 5590 Fixed Price Maintenance. Under this different schedule of budget expenses the annual budgeted amount for account 5590 is $606,861. (See schedule I)

Consequently, when the current through August expenses are projected through the end of the year “Grounds, Landscaping, Lakes and Streams” is under budget by $427,755 while “Maintenance, Repairs and Supplies” will be over budget by $603,218.

Balance Sheet

The balance sheet does not show an amount in a number of account classifications. Balance sheet accounts such as “Accounts Receivable” and “Accounts Payable” are normally updated to the last day of the reporting period as part of a standard accounting “close out” preformed to the books and records prior to producing the financial reports. This raises questions to the accuracy of the published financial reports.

The balance sheet shows a reduction of “Cash & Equilvants” of $339,433, $471,717 in “Total Assets”, $501,913 in “Current Liabilities and $232,665 in “Reserve Funds from the 2006 Audit balance sheet reports as of December 31, 2006. (See schedule P)

Please stay posted to the Montgomery Village Observer’s Blog and website for more bad news about the MVF 2008 proposed budget and the awful truth about raising the assessment ceiling.

Budget - The MVF 2008 Budget Process - Let the Games Begin!

6/28/2007 Approval of the 2008 Budget Preparation Guidelines

At the June 28^th MVF board meeting the board officially kicked off of the MVF 2008 fiscal year budget countdown. As reported in the July 13^th Village News in its “In the News” column staff reporter Mike Conroy reported under Money Business “On the heels of the positive balance for the 2007 budget, Lois Campbell presented the Board with the 2008 Budget Guidelines, as the time to start the budgeting process is right around the corner.”

At the meeting the board acted on 3 staff recommendations necessary to move the budget process forward. First, the board approved the 2008 budget preparation guidelines after agreeing to fund the reserve contribution assessment to a 75 percent level (as recommended by the reserve study report) by a 4 to 2 vote, agreed to consider a raise in the assessment ceiling and third, it set the 2008 budget timeline as follows.

Thursday June 28^th - Set guidelines and authorize preparation for ceiling increase.

Thursday August 16^th - Joint Board and Audit Committee draft review meeting.

Thursday August 23^rd – Board of Directors meeting – Approve draft budget for publication.

Thursday August 31 - Publish draft budget the Village News.

September 1^st to 27^th – Public Commentary period.

Thursday September 27 - Board of Directors meeting – Approve assessment rate and adopt budget for 2008.

Using the 2007 budget as a starting base for calculating the 2008 budget, the guidelines methodology consisted of only 4 steps:

1. Add to “Wages and Benefits”, per the Personnel Committee’s recommendations, 3% for merit raises and $144,000 for new staff positions not included in the 2007 budget.

2. Increase non personnel related operating expenses 3.5% to compensate for inflation

3. Increase “Inter Company” expenses from $724,000 to $900,000

4. Budget $715,000 as “Contribution to Reserves” (Note: this is 75% funding of the amount recommended by Advance Reserve Solutions in its July 2007 reserve study report).

The guidelines present more questions than answers.

Budget to Actual Comparison Is it reasonable to use the 2007 approved MVF budget as the foundation for the 2008 budget? How is the 2007 budget matching up in the monthly financial statements when compared to the actual income and expenditures by fund type and ledger accounts against the budget? In her July 13^th 2007 “Money Matters” column :Preparing for budget season” Lois Campbell wrote “A well-developed budget enables management to measure performance during the year and to make adjustments as needed. The “traditional budget vs. actual” is the gold standard for management success or failure.”

Based on what has been communicated by senior foundation staff, reported in the Village News and shown in the monthly financial reports made available to the board members each month, the 2007 actual expenditures through July compare favorably to the approved budget.

At the June board meeting Lois Campbell was quoted “that the Foundation continued its (favorable) trend from April …the budget still looks to be on track to stay balanced.” After hearing the positive outlook, Board member Jerry Donegan was “encouraged by our bright future.”

However, when budget and actual expenses and income operating categories are organized and compared by fund type a somewhat different picture appears. Using the July 2007 monthly financial statement provided board, the differences emerge:

• Substantial over estimating of income and under estimating of expenses.
• Widespread line item variation between published 2007 budget amounts and what is shown as the annual budget in the monthly financial statements report to the board
• Inclusions of inter fund income fees that record no corresponding expense or negative income offsetting from other fund types. These types of transactions have not been recognized as revenue in the annual audits
• Inter-Company Expenses” equal to the total foundation maintenance and landscaping cost is included as income to the maintenance activity fund. Income from these type sources have not been recognized as revenue in the annual fiscal year audits.
• As has been the pattern for the past several years, there have been significant losses in the community management and maintenance activity funds.

