Thursday, April 5, 2018

How A Simple Request can save a Neighborhood $40,000 per year

Subtitle: Complacency is Costly!

We all live in "special taxing district," but some of us live in more of them than others.  You can tell how many you live in by looking at your property tax bill or notice - the "Non-Ad Valorem Assessments" category lists them, such as "Lighting District," "Solid Waste," and "Guard Gate."  Another clue is if you drive past/through a guard gate on your way home every day.

Even though the "Lighting District" comes to only $67.66 on my tax bill - not a huge deal - one local resident did some digging and found out that he was paying for lights that didn't exist in his community.  This anecdote is evidence of inefficiencies in the system generally, which in the aggregate could represent enormous inequities.  I'm not an expert in street lighting districts, but I have become one with respect to the Guard Districts (guard-gates and/or roving patrol).

Many of the guardhouse districts were created in the 1990s, possibly due to a wave of crime at that time (in my own neighborhood, there are stories of regular armed robberies that precipitated closing off streets and limiting access to 2 roads with guard gates).

At that time, a company called 50 State managed to secure the lion's share of the guard gate contracts, despite the fact that they were not the lowest bidder, raising the prospect of some sort of corruption.  If there was some kind of bribe, it was worth it, because the sweet deal for 50 State endured for decades: once a special taxing district was formed, communities were rarely organized well enough to provide much (if any) oversight of those districts: residents just accepted the fact that there was a line on their tax bill for services they agreed to by simply living in the community.

In 2016 many of the guard gates experienced a huge spike on the tax bill.  This resulted from the diligence of a small gated community called Biscayne Point.  The new HOA President of that district started doing some digging, raised his findings with the then-Chief of Special Taxing Districts (Don Tock), and uncovered massive accounting deficiencies.  Biscayne Point had believed it was running a respectable surplus, but uncovered a large DEFICIT that resulted in a 'catch-up' payment that appeared not only in Biscayne Point, but on the bills of residents in ALL gated communities, including West of Aventura ("WoA") communities like Highland Lakes, Highland Gardens, Oak Forest, Enchanted Lake and Coventry.  It was a very unwelcome surprise.

The tax hikes were sufficiently alarming to shake some areas out of their long slumber, and demand more accountability.  The STD division was reorganized (and is now part of the Parks Department), a new Chief was appointed (Mike Bauman), and the flow of information from the County to communities began in earnest.

One of the most interesting pieces of information I received was a 'master budget' showing a long list of gated communities and the rates each pays for the same services:


In the graphic, the 5 "WoA" guard districts are highlighted.

This image is actually of 2018 rates, not the 2016-17 ones I first requested, but these financial tables led to an amazing discovery: until recently, all WoA Communities were receiving services under a 1994 Contract with 50 State, which was acquired by US Security Associates ("USSA") a few years ago.  That company was charging the County (who then charged applicable residents) $201,163 per gate for services (batch at the top of the graphic).  The exact same services were available from Kent Security for $184,981 per gate (batch at the bottom of the graphic), so for a 2-gate community, the difference was over $41,000 per YEAR!

"APPLES TO APPLES"
Skeptical readers may guess that USSA provides superior services or better guards that are worth the premium.  NOPE!  The situation here is exceedingly rare in that it is truly 'apples to apples' because when a community switches from one provider to another, the same guards can be hired by the new provider, making the transition largely undetectable (except for the badge on the guard's uniform).  Even the pay the guard receives stays the same, because becoming approved by the County involves assenting to cost of living and wage requirements that are the same.

One of the first communities to catch on to all this was Highland Lakes/Highland Gardens, where their county liaison Marc Hurwitz was (and is) also President of the larger area HOA.  Hurwitz organized those 2 gated communities sufficiently to formally request a provider change to Kent.  In addition to the $40,000++ cost savings, satisfaction levels actually went UP!  This may be due to the fact that Kent is based locally, whereas USSA is based in Marietta Georgia, and run more for profit than for quality control and customer service.

... AND MORE: CAMERAS
Kent was also able to overcome a challenge that had existed for years: getting CAMERAS installed at the gates to reinforce the work of the guard, provide a tool for police investigating area crimes, and simply to serve as a visible deterrent to crime.  In several other districts (Biscayne Bay, Gables by the Sea), frustrated residents simply installed cameras themselves, but one district (Sans Souci) discovered a disastrous downside to doing this: when a resident requested footage that was not deliverEd, the HOA found itself party to a lawsuit that went on for years and cost thousands to defend.

Another Gate district - Keystone Point - went a different direction: they set up a entirely new and separate taxing district in order to get the cameras through the County!  This "solution" ended up being such a costly and inefficient nightmare, that the County now actively discourages replicating this model.

By taking ownership of the CCTV/Camera issue, Kent both avoids the inefficiencies of the County, and at the same time protects residents and HOAs from the liability and risk (and maintenance and upkeep) associated with having control.

THE BALANCE IS SHIFTING
This is just speculation, but I think 50 State sensed there was trouble brewing around it's decades-long grip on the special taxing districts, and it chose to bail out by selling to USSA, rather than see its model begin to implode starting in 2016.  By 2017, Highland Lakes and Highland Gardens had both moved in the above graphic from the "USSA" batch of contracts at the top of the image, to the "Kent Security Services" batch of contracts at the bottom of the image (all WoA communities are highlighted in the table so you can find them easily).

And even the 2018 graphic is out of date, because in December 2017, Coventry (G-103) joined Highland Lakes/Highland Gardens in transitioning to Kent.  With close to 30 homes in Coventry, residents there will save over $600 per year for the exact same services (same gate, same guards) as they had with USSA.

Now Oak Forest and Enchanted Lake have also formed security committees to better oversee services and communicate with residents, and also to request transition to Kent to save about $250/year per residence (enough to buy a Ring doorbell after 1 year, or a private CCTV after 2 years, both of which would vastly improve personal security).  Those savings are not one-time; they accrue year after year after year, and all just for knowing enough to ASK the county for a provider change.

The moral of the story: get organized, ask questions and be an informed consumer, and you can break dynastic contracts with unmotivated providers and improve things not just for yourself, but for your community.

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