BOARD OF DIRECTORS MEETING

Agenda and Report

Monday March 11, 2019  7:30PM

2nd Floor Party Room

6:00PM – Closed Session (Held by Board in Management Office)

7:30PM – OWNER FORUM – 15 minutes, 2 minutes per person

The Board and Management will address feedback and questions from Unit Owners.

OPEN SESSION – Call to Order

Roll Call – Confirm Quorum

The meeting chair, expected to be Board President Michael Parrie, will confirm a quorum of Board Members is present. Board Members and representatives from Management will be introduced.

Committee Reports

Committee Chairs or others so designated will be invited to update the Board on business and activities.

Board Report

The Board President may review business or other matters of interest with the Board and audience.

Action Items – New Business

1. Closed Session Business

This agenda item is provided for any resolutions proposed resulting from Closed Session discussion.

2. Minutes – Board Meeting January 28, 2019

Attached to the report for Board Member review, are the proposed minutes from the Board of Directors Meeting held on Monday January 28, 2019, as submitted by Timothy Patricio, Property Manager.

A sample motion: “I move the Board of Directors approves the minutes from the Board Meeting held on Monday January 28, 2019.”

3. Assignment Of Management Contract

Draper and Kramer, Inc. reported to the Board their condo division has been acquired by First Service Residential. As a part of the sale, there is no change in contract terms and conditions, and all affiliated employees including the corporate head of the condo division, property accountants, professional assistants, property supervisor and management office staff will be transitioning to First Service Residential. The transition formally takes place on May 1, 2019, however, pursuant to the terms of the Management Contract, the Board would need to formally “assign” the Management Contract to First Service Residential.

A sample motion: “Be it resolved that the Board of Directors Assigns the management agreement with DK Condo, DKRE, Draper and Kramer, Inc. to FirstService Residential effective May 1, 2019.”

4. 2019/2020 Insurance Program

Attached to the report for Board Review is the Premium Summary and Comparison for the 2019/2020 Insurance Program. After consultation with individual Board Members, Management renewed the Insurance Program through Alliant/Mesirow for the 2019/2020 fiscal year as proposed. This includes the Property and General Liability coverage, and Workers Compensation.

The Commercial Package coverage, with policies including Property, General Liability, Crime, Director’s & Officers and Umbrella insurance, was renewed for a total of $159,473. The budget for this expense $162,000.

The Workers Compensation program coverage was renewed for a total of $37,850. The budget for this expense was $52,000.

A sample motion: “Be it resolved that the Board of Directors ratifies the action by management to approve the renewal of the Association’s annual insurance program for the 2019/2020 fiscal year, as proposed and recommended by Alliant/Mesirow Insurance Services for Property Insurance, General Liability Insurance, Equipment Breakdown Insurance, Crime Insurance, Director’s & Officers Insurance, Workers Compensation Insurance and Umbrella Insurance, at a total combined premium expense of $197,323.”

5. Market Space Lease

The Board and Management successfully negotiated terms of a lease between the Association and a new operator “Go Grocer” for the Grocery Market space, Unit 14c in the mall. Attached to the report for Board Review is the current lease, as negotiated and reviewed by legal counsel. Go Grocer is expected to lease the space for 10 years with 2 ‘5 year options to renew’, and provide a grocery market, café and pharmacy, among other similar operations, with a starting rate of rent at $4216/month, or $50,600, set to increase annually.

The rental rate paid by the previous operator at the time of their departure was $1750/month, or $21,000 annually, set to increase every five years.

A sample motion: “I move the Board of Directors approves the lease for commercial rental of Unit 14c in the Park Tower Mall area to ‘Go! Grocer 7, Inc., an Illinois Corporation’ dated ______________, for the purpose of operating a grocery market, café, pharmacy and other specified operations, for a term of ten (10) years, with two (2) five (5) year options to renew, and other general terms and conditions as negotiated with the Board of Directors and Management, including a base starting rental rate of $4216 per month to increase annually consistent with the terms and conditions of the lease.”

6. Market Space Flooring

Attached to the report for Board review are three quotes for flooring work in Unit 14c. As a part of the leasing of 14c with Go Grocer, the Board agreed to improve the flooring.  Specifically, the current vinyl floor will be removed and the concrete will be polished with an epoxy coating. Similar results to what is expected can be seen in spaces 5c and 12c, owned by Lettuce Entertain You. Three bids were sought:

Broadleaf, Inc                  $22,200*

Munoz Epoxy Floors       $19,200**

Vera Floor Systems         $21,620

Broadleaf is the vendor used by Lettuce Entertain You. Munoz is the vendor used by Go Grocer at locations where they own the space. As the low bidding vendor, and a vendor we know the new operator to be familiar with, we suggest Munoz be engaged to complete this work.