In the opinion of the MV Observer, building next year’s budget solely on this year’s numbers as presented to the Board is burying MVF’s fiscal future on a foundation of quick sand.

Budget Preparation Policy Will the 2008 guidelines as presented supersede the existing established board policy that outline the methodology for preparation of the annual budget and establishing assessment levels?

In a series of articles on the budget process was published in the Village News in the spring and summer of 2006, John Zakian in one of his Executive Vice President’s Message column discussed at length the principles and concept of Zero Based Budgeting (ZBB) as the basis of MVF’s budget preparation policy.

In the June 16^th 2006 Montgomery Village News front page story headlined “Work to begin on Drafting 2007 budget” it was stated that “Zero-based budgeting principles will be in use for drafting the 2007 budget, which means that all programs, services, activities, and staffing levels will be reviewed top to bottom as to need, purpose, justification and appropriate level of financial support.” In Lois Campbell’s July 13^th “Money Matters” column referenced earlier she stated “In short a well-articulated (budget preparation )concept prepared with care results in the ability to exercise management controls over the corporation by measuring progress against financial bench marks and corporate goals”.

An effective resolution that establishes, defines and implements the community’s board approved policy should do the following:

• Set forth in a public statement the community’s commitment that becomes an integral part of the association’s governing documents
• Establish this commitment in a framework that will ensure compliance with the law, the association’s governing documents and the association’s unique and specific requirements and the board’s fiduciary duty
• Allow for consistency in purpose, procedures, best practices and principles
• Insulate and protects against short-term pressures, conditions and occurrences that should not affect future related decisions and attitudes.
• Protect the policy from erosion and poor practices over time as the board, management, vendors and staff membership and viewpoint change.
• Ensure continuing, effective, reasonable and professionally performed practices.

In our view, it was not wise for the board to agree to use the “2008 Budget Guidelines” as budget policy rather than one based on Zero Based Budgeting (ZBB) as John Zakian inferred was policy in 2006 and which Lois Campbell intimated in July of this year was to continue to be the 2008 policy.

8/10/2007 2008 MVF Draft Budget Delivered

Although the board members waited with great anticipation for the arrival of the staff proposed 2008 budget their attention during the interim 7 week period following the board’s approval of the 2008 budget guidelines the board was very much occupied with other matters.

There was a protest from the residents of the partitioned community of Picton directed towards the independent kingdom of EVHC “to tear down that wall”. In attendance at the July 28^th MVF board meeting were District 14 representatives of the Maryland General Assembly.

On July 30 a Dispute Resolution Hearing was held concerning the board’s actions in appointing a treasurer and the composition of the EVP Search Committee. After meeting for more than a dozen times the EVP Search Committee became deadlocked over a final selection.

On Friday August 10^th the MVF 2008 budget draft was delivered in a hand addressed plain brown envelope propped between the screen and front entrance doors of MVF board members. The envelope contained the proposed budget in a 3 ring binder together with an explanatory covering letter.

With only one week to study the document before the August 17^th joint meeting of the board and the audit committee time was essence. The budget was quite a homework assignment for even the most knowledgeable and experienced MVF budgeters.

The joint meeting of the board and the audit committee was held as scheduled with no changes recommended.

8/16/2007 Presentation of the MVF 2008 Fiscal Year Budget

The August 17^th edition of the Village News “Money Matters” feature by Lois Campbell contained an edited version of the summary cover letter of explanation to the 2008 Draft Budget delivered one week earlier to the board members. Following are the direct quotes from both sources.

Balancing the Budget

“This budget is balanced and includes assessment increases for both the MVF and a Designated User (DU) funds…every line item in every department has been examined for excess. No new initiatives have been added and no services have been cut. However the assessment ceiling must be raised in order to avoid a deficit budget. Community Management and Landscaping and Public Works are at breakeven in this budget. Income is estimated conservatively and expenses have been carefully examined.”

“The current year (2007) budget is a balanced budget after two years of deficit budgets. Years 2005 and 2006 were back to back deficit budget year that were made worse by poor accounting practices and inadequate financial oversight. Primarily, the cause was the reduction of assessments in 2005 followed by no increase in 2006. If the CPI and cost of living increase had been applied to the 2005 and 2006 budgets and the assessment ceiling had been raised, many of the current difficulties with budgeting would not exist today. It will take time and effort to recover financially from the mistakes of fiscal years 2005 and 2006.”

“This 2008 budget will either be a deficit budget once again, or the ceiling must be raised. Both the MVF and the DU rates must be increased.”

