Condo Media - September 2014 - 14

by Jack Carr, P.E., RS, LEED-AP

C A I

R e g i o n a l

N e w s

MAINE

New Condos and Old Tricks
Creating and Protecting Communities

M

ainers have a love-hate
relationship with September.
It's a time of the some of
the best weather of the year
with the anticipation of the fall colors
soon to come, but it also reminds us
of the yard and building maintenance
work undone before the early winter
begins. September is a time when we
start planning our Halloween costumes,
but before we start discussing the scary
things going on, let's comment on the
good things in the condo world.
Maine's condo and apartment
market continues to be hot. Portland multifamily buildings for sale
are attracting investors from all parts
of the country due to the attractive
high rents and lending deals. Even
the slower markets in Biddeford and
Lewiston are seeing spinoff effects of
more widespread interest into those
locales. These higher rent rates push
more renters toward renting or buying
condominium units.
For this reason, more condo developments are on the drawing boards
for both ends of the Portland peninsula. In Munjoy Hill's new trendy
neighborhoods, two new condominium developments are on track
for opening next year. These include
the Munjoy Heights, with 29 luxury
townhouse units with garages and
elevators, scheduled for opening early
next year, and shortly thereafter, the
Marquis Lofts complex is scheduled to
be available for occupancy.
The development of Thompson's
Point finally has been approved by
Portland allowing the creation of a
highly anticipated Fore River complex
on 30 acres at the gateway to the city.
In addition to the two 120-foot tall

14

Condo Media * September 2014

condo towers, the facilities host a sports
stadium and a covered amphitheatre.
Now for the scary stuff. I remember
when Halloween was not such a big
deal. Perhaps next month's holiday
is meant to remind us to be wary of
the unknown and be prepared. Trust
comes with a price, as seen in recent
news about condominiums facing the
real fear of embezzlement and fraud.
A Hampton Beach condominium
president pleaded guilty this past June
to mail fraud for allegedly embezzling
hundreds of thousands of dollars from
his New Hampshire condo association's account over the last four years.
Seacoastonline.com reported he is
accused of forging board members'
signatures, creating fake invoices and
association statements, and siphoned
off money from a reserve fund roof
repair project. He will be sentenced
next month in U.S. District Court.
You may recall Southern Maine was
shocked in the recent past by two cases
of condos being allegedly robbed by
trusted custodians of condo funds.
The first case involved a Berwick woman who was the bookkeeper for two
condo's in Portsmouth. She allegedly
stole over $30,000 while maintaining
the condo's financial records. The second case involved the embezzlement
of funds from a Biddeford condo.
The news came as a shock, but it
should not have. Theft from non-profit
organizations and profit-making companies happen more than we think. Often,
it is not reported due to the board's fear
of embarrassment or worried about bad
press jeopardizing reputations. Small
non-profits are perhaps the most vulnerable to this type of crime due to their
size and lack of qualified personnel to

provide adequate internal controls.
Perhaps this news should be a wake
up call to board members to be more
vigilant on noting irregularly high
maintenance costs, odd equipment
purchases, or other unusual repair
item histories.
As difficult as these issues might be
to put on a board's agenda for discussion, it is necessary. Probably the
greatest cause of embezzlement is loose
financial controls providing too much
temptation in hard economic times.
So, where to start? The condominium's CPA could certainly provide
workable guidelines to install simple
financial controls with an annual audit
of the financial systems and a protocol
for having multiple eyes see periodic
monetary documents.
Associations should avoid one person
being solely responsible for recording
and depositing checks; requesting, authorizing, and recording expenditures;
opening mail; and reviewing transfers of funds between bank accounts.
Bonded property management companies can perform many of these duties.
Your insurance package should include
fidelity insurance to protect the association when the worst happens.
Further steps to protect cash include
requiring all check expenditures to
have two signatures and two authorizations for each cash disbursal, and no
pre-signed checks. Contracts should
be competitively bid and reviewed and
approved by the board. We should
remind ourselves of President Reagan's
quote, "Trust, but verify." CM
Jack Carr, P.E., RS, LEED-AP, is
senior vice president with CriteriumEngineers in Portland, Maine.
http://www.Seacoastonline.com
Condo Media - September 2014

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