Receiver's reportsThe third and fourth receiver's reports are now available.
The third report, filed June 12, 2015, can be found by clicking HERE.
The fourth report, filed July 10, 2015, can be found by clicking HERE.
We strongly recommend reading these in their entirety, as they have a lot of information about the state of Cedar Run.
Just a few highlights......................
Accountant-gateAs mentioned in the previous blog's comment section, the receiver has been trying to get information from James Barr, the accountant hired by the Sher/Shaw group to file tax returns, who has not cooperated. The auditors need copies of the tax returns and any supporting documentation used in the filing of these tax returns. This is supposedly the last bit of information needed to complete the audit.
At the time of the court hearing on 7/13, Mr. Barr was still refusing to cooperate and still withholding the documents. The judge then signed an order that required Mr. Barr to comply or face contempt of court on 8/6. As of the writing of this blog entry, James Barr has FINALLY provided SOME documentation. However the documents provided are vague, and we do not know if the auditors' requirements have been met.
Once Sher was out of the picture, the directors on the Phase 10 board had learned how dire their financial situation was (and still is). Their delinquency rate was/is extremely high, and little or no efforts had been made to collect from non-paying owners. The buildings were grossly under-insured, and their was no liability (D & O) insurance for the board. There were past due water bills and almost no money in the bank to pay them.
Assessments for this phase were never increased under Sher/Shaw's tenure, but there was literally no money to even operate, let alone build any cash reserves. During the nearly three years that Sher/Shaw controlled Phase 10, we know of at least two instances where the MASTER BOARD paid their water bills and insurance. There may be many more, but we will wait for the audit report to confirm.
What does this mean? It means that money paid by ALL Cedar Run owners (most being outside of phase 10) was used to prop up Phase 10 and mask their financial insolvency by subsidizing them with HOC funds. HOC funds are to be used exclusively on the COMMON GROUNDS of the property.
Today, Phase 10 is now being managed by HHSG (same company acting as receiver for the Master Board). As of July 10, Phase 10 had over $9000 in past due water bills with the Village of Wheeling. The water was literally about to be shut off in a matter of days.
The receiver appeared in court on July 13 and asked the judge if the HOC (aka Master Board) can provide a zero interest loan to Phase 10 to pay these bills and keep the water on. The judge approved. The terms and conditions of this loan are not known at this time.
Very soon, Phase 10 will likely levy a special assessment to help bring its finances in order. This is an awful outcome for all the paying owners of Phase 10, but it is a necessary step to bring them back to financial solvency.
This unfortunate circumstance is purely a result of three years of IRRESPONSIBLE MANAGEMENT.
Rising operating costs
No incremental assessment increases
Outrageously high delinquency rate (with no efforts to collect)
On a related note
Phase 5 was in a similar situation as Phase 10. They were also managed by Sher/Shaw (starting about 7 months later than Phase 10). They too were left with virtually nothing in the bank and unpaid water bills.
Phase 5's board has not opted for professional management, and it is unclear what their long-term plans are. They did have a meeting with owners to discuss their future on Wednesday, 7/29. Results of this meeting are not yet known.
Balance Letters from HHSGEvery month, the receiver sends account statements to all Cedar Run homeowners. Many owners have complained about these statements showing inaccurate balances. A few things to note:
- Any payments sent to previous payment addresses (in Wheeling or Chicago) will NOT be reflected in these statements
- Payments sent to the correct address (Los Angeles, CA) sometimes post after these statements are created and may not always show up on the statement
- The audit results should account for any payments sent to the previous addresses and all payments made BEFORE the receivership began.
- If you owed anything BEFORE the receivership began, you won't see it on the statement until the audit is finished.
- DON'T PANIC!
- Wait for an updated statement AFTER the audit is complete
- If it still shows an incorrect balance, contact HHSG and be prepared to show proof of payment
We'd love to hear from you!