Mistakes of the Past

“In addition, commitments to services clients were added, often without a thorough understanding of the cost and without receiving sufficient income to cover the cost. Furthermore, there was little financial oversight until late in the year.”

Contribution to Reserves

“The 2007 budget was balanced by including a reduced contribution to reserves. In 2006 there was no contribution to reserves as there were no funds available to make that contribution. For 2007, a MVF assessment ceiling and a responsibility to MVF members and Designated Users rightfully limited corrective action. Thus, the 2007 budget was balanced by limiting the contribution to reserves to $118,000."

“The assessment ceiling cap on the MVF Fund was reached in the 2007 budget. This was not sufficient to cover the full contribution to reserves. Had the contribution to reserves not been reduced, it would have been a deficit budget for a third year.”

Longer Term Issues

“The future has its challenges; the assessment ceiling has been reached and specific plans for financial revitalization have not been drawn up. These challenges deserve some further discussion. Financial resurgence requires the Board to take action. This action not only includes raising the assessment ceiling, but restoring the operating fund balances to positive territory. Financial health will not occur without intervention. Efficiencies in management and services are being sought throughout the organization and can be foreseen in the future but not until existing structural problems that have been developed over the last three years are corrected”.

“A final word on financial health it take time to undo the mistakes of the past. While great strides have been made to restore the accounting system to an acceptable state, this is not sufficient. Sound financial management is required. It cannot be accomplished in just one year, but this draft budget is the first step in the right direction.”

In her Executive Vice President’s Message titled “Reflections on the year” Pat Huson wrote “During this past year a number of tasks involved restoration of former standards and policies, which were by-passed or changed to the detriment of the organization…In the area of finances, an intensive effort has been made over more than a year to bring the financial record keeping and reporting back to excellent condition. Internal controls have been evaluated and updated to an effective level. Several new staff members are in place and are doing an excellent job. Monthly reports are being produced, and a proposed budget for 2008 has been prepared for review by the Audit Committee and the Board of the Directors. An assessment ceiling will need to be raised to fund the budget.”

8/26/2007 Board Considers 2008 Budget

As reported in the Village News August 31 edition “Interim Director of Finance and Administration, Lois Campbell, presented the 2008 draft budget. Campbell noted that although there had been financial problems in the past MVF’s current situation is such that the accounting problems had been corrected by the end of 2006 and proper financial management had been in place since August of 2006 due to her own efforts and those of Pat Huson.”

What was not reported in this edition of the Village News or in the August 29^th edition of the Gaithersburg – Montgomery Village Gazette was that the Foundation Board failed to approve the 2008 Draft Budget by a 4 to 4 deadlock vote. The board did agree however to publish the 2008 draft budget and the remaining budget schedule dates and events.

8/31/2007 Campaign to Raise the Assessment Ceilings

The previously published 2008 timeline approved at the June 28^th board meeting showed September 1^st to 30^th as “Public Comment” period. Now as announced and prominently displayed in a bold border frame on page 5 of the August 31^st edition of the Village News, “Raising the assessment ceiling of is the one and only mission of the MVF village leaders and foundation staff.

Schedule for raising the assessment ceiling

Wednesday, September 5^th - Send notices and information to homes corporations, condominium and multi-family MVF representatives on meeting schedules to vote on the assessment ceiling increase.

September & early October - Board members promote ceiling increase with Homes Corporation and condominium presidents.

Tuesday, September 25^th - at North Creek Community Center (20125 Arrowhead Road) – Village wide meeting to educate MVF representatives and alternates.

Thursday September 27^th – MVF September board meeting.

Thursday October 18^th at Lake Marion Community Center (8821 East Village Avenue) Vote taken on increase in assessment ceiling.

Thursday, October 25^th or Thursday November 8^th at North Creek Board Room (20125 Arrowhead Road) – 2008 Budget approved and MVF and DU assessment set for 2008.

Friday November 2^nd or Friday November 16^th Assessment announcement in Village News and notices sent to owner prior to Saturday December 1^st.

The preparation of the 2008 Draft Budget by the staff is no longer a step in the overall process that allows board members with due diligence and forethought, to carefully craft a board budget for public release.

As Lois Campbell and Pat Huson confirmed in the September 14^th Village News financial transparency and public comment and approval have been hi jacked and are now being held hostage as ransom in return for a raise in the assessment ceiling. There is no indication from anyone on the Board to the contrary.

The question is do we allow the Foundation Board to raise the assessment ceiling or we raise the roof on the MVF financial house of cards?

Keep posted much more to come!