While writing Broken Control Mechanics,
we realized that the content on
Canned Meetings & Unfair Vendor Contracts
deserved its own article. Maybe two.
Below is what we have so far.
We will add more in time and complete the article over the next few weeks.
Thoughtless decision(s) by the board majority have, again, placed the building in compromising position(s) with vendors. The Elite Contract is particularly unfavorable to the building and one-sided:
There’s no clause for termination. Meaning the building can’t terminate with the vendor with any prior given days notice
There is no contracted number of hours/role provided in the contract; the building (identified as owner in the contract) is obligated to an assistant manager and a manager, a receptionist, a porter, and a lifeguard, but no set number of hours for any of these roles.
Staff hours may be increased at the building’s request and any modification of staff hours (which are not clearly outlined in the contract and, apparently, are at the sole discretion of Elite Amenities), will be added to the contract price at the rate of $35/hour plus applicable state sales tax.
The compensation schedule is designed to be deceptive: in year one, while it is clear that we are paying ~$597k for Elite for the first year, between September 2024 to August 2025, we are paying roughly $43k in the months from September 2024 to February 2024 then $53k from the months of March 2025 to August 2025. Considering our annual Financial Statements cover a fiscal calendar year (starting from May of the previous year to April of the year our Annual Financial Statement is dated), this will mislead owners in the 2025 Financial Statement to believe that our Health Club Operation Costs did not increase that much. The Auditors would also never catch it since they are concerned with reporting on that Fiscal year and rely on the board to provide them nuances
Additionally, while we haven’t read the Douglas Elliman contract, the building has never resolved Akam’s contractual obligation to pay the building $100,000 if it had not found the building savings under its first year of service. Had Akam found the building savings? What were those savings? Can owners be made aware before Akam leaves the building?