It should be noted, in recent years the Association budgeted for flooring replacement at $45,000. However, the lack of follow up or cooperation with the previous market space operator resulted in these funds not being used. Obviously, the proposed treatment by any of these vendors falls within this previous funding limit.

A sample motion: “I move the Board of Directors approves the proposal by Munoz Epoxy Floors to remove the vinyl tile in 14c and install a polished epoxy coated flooring system at the proposed expense of $19,200 to be funded by the Reserve Fund.”

7. Plaza/Market Signage

Attached to the report for Board review, are quotes for replacement signage for the plaza. There are two primary reasons new signage is needed:

1. As discussed during budgeting, the wiring is bad. We received an estimate that repair would be a minimum $3600 labor, and may be more depending on the exact problem that we find and materials needed. At the time, we were looking at what the cost would be to just replace the LED panels – one for “as is” RED only display for $24,685 and one for a full color display of $28,750. (Attached from Triangle sign.)

2. Park Tower Market is no more. With Go Grocer taking over the space, as a part of the negotiated lease agreement between the Association and Go Grocer,  visible signage needs to be installed consistent with their trademark. (Attached are options from ‘tfasigns’, who design and install signs for Go Grocer. They’ve provided 3 bids for 3 similarly sized signs with different panels. A rendering of what this expected to look like is also attached. Of these three numbers, Go Grocer would pay $21,250 plus tax for their portion of the sign:

$70,117.88 (PT Portion $46,689.68)

$47,957.63 (PT Portion $24,529.43)

$54,241.88 (PT Portion $30,813.68)*

The cost is very competitive with the bids from Triangle, and if anything better. These particular tfa signs are very high clarity LED, while the Triangle signs are much lower (better explained in person at the meeting if you would like more specific details). Also, the total cost includes rebuilding the entire sign which is necessary to affix the Go Grocer signage. Considering that, the cost is much more reasonable than the Triangle bids.

Every sign has a parts and labor warranty of 5 years. All the signs LED displays are foreign made. The more costly option is said to be Made in the USA, but it is really fabricated in the USA with parts that are manufactured in Asia. The only really difference is the service and support hours, which for the sign fabricated in the USA are more convenient. If a part goes bad, or materials are needed for a repair, with any of the signs we are told it is a turn around time of about 2 weeks once a problem is identified and an order is made. This is fairly comparable to problems we’ve experienced over the years with the present sign.

For Board review, there are some additional correspondence attached between myself and the TFA rep, with some other questions I had. I am presently awaiting responses to some follow up questions, and hope to be able to share even more details at the meeting if necessary. But, from my review and research, the best quality and clarity sign would be the highlighted sign, at $54,241.88. Our portion would be $30,813.68.

A sample motion: “I move the Board of Directors approves the proposal by tfasigns for replacement of the plaza market sign and LED panels, as they’ve proposed, at a cost not to exceed $54,241.88, and with approximately $23,428.20 of the cost to be shared with ‘Go! Grocer 7, Inc., an Illinois Corporation’, for the installation of their ‘Go Grocer’ marquee as proposed, to be funded by the Reserve Fund.”

8. Unit Owner Request – Leasing Policy Exception

The Board has been in receipt of a request from the Unit Owner of 4509 for a leasing policy exception.

A sample motion: “I move the Board of Directors approves/denies the request of the Unit Owner of 4509 for an extension of their exception the Association’s Leasing Policy.”

9. HVAC – Chiller Pump

Attached to the report for Board review, are quotes for replacement of Chiller Pump #3. Originally this was expected to be an operating expense of about $7500 to simply rebuild the pump. However, as our team had vendors examining this further to get proposals for the rebuild, concern over the cost versus condition has led us to reach the conclusion replacement would be a more efficient use of resources. The bids are as follows:

Fluid Technologies          $12,510

TRAMCO Pump Co.         $13,472

W.J. O’Neil                       $14,375

We have done work with each vendor, so we have no objection using the low bidder. Because this is over $10,000 we suggest it be funded by the reserve.

A sample motion: “I move the Board of Directors approves the proposal by Fluid Technologies Pumps and Controls, Inc., to replace Chiller Pump #3 as proposed at an expense of $12,510 to be funded by the Reserve Fund.”

10. HVAC – Chiller Purge Units

Attached to the report for Board review, are quotes for the installation of new purge units for both Chillers, a projected budget this year at an expense of $30,000. The purge unit is a device responsible to reduce potential leaking of refrigerant and keeping air out of the line. There will be an improvement over the old purge devices, in that the new technology is stand alone and will monitor the refrigerant when the Chillers are idle or off, to keep air out of the line over the winter and reduce leaking. The current purge units are obsolete at the present age of the chillers, and do not operate while they are idle or off. The bids are as follows:

Johnson Controls            $30,548.12

W.J. O’Neil                       $33,875.00

3rd TBO                             $________

The Chillers and Cooling Tower, were both installed by Johnson Controls, and the maintenance contract for the system is presently with Johnson Controls. So it would be most efficient to have them do the work. However, we would like to get the 3rd proposal before making a final recommendation.

A sample motion: “I move the Board of Directors approves the proposal by _______________, to install new Chiller Purge units as proposed at a cost not to exceed $30,548 to be funded by the Reserve Fund.”

11. HVAC – Lobby Air Damper

Attached to the report for Board review, are quotes for replacement of air damper system for the lobby air handling unit. This is budgeted as part of a variety of HVAC tasks planned this year for Air Handling System improvements, the total budget for which was anticipated at $84,000, of the $640,000 in HVAC Repairs and Replacements noted in the approved budget.

This particular replacement is recommended for work now, as the current damper failed and has to be operated manually, which is for obvious reasons problematic, particularly during periods of adverse weather. It is also a code compliance issue. The bids for the recommended replacement device, “Tamco 9000” as noted on the proposals, will be an improvement over the existing device as it is better able to handle severe weather – particularly very cold conditions. Bids are as follows:

DEMCO Mechanical        $11,995

Kroeschell Service           $14,105

W.J. O’Neil                       $14,675

We have done work with each vendor, so we have no objection using the low bidder.

A sample motion: “I move the Board of Directors approves the proposal by DEMCO Mechanical, to replace the lobby air damper as proposed at an expense of $11,995 to be funded by the Reserve Fund.”

12. Low Zone Hot Water Heater Replacement

There are three domestic hot water heaters serving the low zone units, 3rd floor to 29th floor. (Water heaters for kitchen and bathroom water.) All three were original to the construction of the building, and actually scheduled to be replaced in the next fiscal year, 2020/2021. In late January one of these failed at the burner, and the condition was so deteriorated, repair was all but impossible. All three all cycle on and off and at any one time 2 are typically needed for proper heating during the winter. So we immediately acted on replacement on an emergency basis.

We used W.J. O’Neil, who was already present doing work on the heating boilers. They gave us 4 options  for similar capacity heaters that would be relatively readily available, including two which are the same brand “Lochinvar”, as the new water heaters installed for the high zone in 2017. Attached to the report for Board review is the proposal with the choices we looked at. The option we chose and approved, was $18,855, which we request the Board ratify

Obviously, not being budgeted this year, this was not an anticipated expense. However, the number used for budgeting the Low Zone Heaters, was the same cost as the project for the High Zone plus inflation, $250,000. The big difference is, for a variety of reasons, we cannot use the same type of expensive but very high efficiency water heaters used at the penthouse level for the high zone, as we can in the 2P mechanical area for the low zone. Both the size difference and the venting of exhaust are key variables making it impossible to use the same exact devices in both locations. There are advantages and disadvantages to each, but these less expensive hot water heaters are still around 85% efficient, which is better than the existing heaters which W.J. O’Neil said at best gets us 65 to 75% efficiency.

HOWEVER, the good news is this exercise gives us budget guidance for 2020/2021, and we will be able to adjust future anticipated expense from $250,000 to about $50,000 which gives the Association a bit more breathing room in the Reserve Fund.

A sample motion: “I move the Board of Directors ratifies the action by Management to approve the replacement of a Low Zone domestic hot water heater, as proposed by W.J. O’Neil at a cost of $18,855 to be funded by the Reserve Fund.”

13. 1P/2p Flooring – Mall Elevator Vestibules

The purpose of this action item is for the Board to consider expanding the flooring installation on the 1p and 2p levels, to the elevator vestibules serving the mall. Maintenance reports they should need no more than $2500 in additional materials to complete the additional work, and it is possible we can get it done for much less. We request a budget of that amount for this work, just to make sure.

A sample motion: “I move the Board of Directors approves a budget not to exceed $2500 to expand the 1P and 2P flooring project to the elevator vestibules on 1p and 2p, serving the mall elevators #7 and #8.”

14. Compactor Replacement

Recently the leaking oil from the compactor was investigated, and determined to be caused by conditions that can not be repaired, so the staff sought bids for replacement:

DEMCO Mechanical       $11,325

Flood Brothers                $14,293.71

Republic Services            $12,636.15

Each proposal is for a ½ yard container, which is a bit higher capacity than the present compactor, but we are told the mouth of this unit is better fitted to our trash chute. Republic Services is our present waste management vendor, who have said they will integrate inspection and simple maintenance of the compactor with our existing contractor. If they will match the 3 year warranty by Flood Brothers, we suggest to proceed with their proposal.

As this expense exceeds $10,000, we suggest it be funded by the reserve. This was not a budgeted expense for the year, but small enough that it should not adversely impact business or our overall outlook.

A sample motion: “I move the Board of Directors approves the proposal by Republic Services, to replace the trash compactor as proposed at an expense of $12,636.15 to be funded by the Reserve Fund.”

15. Garage Proximity Reader

As requested at a past Board Meeting, we investigated the possibility of installing a “proximity reader” at the garage exit. It was suggested this would be done in conjunction with the coming FOB Reader replacement project. Attached to the report for Board review is the proposal CBS provided as a change order to install such a reader. In addition, you will find information on two reader “credentials”, one a portable tag and one a windshield tag (see below). These act much like the “I-Pass” readers for the toll roads. When you’re within about 15 to 20 feet of the reader, it activates the automatic door.

We will have physical samples at the meeting.

This would be a very convenient improvement, especially for the cost. However, there are several considerations we would like to discuss at the meeting:

1. Which control “credential” is preferred? (Noted on bid, portable tags about $15, windshield tags $10.)

2. Do we switch to these and eliminate the fob reader?

3. Should these replace garage “clickers”, which would improve security since we have very little control over clickers?

4. Could these replace license stickers?

A sample motion: “I move the Board of Directors approves the installation of a proximity reader at the the garage exit, as proposed by Chicago Building Services Inc., at a cost not to exceed $2,763.94.”

Depending on discussion, the motion could be amended to include any other considerations.

16. Construction Requests

Attached to the report for Board Member review are remodeling packets for the following Unit Owner construction projects:

#3806-Bathroom Remodel

#4810/11-Flooring Remodel

A sample motion follows: “I move the Board of Directors approves the remodeling plans of units 3806 and 4810/11 as submitted by the unit owners, following the recommendations of the chief engineer as outlined in their written specifications and in accordance with the Rules and Regulations and remodeling guidelines of the Park Tower Condo Association.”

Business Reports
1.     Treasurer’s Report

Fund Balances End of January 2019

Operating Funds $608,948 (increase of $41,619 from prior month)

Reserve Funds $2,027,297 (increase of $141,927 from prior month)

Total Cash and Investments $2,778,172 (increase of $183,546 from prior month)

January 2019 Revenue and Expenses

Total Operating Revenue: $507,170

Total Operating Expenses: $408,086

Income From Garage: $21,497

Contribution To Reserve: $136,675

Total Deficit: $16,093

CD Transaction

Management acted in consultation with the Board Treasurer to renew a Certificate of Deposit at International Bank of Chicago. This action should be formally ratified by the Board. Attached to the report for Board review is the memo from Draper and Kramer with specific details summarized as follows:

A CD with International Bank for the Reserve Fund, was renewed for 12 months, totaling $105,110.66 with a 2.65% yield:

A sample motion follows: “I move the Board of Directors approves the renewal of a $105,110.66 Certificate of Deposit with a 2.65% interest rate for 12 months with International Bank of Chicago, for the Reserve Fund investments, scheduled to mature on January 24, 2020.”

2.     Management Report

a. Business and Activities

b. Recent Sales Activity

ADJOURNMENT

There being no further business, the Board will consider adjourning the meeting.

A sample motion: “I move the Board of Directors adjourns the March 11, 2019 Board Meeting at ____PM.”

OWNER FORUM – 15 minutes, 2 minutes per person

The Board and Management will address feedback and questions from Unit Owners.

Next regular Board Meetings – March 25th and April 8th, 7:30PM in the Party Room